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Ultimate Buyers Guide - By Celerity

Discussion in 'Members' Lounge' started by Celerity, Jan 16, 2007.

  1. Celerity

    Celerity Well-Known Member

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    Hello dingbats,

    It's time for a fireside chat with your ol' uncle Cel.

    I know a lot of you.... some of you.... like one dude wanted Celerity's take on buying a house - The good bad and ugly. Well here it is.

    First thing, I need to tell you - That you need to take everything that everyone says about buying a house and throw it out the window. In fact, at the end of this thread, I want you to throw out what I have to say as well - Just for good measure. Because home owners and those that have recently purchased a home have brain damage. Below I will list the top reasons, faulty logic, and flat out horseshit that everyone has shovelled on me throughout the process.

    1: Owning a home means you won't be paying someone else's mortgage, making their credit great, and allowing them to live on a tropical island, getting blowjobs and having a jolly time on your dime.

    2: Owning a home means you can do whatever you want. You can have your cars sitting on the side of your garage and no one can tell you that you "have too many hondas" or "make too much noise" or "Make the place look like a used car lot"

    3: Owning a home is cheaper than renting, really.

    4: The amount of money to get into a home is the same as the amount of money to get into an apartment - first, last, and 1 month's security.

    5: You can get into a house for nothing down.

    6: If you get a house, you're in control

    All of these things, and more, are complete lies and flat out donkey shit. Allow me to explain why, one by one:

    1: Renting doesn't do much of anything for your credit. But neither does owning a home. Owning a home gets you credit cards and loans and shit because your house is on the line, and people (Credit companies) will only come after you because they see that you have something to lose - Something that they try desperately to take away from you. They WANT YOU to default on these loans. Thats why everyone will give a home owner a loan. Buying a house doesn't improve your credit. In fact, it worsens your credit quite a bit - The end result is higher credit because you pay your shit on time like the Pope on Sunday because as I stated earlier, you have something to lose and everyone wants to fuck you out of it. A bum is penniless, a homeowner can be negative thousands with the blink of an eye. Think about that.

    2: Owning a home gives you less options than renting. Yeah yeah your landlord says you can't have your 8 cars at the house. Mine told me that too. But when I signed the lease guess what I brought with me. 4 cars. It took about 6 months for him to realise that my shit is actually nice, and after giving him free oil changes and fixing his van for no money, he now calls me to ask what kind of exciting deals I got this month. Owning a home means that you have to keep up appearances and make your house look tidy and neat. Because if you don't it hits you in the pocket more than any hollow "I'll end the lease" threat ever could. If your house is the one with a car sitting out front for 3 days you'll get all sorts of letters in the mail, knocks on the door, and flat-out warrants for you to get rid of whatever unsightly car you own. Any neighbor can do this, in any neighborhood at any time. If you live in the country or somewhere really rural, then you don't have to worry about this - But then again, I'm willing to bet you didn't when you rented either.

    3: Renting a home is cheaper. In a month by month sense. And it's important that when preparing for your big move that you manage to put as much in your bank account at the end of every month as you can. That's because when you decide to rent a home, you have to go through a formula to calculate what you can charge. That formula is always below your mortgage payment. You refi to bring down your payment in the hopes of matching your rental formula, and adjust as you can. Why ? Because I can't rent anything for $2000 a month, just can't. No one will pay it. If you know someone that rents a house or something for $2000 a month you know they are stupid, and their landlord saw them coming and snapped on a rubber glove. If the house you are renting was purchased during the real estate boom, forget about it - It's more profitable to burn it down, pay capital gains, whatever - over renting. In about 4 years I predict that home rentals will be a thing of the past. I'll get to how to pay little for a house in a bit.

    4: By all counts, everytime I have done this, and with every mortgage I have ever seen or worked with - If you wish to buy a house you should have $50,000 in hand for every $250,000 you spend. Of course, no one can do this - so instead with just about every home deal the closing costs and downpayments are built into the loan.

