Post # 1
DH and I are in the process of buying our first home. The housing market in the price range we are looking is very competitive right now. Houses under 250K are usually in such disrepair that it’s impossible to get a loan on them (unless it’s a rehab loan) OR they are in less desirable neighborhoods with higher crime rates.
DH and I were approved for a loan up to 300K-this would allow us to buy a nice home in a better neighborhood but we want the flexiblility and financial freedom of a lower monthly mortgage payment so we want to stay away from anything above 250K. We would rather buy a less expensive home and pay upfront costs to do repairs to it. However, that brings us back around to the problem that we can’t get a loan for a home that needs repairs.
Our real estate agent, who is also my mother in law, is suggesting we wait until we have more money saved so that we can either buy a house with cash (um, hello….how long will we have to save to have $250K in cash? We are not that well off that we can save $250 so quickly) She is getting frustrated with us for going back in forth on whether or not to spend more to get a house in the neighborhood we want or to spend less and sacrifice neighborhood. She absolutely doesn’t want us to sacrifice neighborhood. We understand the logic and her reasoning behind this but we are also very young….I’m only 23 and DH is 25. We don’t have children yet and if we did the neighborhood we would be moving too is not DANGEROUS by any means it’s simply not as affluent as the neighborhoods that she would like to see us in, and the crime rate is higher because it’s closer to a big city.
DH and I are stuck. Should be listen to my mother in laws advice and wait indefinitely or should we take the risk, buy now and then sell when we feel we have outgrown our house or outgrown the neighborhood? Rent is just as much if not more than a mortgage payment EVERYWHERE within a 40 mile radius of our jobs so we might as well just buy right???
I feel like my MIL is being way to un-realistic-we don’t want t a high mortgage payment, we just want to get into a modest home that we can live in for the next 5-10 years and maybe use as a rental after that.
Are we foolish to buy a house that is maybe not in THE BEST neighborhood and not EXACTLY what we want? I don’t think so, I mean, it will be our first place……we have to start somewhere!!!
Post # 3
- Wedding: July 2013 - The front lawn of our church
@Kimber_bee: I think you should go ahead and look for a house in the not so great neighborhood. You’re still young, and you can use this time to save money for the house you really want. Just make sure that you are saving and preparing yoursleves financially to move in the next 5 years or so. Don’t wind up stuck there because you didn’t plan ahead. Then you really will regret buying that house.
Post # 4
I think you should look at the types of repairs that need to be done on the homes that are in disrepair and the $$$ you’ll need on hand to get that done. New roof? $10-20k. New electric? You’ll have to re-drywall the whole house = $$. New kitchens can easily cost $15-20k. A bathroom remodel is easily $5-15k depending on what needs to be done with plumbing and fixtures. Remodeling isn’t always cheaper – since you guys are new to the game, make sure you do your homework. Even remodeling one kitchen will put your downpayment in the range of the homes you’d rather have. Why not wait 1-2 years and buy then?
Post # 5
@Kimber_bee: What do YOU want and what does your husband want? I think taking your MIL out of the equation will help you guys decide!!
Post # 6
@crayfish: I completely agree – repairs add up! Don’t be in a rush to buy if you’re not completely ready though. Although to be honest, if pressed to choose, I’d pick the better neighbourhood – real estate’s all about location. It will have much better resale value too.
Post # 7
@ChicFoodist: +1, location was definitely the biggest factor for us.
Post # 8
@crayfish: DH & his dad have the skills needed to do the work themselves which will save us money. But anyway, buying a fixer is out of the question because of the loan situation…..SO our option is buy a house that we can slowing make to our tastes for a lower cost in a not as awesome neighborhood. OR get into a rental and spend JUST as much per month as we would if we owned the home….this will not put us in a better situation than we are in now and we wouldn’t have a year of mortgage payments under our belts if we went this route.
If my MIL wasn’t throwing her own oppions at us I would say let’s just buy a house in a not so hot neighborhood, save our money, rent the house out in 5 years and buy a home that better suits us 5 years from now. (who knows we might have a kid by then!)
My MIL is now saying that she is tried of showing us property in those neighborhood because she “dis approves” of us living there and is suggesting we use another agent.
She’s being a drama queen. She did this when we wanted to get married too—-telling us to wait 5 months for no reason since she contributed NOTHING to our wedding. I really feel her emotions are more of what is getting in the way of this than her “professional oppinion” that buying a first house in a OK neighborhood isn’t a smart financial move.
Post # 9
i agree….it’s all about LOCATION. HOWEVER, does that mean our first house has to be in our DREAM location? Can’t it just be in an OK location???? Can’t we work our way up to a more desirable location?
Post # 10
@Kimber_bee: I agree that you should look carefully at the types of repairs that need to be done. If it’s just cosmetic stuff or things you want to change that aren’t your style, then that’s fine. You can always do that stuff down the road when you have more money.
If it’s something that is a safety hazard or that has the potential to seriously damage your home (like electric work or a new roof) then you may want to think twice about it because that can cost a huge amount of money.
And you also want to seriously want to consider the crime rate as well. It may not be too bad right now, but that might not always be the case. And if you decide to sell in the future that could wind up being an issue with potential buyers.
One important thing you haven’t mentioned: do you have a down payment available to put towards the more expensive houses? If so, do you have an additional financial buffer on top of that? If you do then maybe you’d want to consider one of those houses instead.
My SO and I just went through this over the summer. He was pre-approved for around 300-350K. We wound up spending a little less than 200K on a condo that was in good condition, but wasn’t updated (only about 10 years old though). Honestly, it was a good choice for us. His mortgage payments are very manageable and the HOA fees are relatively low (pretty much maintenance and landscaping only). If you don’t want to wait and don’t want to spend a lot, then that’s something you could also consider.
Post # 11
We can’t get a loan for a house that needs massive remodeling. It would be strictly cosmetic.
We have enough cash to cover our closing costs and down payment for a house that is 318K. HOWEVER, we only want to spend 200K-250K. We also have about 6 months worth of income in savings AFTER our downpayment