Buying my first house - need some advice

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Uzzz said:
Did you get a pre approval to see how much of a mortgage they would give you in any case? ... Some places like to see 2-3 years of steady income, and are sometimes weary of entrepreneurs, even if you made lots $$ last year or so . Something bout consistency... but then you could always plop down a bigger down payment like someone mentioned earlier.

Nice house! Looks like 2 different houses front/back.
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Thanks guys, I really appreciate it. Compared to a lot of the guys here I'm still very small potatoes, but it was all done by myself and in a tiny little room so if your struggling, I can guarantee that it can be done. You just have to think big.

I didn't have to get a pre-approval because I ended up having a pretty good relationship with the people I'm buying it from. He's a business guy too and he trusted me, not to mention the fact that if I screwed it up, he'd get all the money that's currently in escrow. I think your right about making a big down payment. I could be wrong, but even now they would probably want me to do a pretty big down payment just in case I made a bad investment or something. I don't have a long history of success or anything so it will look pretty strange to them, especially here in KS.
 


joshmv said:
I didn't have to get a pre-approval because I ended up having a pretty good relationship with the people I'm buying it from. He's a business guy too and he trusted me, not to mention the fact that if I screwed it up, he'd get all the money that's currently in escrow. I think your right about making a big down payment. I could be wrong, but even now they would probably want me to do a pretty big down payment just in case I made a bad investment or something. I don't have a long history of success or anything so it will look pretty strange to them, especially here in KS.
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Ah i meant a pre-approval from the actual bank to see how much of a mortgage you can get.... but i'm not sure if it works the same in the States as Canada.
 
Uzzz said:
Ah i meant a pre-approval from the actual bank to see how much of a mortgage you can get.... but i'm not sure if it works the same in the States as Canada.
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Ya, that's actually what I was talking about too, but I know it wasn't worded right. I just meant that a lot of people will want to see a pre-approval from a bank before they accept your offer like you were talking about but they said it wasn't necessary so I've never gone and gotten one.
 
joshmv said:
Ya, that's actually what I was talking about too, but I know it wasn't worded right. I just meant that a lot of people will want to see a pre-approval from a bank before they accept your offer like you were talking about but they said it wasn't necessary so I've never gone and gotten one.
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Ah ok gotcha. That's cool. It could also help you out deciding how much of a down payment to put down if you know what kind of mortgage you can get.

**if you go the mortgage route.
 
Nice house and congrats!

Although I'd be talking to several banks to make sure you are getting the best terms for a loan. They may be able to beat the homeowner's contract.
 
Real estate is the best hedge against inflation.

Why not a 30 yr loan ? Don't pay all cash for investments, leverage other peoples money and get a loan. Pay all cash for toys: cars, tvs, etc.. Also consider the tax benefits that come with mortage interest.

Don't even bother with high interest savings accounts.

Yes I believe you still keep your house after bankruptcy as long as the equity is exempt and you're still making payments (naturally).

Costs and fees for mortgages varies that's why its important to shop around. Some will be higher interest with no points, others will want points (1 point is 1% of the total mortgage amount paid upfront) but offer lower interest. Whatever you do DO NOT GO FOR AN ARM. Arms are what a lot of retards opted for and have now lost their homes because of them. Go fixed rate.
 
pocketrockets said:
They may be able to beat the homeowner's contract.
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Could you expand on that?

Andrew Scherer said:
Don't even bother with high interest savings accounts.
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Are you suggesting to stay away from them to invest in the stock market, other business ventures etc?

Andrew Scherer said:
Yes I believe you still keep your house after bankruptcy as long as the equity is exempt and you're still making payments (naturally).
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What makes the equity exempt? I was thinking about writing off a small percentage of the house that I'll be using as the home office, does that screw anything up?

Also, I was guessing you could keep it and still make payments even if you are sued, but if you claim bankruptcy and everything is gone, how do you keep making payments if you have a mortgage?
 
joshmv said:
Could you expand on that?
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I was assuming you were doing some sort of financing through the seller but I just re-read your post and I guess it was for an all cash deal.

If you do pay all cash I sure hope you are negotiating for a major discount on the price. He must be licking his chops on this deal, lol...

I would SERIOUSLY reconsider just getting a loan. Hopefully you still have the option to do so.
 
if you have the money to buy it outright just do it, life is better lived with no strings attached.
 
joshmv said:
Are you suggesting to stay away from them to invest in the stock market, other business ventures etc?
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Probably not stock market, but if you want to put your money into savings just use it to buy silver and hold onto it.

Any kind of interest rates you're going to get with a savings account won't keep up with the real rate of inflation - they'll just be losing value over time.

joshmv said:
What makes the equity exempt? I was thinking about writing off a small percentage of the house that I'll be using as the home office, does that screw anything up?
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Not sure about that, would be a good idea to consult a professional on that stuff.

joshmv said:
Also, I was guessing you could keep it and still make payments even if you are sued, but if you claim bankruptcy and everything is gone, how do you keep making payments if you have a mortgage?
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lol I'm not sure man, however you can hustle it up.

jdomaha said:
You are fucking yourself dude.

FUCKING YOURSELF.
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This is the time when the big dogs buy, make no mistake about it.

I remember talking to a RE investor in Florida some years back. A friend and I bumped into him in a book store when we were checking out RE investing books. He was going on and on about how its a great market now, and he sees a lot of people overextending themselves, getting ARM mortgages, and basically buying more house than they can afford (which is exactly what happend). He mentioned that he couldn't wait till it all came to a crashing end, because he was ready to buy those shitty homes and "clean up the mess". He's probably licking his chops now.

