Are you sure you're ready to buy a house?

[Racket_Man]

The SC is supposed to be bringing in his tax returns, paystubs, and documentation of his down payment next Thursday. I'm not sure why he's waiting a full week. But with a closing date in May, I suppose he's not in that much of a hurry.

I just remembered something else he mentioned. His 2015 tax return isn't going to show much income, he said. He took some time off work and lived off his savings. But that's the same year he had the bankruptcy. I don't think that's a coincidence. I'll ask for clarification when he comes in next week.

When I first applied for my mortgage way back in May of last year I applied to my bank. I signed all the forms for verification of taxes, income, $$$$'s in bank, pulling my credit report, etc. I gave them physical copies of and access to my Federal Tax returns for the prior 2 years.

The loan officer did question one or two things about my checking account as in why there were "large" cash deposits going into my account (because I am a pizza delivery driver and put my tips and mileage into the bank every 4 weeks) they thought I was being gifted $$$'s. I told them to pull 18 months history on the account and look at the "pattern" (every month like clockwork).

They wanted something -- I had it to them /e-mailed it ASAP.

How is this guy NOT doing a decent (say 10%) down payment?

As to closing costs I (from my recent experience) would assume that includes all of the paperwork fees, required state/county/local transfer fees and searches, title company fees for services, 1st P&I/PMI/property tax payment, (other stuff that I do not remember). my closing costs were right around $2000 PLUS stuff that was NOT in the official closing costs like my full year payment of home owners insurance premimum.

[greek_jester]

Am I the only one who was surprised, based on what you've written about Goodhair in the past, he said no?

You are not. I was waiting for the op to say that Goodhair wanted it to be approved anyway.

[Ghel]

Am I the only one who was surprised, based on what you've written about Goodhair in the past, he said no?

Of course Goodhair said no. The SC is just a guy. He's not a business owner, and he has no political connections. Goodhair only does stupid things for people who are part of the Good Ol' Boys Club.

Just as a side item: I'd NEVER buy a house with that clause. There's no END to the trouble that could be caused by the old owner staying in the place after it's sold. You are the sort of person who'd be no issue, but think about all the SC's we hear about - what would one of those bozos do living in a house they don't own? No thank you.

I completely agree. The reputation renters have for trashing rental properties extends to sellers after the property is sold. I've never seen a sale where the buyer didn't take control of the property immediately after the documents were signed.

Re: That $1000 difference, to me the word "only" should never go in front of that amount of money. Maybe it's a big difference to this guy too. So in that case, why the heck is he even trying to buy a house? If his money is that iffy, he should just rent until he's got things in order.

Yes, I'm concerned about that, too. If he doesn't have enough money saved up, he likely has unrealistic expectations about how far his money will take him.

How is this guy NOT doing a decent (say 10%) down payment?

As to closing costs I (from my recent experience) would assume that includes all of the paperwork fees, required state/county/local transfer fees and searches, title company fees for services, 1st P&I/PMI/property tax payment, (other stuff that I do not remember). my closing costs were right around $2000 PLUS stuff that was NOT in the official closing costs like my full year payment of home owners insurance premimum.

He is supposed to be doing a 10% down payment. It's just that he may not have enough saved up for it.

Also true that the closing costs don't include the first year's homeowners insurance, which has to be paid at least 3 days before closing. That will likely be another $750, which he may or may not have.

[Captain Neon]

Just as a side item: I'd NEVER buy a house with that clause. There's no END to the trouble that could be caused by the old owner staying in the place after it's sold. You are the sort of person who'd be no issue, but think about all the SC's we hear about - what would one of those bozos do living in a house they don't own? No thank you.

Similarly, there's no way I'd let someone move in to a house I'm selling prior to settlement.

What needs to happen is your real estate agent needs to be damned sure that the buyer has loan approval some reasonable time BEFORE the settlement. I assume your agent wasn't kept up to date, but the buyer's agent should have been more on the ball and identified the problems ahead of time, preferably before making an offer!

I wouldn't either. It never even crossed my mind that that would be an option anyone would agree to. When my brother sold his house he did have that clause and acted like that was just how things were usually done. I don't know all of the details in his case.

He was actually upset when the new owners showed up in the morning 30 days after closing, and he still had 4 hours to finish getting out. Actually told the new owners that it was their problem and not his that they were going to have to pay their movers for 4 hours of downtime before he would hand over the keys.

