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Thread: The "Looking to become a homeowner" Thread

  1. #41
    Parts Guy tigeraid's Avatar
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    As absolutely terrified as I am, currently staring into the dark abyss of despair...

    I.... agree with billi.....

    While I cannot speak of the housing market in the States, and I realize that it seems to be MUCH more unstable than Canada... A house is almost ALWAYS, 95% of the time, an investment. With nothing but normal maintenance, worst-case scenario in the MAJORITY of cases, you will be able to sell the house for roughly what you paid for it. Even super-worse case, maybe the neighbourhood value takes a shit because of some abandoned homes or something, maybe the house loses $5k or $10k. If you've been living there for 5-6 years and have paid down a significant amount of the mortgage, you're still coming out of the place with cash in pocket. HUGE cash, relatively. Now you can use that on a downpayment for another house, or to pay off other debt, or whatever.

    It's not that renting a place is "throwing away" money. You're literally paying for room and board. It's not throwing it away. But owning a home gives you an additional investment, it gives you liquidity to work with. As mentioned, it gives you, the normal schmuck, the ability to work with a large sum of money to invest in your future.

    Real life example is Tara and I, we're finally thinking of moving just outside the city to a nice "hobby farm" sort of property. We bought our house for $148,500 eight years ago. We're at like $130something right now. In a couple more years, $120k or so. We plan to put the house on the market for, let's say, $165,000. Maybe we're deluded, we end up settling for $150k, almost what we paid for it eight years ago. That STILL gives us something like $30,000 to play with! That'll pay off a credit card, buy a new car, and have a healthy downpayment for a new house, maybe. Or a huge downpayment on a house. Or whatever. Is there a risk? Sure a tiny bit. Maybe just MAYBE the housing market will crash in a year or two and suddenly we can't sell the house for shit, or only sell it for an abysmal sum. But it's pretty unlikely.

    And... once again.... *shudder*... I agree... With billi.... .... That in an absolute doomsday scenario, you lose your job and have to walk away from the house. You're bankrupt. Shit happens? Credit score sucks. Life goes on.

    Real life example: buddy of mine is in that exact situation. Got married, used money left in his dad's will to put a downpayment on a really nice $250k-ish house in suburbia. Ended up pissing away all his money into gambling and various other stupid ventures, then to top it off got divorced, and started having health problems that made his work hours spotty. Life crumbles, he has to walk away from the house and declare bankruptcy. Now here we are like 5-6 years later, he's re-married and has two kids, loving his life, and renting a shitty little condo unit. The place sucks, but are you gonna do? Is that risk REALLY all that huge a risk, that you have to go back to renting an apartment? Seems reasonable to me.

    Fucking billi.

    EDIT: mind you, this is all on the assumption you can afford a mortgage and/or downpayment in the first place. And are smart enough to not buy a shitheap of a house unless you're willing to do the work. The "renting is cheaper than buying where I live" argument is only useful if you're on such a tight budget that "I can only pay $600/month instead of $800/month" or whatever. Well then obviously, you'll rent. But to be able to AFFORD a mortgage but say "fuck it, I'm going to rent because it saves me $200 a month" is ridiculous.
    Last edited by tigeraid; July 10th, 2014 at 08:43 AM.

  2. #42
    Bad Taste novicius's Avatar
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    Gosh, those are some pretty offensive words for us who choose to rent; why don't you tell me how you really feel, Tiger?

  3. #43
    High Plains Luddite George's Avatar
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    As absolutely terrified as I am, currently staring into the dark abyss of despair...

    I.... agree with tigeraid.....

    And with billi.

    My wife and I are on our second house. We've been homeowners for 16 years. We recently figured out how much equity we have in our home and it made us very, very happy...and, it was relatively painless to acquire that equity. I mean, most of us have to pay a monthly fee to live somewhere. It's nice to see some of it still belongs to us.

  4. #44
    Corvette Enthusiast Kchrpm's Avatar
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    I'm not saying buying a home isn't often/usually a better financial decision. After all, I bought a foreclosed home for basically that reason.

    All I am saying is that, if you're in an area where home prices are not rising and rent is low, you're not a do-it-yourself-er (so any maintenance/repairs will come out of pocket), and you don't plan on staying where you are for very long, then renting can be a valid if not much better option.
    Get that weak shit off my track

  5. #45
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    Quote Originally Posted by Crazed_Insanity View Post
    What good would a credit score of 850 do for a homeless person? BTW, bankruptcy won't even stayed in your credit history forever. You could still recover from that eventually when your luck turns around.
    Well, being able to become un-homeless would be high on the list. I can't speak for elsewhere, but around here you can't rent with bad credit. A guy I know around here has made a sizable fortune as what I'd call a predatory landlord - he rents exclusively to people with recent bankruptcies (not just bad credit, recent bankruptcies) and charges them a FORTUNE for rent. He has no shortage of renters - he adds 4-5 houses to his portfolio annually, has around 50 or 60 right now. The people he rents to don't have a lot of choice. Secondarily, bad credit can cause you to miss out on other financial benefits and opportunities that good credit gives you. I think it's a pile of BS, but bad credit can affect your insurance and even your job prospects. In today's America, you really want to avoid bad credit - even for seven years. The bankruptcy -> pay more for everything -> never get ahead again scenario is real, and getting real-er.

    (I would also argue the morality of undertaking a large financial commitment without reasonable certainty one would be able to honor it, but I don't think any of us are those kind of people.)

