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Author Topic: Advice for someone who just bought a house
MrSquicky
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My wife and I just bought what is basically our dream home on one of the best blocks in West Philly. It definitely needs some work, but it's really in pretty good shape.

This is my first dip into the world of the landed gentry and I was if wondering people had advice.

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dabbler
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Do all the repairs you can before you move in. It becomes really hard to motivate yourself to fix that cosmetic or minor thing once all your stuff is out.
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dkw
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Second that.
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rivka
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Congrats, Squick. [Smile]
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scholarette
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painting sucks when you have furniture. So does replacing carpet.
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The Rabbit
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As a first time homeowner, be prepared for a bunch of unexpected little expenses.
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scholarette
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quote:
Originally posted by The Rabbit:
As a first time homeowner, be prepared for a bunch of unexpected little expenses.

qft
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Geraine
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Just be prepared for all of the costs you didn't expect. I went from living in an apartment and not having to worry about utilities to paying for Electricity, Internet, Trash, Sewer, Water, etc. Just make sure you budget enough and you will be fine.

Dave Ramsey has some good tips too. We've been going through his program and it really is a no-brainer approach to being financially healthy. He does bring faith into it but you can ignore those aspects if you like.

Whatever you do, don't use credit cards to fix up the house. Do the things that are absolutely needed, and save money and fix the rest as you can.

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MrSquicky
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We've been living in my wife's 632 sq ft studio condo and we've moving into a 6 bedroom 3072 sq ft house. If I stock the bathrooms and kitchen, I can fit the rest of our stuff into one of the rooms - which is good because we're going to be redoing all the floors.

And we're going to be repainting, re-carpeting, and redoing the bathroom in condo after we move out so we can rent it out.

[ July 01, 2011, 02:46 PM: Message edited by: MrSquicky ]

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dkw
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That's the part that always got to me -- redoing our previous home to rent or sell, and then looking at it and thinking why didn't we do this for us?
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Miro
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There's a children's book to that effect. I always liked that one.
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BlackBlade
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No advice MrSquicky but congratulations on becoming a land lord.
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dabbler
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Beware your heating costs in the winter. I suggest going as conservatively as you can for this winter to see how much it costs. Then you can decide on the mix of comfort/expense. I went from an apartment of $40-80 electricity bills with heat included to 40-200 electricity and 30-200 gas bill. Water and sewer aren't much here at about 60 every 3 months.

I'm guessing you have your inspector's report. We were able to fix several leak sources (bad pipe angles in the attic and bad roof flashing around the chimney) due to the good inspector report that the original owners never fixed. No leaks anymore!

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FlyingCow
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:delurks:

Make sure everything is set up properly with your escrow accounts, and that you keep track of all your taxes, sewerage, etc. A friend of mine almost lost the house because the mortgage lender didn't set up to escrow enough and she got a letter 9 months later saying she owed back taxes.

With regard to heating/cooling costs - in the summer, you might want to block some/all of your downstairs vents to push the cool air upstairs, and in the winter you might want to block some of the upstairs ones to force the warm air into the first floor. Might not be necessary, given the way your furnace/ductwork is configured, but something to keep in mind.

Don't rush out to buy furniture to fill those empty rooms - unless you've got a boatload of money lying around. There are going to be a bunch of hidden expenses (as mentioned by others), and unless you absolutely need the furniture piece right away - wait on it until things have settled down a bit.

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Lupus
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I second the comment on the escrow account. When I was signing, the mortgage person mentioned it, but I failed to really examine it. It was set up to take to little out, and when property taxes were due I was screwed. The escrow paid it, but then I had to pay it back, PLUS, the next year my escrow amount was set much higher than it had to be (though I did get that $ back at the end of the year, it sucked having to pay it all year long).

I would also get bug spray and spray around the entire outside perimeter of the house. They have that outdoor stuff that you can use. It is also a good time to spray around the interior, and the bathrooms before all the furniture is moved in.

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TomDavidson
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I've owned a home for thirteen years and have never escrowed anything. I'd rather earn interest on $4000 of my money myself, and -- as a fringe benefit -- not have to worry that some third party is going to screw up and cost me my house. It's not that hard to set up an automatic deduction into a savings account so that you wind up paying "escrow" to yourself, and it's really not hard to remember to cut a couple checks each year.
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FlyingCow
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As Tom said, you don't *have* to escrow anything. But you do want to make sure you keep an eye on it, one way or the other. If you escrow, make sure it's for the right amount... if you don't, make sure that you're paying everything you're supposed to (property tax, sewerage, whatever).

A friend of mine works for HSBC buying people's property tax debt... so, if someone misses a tax payment, the bank pays the government and takes over the debt(with interest). If after a certain period of time the debt doesn't get paid, the bank can have the home put up for auction to pay the debt... even if it's only a few thousand dollars. He says that they only get to do this for homeowners who don't escrow, fwiw.

