Results 1 to 7 of 7
  1. #1
    Join Date
    Dec 2014
    Posts
    1

    Default To buy or not to buy

    We have our eye on a vacant, 1930 Dutch colonial that has been on the market for 6 months. She has beautiful hardwoods, a newer roof, updated bathroom and kitchen, no obvious structural or foundation issues, and character galore in one of the safest, prettiest neighborhoods in the city. On the negative side, she has terrible windows (broken sashes, painted shut), evidence of rodent infestation, asbestos-wrapped pipes in the basement, and God knows what else an inspection will reveal. The list price has dropped twice and is now more than 10% below the average sales price of homes in the neighborhood. We don’t NEED to buy this house -- we own our own cozy 1926 Arts and Crafts bungalow in another neighborhood -- but our growing family sure could use the additional square footage and extra bathroom.

    The issues we are grappling with are both financial and emotional. We have already patched, repaired and improved our current home to get it where we want it over the years. In a way, we would be starting over with this new “old” house. Thanks to refinancing, our current house will be paid off in just 12 years, but we would need to take out a new 30-year mortgage to afford the new, larger house. We like our current neighborhood near a major university, but the presence of rental properties (our street is about half rentals and half residential) feels unstable to me, as if it could turn at any time. The other house is in a more stable area that is almost exclusively residential, but of course further away from the “fun”. The quality of the schools is not an issue as our kids go to private school.

    We went ahead and got pre-approved for a mortgage. The realtor has told us the sellers are anxious and will accept a reasonable offer contingent on the sale of our current home, and of course an inspection. We just can’t quite take the plunge. My husband is worried about the consequences of taking on more debt at our ages (early 50’s), and whether or not we could continue to make the mortgage payments if one of us lost our job. He thinks we might be better off playing it safe and staying put. Maybe he is right.

    Everyone has an opinion. But I’d like to hear yours.

  2. #2
    Join Date
    May 2008
    Location
    Pacific Northwet
    Posts
    1,906

    Default Re: To buy or not to buy

    Really, it's a question you must answer yourself. But consider the following:

    • Does it make financial sense to move? Remember, there is more to the cost than just the mortgage: there are moving costs, insurance, taxes, utilities, and even travel to work that all contribute to your total monthly cost of living. And don't forget repairs and upkeep of your current house!
    • Cost aside, do the negatives of your current neighborhood outweigh the positives? To answer this question, consider only your current neighborhood, not your future neighborhood.
    • Would a move result in a significantly better quality of life? This is where you compare your current neighborhood and house to where you would move to, and also the houses themselves.


    You need to look at this very objectively, leaving emotion out of it. That "cute" house that you've fallen in love with could be a money pit, and your enamoration is clouding your judgment of it. Appearances can be deceiving, and emotion leads to mistakes.

    If the differences are minimal, then it's probably not worth making the move. But if even one of those three questions reveals a significant difference, it can sway the vote toward -- or away from -- moving.

    When looking at a mortgage, don't be so concerned with the monthly payment. Look at the term (length) of the loan, and consider when you want to be debt-free. If you can't get a monthly payment you can afford in a term you can live with, you can't afford the house! Remember, terms of a loan are negotiable. You should be able to get one for any length of time you want, though "standard" are 15-, 20-, and 30-year. Were I in your situation, I'd be looking for a 15-year fixed rate mortgage.
    Last edited by Fencepost; 12-01-2014 at 02:27 PM.
    The "Senior Member" designation under my name doesn't mean I know a lot, it just means I talk a lot.I've been a DIYer since I was 12 (thanks, Dad!). I have read several books on various home improvement topics. I do not have any current code books I can refer to. I was an apprentice plumber for two years.

  3. #3
    Join Date
    May 2008
    Location
    Pacific Northwet
    Posts
    1,906

    Default Re: To buy or not to buy

    P.S. -- Remember that your current mortgage payment INCLUDES taxes and insurance. When you get an offer from a lender, it will NOT include taxes and insurance.

    You'll need to get a quote from your insurance agent for the new property, and find out from the Assessor's office what the taxes are. Then add the monthly cost of these to the mortgage offer to get a true comparison between what you are paying now and what you will be paying.
    The "Senior Member" designation under my name doesn't mean I know a lot, it just means I talk a lot.I've been a DIYer since I was 12 (thanks, Dad!). I have read several books on various home improvement topics. I do not have any current code books I can refer to. I was an apprentice plumber for two years.

  4. #4
    Join Date
    Jul 2010
    Location
    SoCal
    Posts
    7,760

    Default Re: To buy or not to buy

    To add to a very good answer from fencepost:

    "The realtor has told us the sellers are anxious and will accept a reasonable offer contingent on the sale of our current home"

    Real estate agent are dying to have buyers and seller sign papers. After all, they only get paid when they close escrows. Even when they appear "relaxed", they are pushy, so in your case they want you to write an offer with contingencies.

    A quick look at the things you KNOW that need to be done, and I know why the seller is willing to be flexible. Remember that a house which has been on the market for 180 days may not be such a bargain, even at 10% below market. Otherwise, bargain hunters, flippers and fix to sell folks would have bought it already. You can fork out some money to get a home inspector go through the home thoroughly and tell you what else is wrong with the house and roughly how much it would cost to fix, to give you an idea about how much this house is really worth.

    If you need more space, look at your nice house and see if you can add to it. Talk to architects and general contractors and explore this possibility. This could be the answer you are looking for.

  5. #5
    Join Date
    Dec 2013
    Location
    Iowa
    Posts
    234

    Default Re: To buy or not to buy

    Adding to the other great post:

    Unfortunately no one can tell you what to do. Some additional thoughts though:

    You might want to get the inspection done. The hidden problems are the most expensive to fix, so have someone take a really good look at the foundation, wiring, plumbing etc. There may be a reason a lovely home in a great neighborhood is not moving.

    Get some information on window replacement cost. Is this house in an area where a historical commission might have a say in things. Our local historical commission just denied our church’s rectory new windows – the present also being cold drafty and non-functioning. A historical commission might require you to “fix” rather than replace the windows.

    Being on the wrong side of 50 myself, I find working on my house helps keep me in shape and moving. However, many of my friends are traveling or bailing out - I mean visiting – their kids and don’t have time for fixing up a house. Look at your overall health. Many people your age are very vibrant, while others are dealing with major health concerns. Part of you might really like the home fix up thing and want to do it again. Even the smaller home might have new projects in it.

    Do consider whether either of your jobs is at risk or not, or even if one of you is thinking about retiring. The smaller house might let you cut back a little at work and enjoy some other activities. Also, get a good idea of what your present home is worth. If you use the equity in your present home towards the new home your monthly payment might be manageable and you might look into other mortgage options. If you have the discipline, larger payments on the principle of the loan can get it paid off sooner. Make sure you do not get a mortgage that penalizes early payoff. Keep in mind that a larger house also means larger taxes and utility bills.

    Are the kids close to leaving for college, or are they going to live at home while going to college or struggle a bit so might need extra time for college or trade school or community college? Is there a college fund?

    Could you rent out your present home and make enough to help cover new the house payment with the option to eventually sell one of the homes?

    I would start with a good inspection. That could give you your answer.

  6. #6
    Join Date
    Dec 2014
    Location
    Oklahoma City, OK
    Posts
    1

    Default Re: To buy or not to buy

    I would recommend buying.

  7. #7
    Join Date
    Jul 2010
    Location
    SoCal
    Posts
    7,760

    Default Re: To buy or not to buy

    Quote Originally Posted by hallmarkhomebuyers View Post
    I would recommend buying.

    Can you tell us why?

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •