Advice For Potential Firsttime HomeOwner

[clintard]

Hello again guys,

Most of you should know im a young guy. 21 years of age and i live in central illinois. Im looking into buying my first home. Ive watched the local market like a hawk for the past 6 months and ive been to look at several properties. None of them have caught my eye until now. Being young and single i really cant afford anything over 50,000$ and still live comfortably so within my price range i dont have a whole lot to choose from. The other day i made an appointment to finally go and look at a house ive been watching since i started looking and im in a state of mass confusion over it. I really want it but im not so sure of it yet i really want it. Know what i mean? I took my camera with me and the lady thought i was some kind of wierdo for doing so. I made a video of it but i was rushed so it didnt turn out to be the best.



The house is 42,900$ Its been on the market for about 8 months now and the price has come down from 49,000$ which it was originally listed. Its had a lot of remodeling done to it as well. It has a brand new gas water heater, brand new carpets in all the rooms, full basement that has been partially "finished". The attick has been converted into a childrens playroom with a full bathroom up there. I had to bend over to walk up there so it wouldnt be of much use to me other than storage but i still thought it was neat, and ill have it for if i ever have a child. The kitchen has brand new cabinets and has been completely remodeled as well. All in all it seems to be a pretty damn good deal but ive only had 6 months experience at this so im still a noob.

Here is a link to the actual property listing via the realtor's website if you want to take a look.
http://www.century21.com/buy/proper...th+Pictures&tr_key=33029225&bSite=N&Zip=61938


And here is a link to the video i took, check it out
http://video.google.com/videoplay?docid=-6017703881082867884




Most of you guys have been through this experience so i have come here for your wisdom and guidance..once again. If you would take the time to tell me what you think of it, give me advice, anything i would really appreciate it. Thanks for your time

 

[Buster Hymen]

First off it has a garage! :thumbup1: Even though the house isn't large that seems like a good deal, since houses that size go for at 100k up here. Any ways, the listing says it is about 50 years old, so for something that age I always check the condition of is the more expensive items to repair, namely the furnace, the roof and the foundation. Also check the size of the incoming electrical service to see if it is large enough for any futrue electrical demands (it also may be knob and tube). Also check to see how the house is insulated. By the age of the house, isn't that around the time they were using asbestos?

 

[clintard]

First off it has a garage! :thumbup1: Even though the house isn't large that seems like a good deal, since houses that size go for at 100k up here. Any ways, the listing says it is about 50 years old, so for something that age I always check the condition of is the more expensive items to repair, namely the furnace, the roof and the foundation. Also check the size of the incoming electrical service to see if it is large enough for any futrue electrical demands (it also may be knob and tube). Also check to see how the house is insulated. By the age of the house, isn't that around the time they were using asbestos?

The furnace and central ac unit are both 7 years old. The roof looked good visually and is 8 years old. The water heater is brand new just installed a few days before i come to look at the house. Im not sure about the electricity but it does have a brand new breaker box on the back porch going down to the basement. As for the insulation it does have asbestos siding on the outside of the garage, its that tiled crap, my dad ripped it off our old house and put vinyl siding on it. Im not sure about the insulation in the house, any hints on what/where to look? I mean how do i go about finding out how good the walls are insulated? There is quite a few new windows in the house, but there is still about 6 or 7 of the old wood framed windows, they do have storm windows on them though.

I asked about the basement flooding during rain and i was told that it didnt have any problems with water backing up or coming in. Theres a lot of wood down there and i checked it for rot or damage around the bottom near the floor and couldnt find anything. Also the heater sits on the floor right next to the sump pump hole which didnt have any water in it and the heater didnt look to have any rust or water lines on it.

 

[Buster Hymen]

The house sounds like it is in good shape, with the older stuff recently being replaced. As for the insulation, check what the disclosure laws are where you live. Where I live, if the house is insulated with asbestos, it must be disclosed by the seller/agent. If they don't, they are financially responsible for the price of the removal and are fined. I'm sure your agent should be able to find out for you. Other than that, it looks like a good starter house!

 

[Mad Jac]

check plumbing and electrical very carefully, only i see that sucks is walking to the garage in the snow because its not attached to the house. but good luck with your serach your lucky here in Tampa its hard to find a house for under 200,000 anymore.

 

[Robbarrie]

Take allot of pictures as you walk through....

Do you have an agent that you trust ? Make sure you do.

This is the best advice - get a "recommended" house inspector to go through the house with you. It may cost you a bit but these people know how sellers try to hide stuff. They will check everything, and he is there if you have any questions. It's a small price ( cost me 300 Cnd. ) I cant imagine that you'll pay much over a 100 US. It's cheap insurance really...could save you allot a money and grief. Careful if the house is a flipper, other than that - write down all the things you have in question, as you go through the house, be picky and look for surpises....and then when you walk though again with the inspector - you will already HAVE A LIST. They know the market too and many will ask what the asking price is and what you plan to offer. Read there face and body language, it will give you an idea of what they would do if in your shoes...

What do the houses look like around you ? Neighbors can make you regret a purchase - trust me ! Also being young, if your not going to take care of it - your not going to make (as much as you might think) a good buck if you ever decide to sell. You have to think potential as well, what kind of things can you do to increase it's value ? Do you have the time, money and knowledge to do it right ? You might be better off to save your money and invest it for now until your really ready. ( Until you might have wife and kids )
There is so much to consider, think it through and your options.

I know here, where I live. You can put in an conditional offer on the condition of home inspection as one of your conditions. If your inspection reveals something in question - you can negotiate or with-draw your offer and you won't be obligated to purchase.
Take a good friend, or family member with you, and a rule of thumb is never buy the first house you look at. Shop, shop and shop some more.