So, if you choose to escrow - make sure it's set up properly. If you choose not to escrow - make sure you stay on top of it. Just don't assume everything is just going to work itself out.

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Samprimary
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quote:
Originally posted by The Rabbit:
As a first time homeowner, be prepared for a bunch of unexpected little expenses.

if you prepare for them, then they become expected. then you have them on top of everything else you didn't prepare for.

foresight and forethought are the leading causes of rapidly inflating household ownership expenses.

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Scott R
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Make sure you've worked with your significant other before, before you start work on your home. Sometimes having a relationship-- even a successful one, where there's mutual love, admiration, etc-- isn't enough to withstand the trial of physical labor. If you don't like the person your SO becomes while painting the bedroom, either get someone else to do it, or arrange something else.

(OR learn to love who they are when they're frustrated with getting the masking tape lined up on the wall just right, and snapping at you because you aren't holding the ladder steady, or bitter that the color wasn't mixed right.)

Congratulations.

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The Rabbit
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quote:
Originally posted by Samprimary:
quote:
Originally posted by The Rabbit:
As a first time homeowner, be prepared for a bunch of unexpected little expenses.

if you prepare for them, then they become expected. then you have them on top of everything else you didn't prepare for.

foresight and forethought are the leading causes of rapidly inflating household ownership expenses.

Unexpected and unprepared for are not the same thing. Putting aside a money in case there are things you didn't think of, is not the same as adding more line items to the budget.
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scholarette
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Along the same lines as Scott, make sure you both have the same plans for what work and timetable each person will do. One of my friends bought a fixer upper and thought the plan was to work on it every weekend. Sine they had kids, she was babysitting the kids, while he and his brothers were fixing up the house. What he thought was that there was no hurry in fixing up and he spent the weekends with his brothers watching the game. When she found out that their day of work was 99% basketball, she was pretty upset. She set up handymen to do it, which upset him. In the end, they cancelled handyman, he did minimum needed to move in and they never finished the rest of the stuff.
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advice for robots
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I remember moving into our first home and laying there that night listening to all little creaks and groans and having it settle on me that I was solely responsible for paying for all repairs from then on.

But there's nothing like having your own four walls.

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TomDavidson
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*grin* Scott, I actually wrote a poem about that exact phenomenon -- the first home repairs, and what they can do to your marriage -- for some friends of ours when they got married.
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just_me
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quote:
Originally posted by FlyingCow:
As Tom said, you don't *have* to escrow anything.

This isn't always true... if you have mortgaged more that 80% of the house you probably *have* to escrow.

MrSquicky - Congrats, BTW!

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TomDavidson
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If you have mortgaged more than 80% of the house, you have made a horrible mistake.
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Samprimary
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quote:
Originally posted by just_me:
This isn't always true... if you have mortgaged more that 80% of the house

aaaaaaaack
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Kwea
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quote:
Originally posted by TomDavidson:
If you have mortgaged more than 80% of the house, you have made a horrible mistake.

Not true at all. I have a house I am looking at, and even with financing all of it my payment will be $250 LESS than my rent.

It depends on what type of mortgage you get, how much you are paying on the house, and what your interest rate is of course.

But as a blanket statement that simply isn't true.

YMMV.

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MrSquicky
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quote:
Originally posted by TomDavidson:
If you have mortgaged more than 80% of the house, you have made a horrible mistake.

I had a thorough talk with my financial adviser about the different loan types I qualified for: 80/20, 80/10/10, and 90/10 and he never mentioned that the latter two were horrible mistakes. All three seemed like viable options, although with their different pluses and minuses. Why do you disagree with him?
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MrSquicky
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quote:
Make sure you've worked with your significant other before, before you start work on your home. Sometimes having a relationship-- even a successful one, where there's mutual love, admiration, etc-- isn't enough to withstand the trial of physical labor.
Thankfully, we've done this. We've done a fair bit of work on her condo and we're redoing the bathroom before we leave. Our working relationship is pretty good and we've set up a safe word for when the other person is really, really getting on your nerves.
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TomDavidson
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quote:
I have a house I am looking at, and even with financing all of it my payment will be $250 LESS than my rent.
This is less compelling than you might think, depending on your area. While my house payment is currently just $695 a month, taxes and utilities and incidentals that come with home ownership jack that up to around $1120. That said, home owners currently benefit from a really perverse lending incentive (i.e. mortgage interest is tax deductible), so it can be a sound move. *grin* Far be it for anyone to express an absolutist generalization in the Hatracksphere and emerge unscathed. [Smile]