    5: Know what that means ? That means that when you go with a "no closing cost" loan, you end up financing about $15,000 (Which after a minimal amount of interest comes out to $55,000) Banks NEVER lose. Lets say you get a nice low or no closing cost loan (again, I'll show you how in a bit) - Your moving expenses are still there. You will need $2000 to $2500 for costs outside of the loan (Legal fees, inspection, reports, even overnight shipping fees). The costs don't end at closing either. They keep going (That's why a mortgage gives you the first month to not pay - to get caught up with the expenses of moving)

    6: When you get a house, everything controls YOU. Thought you had more free ability to work on cars ? Guess again ! In order to make the investment work for you, you have to care for the house in ways you never thought. Like going to homedepot and walking past the bolt aisle into the gardening aisle looking for the perfect perrenial to keep the assholes next door off your back for devaluing their house. Or building a fence to hide your pile of tires behind the barn. Or lining blocks around your driveway to make the busted watertable up the street stop flooding your basement after a good rain. You start to look at your own cars as junk (Brian ? Ring a bell ?) and realise that you can't have a project CRX sitting around anymore because you have either better things to do, or need to upgrade to maintain appearances. (And this isn't a shitty thing - After a while, your appearances will become important to you - The look of your house = DOLLARS)

    That's just the beginning of the fun you'll have. Now allow me to be more accurate with the process:

    1: Buying and owning a home is much like trying to pick up a turd from the clean end.

    2: There is no 2.


    (Important note for Elitests)You don't want to change your lifestyle, habits and thinking - but it will change. It'll change without you knowing it. Or if you do notice the change, you'll realise that what I'm saying is totally accurate. And that's not a bad thing. Even for my hobby (cars cars cars !) I plan on finishing the NX and the Vega and selling come summer to get one project to concentrate on. A project that isn't such a "huh?" kinda project. I'll get into something more common like a kit car, dune buddy or rat rod. Lots of people (Observe them) turn to Harleys. They do this because they can continue their hobby without the stigma of being a wrench monkey. Look at Noah, Brian, Clayton, Steve - All people who have changed their attitudes and personal tastes since they got a home. They each have tools showcased instead of laid about, they moved away from Hondas and into higher classes of cars not because they have shunned turning a wrench - but because they now integrate their lives wholly. We called them turncoats - they aren't turncoats, they are just less free to build fun stuff now !

    And so am I !

    So Cel has phrased what is going on around us in a different light, lemme now tell you how it's all possible, and what means what.

    First off, buying a home is awesome. And it sucks at the same time. America's economy is based on Real Estate - It is how we are the richest country in the world. Home ownership is an investment that outranks all other investments in the short and long term - if you play your cards right. First we'll discuss what kind of house to look for.

    Most people go WAY wrong here. There is a term out there.. called "Starter home". A starter home is just that. When you want to get into real estate, you get a starter home. Just like a starter deck of Magic: The Gathering. You can go out and buy a $200 deck and still get your ass kicked by a simple starter deck. Ownership is like this. The heart of this is simple: Stop getting all butthurt and jealous because someone you know has a bigger house. Even if you CAN afford a huge house, you're wasting your time in getting one. Think Tortoise and the Hare. A Cheap house will get you your dream house in 10 years, an expensive house will get you your dream house in 20 years, and your dream house right off the bat will wind you up in bankrupcy eating out of dumpsters (Even celebrities get caught on this one) When you buy a house you should consider two things: What are your family plans for the next 6 years and what kind of improvements can you REALLY do ? If you can't do house work (And hey, I barely can) then a smaller house, but one in mint shape, is totally the best idea. If you can do some electrical, maybe a new roof, or build an addition or deck - then get something that allows you to do that. If you don't know what a 20 on center 12 pitch roof with rubber sheeting and rollover gutters is, don't get a handyman's special. Buy what you can handle, not only financially but physically. And for god's sake, if you get a cheaper house you'll be out of that cheaper house, with money in your pocket for a better house, sooner than you would be in a mediocre house. It's simply better planning.