I've rented most of my adult life and have never trashed a place, but have had three landlords that refused to return the deposit. One even tried to con an extra month's rent by claiming that she never got the last month's rent check. When my wife hand delivered the check on move out day, she informed the landlady that she had stopped payment on the prior check. Landlady was visibly pissed. In all three instances, they simply ghosted us. All were out of state moves, and we would have spent even more trying to recover than we were owed. After that, we don't go out of our ways to make the place move-in ready any more.

[bainsidhe]

Wow. When I bought my townhome 3 years ago, I remember jumping through all sorts of hoops to provide more information...and more information...and more information. I was told it was because I didn't have a lot of credit. Well, that's because I pay off my balances each month and I have a paid off car. And I had excellent credit, but still it took almost two months for approval. So it boggles a bit to hear this guy acting so surprised that a bank would question his ability to pay.

[earl colby pottinger]

Hot market

The housing market in Toronto is hot! So hot that I have $290,000 in cash, GICs and mutual funds and I still have to jump thru hoops to try and buy a house. It is so bad I am thinking of going to the states and buying a house 100% cash.

The idea that someone has to worry about $2000 vs $3000 down-payment is crazy. If you can't handle such a small basic down-payment you probably will not make the monthly payments either.

[morgana]

Huh. Just checked one of the real estate websites. Around here, that $290K Canadian would buy you 3 bedrooms, 2 baths, 2 car garage, on a quarter-acre. In a well-established, well-maintained neighborhood. And leave some to spare for new furnishings.

[notalwaysright]

The housing market in Toronto is hot! So hot that I have $290,000 in cash, GICs and mutual funds and I still have to jump thru hoops to try and buy a house. It is so bad I am thinking of going to the states and buying a house 100% cash.

It's pretty crazy here, too. I keep seeing articles about how first time home buyers can't afford homes here, and there are very few houses on the market. Under 300K doesn't get much, and what is available will go quickly. The rental situation is crazy, basically the town is full. I guess that's expected, we're close to a big city that is outrageously expensive. Actually, two if you consider our neighbor across the border.

I know of at least one place around here that works with people who might not be able to afford big down payments. I know someone who used it, they can afford all the extra costs that come with a house, they just never could save up the huge down payment. They pay much less for their mortgage than they did on rent. It doesn't come without a catch, you have to agree to sell the house through that company. The idea is to keep housing costs down to an enough that a "regular" buyer can afford it. This might be specific to areas like mine, where houses are crazy expensive.

[Slave to the Phone]

Worrying about a thousand dollars while buying a home could be a very bad sign. There are tons of unexpected expenses that comes with buying a home.

And once you are in the home, you are responsible for the costs if an appliance goes belly up, or a pipe breaks or the roof develops a slow leak that is only found after all of the insulation is soaked and the ceiling falls in.

You need to be prepared to deal with the issue as well as paying the mortgage.

On the plus side, my monthly mortgage for a 3 bedroom, 1 and 3/4 bathroom home on the side of a mountain* is cheaper than it costs to rent a 1 bedroom apartment in town.

*Don't do that. Seriously, don't do that. The view is wonderful, which means you have to wash your windows all the time. Part of the home will be on stilts and pilings and unless the supports have 20 feet of concrete under them, they will shift. This means you will constantly dealing with your home shifting. It costs us about a thousand every 2 years to have the place re-leveled and the pilings reinforced, not to mention the interior walls crack and have to be repaired. Seriously, trust me on this. We have a beautiful home on the side of a mountain with lovely views in 3 directions. I wish we had never bought it.

[Racket_Man]

Worrying about a thousand dollars while buying a home could be a very bad sign. There are tons of unexpected expenses that comes with buying a home.

And once you are in the home, you are responsible for the costs if an appliance goes belly up, or a pipe breaks or the roof develops a slow leak that is only found after all of the insulation is soaked and the ceiling falls in.

You need to be prepared to deal with the issue as well as paying the mortgage.

On the plus side, my monthly mortgage for a 3 bedroom, 1 and 3/4 bathroom home on the side of a mountain* is cheaper than it costs to rent a 1 bedroom apartment in town.

