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  1. #1

    Is anyone here a home owner?

    Hello, I have a couple of simple questions about being a home owner if you do not mind. If you would like to send me a private message that would be great. They are very basic questions such as will the rent skyrocket after a certain amount of years, and if things get really bad how hard is it to sell the house and would it effect your credit rating. Thanks!

  2. #2
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    hmm...what country are you from? because I'm pretty sure not all countries will be the same as regards to home owners and tenants.

    i.e if you fall behind with the rent here in the UK, there are court procedures to evict people, whereas if you fall behind with the rent in say Queens or The Bronx in the US, then it might lead to broken limbs

    owm
    Last edited by Outlaw Web Master; 01-13-2008 at 07:58 PM.
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  3. #3
    Oh sorry for not mentioning that. I am in the US. Well I suppose I better ask my questions here on this topic instead. So when you see a house on sale on sites like craigslist, are those the final monthly prices or do they add on a ton of extra fees? What if I buy a house for $300,000, if for whatever reason I can no longer afford it or just no longer want to live there, I could sell it for the same or higher price and will receive the $300,000+ upfront so I can buy another house? I am not sure if you receive the full amount upfront or you just get it in monthly payments. I always thought two story 3 BR houses with two car garages were really expensive. However there are brand new houses in my area for $1100 or less per month and I am wondering if there are any catches/hidden fees (not factoring in electric, water, etc. of course).

    Plus 6 years ago my dad screwed up my credit but I managed to pay off the $10,000 owed but they still appear as negatives on my credit report even though the balance is $0 dollars. I wonder if the past history will decline me for a new home.

  4. #4
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    Sounds like you really should talk to a mortgage lender. They will give you the full skinny on everything you need to know. A good place on the net to learn about mortgages and homebuying will be the Fannie Mae Foundation. http://www.fanniemae.com/index.jhtml

  5. #5
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    Nothing is ever final until you get approved for a loan and your lender sets up your terms. The seller might give you a ballpark number (which will be favorable for the sale), but it means nothing. If you have less than 20% to put down on your home, you're going to have to pay mortgage insurance, and if you're a high-risk lendee, you're not going to get the respectable 6-7% you can get now with good credit.

    Check with your lender. And stay away from anything that isn't a traditional loan. Variable, ARMs, etc. are a big trap! I wouldn't even bother looking at home with any serious intent until you've secured a preapproval letter with terms you can handle.
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  6. #6
    Ok so it is more complex than just simple answers to my questions? Thanks

    *EDIT* I will read the_pm's post now thanks.

  7. #7
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    You might also like to factor in the 'hints' of a US recesion, which could effect 'interest rates' in general and the actual house value could actually fall.
    ie, maybe you purchase now for 300,000, but in 12 months the house value drops to 250,000 leaving you with a loan bigger than the value of your house.
    You need to have the confidence that the maket is 'sound', if prices are going to drop, wait untill they are as low a they are likely to get.

    I gues you also need to know if there are differant laws etc. between states, here in the UK for example, Scottish property law is not identical to English property law.

    As others have steered you towards 'Do Not Rush into Anything'

    Good Luck
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  8. #8
    Yes I am aware of the possible recession, but people are always going to need homes so I am sure it will pick back up. Plus the value of the house dropping is only a concern if I want to sell it correct?

  9. #9
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    Quote Originally Posted by Outlaw Web Master View Post
    whereas if you fall behind with the rent in say Queens or The Bronx in the US, then it might lead to broken limbs
    Nope, that is not true. Well, not after 1990s it isn't.

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  10. #10
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    A lot of states have property taxes usually at 1 percent of the assessed value of the home each year. Make sure you take this into consideration.

    Also make sure you get a fixed rate mortgage. The interest rate on an ARm adjustable rate mortgage resets periodically and generally increases over the teaster intrductory rate. As interest rate goes up you can see your monthly payment balloon out of control.

    I also forgot to mention HOA homeowners association fees if applicable. Of course you'll also want to insure your home against fire damage etc .
    Last edited by cywkevin; 01-13-2008 at 10:43 PM.
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  11. #11
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    Let's say you buy a house for $300,000. You don't have $300,000 but you have a $30,000 cash downpayment and you finance the remaining $270,000 thru a mortgage loan payable at $1,700/month for 30 years. (monthly payment determined by your credit rating and the interest rate you get). Most of this payment will go to paying off the interest and some will go to bringing down the principal (like making the minimum monthly payments on a credit card and never seeing your balance go down). After 5 years you will still owe about $250,000. So, if you sell the house for $350,000 you will get ~$100,000 cash ($350,000-$250,000). If you cannot find a buyer for the house you have to keep making the monthly payments until you do. if you walk away from the mortgage it will affect your credit rating. In addition to the above are 'closing costs' when you buy (will be thousands) plus you will have property taxes and monthly mortgage insurance. Depending on where you live property taxes could be $4,000-$10,000+ per year)
    Last edited by Techno; 01-13-2008 at 10:44 PM.