    For price, maxing out what you can afford is fucking stupid. Like retarded DEET DEE DEE stupid. You know how I know it's stupid ? Remember those people that want to loan you money because they want you to default on the loan ? THEY SUGGEST IT. Everything that the realtor suggests, the mortgage company suggests, or .. shit.. ANYONE recommends they recommend because it will line their pockets and get you in shit trouble quicker than any other option. That's why like.. half.. of america is foreclosing this year. Because everyone was told they were approved for a $400,000 loan, took it, and found out they were suckered. Just like any investiment portfolio, for your money to work you have to diversify - the more money is tied into your home the LESS MONEY YOU WILL MAKE. Houses are a great investment, but the slightest thing goes wrong (You skip ONE payment) and everything is gone. Keep your money, and put it in a bank, a CD or money market. Get a size and price house that you can live in, and make the most of come time to sell. (This is also why home owners get rid of their Import sport compacts.. it's a losing financial proposition)(Think I'm full of it ? Get a 98 Civic, load it full of $10,000 worth of electronics and rare JDM goodies, and then get a 98 Civic, strip it, put it on a trailer and paint a huge number 6 on the door - Which do you think will sell for $10,000?)

    I'm gonna stop here briefly. One, for a cigarrette, two, to not lose this post and thirdly to give you some time to read it. I'll be back.

    -> Steve
     
    Last edited: Jan 16, 2007
  2. BigJ

    BigJ I'm just about that action Boss. VIP

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    Fuck. I need me a house.


    Between me and my four roomates we pay 1875 a month for a shack. A real big, 2 year old shack, but a shack none-the less.
     
  3. jeffie7

    jeffie7 Wrong Whole! VIP

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    Buying is cheaper then renting? that's never a set thing.

    You buy a house in todays market for 300K as most of you might know the market shot up over the last 5 years. we're at a pretty high mark in the market it did however pull back a slight bit over the last 10 months or so.

    ok so you buy a 300K house. you go into it with a room mate or two to cover the cost, next year you find a lady you like, a year after that you want to move out of your house and buy a house for yourself and your wife. but wait. the market pulled back and you're 300K house is now only worth 270K.

    Did you save money by buying?

    late 80s a lot of people lost a lot of money in the market. from 90-2000 the market around here was pretty stable, from 2000-2006 the market went crazy, as of right now it COULD but might not, take a crash, or at least pull back in some of the areas to level out with other areas.

    Renting lets you sit back and play the market, it lets you buy when you want at the prices you want, you can wait it out and buy in a buyers market.

    Renting can be a great thing and in many cases is damn smart. no doubt buying long term will always make you money, but unless you plan on spending more then 5 years somewhere (trust me, it's like a car, you change your mind) then it's risky. even more so after a big jump in the market like we just saw.
     
  4. cheese9988

    cheese9988 Senior Member VIP

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    Good read. I had tried to buy a house when I still lived in Buffalo a couple years ago. Ended up getting screwed after three months because it wouldn't pass a mold inspection.

    I pay about $600 for my apt, which isn't too bad, its a large apartment. But the neighbors and the parking lot is getting real old. I have no yard to just let the dog out either. I looked around and for probably $100 more, which I can afford, I can get into a nice little home.

    Buying can be more expensive too if you figure in upkeep, appliances, heating (the furnace itself), etc. Depends on how you look at it. Either way there won't be very many people who will say a house is not a good, mature investment.
     
  5. Celerity

    Celerity Well-Known Member

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    Getting a Cheap house:

    The nice thing about getting a cheap house is that you keep more of your money in your pocket. That means that come 6 years (6 years is the Mortgage almanac magic number - the market increases roughly every 6 years) you can have enough money in a savings account to buy another house - sell your house (or rent it for a bit before selling it) and combine with your savings to get into a much more totally awesome house. Keeping money in your pocket gives you power.

    Getting a small, good condition house:

    If you get a house that is already done and ready to live in, then you win. All you have to do to make money is just live in it and not burn the fucker to the foundation. There is no easier way to make money than to buy a box and do your best to not destroy it.