Needless to say, he makes a killing. Easily a millionaire many times over.


Anyway josh your home looks nice and I hope you end up buying it, I'm sure you'll be happy.

I haven't bought any property yet but hope to within the next year or two, hopefully before the market starts creeping back up. Honestly I'm looking to get out of US market and I'm checking out Europe, possibly Spain. I want to buy a multiunit, live in one, and collect rent checks in Euros on the others from tourists. Being a landlord has always appealed to me, but I know it turns off many others.
 
Congrats on the house bud. That's a nice home for anyone to be paying for upfront, nevermind a 24 year old. Shit when I'm that age I'll be struggling to pay for graduate school haha
 
Look into the homestead laws in your state if you are interested in learning about what happens to your home in the event of bankruptcy. For example, Florida's homestead laws dictate that no matter what happens you can keep your house it you own it outright. In the event of carrying a mortgage - not so sure. Anyway, my point is that it might be worth paying a real estate attorney for 30 minutes of their time ($150?) to find out about exactly what right you will have in either situation - true ownership vs. mortgage.
BTW, congrats and your story is inspirational. Im nearly 24 and no where near thinking about a house!
 
CSampson said:
Look into the homestead laws in your state if you are interested in learning about what happens to your home in the event of bankruptcy.
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Awesome, I was wondering what the actual name of it was. And your right, finding that out for sure is probably my highest priority since that will probably make the difference for me whether I mortgage or not. Thanks.
 
joshmv said:
So I've finally decided to buy my first house
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Looks like a good choice, love the pictures. A few things come to mind. One is that you need to be prepared for a big change when becoming a new homeowner. The house seems to be pretty big for a guy in his 20s. I don't know if you will be alone, but consider the costs after closing such as:

  • heating and cooling
  • electricity
  • ongoing repairs and maintenance of appliances and other systems in the home
  • security
  • cutting the grass
  • landscaping
  • exterminator for pest control
  • interior decorating and painting
  • additional furniture purchases
  • and maybe even maid service to help keep it clean

Keep a list of all major items in the house that could fail and track down current prices to replace them at Lowes or Home Depot. Make sure you have a repair fund that is immediately available to draw upon in case of emergencies. That would be my suggestion for having a money market account or other interest bearing account; one that is dedicated to a specific purpose like repairs.

If you have enough money to actually buy the house, I say go for it. I know there is an argument for financial leverage, and putting your money to use in other ways, but I would avoid a mortgage if at all possible. Your monthly bills would include insurance payments, property taxes (or pay it once a year), utilities, termite bond, exterminator, and cleaning, among other things.

To your point about getting sued, you should look into an umbrella liability insurance policy. That should help protect your assets from "slip and fall" litigation from anyone who is hurt while visiting your property. You would expect to pay about $16-$20 a month for about $2 million in coverage. Also even though you are young, consider a disability policy that will pay you when you cannot work because of a heart attack or car accident or other disability. Without this type of income replacement coverage, calculate how long your savings will continue to cover your monthly expenses until you can recover and start working again. For some people this could mean having at least a year's salary saved up.
 
Why not use the money that you're going to invest in your house -- and use it to vacation semi-permanently?

Depends on your life style I guess, if you're buying a house for your wife and kids then it's cool.

But if you're single with a GF, use the money to take 4 years vacations. Rent a nice room, move when the fuck you want (don't have to be tied down)

Just my 2 cents.
 
joshmv said:
Thanks again guys, the tips and compliments are awesome.

Ok, I'll bite, why am I fucking myself?
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Ok man. It's a nice house and all, and you're probably all happy and shit...but you haven't thought about one...

small....

thing.

That house is a fucking deathtrap when the zombies come.

Look, you've got a walk-out basement. Sliding glass door? What the hell are you thinking?

Zombies love that shit.

It is a fetish for them.

And all it takes is for one of the walking dead to catch a glimpse of your ass through that window and you'll be neck-deep in the dead in 20 minutes.

You've got no upper story, you've got nowhere to run when the undead rise again and come for you, dude.

Go with a two-story at a minimum. You get your perimeter breached, you barricade yourself upstairs so no shambler can get at you. Worst comes to worst, you cut away the stairs with a chainsaw.

Two stories give you a numerical advantage if you rent rooms out. They also give you a sturdy platform from which to throw Molotov cocktails or to dowse the dead with gasoline.

Get a three-car garage and fill the third stall with lumber. Preferably 2x4's.

Always back your 4x4 truck in, so you can make a fast getaway through your windowless garage door.

Dude props to you that you're making good money. A house isn't an investment, however. At least your primary residence isn't. It's a place to live, and a place to keep safe and a place to keep those motherfucking zombies away from your balls man.

I advise this: Hire these people (not a dickroll). They know what defensibility is, and can put something together for you that'll stand for centuries.

Hope I've been at least some help to you man. You sound like you need it.
 
Awesomebtn - I appreciate your insight, there's too much in there to really reply to, but there were some great reminders.

Amanda11 - I really wish I could bring myself to do that because I think it would be awesome, but for some reason it's just not my thing. I know the majority of people my age would jump at the chance to do that, and in the dead of winter I'm usually wishing I'd do it too, but I'm getting married next year and then hope to start a family. Can you tell I'm from Kansas? :) We do hope to vacation a lot though, and already have a couple planned.

jdomaha - I really thought you were going to bum me out with actual mistakes I was making but I should have known better, and I'm one step ahead of you. I've usually got my glock strapped to my side, and have plenty of AR-15 zombie killers ready to roll if we need to. The house also has a sweet concrete enclosed saferoom so we can always hide out in there if we need to. Next step - a moat
 
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