I always low ball, then barter if you really like it. If your agent says they would go - an X amount of $ - go lower ! I did and they took it, I saved 2500 before I put the offer in because I did that. The agent said " WOW - better than I thought " You can do everything right - but it all comes down to your gut feeling. Do your homework ! My agent as been a friend of the family for - I bet 25 years. She was very embarrassed to think that her advice (offer) was low enough, she gave me 1% decrease cut on her commission. Bonus !

Since it hasn't sold for 8 months - Now remember I have no way of seeing the house but I'd put in a first offer maybe around 36K and see what happens..... you never know, sometimes the conditions like a good (fast) or late closing date can be in your favor ! Best of "Good" luck.

 

[mikemax04]

My opinion is to hire an expert to check from top to bottom. Being on the market that long and coming down in price should raise a flag. If it was really a deal, someone in the know would have snapped it up by now. Pay someone in the know, who knows what to look for before you get stuck with a money pit. Also don't believe the age of all the "newly bought" unless they can show you a receipt. Buying a house for the first time is exciting, just don't jump into it blindly and then regret it for a very long time, cause they can bleed you dry. If you do decide to buy, make sure you at least get a one year warranty on all the major appliances. Good luck.

 

[clintard]

My grandfather set up and appointment to go look at the house today, he knows his stuff so i trust his judgement as good as any inspector. I asked about an inspector but the only one they provide works within the company. I also asked about the asbestos issues and they are going to find out and get back with me on it. I think the number one reason the house is as cheap as it is, is the location where it is, Its located right off a road with quite a bit of traffic on it and there is no way to park a car side by side in the driveway. Also you have to walk through one of the bedrooms to get to the bathroom on the main floor. Im going to relocate the doorway to the smaller bedroom and also put a door in that bedroom that goes into the batrhoom so there are 2 ways to get to the bathroom. The basement has a shower down there and it also has an unfinished room that is kind of tucked away from everything. How hard would it be to do the plumbing in a concrete basement to turn that unfinished room into a bathroom? Thanks for your input guys ill keep you updated as to what i find out etc.

 

[Rusty McNeil]

I think all the advice you've gotten so far is very good so I'm going to add something about financing.

Do not go for ANY type of "Creative" financing, you will forever regret it. A home is about the only thing you will ever buy that will increase in value and creative financing is a good way to steal those gains away from you before you ever get started.

Conventenial financing is the only way to go. No 80/20 loans, no Adjustable rates, no balloon notes on the end, no interest only loans or negative amortization loans.
These are all things that can make it seem like you can afford a house when you really can't, and will cause you alot of pain later on.

A home is supposed to be a blessing don't let it turn into a curse.

Something to really not forget is that finance people work on commision so it is in thier best interest to stick you with the highest interest rate they can get you to swallow. They are NOT working for you so don't get into the mindset that they are doing YOU a favor by GIVING you a loan. The young can really fall prey to this because of thier unsuredness about the ability to even get a loan.

The other thing is if you can afford it in any way possible put it on 15 years and not 30. You will save tens of thousands of dollars on a 15 year note versus 30

Example

$50000 loan
15 years fixed rate 6%
10% down
Payment (Principle & interest only) don't forget your taxes and insurance will be added to this through escrow
$337.54
Total cost to buy house $60757.69

Same scenario but 30 years at 6.25%
payment is $246.29
total cost of loan is $88663.28

total difference is $27905.59, think if you invested that.

$27905.59 invested at a mere 8% for 20 years compounded yearly ends up being

$130,064

Something to think about

Another way to look at it is
Put it on 15 years, pay the $337 a month and at the end of 15 years when the house is paid for pretend it's really a 30 year note and continue paying the 337 but pay it to yourself into a CD at 5.5%

At the end of the second 15 years of your "30 year note" you will have $92,883

Interest rates work both ways, make them work FOR you instead of against you.

If there was ANYTHING I could tell someone your age that I wish someone had drilled into my head when I was younger it would be to live within your means, stay out of ALL debt, and save, save, save. If you stay out of debt you will still have the cash to buy the things you want within reason. There is NO reason someone your age with a decent job living within their means can't be a millionaire by the time they retire. Most people get on a debt tread mill and give up before they ever get started.

Another thing is;

Once you start building equity in a home,

Don't use it for a freakin' ATM machine by taking out those dumbass home equity loans!!!!

Never getting married is another good way to end up wealthy... lol

Here is another place to look for a whole philosophy on handling money, http://www.daveramsey.com/ the guy is not a get rich quick scammer but a planning advisor on how to not end up like 99% of us where we are slaves to the lender and basically busts the myth of credit as a tool and shows you how you can live a better live and retire better by avoiding using credit at all costs except a home and living on the cash you make. He changed my life. Think of what it's like to live where ALL your money belongs to you instead of convincing yourself you need something NOW. Borrowing money on anything but a house is just plain crazy.

Sorry for rambling so much but this is a subject near and dear to my heart that I wish someone had taught me when I was younger. Sometimes people kinda lose thier minds in the process of making a major purpose by mixing up their wants and needs and it can affect you for an eternity.

 

[clintard]

Thanks for all your input everyone.

I checked with the realtor about the asbetsos and they are doing some research on it. The garage has visible asbestos siding on it. As for the house i think it has the same asbestos siding on it but they have put vinyl siding over it without ripping the old stuff off. not positive on that.

Would it be smart of me to have a contactor give me a free estimate on what it would cost to rid the home of asbestos and use that price as a bargaining point?

As for the loan, im dealing with several places right now. I dont have the best credit and im young so im pretty sure they are either going to stick me with a high interest rate and/or make me have to have a cosigner for the loan. Thats a drag my grandparents are the only people who could cosign for me and they already worry therselfs to death over other things.