I knew all of this going in when I decided I could afford to buy deceased GFs house. I knew I was going to put down like 10% (which seems to have been a good standard for years) I knew I was going to have, all told, about $6k in closing costs ie. the majority of the down payment and all of the upfront fees and payments and costs and paperwork and filing fees etc.

I ALSO KNEW what was good and bad about the house way before GF even got sick years ago. Only one this is critical and I am going to band-aide it for now (way too much $$$'s to demo and build new). I know the house has 90% of the original wiring from 75 years ago (yes that cloth insulated knob and tube type wiring) this will need to be addressed in the future. plumbing is OK for the time being.

With the major appliances most have been replaced within the last 6 or 7 years so I have some leeway on those but you never know (see below for furnace failure).

Like Slave said above my all inclusive mortgage payment (P&I, PMI, property tax payment, etc.) is about $150 less than me renting a not not so nice apt and even with utilities and cable/internet it works out just fine for me income wise financially .

I had my first "major crisis" a week ago. sometime during the night on Thursday the furnace decided it was going to fail. Wake up on Friday morning to a cold (about 50 degrees) house. Get a heating tech in -- diagnosis bad control board about $500 cost total with tax -- not in stock till Monday -- OK break out the electric space heaters and keep as much warmth in a possible and make sure the pipes in the basement keep warm enough. Monday furnace gets fixed but the problem is not the control board but a gas valve OH JOY BUT this part is cheaper $290 inclusive. The one saving grace was the temps here in Cheeseheadland Central were VERY moderate for the time of year (YEAH for shorts and tee shirt weather in the middle of Feb). still not bad for a `10 year old furnace.

The funny thing about this "crisis" is I treated it just like I would a car repair (in my case most of the time VERY unexpected and a bit on the expensive side) Yeah a YAWN is kinda what it was for me. I have no choice but to roll with the punches because I knew what I was getting into up front.

[earl colby pottinger]

Where

Huh. Just checked one of the real estate websites. Around there, that $290K Canadian would buy you 3 bedrooms, 2 baths, 2 car garage, on a quarter-acre. In a well-established, well-maintained neighborhood. And leave some to spare for new furnishings.

What real estate site are you using? There is no site in Toronto that cheap that I know of. An URL would be great. I just double checked and all I could find in that price range is apartments buildings/condos.

[wolfie]

She might be referring to her local area. Why would someone in "flyover country" (her location is listed in her post's header) know what real estate sites cover the Toronto area?

[Captain Neon]

I ALSO KNEW what was good and bad about the house way before GF even got sick years ago. Only one this is critical and I am going to band-aide it for now (way too much $$$'s to demo and build new). I know the house has 90% of the original wiring from 75 years ago (yes that cloth insulated knob and tube type wiring) this will need to be addressed in the future. plumbing is OK for the time being.

I rented a house that was primarily knob and tube. However, the landlord fancied himself an "electrician" since he installed security systems for a living. The splices that I could see in the basement were frightening, and even for a low-voltage technician the phone lines were a fiasco. Despite being an "electrician" he never did fix the porch light after it stopped working. I have no idea if he fixed it after we moved out.

In his dream world, he wanted to sell the house. He lived 4 hours away, but had been trying to "save money" being his own agent. There are nicer houses, in nicer neighborhoods selling for half what he wanted, and seemed surprised that his DIY kitchen and bath upgrades aren't reeling in the buyers. He was so proud of the work he did, but it was poorly thought out, poorly executed, and incomplete. Last I heard, it was still for sale and his tenants never renew the lease for another year.

When we moved out, he expected us to show the house for us, and frequently got upset that we weren't available to show the house during the day when we were both at work. We don't get Groundhog Day, Valentine's Day, President's Day, or Saint Patrick's Day off. We aren't government employees!

[Argabarga]

Eeek, sounds like one of those places where you could flip all the breakers in the basement, and there's STILL a lone light that won't go out........

[dalesys]

Eeek, sounds like one of those places where you could flip all the breakers in the basement, and there's STILL a lone light that won't go out........

Or like the old family farmhouse where my dad was born. We moved in when I was 17 and my grandmother had had it rewired by an expert. Yeah right. He saw ya comin'. Big fuse box one end of the porch and everything on one fuse. OK for a 67 year old LOL alone, but for a family of 9 kids! Industrial KitchenAid mixer maker bread, somebody vacuuming and the well pump kicks in... POP.