    Getting a large house that needs repair:

    Your weakest option, unless you are REALLY good with home building and have lots of friends that owe you favors. It's not cheap to own, but the initial price keeps your monthly commitment very low. Also, while we're on the subject I want to address a popular saying. "Every $10,000 you put into your house gets you $20,000 back". This is a lie. In fact, this is more than lie, this is more of that "Buy this shitty house, because no one with a brain will" utter catshit. A VERY small percentage of home buyers have what it takes to pull this off - chances are you're not one of them.


    Now that you have a smack in the face from the stark pimp-hand of reality, you'll be ready to move on to the toughest part of buying a house. The Deal.

    A Brief history of mortgages:

    A long time ago, houses started passing the means of the average consumer. The Home became an "American Dream". 99% of the populace could only afford to rent an apartment until they died alone and in the gutter. VERY FEW had the muscle to get in and buy a house. Then the western expansion came, giving more people the opportunity to own a home. But people were more concerned about , oh, Eating and staying alive than they were about finances. Financial Mortgages all but disappeared until the expansionist era ended in the late 1800s. The land grab was over. Now it was back to colonial bullshit, but on a larger, more corrupt scale. The Mortgage loan returned.

    The mortgage loan was a hairy, unregulated beast wherein banks could charge you whatever they goddam pleased and you had nothing to say about it. Contracts were drawn up and what is now considered "a normal mortgage" was born. There are limits to what you can do to back out of one, and limits to what banks can demand and when they can demand it. Mortgage lender law fills about 80 volumes.

    But not to be outdone, the sensational advertising era of 1980s came and gave the banks what they lacked: A fresh and large stock of idiot sheople to rob and connive as they saw fit. Only this time it was done using marketting and slight-of-hand tricks instead of bullying and legal racketeering. Thus came the time of "Interest Only", "Reverse Amortization" and "whoever maes".

    End history lesson.

    Now the homebuyer is faced with tons of options of how to lose their shirts. Lets go back to the "normal" mortgage. A normal mortgage, in it's normal terms, means that you have ponied up 20% of the overall loan as a show of good faith (Like a decent car loan) and you are asking the bank to provide you with 80% at a reasonable interest rate. In the efforts of doing business, banks can't wait 30 years to pay their employees and mortgage departments, so they asked a nominal and realistic fee of about $10,000 to do business. This works great until one realises that your slight home in the right market can fetch at LEAST $140,000. 20$ of that is $28,000. Can you, or 99% of America, put up that kind of cash without winning the lotto, getting money from Papa Dukes, or knocking over a convenience store ? No. In an effort to save the Mortgage loan, banks started making concessions to attract customers. Like building the cost of business into the loan, or playing money games like balloon payments, adding "points", or making up other "units" of money that they can play with at will. But in order to protect their investment, the house that you are buying MUST be equal (or more than, preferably) to the loan amount, plus closing costs, AT ALL TIMES. And that's just good business sense. Who is going to enter into deal after deal with the possibility of completely losing their shirts? An idiot.

    And in the case of Mortgage lending, they hope and pray that YOU are that idiot.

    Now these people that you deal with, at all points in the game, they are SALESMEN. If they offer you a "deal" or if they offer up a "plan that will work better for you", the more they push it - the more they say it's the best way - the more and more they are LYING TO YOUR FACE. If any mortgage worked out better for you, then they wouldn't push it. They wouldn't even offer it. Ergo, the best deals out there are the ones that you don't hear about.

    in CT we have the CFHA (Chaffa) loans. Every state has these. These are advertised and easily available. And nothing says "fucking scam" like advertised and easily available things. The good deals are the ones that are hard to get to.

    If you are buying a house, I want you to try something. Let me know what happens. I want you to enter into the office and say "I would like an FHA loan". Watch them steer you away from it. It's GOLDEN. The FHA loan is a government required offering that takes the unrealistic 20% down and makes it more realistic - like 3%. And you also know how it's a good deal ? It requires excellent credit to get it. I am able to get an FHA loan. I'll explain why I didn't take it in a second.

