Buying my first home UPDATE: offer accepted, now what?

It might seem that way, until you factor in the amount of interest you will pay over the life of a mortgage.
If you invest even a small amount regularly, then you often end up ahead while still renting than if you purchased.

As has been pointed out, the "hidden" costs of home ownership can tip the scales toward renting.

 

make sure you are there when the inspection is being done, and have the inspector crawl and climb into every nook and cranny.
key things to look for -- electrical -- is it knob and tube? aluminum? If there's a basement, take a good look at any exposed wiring for signs of do-it-yourselfers, rather than licensed electricions having done the work. If it looks shitty in the open, beware of what's behind the walls.

the foundation -- any signs of water damage? look for signs of rust / dirt on interior basement walls that indicate seepage?
does the land slope away from the house?

the attic - is there good ventilation up there, which is the key to comfortable living. If its just dead air, then you die of heat in summer and face icedams and rotting wood in the winter

 

Dude, no one cares about your little slice of Shantytown.

;D ;D ;D ;D ;D ;D

(Can't wait to visit)

 

This was a foreclosure bought "as is." It is actually in great good shape compared to the other foreclosures I saw. But I don't get to haggle over things like the closet racks.

I plan to be there for the inspection. The home was built in 2004, so I'm not anticipating any real structural problems.

For the appliances, my plan is to buy with a credit card from Lowes or something similar, where there is no interest if the balance is paid in full within a year. I'm getting 10 percent tax credit as a first-time home buyer, and I can use that sizable chunk to pay off the balance. That will allow me to buy some newer stuff as opposed to relying on craigslist/auctions, etc.

 

With newer homes, the concern is cheap, shoddy workmanship and poor materials like that crappy Chinese drywall.

 

At least in NJ (and I'll assume other states as well) something like the light fixtures (and closet shelves if they were specifically made for the closet) are considered to be a part of the property ("real property" is the legal term). If they were there when you bid on the property and not there now, then the seller likely owes you money to replace them. However I don't know how it works in an "as is" foreclosure, but definitely check with an attorney.

 

I've said it before, but . . .


What does Joe Renter plan to do when he's 65 and wanting to retire?

Working till the day I die because I have to keep making rent payments isn't my idea of the American Dream.

 

Renters can invest in other ways. In your model, all your money is tied up in your house - which you'll then have to sell in order to have any money to live on when you retire.

 

The money "tied up" in my house is money (well, much of it, anyway) that I would have been using for rent anyway. And it most certainly is not "all" my money, since I do invest $900/month into a 401(k).

My monthly obligations (other than $300+ for taxes/insurance) will end in May 2012 when my final mortgage payment is made. As a renter, the monthly obligations never end.

And finally, you do not have to sell a house to reap the benefits from it.
--- Benefit No. 1: No more major chunk of income going to housing.
--- Benefit No. 2: Ability to take cheap home-equity loan vs. expensive personal loan in case of emergency.
--- Benefit No. 3: Ability to receive payments if desired by way of a reverse mortgage. Think about it. A 65-year-old renter will be PAYING $1,000+ a month for housing. A 65-year-old homeowner could be RECEIVING $1,000+ a month for housing. That's a $24,000 swing --- every year.

 

Fuck that; when's the housewarming party....

 

Benefit No. 2 -- "Home equity loan" is just another way of saying "second mortgage" since in a home equity loan the collateral you put up to cover the loan is your home.
Benefit No. 3 -- Be very careful with reverse mortgages. With a reverse mortgage, you're signing your home over to the company paying you the reverse mortgage. So if you're that 65-year-old homeowner living in the house your kids grew up in and you take out a reverse mortgage, you don't get to leave the house to the kids in your will. The reverse mortgage company gets it.

 

I'm referring to the benefits of owning (which means after the mortgage is paid). In such a case, it's not a second mortgage, just a cheap loan. And the bank ain't gonna foreclose over a $5,000 loan for home improvements.

No, you are not signing your home over. You are, in effect, taking out a loan with the house as collateral. And you cannot lose the house as long as you are alive.

If you die, the loan is due. That's all. The loan CAN be paid by giving the bank the house. But it doesn't have to be. Let me explain:

Dad takes out reverse mortgage (but still leaves home to Junior in his will). Dad gets $10,000 in reverse mortgage payments over the first year.

Dad then dies of heart attack.

$10,000 (plus interest) is due the bank.

Junior can pay off that loan and keep the house. Or he can sell the house, pay the bank and pocket the (large) difference.

Of course, people do need an understanding before they take out one of these things. But I was just pointing out how it's ANOTHER option that makes owning a home infinitely better than renting.