The Home Ownership Thread

[Numbernine]

130k for a mortgage is nothing. Go for it.

+1

 

[ChrisGold]



130k for a mortgage is nothing. Go for it.

Especially if you are sure that you will have equity in the home from day one. (no PMI is a nice $ savings) Based on your current rent this is not a stretch at all for you, and you have the equity in your home (plus a knowledgable father) as a safety net.

 

[RedLantern]

Is your father going to hold the note, or are you bank financing?
What would your father think if you decided that it wasn't for you and sold it for a profit?
How are the rest of the house systems?
Are you ok with ongoing maintenance costs, higher utilities and limited personal mobility for job opportunities?
What if the renovation+ costs go over estimated?

If it's something that you really want to do, then go for it. Don't do it if its something your father wants you to do but you're on the fence about.

The problem that I see about it is that 1100sf isn't a big enough house to become "established" in, regardless of whether you want to have kids or not. Basically, you need to decide if the changes in lifestyle and increases in cost are worth it for an apartment replacement, rather than a family home. All of which would be fine, if there is no problem with you selling it with no hard feelings from your dad.

 

[Master-Classter]

Seems like a good way to 'get in there' but I'm also pointing out that your current space works for you in terms of size and location and price plus you can always walk away. Now you'll have to commute 25 minutes, rent goes up 50%, the space is better but still limited, and I'm not sure how much you've planned for but I would assume things will come up that need to be done and with a house, those things happen in increments of thousands of dollars. How 'rare' are these sort of opportunities?

 

[CBrown85]

Variety is the spice of life. Move.

Also, where the f are you living where a house can be bought for 125k?

 

[brokencycle]



Variety is the spice of life. Move.

Also, where the f are you living where a house can be bought for 125k?

Anywhere in the central or mountain time zones?

 

[texas_jack]

Sheeeiit, if you can get into a home at your age without all the financial bs and no PMI I would go for it.

 

[texas_jack]



Variety is the spice of life. Move.

Also, where the f are you living where a house can be bought for 125k?

I'll sell you our rent house for less than that.

 

[Connemara]



Is your father going to hold the note, or are you bank financing?
Bank financing. Dad will pay cash for the house and reno, sell it to me at cost. We expect that to be $120K or under.
What would your father think if you decided that it wasn't for you and sold it for a profit?
He doesn't have a problem with this..
How are the rest of the house systems?
We aren't sure about that yet. I am a little worried about the electrical just based on the age of the home.
Are you ok with ongoing maintenance costs, higher utilities and limited personal mobility for job opportunities?
I'm trapped in this geographic area for quite a few years to come so job mobility isn't an issue. I am hoping to take care of the major maintenance (new roof, foundation, floors, kitchen, etc.) with the reno but I do understand there are unforeseen costs. I have an emergency fund and will continue to build that aggressively. As for utils...I have electric baseboard heat in my apartment and it costs me $250+ a month in the winter. And that's if I use it sparingly. I know people with gas heat (this home has gas forced air) in similar sized homes that pay less than that.
What if the renovation+ costs go over estimated?
I told him I want the option to walk away if something huge comes up and the total cost of the purchase and reno exceeds what I am willing to pay. He agreed to this. Basically, I want him to view it as he initially did - a foreclosure that is a good opportunity for a flip. This eliminates a lot of the risk IMO.
If it's something that you really want to do, then go for it. Don't do it if its something your father wants you to do but you're on the fence about.

The problem that I see about it is that 1100sf isn't a big enough house to become "established" in, regardless of whether you want to have kids or not. Basically, you need to decide if the changes in lifestyle and increases in cost are worth it for an apartment replacement, rather than a family home. All of which would be fine, if there is no problem with you selling it with no hard feelings from your dad.

I don't want a large house. When it comes to homes I'm a minimalist.

Thx Red. See above.

Seems like a good way to 'get in there' but I'm also pointing out that your current space works for you in terms of size and location and price plus you can always walk away. Not you'll have to commute 25 minutes, rent goes up 50%, the space is better but still limited, and I'm not sure how much you've planned for but I would assume things will come up that need to be done and with a house, those things happen in increments of thousands of dollars. How 'rare' are these sort of opportunities?

Somewhat rare in terms of the location. It's a neighborhood very close to the city but has the lower taxes and crime rate of the burbs. I would not consider a house further in the suburbs because I want to be close to work. The commute is only 12 minutes or so unless I take the bus.

Sheeeiit, if you can get into a home at your age without all the financial bs and no PMI I would go for it.

That's why I am very tempted. I am also sick of apartment living (people above, below, and to the sides of me) and would like some space, particularly yard space to grow a garden.

Oh, as for values in this town - a lot of homes sell for $200-$250K, with new construction going for $350K+. The small neighborhood I'm considering is comprised of older, smaller homes. The town is quite desirable due to the great school system, proximity to the city, and relatively low taxes. I say relatively because low taxes just don't exist in the State of New York.

 

[random-adam]



I don't want a large house. When it comes to homes I'm a minimalist.

That's why I am very tempted. I am also sick of apartment living (people above, below, and to the sides of me) and would like some space, particularly yard space to grow a garden.

Good on you. My wife and I bought our 1092 sq ft place five years ago; no regrets (albeit also no kids) yet, and I haven't had to deal with the jackhole in the unit above me blasting her bass at 2am.

Good luck! Look into tax breaks for insulation work and keep your downspouts clear.

 

[texas_jack]

Yep, I got $800 to insulate my attic last year. Only needed $200 extra to get it done.

 

[Connemara]

The attic was actually insulated recently! My dream would be spray foam throughout but then you have to tear out the sheetrock and it becomes a major job.

 

[js0930]

As someone who is currently renovating a home - new roof, new furnace, rewired all but one bedroom, tore out a bathroom and just finished framing its replacement, full interior repaint with massive plaster repairs, refinished/refinishing floors throughout, (bolded items were contracted out using a renovation loan) this is what I would think about:

1. As a general rule of thumb, assume renovations are going to take at least 1.5x as long as you think and probably cost 1.5x as much (this is assuming you don't have knob/tubeor ungrounded wiring or galvanized plumbing. If you don't know what those are, please look into it before buying this house).

2. Are you handy? Do you mind giving up your weekends for the foreseeable future? This is a path to wealth, but it will suck up more time and money then you are likely able to imagine right now while all your friends are out drinking and having fun.

3. 2 bedroom? 2 bedrooms are the first to tank if the market drops while 3 bedrooms hold value much better. If it's a 1 bedroom it's even worse.

4. Assuming you do it, good luck! I'm happy to answer questions if you have any over PM or in the thread.

 

[Ataturk]

Bank financing. Dad will pay cash for the house and reno, sell it to me at cost. We expect that to be $120K or under.

How does this get you out of the PMI? It doesn't matter what the house appraises for if the actual purchase price is lower.

 

[brokencycle]



How does this get you out of the PMI? It doesn't matter what the house appraises for if the actual purchase price is lower.

Typically, the PMI is based on equity, so if you buy a house for $120k that is appraised at $150k, you wouldn't need PMI.

That being said, if your dad sells it to you at cost, the appraiser will see the sale price, and appraise it for close to the sale price.