Buying a house

[backatit]

Congratulations! And also it sounds like on picking a nice size for a house.

[Puget]

Good luck with the house building pgher!

SO MANY things to get squared away, but moving along. Inspection scheduled for Monday, loan in process, attorneys looped in (it's a state that requires them), started getting insurance quotes but need to find out when the roof was replaced before I can finish those, which realtor is working on finding out.

Aside from a bunch of meetings I have not gotten much actual work done in the last few days, and tomorrow I leave for a friend's wedding for the weekend. Oh well, I'll get caught up somehow sometime.

[Trogdor]

We bought one similar to what you describe; 1200 square feet surrounded by larger houses.
You know what they say: "buy the cheapest house in the nicest neighborhood". 1200 sqft was perfect for the two of us.

It was a cute but bland house when we bought it. We did a few improvements, new roof, added shutters, trellises, fenced the back yard for our dog, lots of landscaping (we did all of it ourselves, using perrennials from the clearance section), built a raised bed garden. Except for the roof, it was mostly cosmetic work to improve the curb appeal.
We sold it a few weeks ago for a hefty profit, mostly because there are so few homes for sale, and smaller homes are in high demand. Our realtor says its the lowest housing inventory in decades. There are so few listings that each one is a bidding war.

Low housing inventory was great when we sold our house, but now that we're shopping for a house, it's very frustrating.  We're moving to a small city (about 10,000 people), and there's maybe one new listing a day, and sometimes fewer. I just keep hitting refresh on zillow, compulsively. Then we have to drive 3 hours each way to look at houses. It's brutal. Imagine going to a shoe store, and there's only 5 pairs in the store, and two don't fit, and one is a ballet slipper, and one has worn out soles and no laces.

[backatit]

So how did the inspection go?

[Puget]

So how did the inspection go?

Pretty well!

The structure appears to be sound-- they really built those houses to last. Main concern is corrosion of the waste pipe and leaking of the water pipe as they leave/enter the (unfinished) basement. Those are going to need to be replaced and we're trying to negotiate some money back from the seller for that. Other things were either relatively minor or I already knew about (vinyl siding needs some repairs, windows eventually need replacing but are protected with storm windows for now).

The best thing was we pulled up a corner of the carpet downstairs and there is beautiful wood under it! One upstairs bedroom is already wood and the other has carpet just sitting on top of the wood, though that wood has been painted. They just need to be refinished and its going to look fantastic.

[backatit]

That's awesome. Good luck with the water pipe. When my daughter bought her house the AC company (the owners had just had new AC put into the very old house) had run the AC drain INTO THE CRAWL SPACE! So she was able to negotiate that fix because there was no way they should have done that, and the owners were livid too - that shouldn't have passed the A/C inspection. The AC company fixed it, and redid the whole crawl space in face with new vapor barrier because they had ruined the old one (it was a real mess - they had to treat for mold, etc, but it was winter and it had been installed in late fall so there was no huge issue). She's pretty happy with the repairs now - she has a brand new AC system (they had also done some stuff with the duct work that they had to fix - the homeowners were not too savvy as they hadn't checked the crawl space to see how they'd tacked up the ducts - there were a couple that they hadn't properly fastened so those are all properly supported now with straps, etc.).  And my daughter now knows that when you have work done, you get IN the crawl space and look at what's been done, so that's a good lesson for her :).

[Puget]

OK, final purchase contract signed by both sides and I wrote the largest check I've ever written so far (which will be dwarfed again by the one at closing).

Got credits from the seller for the pipes and a few other things identified in the inspection-- enough that it should pretty much cover closing costs. My agent took care of those negations entirely and got more than I expected -- he seems to be very good at his job, for which I am grateful.

Everything seems to be proceeding smoothly with the mortgage. They have to do the appraisal, the title stuff has to happen, and I need to finalize insurance and then hopefully we are good to go for closing in just over a month. I'm staying in my current apartment an extra month after closing so I have time to have the pipe replacement done and the floors refinished before moving in. 

[Antiphon1]

Congratulations! This part of home ownership is so exciting.

