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This is our first home purchase. My wife and I make about $100K pre tax. We found a home, and the owners are willing to sell for $270k. I learned the taxes, the past few home bills. We pay for cell phones, car insurance, and both still have student loans but no other debt. We are planning to budget about $5k/year because of the large property and we might need some help a few times per year with upkeep. We know our food budget per month. We will also have an emergency fund. We will continue to save 15% every year for retirement. We do not have children but plan to pay for their college. I am sure we are missing quite a few things. Can anyone help share other items we should budget for so we can figure out if this is a home we can afford? We will be putting 20% down.
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Welcome to the forums!Originally posted by voicemail View Post
Basic questions:
1. How much do you spend monthly now?
2. What is your take home pay?
3. How much do you have as an emergency fund?
4. What does your credit look like? Your spouse?
5. What are your debts and the interest rates associated with them?
6. What are the homes in the area worth?
7. How old is the fence, roof, AC, and heating unit?
8. Does the house come with any appliances or furniture?
Plan on spending 1-2% in maintenance in the upkeep of the home. So 5k is a good estimate.~ Eagle -
Check out this post: Checklist for Buying a House
Also this one: Home Buying: pre-qualified, pre-approved, and loan commitment
Hopefully those will be useful.
~ EagleComment
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Will your wife plan to continue working full time when the kids come?
If she had to stay home for a while (or wanted to), could you manage on one income?
How is the school district for future children?
Are you looking at a 30 year mortgage or 15?
As for taxes, can you escrow those into the payments?
I also strongly agree that the age and condition of the house and house parts (roof, HVAC, etc....) is important.Comment
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Do you have a downpayment? How much?
15 or 30 year mortgage?
As others have stated, pay close attention to the condition of major components of the house and how much it may cost to repair. Possibly, make the current owner make some of the repairs or drop the price of the house to compensate.BrianComment
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Originally posted by bjl584 View Post
what are some of the major components we should get 'last replaced' dates for?
---- to answer some other questions ----
20% down payment, my wife works from home and will be able to still earn her portion of the income with kids. 30 year mortgage.Comment
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what is the advantage to escrow the taxes rather than pay them each year? Do you mean the annual school and property taxes?Originally posted by dawnwes View Post
the school district is great for elementary school, but the high school is extremely large and my wife and I might not choose to send our children there, but rather use private school for those last few years. I agree that this must be factored in too.Comment
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Furnace, A/C, appliances, the roof, electrical and plumbing. Those last two aren't usually an issue in newer homes but if you are looking into the aging house market you need to make sure they are carefully inspected by somebody who is qualified to know if there are any problems.
Ask your retailer to help you negotiate a home warranty plan paid by the sellers. It's a fairly low cost option when you are talking the hundreds of thousands flying around in real estate transactions that will help you make sure you don't move in and in 3 months your paying a bunch of repair costs.
I've seen cases where the sellers balk at paying for a home warranty and the real estate agents will split the cost between them to get the sale completed. If nobody mentions it to you, tell them you want it.Comment
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It would probably be worth your while to have an inspection done. It may even be required by the bank. They will check the roof, the foundation, look for evidence of water damage, shifting, or mold. They'll also look at the HVAC system, and the hot water heater and plumbing.Originally posted by voicemail View PostBrianComment
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We just purchased our first home in April. The only advantage to escrow is so you don't forget to pay your taxes, and it lets you spread the tax bill out over the course of the year instead of having to pay it all at once. I think most lenders require an escrow account anymore in order to make sure that a tax lien doesn't get put on the property that they technically own. Our taxes and homeowner's insurance are included in our escrow. Most of the big expenses to watch out for have been mentioned, a/c, water heater, roof, plumbing, electrical, and appliances. I had to replace a few outlets and light switches, but I had purchased the house as is and they were only a few bucks anyway. The fridge did die on us last month, but it was 20 years old. Most of the time you'll just be paying for cheap stuff like air filters for the furnace, light bulbs (the outside floodlights can be expensive), recaulking the tub, replacing damaged screens, and general landscaping supplies; none of which should run you more than 10 bucks or so. You said you've seen past bills so I guess you have an idea what your utilities will be. Garbage and water are usually negligable, about 25 a month for garbage and 50 for water, but we're not very conservative with our usage. Gas and electric can vary greatly depending on what temp you like the thermostat at and electronics and appliance usage. The only other thing I can think of that we had to budget for were the closing costs. They add up pretty quickly and are usually around 2-5% of the purchase price. So make sure you have 22-25% saved, unless you are going to stipulate that the seller pay all or part of the closing costs; because if the closing costs cut into your down payment and make it less than 20% then you will have to pay PMI, which could add an extra $100 a month for the first year or two. My only other advice is to be aware of any local ordinances, the week after we moved in we got a letter from the township saying that we had to clear all the brush next to the garage because it was an eyesore. Look out for intruding tree branches, tool sheds or secondary structures built too close to property lines, regulations on fire pits, and things that might cause neighborly disputes like shared driveways and fences. In some states if a neighbor solely maintains or uses part of your property for 20 years they can try to take it from you through adverse posession. Unlikely I know, but these are the kinds of weird laws that you would never think of but can be important when you own a home.Comment
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most people that step into a home for the first time buy smaller starter homes. they get accustomed to payments and budgeting, hopefully gain equity and use it to step up in size and location. i don't know if 270K is high end or low end in your area. do mortgage comparisons, see what your comfortable budget will buyretired in 2009 at the age of 39 with less than 300K total net worthComment
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Originally posted by 97guns View Post
great signature!
would you be willing to share with me "how"? Either here or PM or email please?
and congrats to you!!Comment
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97Guns "retired in 2009 at the age of 39 with less than 300K total net worth"
Why would you retire so early with such a low net worth?~ EagleComment
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Don't forget to check the windows. Once when we bought a house, we found out after we moved in due to it's location very near Lake Erie, the excess moisture in the air had made many of them loose and leaky. In my part of the country where it can get to 20 below or more for part of the winter and below freezing for much of the winter, the last thing you want is leaky windows. Same goes for where you would need AC most of the year as well.
This same house also had a small roof leak that we didn't discover until we had lived there for about 2 years as it was in a closet. Well we got the roof fixed and in no time the stone entryway was popping up and had to be removed. All the moisture had apparently kept it just damp enough to hold the stones, but the minute they got good and dry it was over. Thankfully home insurance covered that.
Yes, you want your taxes done via escrow! Our current home's mortgage is actually more of a home improvement loan so didn't include that. Coming up with those huge chunks of money for taxes each year is horrible, especially since one of the property taxes is due in April along with taxes, and since we are self-employed, estimated taxes. I feel like I'm still reeling from all the money we had to come up with (not that we wouldn't have had to come up with it anyhow). But every penny we had in savings disappeared this past year in two weeks time!
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