(Closed) House buying attempt #5. Inspector on a brand-new home? Loan points?Are we crazy

posted 5 years ago in Finances
Post # 2
Member
3323 posts
Sugar bee
  • Wedding: September 2017

Get an inspector. New homes can still have deficiencies, and you’ll want those fixed before you move in. Especially if it’s just been sitting for a year with no one living in it. Also the warranty might not cover things if it’s not related to factory /building default (ie mold in the walls) bc it could be location related. However if the inspection shows warning signs you might be better off.

Post # 3
Member
2923 posts
Sugar bee

In for a penny, in for a pound.  Ge it inspected.

Post # 4
Member
1987 posts
Buzzing bee

For sure get an inspection. I wouldnt buy the points on the mortgage because interest rates are low. You can do more with that $ now, in terms of investing it, rather than have it tied up in the house for 5 years. 

Post # 5
Member
458 posts
Helper bee

It kind of depends on how long you want to live in this house. If you intend to own this house long enough to pay off the mortgage, then the amount you save in interest payments over the life of the loan would make it worth it (in my opinion) to go for the lower interest rate. Check out http://www.bankrate.com/calculators/savings/loan-interest-calculator.aspx. It allows you to calculate the amount of interest you’ll pay over the course of your loan. By their calculations, you’ll pay about 20k less in interest over the life of the loan by going with the lowest interest rate vs the highest. Also, the reason interest rates are so low is because there really aren’t much better things for the bank (much less you, as smaller fish in the economy) to be doing with your money right now so I wouldn’t worry so much about that aspect of it.

Post # 6
Member
1987 posts
Buzzing bee

View original reply
amiryana :  You wont make money by letting cash sit in a checking account, but you can absolutely make money in the stock market & other investments. If OP isn’t interested in investing & using her money to make money, then sure- buy the points. However, you CAN do smarter things with your money right now to take advantage of low interest rates available on most mortgages. Also- once you’ve got enough into the house withour the PMI you can look at a re-fi and get a lower rate then, too. Meaning, you don’t necessairly need to throw down the cash now.

 

OP- in reference to your Q’s about purchase price/appraisal- its a personal decision. People pay more than appraisal price sometimes because to THEM, it’s worth it. Like people that pay cash & don’t go through an appraisal process, because they want the house and are comfortable with what they’re paying. There are houses in the world that would appraise at 1 million dollars, but personally, they’re not worth that to ME. An appraisal isn’t an end all, be all. You’re not nuts to pay what it appraises for, especially if you plan to live in it for a while.

Post # 7
Member
458 posts
Helper bee

View original reply
italianbride0508 :  You could potentially make a profit by investing that money, but stocks are risky whereas paying less on interest is guaranteed “profit” so to speak (since money you don’t have to spend is just as good as money paid to you). You’d probably want to put it in an index mutual fund to best balance out the risk v reward tradeoff. The Dow Jones version of this has risen about ~2.2% over the last year – not great, but it’s also hit some pretty steep lows just in that time, as well.

I, personally, would rather the guarantee of paying less in interest than for sure paying that interest and then investing the extra 5k now for 2%/year. But I’m also definitely risk averse. I’d persontally take the for sure 20k in not paying interest than betting 5k on the stock market any day. But that’s my preference.

Post # 8
Member
510 posts
Busy bee

Definately get an inspection no matter how perfect you think the house is. There are many components of the house which you cannot see with the naked eye. Also the inspection report will come in handy in future when you want to renovate – particularly structural renovations. We own many properties and the inspection report is something we would never skip. If you are going to invest that much, then you really need to know the structural elements of your house. 

Post # 9
Member
1309 posts
Bumble bee
  • Wedding: April 2015

If you can’t afford the $350 for an inspector, I’m not sure you should be buying a home. 

Post # 10
Member
337 posts
Helper bee
  • Wedding: March 2015

I would NOT buy a house without an inspection, regardless of when it was built.

Post # 12
Member
9442 posts
Buzzing Beekeeper

View original reply
bellanotte11 :  definitely get an inspection – no house is perfect and it’s well worth the low cost. 

If you plan on staying in the house long term I would take the lowest rate offered and pay points since it saves you money over the course of the loan. Plus it will give you more flexibility in your monthly expenses going forward to have the lower payment. With a lower payment you can save the difference, invest it, or pay it towards the mortgage principle to shorten your loan term and save interest. When we refinanced we had the option to continue with our regular payments and kill the mortgage 8 years early or pocket the difference and save up for different goals – either way was a win and the decision was the best “problem” we could have had. 

As for the purchase price I have no advice since that is so market dependent. A brand new $385k house just straight up does not exist in my market so to me it sounds like a steal, but for all I know that’s way overpriced for your market. Trust your realtor on that front. 

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