Have you asked your realtor for contractor referrals?  Many realtors also handle rental properties and may be able to suggest plumbers and other contractors.  You may also be able to negotiate for times to have the contractors look at the property so they can bid the job.  If you can get a little head start, you might be able to tackle some of the other repairs/upgrades before you move in. 

[Puget]

Congratulations! This part of home ownership is so exciting.

Have you asked your realtor for contractor referrals?  Many realtors also handle rental properties and may be able to suggest plumbers and other contractors.  You may also be able to negotiate for times to have the contractors look at the property so they can bid the job.  If you can get a little head start, you might be able to tackle some of the other repairs/upgrades before you move in.

Thanks!
I'll ask-- he doesn't handle rentals though. My dad is a recently retired contractor-- not from the area, but I at least have good advice on how to pick one. I do have up to 4 visits to the house prior to closing written into the contract.

[histchick]

We bought our house a few months ago.  So far, the doorknobs haven't fallen off (yet), but a couple of newly-installed blinds did, and we're having some plumbing work done this week. Our former home just sold last month. What really helped us (in a small town) was a having a realtor who could give us the names of electricians, plumbers, contractor, etc., that she has used and liked.   

[monarda]

Congrats, Puget!  When's the closing? <need to start shopping for the virtual housewarming party>

We have three different rental property investments, so don't hesitate to ask any house questions!  (Though your dad can probably provide most of the help you need)

and... we are currently under contract to sell one of them. We've never sold a house before, only bought them. The one we're selling is the house I bought while I was a VAP over a dozen years ago, in a city several hours drive away from here where we live.

[mleok]

You have put in an offer, so this may come too late. 

My advice is always to buy the least house you need, put a good down payment on it, and plan to pay it off quickly. 

I do a finance problem with my classes where, as an example,  one can afford a $200K house, but buys a $100K house.  The buyer makes the payment of the $200K house.  After under 8 years, the lower priced house is paid off. The buyer then sells that house, buys a $200K house, (financing the other 100K), continues with the same payment, and after about 15 years and one move, owns a $200K house outright.  Had the buyer directly purchased the $200K house, the buyer would still owe over $100K and still be facing 15 years of the payment on the original $200K mortgage!!

Personally, I financed about what I make in a year.  I devoted all of my summer money toward paying down the principal.  After 8 years or so, I had paid off my house.  Since then I have devoted what had been my house payment toward bumping up my retirement contributions.  Of Before the 08/09 financial collapse, i was chastised as many thought that the best idea was to not pay off the mortgage, or even to cash out any equity that you had to invest in the stock market.  After , the financial collapse of 08/09 hit and many people lost 1/2 of their stock equity, I didnt hear much about that.

The bottom line is that debt adds risk.  (look Hamada equation in an intermediate finance book for the math).  I still invested heavily in my retirement, but I dumped all of my extra money toward paying off the mortgage, so I didnt forsake retirement savings.

So as you asked, my advice, is and has been, finance as little as you can get away with on a 15 year mortgage for no more than 25% of your take home pay, and dump your extra money toward paying it off faster.

Oh, and on a related topic, NEVER depend on your summer money to make ends meet. Summer money is ALWAYS extra.  It is too easily cut because enrollment is down, administration cuts summer wages, a new admincritter (AKA "a$$hole) decides that someone else should teach that/those classes, or as mine have done in my college (not the university, only the college Im in) the dean sets an arbitrary lower limit on the number of classes one can teach (my college faculty are limited to 2 classes, but the university limit is 4 and all of the other classes use that as the limit).  The bottom line is that you do not want to be in a position to depend on what  can be changed at the whim of an admincritter.

Congratulations on your offer.  I sincerely hope that it ends up being a great decision for you (as only time will tell)!

It's certainly great if you can find a livable place for 25% of your take home salary on a 15 year fixed rate mortgage. I wish I made so much that one year of my base salary covers 75% (or even 50%) of a livable house. I'm curious as to which part of the country you live in that has this wonderful combination of high salaries and low housing costs.

For example, a $1 million property, with 20% down, on a 15 year mortgage on a 3.497% interest rate, has a mortgage payment of $5718/month, so if that was 25% of your take home salary, you would need to bring in $22,872/month, of $275K/year post tax. So, given the typical professor's salary in San Diego, you're suggesting getting something closer to the $300K to $400K range, which would barely get you a one bedroom condo.