    That said, I don't think anyone in their right mind would argue summarily against home ownership, especially in the long term. Watching a couple people in my life struggle with increasing rents while living out their twilight years on a fixed income is scary. Definitely do not want to be there, and the only reasonable way to protect against it is to pay off a house while employed. Renting stops being cool when your income drops off forever - unless I suppose you've planned for it in your retirement savings, in which case it might be awesome.

    I simply believe that home ownership is a thing one should do when they're ready, not when they can. I could have bought a place when I was 20 - but around 24 and again around 31 it would have totally screwed me over. Far better that I waited, built up a good sized savings account to weather storm, got situated with a stable career in a stable company, learned some stuff about where I wanted to be and what I wanted to do and bought when all the factors (and Excel) agreed. There are indeed other places I might like to live, but I could reasonably die in this place and die happy.

    My situation is of course my situation - a dude with a career largely based in unstable businesses living in a place with retarded real estate pricing. But I read a lot and I know a lot of people, and there are way too many stories about people who were "conned" into buying homes because they could, only to find out that they shouldn't have. Of course in the end they're alive and everything is ok, but for me, and maybe this is what it all comes down to, for me, I'd rather live a life on the gradual uptick than one punctuated with financial highs and lows. Losing stuff, having to move, or being trapped in a place because you don't have the wherewithal to escape all seems pretty sucky to me.

    My point in any thread about "what should I do" is *always* going to be bring up factors - factors that not everybody know, regardless of whether they should or not. I'm not a dumb guy, but I've gone through plenty of things where I wish someone would have just said something to make me stop and think. I think it's irresponsible of people to do things like that, and I'm not an irresponsible guy.
    Last edited by thesameguy; July 10th, 2014 at 12:22 PM.

  6. #46
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    Home ownership definitely has its higher rewards... and also higher risks associated with it compared to renting. Definitely should only do it when you're ready and not be rushed into it. One really need to gain as much understanding of what you're getting into as possible. If you're already living pay check to pay check and don't really have any extra money to invest anyway, then 1st priority you should do is probably think about how you can save more money.

    However, once you've saved up some money and thinking about investing..., investing in a house is really a great way to go! Whether your investment(home value) gain or lose money, none of those investments can actually offer a roof over your head, right?

  7. #47
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    I am not a paycheck to paycheck person.


    I budget each months income out before it comes in and outside of school loans have zero debt (which may be waived with the Student Loan forgiveness deal right now). I currently have a Roth IRA that I started several years ago.




    I also just found out that due to my employer, I get 400$ back in closing costs and may qualify for zero down for home purchase. I will be looking into this option next week.

  8. #48
    Senior Member Leon's Avatar
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    I became a homeowner because I got tired of the rental place I was in being sold out from under me.

    So I bought the place.

    Bonus, it then carried on going up in value rather nicely.

    Different markets do different things however. The house my mother bought decreased in value. The rental property she bought stayed about static. Both houses were / are in a small town.

    I will be selling the rental house, because it isn't returning enough to offset the risk of ownership.

  9. #49
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    Well, I was approved for the Wells Fargo Neighborhood LIFT program grant. Kinda shocked and surprised. A little terrified too.

    Currently actively looking at houses as I need to have a contract on a house within 60 days or I lose out on the free 15k.

  10. #50
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    I went and looked at 5 houses tonight. One was a no way with the garage layout. I couldn't pull in the driveway and open the car door because it was too narrow, and this was in my Mom's C-Max. Garage was non-existent in vertical dimension, I needed to duck to get around down there. Off the list.


    Second one, was a pleasant surprise, I don't care for the outside at all. However, the inside has so much charm. Downside is at the top of my budget, and the main support needs to be replaced. The 2 x 10's are cracking and worn out. I suppose after nearly 100 years, that is to be somewhat expected. Going to do some calling around to get an idea on cost to replace that and possibly replace/reinforce a few of the floor joists while the new support would go in. The basement was very useable for what I would want, I don't think the Denali would fit in the garage, but that isn't an issue. It can fit under the deck (garage is on the backside of the house with a wrap-around driveway, and a large porch to boot). I am guessing it would be in the area of 4-6k worth of work to replace the main support. I know this is pretty common work to do, and I wouldn't be doing this work at all. To much to lose if something were to go wrong.

    Next house is 6% higher than my budget, but appears to have no issues with foundation or support. Downside is the basement would be just a storage center. Can't really finish it to use as a rental, can't do much with it. Also has a deck, with a detached garage that would need to be torn down and rebuilt. The foundation for the garage was crumbling, and the garage itself was tiny with an odd add-on that has dirt floors. I could settle for that house depending on the pricing situation.

    4th house was too tiny, garage was underneath the house and pretty much non-existent also. It was much more usable than the 1st house, but again I would be ducking to go up or downstairs the way it was designed. I could build a garage in the backyard to alleviate this (just as the neighbor did), but the value of the house is not likely to increase with that addition.

    5th house. A waste of time. Very charming exterior, but the interior was a complete joke. Not even a consideration.


    Numbers 2 and 3 are staying on the list, ironically the largest and oldest houses of the bunch. Both are in very stable market areas. The 2nd house with the main support beam is on land the could easily increase in value from the land alone being so close to some of the most expensive shopping area in the KC metro area next to one other place. This house is currently the front-runner as long as the seller seems to be willing to deal on price to count on the main support replacement.

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