I want to buy a house within the next ten years.
Aside from money and a good credit rating, how do I get there? What do I need, what should I know? Where do I start?
please boost. I know there are others thinking about this now
@tulpa Thank you for that :)
There are people who will literally just sit around looking for houses for you?
@brandon The sooner the better. Get the shortest note you can afford. Make sure you understand what taxes run and when they're due so you are prepared. Beware of letting your real estate agent chose your loan insurance for you. Shop for your own if it's required. Many lenders require that taxes and loan insurance are paid monthly and stored in an escrow accout until due. Have an emergency fund for unexpected costs. You're the landlord now.
@brandon bare minimum: check the neighborhood, go there at different time of day to get the feeling of living there. some places smell, some are noisy. we crossed out a few places because there was a night breeze bringing awful smell from a steel mill across the border. also, waterfront properties we dreamed off turned out to be a disaster during wind, when lake water is pushed ashore. and then there's a stetch of dead fish once in a few years, and fishflies every year...
@brandon industrial agriculture facilities could be a problem, too: smell and light pollution from greenhouses, dust from tractors developing fields. after marijuana legalization most of the greenhouses here swicthed from tomatoes to mary jane, oh gosh, it stinks like skunk. lol.
@brandon now, check for possible future problems: road widening, commercial and residential developing.
@brandon railroads! and airports. that's noise. train whistling at 3pm outside your windows is no good. almost like a revving jet above your roof.
@brandon be your own agent and inspector. learn about electricity, plumbing. you'll need it later. check and recheck everything yourself, even if you have a hired professional. don't be affraid to ask questions. e.g here in ontario home inspector could not be held accountable if you bought a lemon. so do your due diligence.
@themactep Thank you Paul for all your insight! It'll be very helpful! It's nice to have some advice that is a direct product of house-chasing experience :)
Thankfully the trains that pass by my place don't bother me all that much. That's the me that lives in the city, however, so maybe it's really the juxtaposition that doesn't cause too much irritation :P
@brandon keep in mind that there's a difference of a noise in an already noisy environment and the same noise in a quiet one. the rule is, do not assume, go test it. i used to drive to the neighbourhood of interest at night and wait for a train to pass by. it resulted in that we found the only town in the county without a railway as it blew up a hundred+ years ago. https://windsorstar.com/news/local-news/essex-recalls-its-explosive-history-and-heritage-train-station-that-survived-two-blasts
@brandon Ask a bank to get pre-approved for a loan about the time you are serious about buying. Don't actually buy at their approval limit. They usually allow more than you can really afford.
@52fighters What's the advantage of getting it pre-approved vs getting the loan specifically for the house you're looking for?
@brandon You can present that letter to the seller to move the process along and lock-out other buyers. Approval takes time and if you aren't pre-approved, the sellers are likely to move on to another buyer.
@brandon save as big a down payment as possible.
Over-extend a bit. Mortgages always decrease with time and incomes tend to increase as you age. But still, be ultraconservative in all your estimates to make sure you are not sowing the seeds of financial ruin.
I started with an apartment/condo unit and I think entering the market at a lower price tier was a good move. There is less on the line and you gain familiarity.
Be realistic by observing the market. No place is perfect.
@groovestomp @brandon I would like to provide a counter point to the Save Up as Much as You Can advice. Put down as little as you can. It actually depends on where you live. If inflation is 3% a year, your future house will be $250 per $100k value. So the sooner you buy it the sooner you get that inflation as equity. This also applies to market increases, so it depends on where you live.
I also do passive investing in index funds and averaged returns over the long term there are 4-7%; which is a lot higher than the interest of the mortgage.
Before we bought our house (twice the price of our condo!) we paid off our car and did everything to reduce our monthly expenses.
@groovestomp @charims @brandon It's funny how the monthly payment vs total cost thing feels different for different people. My dad always says "you will always have a car payment". Either it's a real payment, then it's saving for the next car, then your car is old and maintenane and upkeep get to be a payment itself. Makes sense, but I am currently not saving for the next one
@MrDers @charims @brandon I have never owned a car for myself.
My wife and I bought a new car together in 2017 I think because we had a our second child and just felt that we needed the space. The car we had was still fine; we were just planning for the future.
At this point I would *like* to have a secondary vehicle because we will be ferrying the kids to different places as they participate in more extra-curriculars; but the pandemic has certainly postponed that.
We have a private family loan to look at and I want to drop our monthly expenses further.
What you dad said applies broadly, though; maybe it's not a car payment specifically. It was definitely an adjustment to get used to the idea of maintaining a constant "stream" of debt. 🙂
@groovestomp The pandemic really changes the calculations. We have always had two cars, one big one and one commuter. But now I'm home with the kids and use it on occation. Once school gets back in I'll use it every day, if only for a few minutes. Technically transit in the Seattle are works but the amount of time getting places doesn't work for most people. I also like the idea of living near work, but I was sick of living deep in the city
@MrDers oh man, I understand this.
We are lucky to live relatively close to our obligations. I'm a half hour public transit commute from the office and we're ~10mins from daycare and my wife's work by car.
But I want to move out of the city. Ever since I moved into the city I wanted to move out. My wife has only ever lived in *this* city, though. The never-ending tension. :-D
@charims @brandon @groovestomp I love this advice. But it reminds me that different people need to live their lives different ways and be happy. Just do it responsibly. For example, I'd be happy never eating out and buying nothing and sitting in a cold house to save money on heat. My partner, not so much. 😀
My primary goal is to get the monthly expense ratio as comfortable as possible' so I am okay with paying higher interest as long as it means overall monthly expenditures are lower.
Every year we make additional payments on the principal and then push out the amortization to the maximum available.
Doing this we've reduced monthly expenses to 66% of their starting amounts.
We did 35% down, but we're in Vancouver, BC, Canada; which is one of the most expensive cities to buy in. Definitely the most expensive in Canada.
If neither my wife nor I were as frugal as we were, having that kind of down payment wouldn't have made sense.
In Canada if you have less than 20% down you also have to pay CMHC insurance.
@groovestomp @brandon 35% in Vancouver!?! That's bananas. Saving up money was hard living in Seattle when an apartment costs $2000k a month and you make less than $100k. And your friend group is all about eating out and travelling. That was my 20s.
Brandon should be seeing now that it depends. I bought a house with 5% down and PMI.
In 1 year refinanced the PMI away because the value increased enough. But that might have just been the right place at the right time.
Three most important factors
@brandon location, location, location 😋
Where should you start? Where. Exactly.
@brandon Lenders will likely want to see stable income. Bank statements paychecks etc. I’ve heard that freelancers have a hard time convincing. So don’t switch jobs before you go to buy.
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