[Parasaurolophus]

That's great if you live in a place where you can command a very high salary relative to the cost of housing. I wish I made so much that one year of my base salary covers 75% (or even 50%) of a livable house. I'm curious as to which part of the country you live in that has this wonderful combination of high salaries and low housing costs.

Where I live, one year's salary at the fancy university on the other side of town (where salaries are higher) would cover about 8% of a house. I don't understand how anyone ever buys anything.

[mleok]

That's great if you live in a place where you can command a very high salary relative to the cost of housing. I wish I made so much that one year of my base salary covers 75% (or even 50%) of a livable house. I'm curious as to which part of the country you live in that has this wonderful combination of high salaries and low housing costs.

Where I live, one year's salary at the fancy university on the other side of town (where salaries are higher) would cover about 8% of a house. I don't understand how anyone ever buys anything.

In many big cities these days, only a small fraction of households make enough to afford a house.

https://eu.usatoday.com/story/money/2019/06/20/americas-25-least-affordable-housing-markets/39579711/

[clean]

It's certainly great if you can find a livable place for 25% of your take home salary on a 15 year fixed rate mortgage. I wish I made so much that one year of my base salary covers 75% (or even 50%) of a livable house. I'm curious as to which part of the country you live in that has this wonderful combination of high salaries and low housing costs.

For example, a $1 million property, with 20% down, on a 15 year mortgage on a 3.497% interest rate, has a mortgage payment of $5718/month, so if that was 25% of your take home salary, you would need to bring in $22,872/month, of $275K/year post tax. So, given the typical professor's salary in San Diego, you're suggesting getting something closer to the $300K to $400K range, which would barely get you a one bedroom condo.

Median price of a house in the US is just over $225K
https://www.google.com/search?q=median+home+prices+in+usa&rlz=1C1CHBF_enUS749US759&oq=median+house+price+in+usa&aqs=chrome.3.69i57j0l5.8389j0j7&sourceid=chrome&ie=UTF-8

Put down $25K and finance $200K for 15 years at 3.5% (your number).  The payment is roughly $1430

1430/.25 * 12 is $68640. 

Median US household income is just over $60K a year.

So if the Median House is about 225K and the Median Household income is just over 60K, it seems to me that plenty of people, especially a couple where one (or more) has an advanced degree, could afford a median house.  I could be wrong, but I would suspect that even a sole bread winning family headed by a faculty member would earn close to the median household income, or more.  And if both spouses worked It shouldnt be too hard to earn more than the median household income and handily afford a median priced house. 

you're suggesting getting something closer to the $300K to $400K range, which would barely get you a one bedroom condo.

Quite the opposite!  Im suggesting no such thing.  Here is probably the sad truth that may be surprising to some people to read, and Im going to type it for anyone to read!
Im suggesting that IF the average/median/typical house is priced at $1,000,000 and faculty positions  dont pay closer to $400,K a year (the number provided), then faculty who somehow found themselves in such a situation should move.  Find a job in an area of the country where the salary Does allow faculty to buy a house they can afford on the wages that are offered. 
Why would anyone even contemplate taking a job where the salary that was offered is insufficient to pay rent, (much less food, transportation, utilities and save for retirement) much less accept a job in such a location ?

It's certainly great if you can find a livable place for 25% of your take home salary on a 15 year fixed rate mortgage. I wish I made so much that one year of my base salary covers 75% (or even 50%) of a livable house. I'm curious as to which part of the country you live in that has this wonderful combination of high salaries and low housing costs.

From what I can see, Most of America would meet the requirement! 
https://money.cnn.com/calculator/pf/cost-of-living/index.html
Here is a cost of living tool I found online with a 10 second search.  I entered San Diego but left the default city of Asheville, NC.  Housing costs are 73% lower (i.e. only 27% of what it cost in San Diego).  Im pretty sure that there is a university in Asheville (maybe more than one, if you include private ones). 

I am sorry for the long post. I found myself annoyed at what I perceived to be a 'woe is me' or 'it can not be done' reply to an earlier post of mine.  In closing, if one is not happy in the situation that they have found themselves to be in, change the situation.  No one is truly chained to their location. There are often several alternatives to enduring bad situations.