  12. #12
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    Quote Originally Posted by lexington View Post
    So when you see a house on sale on sites like craigslist, are those the final monthly prices or do they add on a ton of extra fees? What if I buy a house for $300,000, if for whatever reason I can no longer afford it or just no longer want to live there, I could sell it for the same or higher price and will receive the $300,000+ upfront so I can buy another house? I am not sure if you receive the full amount upfront or you just get it in monthly payments.
    You'll only get back your equity obviously. Almost no one has the resources to pay cash for the entire value of a home. You'll only get back your (sale price) - (principal balance of your loan - prepayment penalties) (be aware of these! some loans have long prepayment penalties of 3 or more years) - (misc fees). Remember that realtors take about 3-6% of the sale price, which may be split between the seller and the purchaser. You can save some of that selling your home yourself but there's considerable risk in doing that if you're clueless.

    Assumable loans are the only ones I know where you get payments from the buyer. Assumables are pretty uncommon these days but they do exist and are mostly old VA loans.
    However there are brand new houses in my area for $1100 or less per month and I am wondering if there are any catches/hidden fees (not factoring in electric, water, etc. of course).
    You have to pay property taxes of course--which in certain states is very high (California is relatively low; states like Texas and Oregon (states with no sales tax, for example) are relatively high) and water and garbage collection are the two big expenses you have when own a home that you usually don't have when you rent. Pools add quite a lot to expenses too in terms of added electrical costs.
    Plus 6 years ago my dad screwed up my credit but I managed to pay off the $10,000 owed but they still appear as negatives on my credit report even though the balance is $0 dollars. I wonder if the past history will decline me for a new home.
    My understanding is credit is very tight right now and it's very hard for people to get loans, even people with relatively good credit (700 FICO or above). The freewheeling days of lax credit and "stated income" loans are over with now. You'll probably need solid credit to get a low interest fixed rate mortgage right now. Banks and mortgage lenders have been burned badly - eventually to the tune of hundreds of billions I'd guess - so they are not rushing to hand out more bad loans (if they're not fighting to stave off bankruptcy themselves).

    In a way it's a good time to buy a home - in most markets it's very much a buyer's market - but I don't think the current meltdown has seen bottom yet. If I were buying now I would wait another 9 months minimum to see where the bottom is or if prices level off. Massive overbuilding due to speculation has saturated a lot of suburban markets all over the country with hundreds and in some cases thousands of homes. There's more than a few "new" suburban neighborhoods that are basically ghost towns.

  13. #13
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    My advice is to go to a professional who can explain all these things to you in terms in which you can understand. There is a LOT involved in buying a house, and everyone has their own opinions of what is the right thing to do and such. You need to talk to a lender, to find out what is right for YOU.

    BUT, of course I'll give you my 2 cents. DO NOT BUY right now, the market is way too unstable, I just wouldn't do it. I bought my house almost 2 years ago and am thankful to not be one of the idiots that bought that couldn't afford. So many people got suckered in to adjustable rate mortgages it makes my stomach crawl. You have got to be really careful, a lender will say and do anything to get you into something. Shop around, read up about how this all works, ask people who you know and TRUST about it all. It's a very big deal and can easily put you into financial ruin if you don't do it right the first time.

  14. #14
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    Quote Originally Posted by Outlaw Web Master View Post
    hmm...what country are you from? because I'm pretty sure not all countries will be the same as regards to home owners and tenants.

    i.e if you fall behind with the rent here in the UK, there are court procedures to evict people, whereas if you fall behind with the rent in say Queens or The Bronx in the US, then it might lead to broken limbs

    owm
    I've seen worst in Glasgow OWM lol

  15. #15
    Now is a great time to buy a house. Interest rates are very low, and it's a buyers market, meaning there are more houses on the market than buyers. Also there is no "rent" involved in buying a house. You have a payment, which you determine by the price and loan terms, and taxes.

    There's a chance that taxes could skyrocket but not too likely. In general they go up with inflation and whatever voters decide to add to their tax bill, such as building a new school, etc...

    Owning a house is protection from skyrocketing "rent" because your payment is locked in for the duration of the loan.

    Selling the house doesn't affect your credit rating but not paying bills will. Also credit inquiries will, so it's a good idea not to go shopping for a loan until you are ready to buy. The the act of shopping for a loan will add many credit inquiries onto your credit report. Lenders usualy ignore it if they are all happening near the time you are sitting at their desk because it's obvious why they are on the credit report.

  16. #16
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    Quote Originally Posted by serverminds View Post
    In a way it's a good time to buy a home - in most markets it's very much a buyer's market - but I don't think the current meltdown has seen bottom yet. If I were buying now I would wait another 9 months minimum to see where the bottom is or if prices level off. Massive overbuilding due to speculation has saturated a lot of suburban markets all over the country with hundreds and in some cases thousands of homes. There's more than a few "new" suburban neighborhoods that are basically ghost towns.
    And what you've described there is the opposite to what's going on in the Aussie property market. Our interest rates are going up, as there's too much heat in the economy, and especially the housing market.
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  17. #17
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    Boy there's some here in Michigan that wished they could ship their homes they're trying to sell to Australia!
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