    Avoid any mortage company "exclusive" offering. It's their special way of scamming you. Ditech (GMAC Loans), Coldwell, Century21, all of them have some sort of bullshit product name like "Reachable Neighborhood" or "'Yes You Can' loan" which drips of such fucktard terms that it actually makes the phone sticky. Now, an FHA loan is a smart choice, and it requires a smart buyer - which is why they only offer it to people with a specific credit rating. The bad side, is that they have a low income cap to avoid people who don't make enough money to make their necessary 10 year financing (to make a profit) impossible by offering it to someone who can pay it off before they blow their load.

    the CHFA (Or whatever your state offers) avoids this by flat out saying that you CAN NOT get out of the loan in under 8 , 10, or 12 or so years. That means you can't sell without paying a massive penalty. Oh yeah, and when mortgage people say "no pre-payment penalty" (ALL banks say this) what they mean to say is that you don't have to pay a penalty for making a $2500 payment when you only owe a $2000 payment that month. A Pre-Payment penalty is often misunderstood by everyone - and the new home buyer is far more in tune with car-type loans where "pre payment" means you've suddenly found 10 grand in a sock alongside the road, and you want to pay off the loan. No, a "Pre Payment" penalty means that when you sell your house - you pay them a HANDSOME sum that often tickles $50,000 or more.

    So remember: the less they talk about a loan, the more you go for it. The more they talk about a loan, the more suspicious you need to be. If you don't pay up front, you WILL pay at some time. Nothing is free. They will offer you a break in one area because they know they can pull it out of your ass for twice in the near future.

    So I was approved for an FHA loan, which is a tough little loan to get. But, I went for a Fannie Mae. Why did I do that ? Lets observe:

    The FHA offers a crazy low rate. I was offered 5.6%. I'm a regular joe, so I'll even tell you that my credit sits somewhere in the mid to high 600s. Oh yeah, I wanted to break momentarily to tell you I went from not being able to finance a stick of gum to being able to buy a house in 4 months. I'll type this up in Blue, and if you're not interested in it, you can skip it.

    Remember my Vega ? Yeah, I'm the one that finances, makes payments on a 1976 Chevy Vega. One day I decided to click on the "finance this" link on Ebay to see what it was all about. Well, it turns out it's for a secured loan with Capital One auto finance for any car I buy on Ebay, or anywhere. Shit, I can get this loan for waking up in the morning. The minimum loan amount is $7500 for 9% interest. I owe Turbomirage a large amount of money, I have to pay up bills due to 6 months of unemployment, and at the same time, I kinda want another car. Lets do some math: If I get $7500 at 9$, I'm paying off, lets say, $8900 for a 3 year term (Minimum term). Ok, I need to get something that has the possibility of appreciating. Even better, I need something that if this goes so horribly wrong, I need to be able to part it out for more than it's worth. I think Lotus, Corvette, Jaguar, but I find a Vega listed in my local paper. I offer full price, get the car, pay off Chris and I'm now $8900 in the hole over 3 years. But my car payment is like, $140 a month. I pay $300 a month for good measure. Well, I make 4 of these payments and now my credit bumps -> 140 <- points. (And this is important) That means that if I took out that loan, and drove the car off a cliff, that credit rating equals more savings in my home loan than the car loan amount.

    So anyway, I have this 5.x rate, (The lender says "You should lock in for 60 days at 5.9%, and not 30 days at 5.8 or so" which means, in reality, I need to lock in at 30 days)(Remember the golden rule) and my "costs at closing" (Different than closing costs) are $15,800. That means that when my move is done, I'll have spent just shy of $20,000 with about $4300 coming back to me from my rental security. That's a big pill to swallow. So I do the math for the Fannie Mae. I did the math for the Fannie Mae based solely on the mortgage lender saying "Don't bother with the Fannie Mae" (Golden Rule again). It turns out if I go with the easier term Fannie Mae, I pay about $100 more a month, but I get to keep the closing costs in my pocket in the beginning (Fannie Mae builds these costs into the loan amount). So I pay more monthly for now, but I get to keep money in the bank when I actually move in. In case, say, the furnace blows up my first night there or something. Or, I want a 2007 Mustang. Whichever.