--------

quote:
I had a thorough talk with my financial adviser about the different loan types I qualified for: 80/20, 80/10/10, and 90/10 and he never mentioned that the latter two were horrible mistakes.
While a second mortgage to avoid mortgage insurance is a sound-ish strategy, IMO you are better off avoiding that second mortgage altogether and saving for another couple of years -- unless your dream house just happened to show up on the market and you can't quite afford it yet. It's only in the latter scenario -- or in the case that someone absolutely needs to move to a home right now and for some reason is determined not to rent -- that I'd really recommend it. An 80/10/10 is a ghastly abomination, but I'd be willing to recommend a 80/10 in certain situations. If you don't have enough cash to come up with a 10% downpayment, you shouldn't be buying a house unless the market is so depressed in your area that a) it's cheaper than rent; and b) mobility is not likely to be an issue for you for many years.
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MrSquicky
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Tom,
I'm not actually seeing reasons in that. Like I said, the licensed professional who has a fiduciary duty towards me that I consulted with on this ran through the different scenarios combined with the rest of my financial situation and showed me the financial projections and how they compared against each other, but never once told me that two of the option he was showing me were horrible mistakes.

I was asking why you disagree with that assessment, not asking you to reiterate your disagreement.

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TomDavidson
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To make a long story short: heavily mortgaged homes generally make the assumption that the market is weak but will strengthen, and that homes are themselves fairly fungible. I'm not sure that either of these are safe assumptions, and I think it's a bit reckless nowadays to behave as if they are.
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MrSquicky
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It seems like you're talking about houses that people are planning or at least open to holding short term. Is that correct? In that case, I'd agree, although in those cases, especially the flipping ones, people don't generally go for the fixed rate mortgages we're talking about, because, assuming you can sell it, adjustable rate ones are much better ideas.

In any case, we're not looking or expecting to move pretty much ever and we were dealing with a 4.25% rate on our 80 or 90 mortgage and a 5% on the 10 option.

I'm not seeing a justification for your blanket dismissal in our case and I'm pretty sure that there are many others where it is likewise inaccurate. If I'm correct in my first paragraph, it seems like you are talking about the small subset of people who are considering short term house purchasing that aren't going with adjustable rate mortgages or have unstable sources of income. I'd agree in those cases, but, while my experience may be unrepresentative of the real state of things, it seems to me that outside of the mad housing bubble on the mid 2000's, those are relatively rare in proportion to people for whom a fixed rate but not 80/20 loan may make financial sense.

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scholarette
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I think a lot depends on the area. I am shopping for a house right now. We really need to move because of the commute, which puts us living in a small town. Moving into an apartment right now might be the best financially but it is too painful in terms of daily living. Since it is a small town, there are less than 10 apartment buildings and with dogs and family of four (no studios or one bedrooms) I think we have 2 choices and neither look nice. Housing rentals don't seem to be an option. Which means buying without a 20% downpayment. We plan on this being a forever home also, so we are looking a little nicer than we strictly need. The idea of buying a home and then in 4 years upgrading doesn't appeal to us financially, esp since the company my husband works for has plans of opening another plant soon, which people think will increase home pricing by a lot.
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Razputin
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quote:
Originally posted by The Rabbit:
As a first time homeowner, be prepared for a bunch of unexpected little expenses.

I felt like Tom Hanks in the Money Pit with my first house... [Frown]
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odouls268
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The radio told me that "mortgage" means "death agreement."

I plan to save up for a 100% downpayment.

Any chance I could crash on your couch until 2041?

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anti_maven
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First thing to do:

Run around the house and garden shouting "It's mine, all mine!" and laughing manically.

All the other stuff are just details...

Other than that, invest in a good vacuum cleaner.

Finally, congratulations on your new home!

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Traceria
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quote:
Originally posted by Razputin:
quote:
Originally posted by The Rabbit:
As a first time homeowner, be prepared for a bunch of unexpected little expenses.

I felt like Tom Hanks in the Money Pit with my first house... [Frown]
Forget felt like. We have become Tom Hanks and Shelley Long:

Pre-settlement: non-disclosed flooded crawlspace, condemned HVAC system, very old water-heater, non-disclosed bathroom leak that required a handy-man to put in and paint new drywall on a ceiling, little to no insulation in the attic, mold, and all the problems that compound from there

Post-settlement discoveries: that the seller's dog apparently stained all the carpets requiring Stanley Steemer to do special treatments, broken glass from the front of the microwave (replaced it) that the seller must have broken by who knows what means, that the guy hired by the seller was completely incompetent when it came to installing the new HVAC system, which would NOT work properly for three months until we called another company after he wouldn't return our calls, replacement of both the washer and dryer within four months, replacement of the water heater, insulation installation in the attic, that the other guy the seller hired to put in the drain system in the crawlspace didn't know how to property wire battery-back-ups for sump pumps and had to bring in an electrician to do so, and my list could go on


Seriously, though neither of us likes the idea of borrowing or accepting money from family under normal circumstances, if it weren't for my in-laws, we would live in an ill-heated, heat-leaking house with no hot water, taking our laundry to a laundromat in a small town that probably doesn't even have one.

But the house is great now! [Roll Eyes]

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