Post # 1
My FI and I have decided to start looking for a new house. We have a house now that was left to me by my grandparents and although it’s lovely, it’s older and small (like a cottage). We’ve been discovering a lot of issues, that will cost more than it’s worth to fix. It’s only 1 bedroom/1 bath and just too cramped for my liking.
anyways, we’ve looked at a few places for sale, and also looked at some modular/prefab homes as well. Herein lies the issue : we cannot agree on a price. He wants to spend 100k in total (including closing costs, inspection etc).
He doesn’t seem to understand we will be getting a crap house. Or a house that needs a lot of work (which isn’t an improvement from our current situation at all!).
I don’t feel like I’m being unreasonable by wanting to look at houses in the 120-130k range. I’ve found two that I really love listed for 123/129k and we could easily get them for less as they’ve been on the market for sometime now. Our mortgage would sit around 450/500 a month in that price range, plus utilities. We are not wealthy, but we certainly aren’t poor and we would be paying mlre than that to rent an apartment !
its causing a lot of tension, especially on my part. I don’t know how to compromise on this. I’m getting very frustrated…
Post # 2
greenmile12: DH and I some similiar issues when deciding on a budget.
The first thing we did was agree on the fact that we had a max budget, but I was willing to see houses in his pricepoint and he was willing to see houses in mine. Ultimately, we came to a bit of a compromise– but it wasn’t until we were actually, physically seeing what it is we were paying for before it clicked. I would schedule appts to see the 100k homes, then the 115k homes, then the 130k, and maybe even 145 to show you what your money is buying you.
That might not “sell” him, but it at least provides context.
Post # 3
Have you taken him to look at some homes in the price range that he is suggesting? Maybe seeing the difference with his own eyes will help him to understand what you are saying. Also, go over your budget with him. If he sees that a house in the $120-130k range will be perfectly affordable for you, then it will probably be easier as well.
Post # 4
greenmile12: Show him. Book some viewings of houses in his price range so that he can see what that amount of money will actually get you. Also, explain to him (or have your realtor explain) that just because a house is listed at a certain price, does not mean you will be paying that price. Negotiations are to be expected and people usually pay less than what the house is originally listed for. I went through the same thing with DH when we started house-hunting last spring. If he is anything like my husband, you can tell him until the cows come home, but it won’t hit him until he sees for himself. Once my DH saw what his top price point would actually buy, he was suddenly okay with extending the budget.
Post # 5
Have you seen any homes that are 100k? Does he realize what that buys? Is he willing to put in the work to update? Have you both sat down and looked a a budget (how much it will cost, how much you have left over, savings goals, retirement goals, etc)? Does he just want to be on a very conservative side?
When we started house hunting we had a very conservative budget, but we soon found there was nothing we wanted in that price range. We reevaluated our income vs potential housing expenses and realized we did have the budget to go up quite a bit and went up about 25% from our original budget to get a house we’d both be happy with. But even with the increase of budget, we are able to max out retimement savings and have a very comfortable amount left over. So we were still far from the max of what we could afford which is why we were ok with raising the budget. We didnt want to be house poor. Does he feel that would happen with a higher budget?
Post # 6
greenmile12: Another thing to keep in mind here is the size of the downpament, not just the monthly mortgage payment. If you’re in a disagreement between a $100K and a $120K price point, my guess is that you don’t have 20% to put down. This isn’t an issue, per se, because there are tons of options available to you, depending on where you live, that will allow for a smaller (or sometimes even no) downpayment, however, this comes with a catch: private mortgage insurance.
Basically, the reason banks want 20% down is that if you don’t pay and they have to foreclose, they’ve got that equity to use to cover the costs of selling the home or incase the home loses value. If you don’t have 20%, private mortgage insurance is used for the same purpose. This will be added to the mortgage payment and is typically about 1% of the loan payment per year. The less (percentage) the downpayment, the longer you pay PMI, so it can make a pretty big difference.
Post # 7
$100K houses in my area (and our market is really good) are older, smaller, or could be considered condos. Heck, my condo sold for $102K just last year – and would be a good starter home.
But, if you’re thinking long term… I’d do what other PPs have said and show him ones you still could afford that you could see living in for a LONG time. If you’re ending up fixing or updating more than you budget, spending more on something you won’t have to is better down the road.
Post # 8
greenmile12: Just an example, let’s assume you have $5K to put down and are looking at 2 houses, one of which is $100K and the other is $125K, (so your loans would be $95K and $120K after your downpayment). At current rates (4.125%) and a 30-year mortgage plus 1% PMI, Mortgage A would be $540 while mortgage B would be $682.
Post # 9
We have found very few in his price range, and they were crap. All of them needed more work than I am willing to put in. They were all older, need new windows/doors, floors, paint etc.
We have looked at houses in my price range and he always says it’s just too expensive and they aren’t worth it. He just doesn’t get it. I don’t know how else to explain to him that houses are not cheap and 120-130k range is NOT unreasonable.
Post # 10
amanda.417: we do have a down payment, which makes even less sense! we have nearly 30k…
Post # 11
Ultimately we will need to either buy a house, or find an apartment. Apartments in our area are running anywhere between 800-1500 and up not including utilities.
Post # 12
Wow, where do you live that rent would be so high but buying is so cheap? We rented in Boston for $1600/month, but buying cost 500k+….
Like Amanda said, the difference in mortgage for 30k is about $150/month. How does that playing to your monthly mortgage. Maybe he just thinks that going up 30k is a LOT, but breaking it down to $150/month, perhaps that sounds more affordable.
Post # 13
greenmile12: Next time you go see a 100K house, sit down afterwards and have a discussion about how much money you will need to put into the house to make it livable.
So you have 100K house, but it needs a new roof that will cost us $5000, and a new heating/AC that will cost us $2000, and new windows for about $500 a window times 10 windows so that is another $5000. New appliances are going to be another $5000K. And if you want to add another bathroom on a one bathroom house to have two bathrooms, that will be another $10,000. Right there is $27,000 that you will have to pay on a 100K house that you wouldn’t have to pay on a $120-$130 K house.
Post # 14
What is your current home worth? Moving is too expensive and too much of a pain in the butt to move to do it only for a slight upgrade IMO. Maybe if you sit down and work out all the costs involved your FI will see that moving isn’t worth it if there isn’t a big difference between the 100k houses and what you have now.
Post # 15
greenmile12: go with him to look at houses that are 100K and make a list of the work that needs to be done there. I think once he sees what he can get for that money, and how much money you will need to put in after buying it, he will change his mind.
I also want to know where you live that houses cost 100K! I’m in DC and people pay 50-60K just to own a parking spot… 200K would probably buy you a studio.