    I found that the loan that everyone told me not to get, both the scumbag mortgage companies, and the loan that my parents wanted me to get (the FHA is a great deal, yes it is). But the loan I got is the one that worked out for me. So I'm at 6.2% with no points.

    Also, Pay close attention to Points. Sometimes taking a point is less than taking the higher percentage. In fact, Points come back to you at some point. You MUST do all of the math and DO NOT ACCEPT ANYTHING until everything is clear. You can hire a Lawyer to do the paperwork with you. You can hire an intelligent, independent person to come with you to the signing.

    As far as the deal is concerned, you also have plenty of options open to you. And some are flat out fucking fun. I'll explain a few below:

    1: Get a pre-approval from a small mortgage company. Like a local place that you've never heard of. Not a Coldwell or anything. These people will send you pre-approvals without asking you for a credit card, mostly.

    2: Hire a broker. A broker gets your name into many places at once. This is priceless. Offer the broker money to sell you his findings to you. This way when you go to a lender of your choice, you say "I have 6 pre-approvals here. Lets talk". They'll shit themselves. They will actually drool, they will get full-on apparent hard-ons when you walk into the room because you are the real deal. You're a piece of dolphin-shaped meat to a shark. They LOVE YOU. And they will bend over backwards to get you in their bed and not in the other's . That's why you pay the mortgage broker $600 for his paperwork and acceptance letters. The other thing about Mortgage Brokers, is that you KNOW they are skimming off the top. Shit, they need to make a check too. But the nice thing about them is that they can find you such good deals that their fees ontop of what they find is often worth it.

    3: Shop around. This is a science in and of itself. Everytime you shop for a house, create a new email address at Gmail, and ONLY GIVE THAT EMAIL ADDRESS. Watch how much spam and offers you get. Don't let it clog up your regular account (As well, don't let the offers fall through the cracks of your spam filters) Spend 3 nights, solid, on the phone with mortgage companies. Tell them all the deals you have (But not from who.. keep your cards close if you get my drift)

    4: Find a real estate agent that has a sense of humor. Also find a guy who is green. He makes more mistakes and tends to show you shit he really shouldn't. Make him work for you. Ask him questions. Stump him. Make him sweat. believe it or not, that kind of treatment is what people want. I do IT Support, and I love tough problems. They do as well.

    5: Never deal with someone who is working without a lawyer. "For sale by owner" means "I'm such a sheisster that I won't pay a professional to do a professional quality deal". These deals NEVER work out, and the sellers tend to lie more about the house. (I got caught in this one, I'll tell you about it if you want).

    6: Do NOT EVER GET ATTACHED TO A HOUSE. you MUST be prepared to walk away at any time. I'll give an anecdote about my week:

    I walked into the bargaining table with an inspection (See the next tip) report that stated that the house isn't what was offered. My agent said "Well, would you like to put this into the deal, and work something out?" and I said "No, I'm done with this, houses come and go, 5 or 6 percent is only around for a limited time". My girlfriend almost broke into tears. You know, in fact, I've had lots of crying women around me lately. Anyway.... the agent tried and tried to save the deal. I wouldn't budge. The head agent came in. He did some math while I quietly listened. I knew what he was trying to do. (Golden Rule) At the end of his spiel, he was right. I was passing up a house for a $2000 roof replacement. When he was done, I put my pen down and leaned forward:

    "I'm sorry that these people were lied to about the roof. I'm sorry that they will take a hit. I'm sorry that you have all wasted your time. But I have spent the past 9/10th of my life being courteous, considerate and empathetic. I also spent the first 7/8ths of my life being poor and stupid. So I don't give a rat's ass about what kind of time people have invested in this deal. I am NOT taking it"

    And I sat back in my chair. The head agent was stunned, but didn't skip a beat. He excused himself and walked out of the office. My agent (The new guy) said in a low voice.. "I used to be a broker, I used to be the head of sales of a major company. I have never seen someone with that strong of a presence at a table."

