Delving Into Real Life Matters

[Department stores *sigh*]

Hey all, so since I joined this site I have noticed that when I come to a major life decision I like testing the waters with my fellow retail drones.

This thread is going to be about homeowners advice. *dun dun duuuuuun*

Background:
My wife and I are a young couple who wish to purchase our first house. Up until now we have both rented our whole lives since moving out of our parents den. Financially we are doing decent as we have limited monthly payments. We are down to our car payment (roughly 330) and our utilities (together roughly 120? maybe?) We just finished paying off our line of credit (which was used purely for school reasons.....and purchasing our dog) and payed off our CC's. Also rent is 1100 a month. With these bills payed we noticed that our bank account is finally moving steadily up.

We have 13000 saved thus far.

Now my main thought that I want some people to sound off on is my wife found a company called "Landmark Legacy Homes" or 'Summerhill Homes" http://www.summerhillhomes.ca/Benefi...page=benefits2 (recent name change) This company makes new homes for buyers where they claim to let you have a large amount of control in exactly how your home is built. They have a few different sized homes to build but she selected the smallest (1300sq/ft) one for me to look at. Its at 316000. If we go into this then it will be built in about 6-8 months. They claim to have upfront costs (closing costs, lawyer's fee etc.) included in the price so there isnt any hassle. They also have selected mortgage specialists from assorted banks they claim work with them to get lower mortgages.

I did some digging on this company and all I could find was their website, looking pretty legit, a few reviews on their customer service , ranging from 3 to 5 stars, and a BBB rating of A+, which made me feel pretty comfortable. The issue is if we decide to do this then we will have to act fairly quickly as they have homes being built in an area we want to live in but are running out of locations.

So reallywhat this post boils down to is Im tempted to pursue this but I would love your guys opinion on the matter. I have always been a little hesitant regarding big life choices and you guys are a valuable asset for thinking of questions, problems, and scenarios that I may not have thought of. If you guys can think of any advice, or possibly come up with any problems with my train of thought it would be awesome if you could bring it up.

Thanks

[csquared]

Now is a great time to buy a home, if you can afford it. Having only a car loan puts you in a good spot.

It sounds like you have done your homework on the builder. However, building a new home can be very stressful. All of that "control" is a lot of work.

With only 13,000 down, you will end up with sub-prime mortgage and PMI insurance. You may find yourself with a 2,000 monthly payment. That is a lot more than your rent. Not knowing your income, you might be stretching yourself on this purchase.

Shop and compare existing homes. New construction has not gotten cheaper. You can probably find a bigger, better house, for less.

Whether you buy new or used, don't forget the expenses that come after the fact: moving, curtains, throw rugs, furniture(?), lawn mower, etc. Your CCs will get a balance again.

Home ownership is great. Just don't bite off more than you can chew.

[jnd4rusty]

Since they are building in certain areas, I would look around and find the designs they are responsible for and then stop and talk to those homeowners. Ask them how they were treated. I know people don't like to knock on strangers doors but if I was going to put all my money in a builder, I would want to know about other peoples experience. We have a couple of places that make manufactured homes and mobile homes where I live and we have looked into them. I trust them because I have talked to people who have purchased homes through them and are satisfied. I know who I will go to when we are able to purchase a home. Good Luck!!

[Der Cute]

I've never bought a home, but I'm also kind of sniffing around.

From other advice I've seen, some of the steps are:

Go chat with a banker about what you qualify for in a mortgage.
Investigate FHA loans
Investigate current mortgage rates
Write down what you NEED in a house/home and what you WANT and what you're willing to compromise on
May be reasonable to have a loan about $2K larger than the house price - the cushion for repairs and new furnishings

And are you handy with fixings or do you need to call for help? Do you have someone you can ask?

[Seshat]

Does the price on the new home include necessary fittings, such as a bathroom, a kitchen, a laundry? Does it include a hot water system, a stove, an oven?

