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House Hunting N00bs
Nov. 29th, 2011 08:51 pmMy husband was talking about house hunting with one of his co-workers. She is newly married and is a few years younger than us. So, she is just starting to look at homes and is dreaming big.
He began telling her about how we have been looking for some time. They began comparing numbers and notes and she tells him, "Oh we are looking in the $170,000 range."
He says, "We're looking in the $150,000 range..."
"Oh, but we think we can get mortgage payments of about $700 a month," she tells him.
Not wanting to crush her dreams outright he says to her, "Um, have you talked to a bank yet?"
Yeah you can get a theoretical mortgage at $700 a month, before you factor in the home insurance, possible mortgage insurance (if you put less than 20% down), and taxes. Our goal is to come in below $1,000 a month, and we are likely going to be in the $800-900 range if we put down about 15% and get a rate of about 4.25% (which is honestly one of the lower rates you will get on a traditional mortgage-- only non-traditional ones like adjustable ARM mortgages are the ones where you can get crazy low 3% rates, but that rate could change at any time and mess you up later).
Anyhow, the only way we can get in under $1,000 a month is with a decent down payment and a house that is in the 150-range. So, unless she and her husband have a combined income that is substantially more than our combined income, I think she is looking outside of her financial comfort zone... (and since she works for the same cheap ass company he does, I seriously doubt they are pulling in that much more than we are, my guess is a little less because I think her husband is a teacher too and I don't THINK he has as many years in as I do, and he doesn't work for the same district).
My husband then asked her what she was doing about the down payment and she said she hasn't thought about it yet. She then said, "Who has $10,000 to put down on a home?"
Um, we do. Right now, actually... and any SERIOUS home buyer would have that AND more (we are still working on the "more" part... but we have well over $10,000 this point and are working our way up to $20,000, plus we have "secret stash" money that we hide in another account and pretend doesn't exist. We plan to use it for fees and other incidentals).
Another mistake she is making is her realtor is ALSO one of their co-workers... My husband brought up this same idea to me a while ago. I told him, "NO!!! DO NOT ask your co-worker to be your realtor!!!" Because if they have some sort of disagreement over a price, or if she is somehow invested in the property (as in working for the owner for example) then if there are any disputes over the final outcome, that will no doubt carry over into his workplace and screw up his work relationship! So, I think she's a bit foolish doing that, but maybe it would work out in her favor too...
So, my husband didn't want to destroy her lofty dreams, but I hope she gets real about this and doesn't do something stupid like put down 3% on a home and take on a massive mortgage like so many OTHER people did. I'm nervous enough about taking the plunge with only a 15-20% down payment and a price range I think I can afford. :\
In other related news, the house we call "Airport House" has dropped in price recently. It is now $153,000 (down from the original asking of $169,900 -- which was too much for that neighborhood, in all honesty). That house is almost cheap enough for me now! XD I liked it because it was totally redone with 4 bedrooms, plenty of space, a nice back yard (flat and mostly grass), a nice fireplace, and a little room that I could make into a library. If "Airport House" is still available in April (and still looks as good as I remember) and there's nothing horribly wrong with it... *I might consider it.
*Note: The little local airport isn't that loud, I already live near it. So, unlike in a larger city, it's not a huge drawback to live near the airport.
He began telling her about how we have been looking for some time. They began comparing numbers and notes and she tells him, "Oh we are looking in the $170,000 range."
He says, "We're looking in the $150,000 range..."
"Oh, but we think we can get mortgage payments of about $700 a month," she tells him.
Not wanting to crush her dreams outright he says to her, "Um, have you talked to a bank yet?"
Yeah you can get a theoretical mortgage at $700 a month, before you factor in the home insurance, possible mortgage insurance (if you put less than 20% down), and taxes. Our goal is to come in below $1,000 a month, and we are likely going to be in the $800-900 range if we put down about 15% and get a rate of about 4.25% (which is honestly one of the lower rates you will get on a traditional mortgage-- only non-traditional ones like adjustable ARM mortgages are the ones where you can get crazy low 3% rates, but that rate could change at any time and mess you up later).
Anyhow, the only way we can get in under $1,000 a month is with a decent down payment and a house that is in the 150-range. So, unless she and her husband have a combined income that is substantially more than our combined income, I think she is looking outside of her financial comfort zone... (and since she works for the same cheap ass company he does, I seriously doubt they are pulling in that much more than we are, my guess is a little less because I think her husband is a teacher too and I don't THINK he has as many years in as I do, and he doesn't work for the same district).
My husband then asked her what she was doing about the down payment and she said she hasn't thought about it yet. She then said, "Who has $10,000 to put down on a home?"
Um, we do. Right now, actually... and any SERIOUS home buyer would have that AND more (we are still working on the "more" part... but we have well over $10,000 this point and are working our way up to $20,000, plus we have "secret stash" money that we hide in another account and pretend doesn't exist. We plan to use it for fees and other incidentals).
Another mistake she is making is her realtor is ALSO one of their co-workers... My husband brought up this same idea to me a while ago. I told him, "NO!!! DO NOT ask your co-worker to be your realtor!!!" Because if they have some sort of disagreement over a price, or if she is somehow invested in the property (as in working for the owner for example) then if there are any disputes over the final outcome, that will no doubt carry over into his workplace and screw up his work relationship! So, I think she's a bit foolish doing that, but maybe it would work out in her favor too...
So, my husband didn't want to destroy her lofty dreams, but I hope she gets real about this and doesn't do something stupid like put down 3% on a home and take on a massive mortgage like so many OTHER people did. I'm nervous enough about taking the plunge with only a 15-20% down payment and a price range I think I can afford. :\
In other related news, the house we call "Airport House" has dropped in price recently. It is now $153,000 (down from the original asking of $169,900 -- which was too much for that neighborhood, in all honesty). That house is almost cheap enough for me now! XD I liked it because it was totally redone with 4 bedrooms, plenty of space, a nice back yard (flat and mostly grass), a nice fireplace, and a little room that I could make into a library. If "Airport House" is still available in April (and still looks as good as I remember) and there's nothing horribly wrong with it... *I might consider it.
*Note: The little local airport isn't that loud, I already live near it. So, unlike in a larger city, it's not a huge drawback to live near the airport.