    With just simple logic, and a strong and reliable shit detector, I am able to whip up the deal into the shape that I want it in. I'm not attached, I can walk away from the table at any time. if I have $2000 in a project, I'll walk the fuck away. I'm done being stupid.

    And the Inspection thing is easy - hire someone expensive. That dude found EVERYTHING. If you have an expensive inspector that can really point shit out that others miss, you're talking about thousands of negotiating dollars at the end. Pick the best lawyer you can. Pick the best for everything because the savings in the end is WAY more. (Oh yeah, and in that anecdote - The sellers wound up calling me 2 days later and offering me what I wanted in the first place. But by then we had found a BETTER house, and my gf had learned the importance of walking away from the table. I turned down their offer and now they are SCREWED.)

    I'll be around to answer specific questions you may have. Enjoy !

    -> Steve
     
  6. Celerity

    Celerity Well-Known Member

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    Jeffie: ok so you buy a 300K house. you go into it with a room mate or two to cover the cost, next year you find a lady you like, a year after that you want to move out of your house and buy a house for yourself and your wife. but wait. the market pulled back and you're 300K house is now only worth 270K.


    $30 over 24 months is what ? Did you make out ? No, but you did pretty well. OOOO I forgot to include that part of the thread... hang on a sec...
     
  7. Celerity

    Celerity Well-Known Member

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    I forgot the best thing about owning a house....



    It's FREE FUCKING FREE MUAHAHAHAHAH


    Yes, over a long enough time period, owning a house is Free. All of the money that you spent every month, if you make the right choices, comes back to you. If the market starts to slide, than at worse, in the end (Again, over about 6 years... the Market Almanac) you have had a pretty nice place to live .... For less than you would have paid in rent.

    This is absolutely true. Now you can see how what people say is both Right and Wrong. It's a matter of perspective.

    If you go with the option of buying a nice, affordable (And chances are, small) house (The option where all you had to do is not burn the fucker down) than when you sell it, you will either make out for free (Or close to it) or you will spread it out to enjoy, say, $100 a month living expense.

    But when you sell a house, it's a totally different set of butt fuckings to prepare for. Selling a house is FAR worse than buying one. You have to pay and pay and pay ... it costs like $50,000 (out of pocket, you can't build it into any loan) to sell a $400,000 property.


    But then, to take it all back to the start, when you DO sell your "starter home", you use the Equity in that house to put that AWESOME downpayment on your dream home. And that is the smart way.

    And be careful how you pull Equity out of your house. The more you pull out, the more you have to pay off, nothing is free - it's just shifted around a bit. If you pull out "$20,000 for a new kitchen" from your equity after 20 years, then in the next 4 years you go to sell you'll lose your shirt. Whenever you pull out a great amount of Equity, you have to stick with the house that much longer to make a sensible sale and get into your dream house.



    Tortoise and the Hare.


    And THESE reasons are why you should buy a humble, manageable and reasonable home - and not a McMansion, or other high-dollar estate. Remember, any 18 year old can finance a Ferrari. By it's very nature, you can see how stupid it is to actually do so.
     
  8. Celerity

    Celerity Well-Known Member

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    Just using general rule-of-thumb mathematics, with really good credit and an assistance program, you can get into a home and pay $700 a month if the following conditions are met:

    You have $6000 to drop into closing (Instead of security deposits for an apartment)
    &
    The house costs $65,000.

    As you can see, a $65,000 house is the kind of house that were you to rent, you would pay about $400 a month.

    -> S
     
  9. cheese9988

    cheese9988 Senior Member VIP

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    As far as I'm concerened the banks have become bigger, hairier beasts, just with a few more regulations. They are a pain in the ass and in my opinon make the most grief out of buying a house.

    Thats basically what happened to me, being a first time homebuyer I didn't know that much about. The seller of the house had tests done by herself and supposidly everything was ok, which was not true. After three months of fussing with the banks I could not get the house because of a very bad mold problem. I had to have a certified tester come in and do thier thing. Turns out the seller had shut the heat off, in the WINTER and condensation formed and created a bad mold buildup everywhere. So if I were to have done all the tests ahead of time, by myself, I could have saved myself two months worth of trouble and probably a bunch of money.
     