Note that in an existing house, the walls are painted, the floors are carpetted/tiled, the windows are curtained, the garden is generally some sort of garden. Not what you'd want, perhaps, but all that finishing work is done.

In a new home, well - a lot of new home areas, especially for first home buyers, have sheets in the windows. Or the builder provides curtains, but they're low quality, no insulating ability, and are mostly so the house looks good from the street.
Ditto for 'a garden', and for the other finishing touches.

Buying an existing home, you may be able to get the kind of bargain we got - our house is UGLY, but functional. And when we have the mortgage down, we can fix the ugly - it's mostly that it was painted badly, carpetted with cheap junk, and the siding is old. All of that is fixable, and the total cost will still be less than the cost of having a house built.

That said, if buying an existing house, it's vital to get the house checked by an expert. Also, make sure the fittings work, or that the house price is low enough to justify buying it and then buying replacement fittings.

What you're after, really, is two total costs: total cost before you're comfortable moving in (ie, the house may still be ugly, or may have concrete floors, or whatever, but you're okay with that), and the total cost before you're happy with it (fully fitted out, or renovated, depending).

Also, if buying a new home, check these things:
* is there a school nearby? Is it a good one?
* Supermarkets?
* Smaller convenience stores?
* Public transport?
* Parks and gardens?

Existing suburbs tend to have that stuff. New places might not. (Heck, check them for an existing house too. but its more likely to have it anyway.)

[Magpie]

With only 13,000 down, you will end up with sub-prime mortgage and PMI insurance. You may find yourself with a 2,000 monthly payment. That is a lot more than your rent. Not knowing your income, you might be stretching yourself on this purchase.

Psssst... I don't think they're legal up here.

I think I'd chime in with the "you want more money for that". If you can't make the 5% down payment, wait until you can. The advice Jackdaw and I got at our pre-marital counselling was to put aside what your mortgage would cost you for three months. (i.e. for three months, "pay" the mortgage into a bank account"). If you miss one month, no problem, but you know you can't afford it. If you make it for all three, then that helps with the down payment. Yes, I know that you're double dipping because of rent. Don't forget that you'll need to pay taxes and the maintenance costs on your new house.

CMHC is your friend in a case like this.

[AccountingDrone]

Hey all, so since I joined this site I have noticed that when I come to a major life decision I like testing the waters with my fellow retail drones.

This thread is going to be about homeowners advice. *dun dun duuuuuun*

Background:
My wife and I are a young couple who wish to purchase our first house. Up until now we have both rented our whole lives since moving out of our parents den. Financially we are doing decent as we have limited monthly payments. We are down to our car payment (roughly 330) and our utilities (together roughly 120? maybe?) We just finished paying off our line of credit (which was used purely for school reasons.....and purchasing our dog) and payed off our CC's. Also rent is 1100 a month. With these bills payed we noticed that our bank account is finally moving steadily up.

We have 13000 saved thus far.


Thanks

My personal advice, and it is what mrDrone and I did was take a look at the financing available, and purchase a home that we could pay on ONE SINGLE INCOME. Do not be persuaded to go any higher than that one income can pay for.

The reason- For us it was because mrDrone was career navy, and unless you fuck up severely you cant get fired ... so we pretty much had a firm guarentee of that we stood by that decision because I have had 3 jobs outsourced, 2 jobs downsized and one job the company decided to close that particular call center and because mrDrone still had 3 years left on his career at the time I opted to work in the call center and then move to a satellite office until it was closed also. [in retrospect I should have taken that transfer as i would have been working at 18 per hour instead of the 9 per hour that the employees there were hired at]

There would have been a few times over the past 20 years that if we did not have the house so affordable on one income we seriously would have lost the place thanks to unexpected unemployment on my part. I am seriously cheesed off that idiots that went and got the huge unaffordable mcmansions got bailed out and those of us who lived within our budgets got screwed over.