  10. jeffie7

    jeffie7 Wrong Whole! VIP

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    I shouldn't have added the roommate part because if you can deal with roommates (I can't and never will) then you can set it up so they pay for the house. then you're out no cost.

    so buying a house and renting it out while still living there isnt to shabby. but for some of use it's NOT an option.
     
  11. Celerity

    Celerity Well-Known Member

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    If I owned a house that two adults could live in (a that would be at least a 2 bedroom), and lets say I got a spectacular deal, the total monthly payment was $1400.

    Then I get a roommate. Are you telling me I can find a roommate that will sleep in the guest room and pay me $1400 a month ? Will this roommate be a wizard and ride a Unicorn to work ?
     
  12. Celerity

    Celerity Well-Known Member

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    A little brain-dropping to sprinkle on the thread:


    No matter what someone, anyone, tells you your costs at closing are, it is ALWAYS Higher. First off, when they give you your first closing cost, immediately double it. Announce to them that you are doubling it. They will promise you that it won't double. Then, when it doubles (And I promise you it will) you can dominate the deal because they have egg on their face. Establish the fact that you see through everyone's bullshit.
     
  13. jamesA

    jamesA Well known pissed off telephone guy VIP

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    It's 10:45 at night, Cel...

    :cliffs: ??
     
  14. Celerity

    Celerity Well-Known Member

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    It's funny how it takes some people longer to read my posts than it takes me to write them :)
     
  15. Celerity

    Celerity Well-Known Member

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    Dude, I thought you were the 1 guy that I referred to in the first paragraph
     
  16. jamesA

    jamesA Well known pissed off telephone guy VIP

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    haha I'll read it later... I'm dozing off right now while looking at car stereos. lol
     
  17. BigJ

    BigJ I'm just about that action Boss. VIP

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    lol. I get what you're saying. My friends are doing this.


    They bought fixers. Put in a bit of elbow grease and are making the money now.

    My buddy bought his house for 370k last year in DOWNTOWN seattle. It had 4 bedrooms and was a pile. Dropped 25k in a 2 bedroom addition, and a full revamp of the kitchen. He rents out 5 of the rooms to his crew buddies and now lives for free. He actually makes a net profit every month of 300 bucks because rent is so high in downtown seattle near the UW. Best part of it was, to invest that 25k, I worked for free. I lived there for 4 months and didn't pay rent, but instead did all the remodeling with him. 4 months later. Recently he invested in the siding, appearance of the house. Kind of pisses me off, He had a bit of money to work with(family is stupid rich), but doing this. he's going to make some serious money on this house when he gets out of college. Within the year he has owned it, its up to near 650k. I am not kidding you. Everysingle flaw that put it 200k under the other houses in the same neighborhood at the selling point are non-exisitant.


    Location, location, location.
     
  18. micah

    micah Senior Member

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    buying a house is such a load of bullshit

    ive never been through such a pain in the ass process.

    we couldnt get an fha because our income was too high, cant get a regular loan because our credit is too low. im being told that with a mid 600 score basically im fucked.
    i havent opened any new lines of credit in almost 2 years, ive just had the same 2 credit cards. literally the last 3 times my credit has been pulled in the last 2 years its been exactly the same score.

    we just happened to find a badass house yesterday. they are offering a lease to own option and it sounds like the perfect thing for us.
    rent for 18 months and if we make payments on time every month then that qualifies us for 100% financing through the real estate group managing the property. then a portion of the rent we paid for the first 18 months actually goes towards the principal amount.

    anyway, nothing is set in stone yet, just wanted to add the kind of bullshit im going through.
    i 100% agree with celerities post
     
  19. get_nick

    get_nick These snozzberries taste like snozzberries... VIP

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    Fuck living with 5 other people. I don't even care if it's the 5 playboy bitches. I would go fucking nuts. i'll pay out of pocket for my house. fuck that...
     
  20. MikeBergy

    MikeBergy Blah blah blah....

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    I can't believe Cel takes the time to write this crap out. Good thing you are self-employed.
     
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