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 House buying suggestions
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Posted on 06-06-16 9:12 AM     Reply [Subscribe]
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Hello all,
I am thinking of buying a house (~300k) in Midwest area. I make 91k. There will be additional income after my wife finishes her study and work.. We are thinking about starting a family soon after she gets done with school. (planning 2 kid and possibly inviting my mom dad to stay with us).. as first time house owner I would like to ask some suggestions. Few questions I have are:

-How much percentage wise is normal for first time house owner to put downpayment? Is it worth to pay some pmi.
-How much percentagewise should be my monthly payment?
-How many bedrooms do I need? I am thinking 4 (us, kids, mom/dad, guest/office/workout)
-Should I buy fairly new house (less than 5 year old) or little older house?
-Hardwood or carpet
-I prefer one storied house (better temperature control and easier). But looks like 2 storied is little cheaper. Any opinions on this?
-I prefer big backyard.. How much time should I need to put aside for maintainance?
-If things break down like AC, fridge, heating/cooling etc.. what are some of my options.. I know I can get insurance etc.. how much money should I set aside for that?

I appreciate your feedbacks

 
Posted on 06-06-16 7:38 PM     [Snapshot: 233]     Reply [Subscribe]
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First off, congratulations! This is an exciting time for both of you! I was in a similar situation just a couple of months ago, so hopefully, I can shed some clarity.

I would say, the purchase has to make sense to you financially. For my down payment, I initially thought about putting 20% down, but ultimately decided to put 15% so that I have a bit of cash for unforeseen circumstances. As to what you need to put down, it all depends on how much cash you have and if you can invest cash in investment where you can bring more return. The way to think about it is—the more you put down the more your cash is tied up. If you put less down and invest the rest in stocks (or some other products that produces higher return), then putting less down makes more sense. On the other hand, the less you put down, the higher your monthly payment will be. So, it’s a balance. To be little safe, your monthly payment needs to be less than 40% of your net income (my personal opinion). If you intend to stay in the house no more than 10 years, it makes sense to pay PMI as well.

You need to get a house with at least 4 bedrooms, it seems. There are both pros and cons of buying a new vs old house. I bought a relatively new home…and it feels good to have everything new and functioning but you also pay premium for that. But personally, once I started looking into new construction, the older homes didn’t look too appealing.

Definitely hardwood—at least in the main floor. Once you start looking into homes with hardwood, carpets look very dirty! Hardwood floor just gives character to home.

In the East Coast, you won’t get a decent townhome for your budget in a good neighborhood. But if you can get a house with a backyard for that price, I would say go for it. Just make sure that there is a lot of maintenance involved.

One important thing you need to consider is school district. This is how poor people get fuckedup in this country. The schools are funded by property taxes and the district where rich people live obviously have better school districts. So, you wan to keep that in mind while you look for homes in your areas.

And I really find that home buying is a two-step process: i) selecting a home, and ii) selecting a lender. Both are equally important.

Post if you have any more questions.
 
Posted on 06-07-16 10:00 AM     [Snapshot: 432]     Reply [Subscribe]
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thank you arbiter for your comment.
 
Posted on 06-07-16 10:37 AM     [Snapshot: 452]     Reply [Subscribe]
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Fantastic review Arbiter.

A few insights Bajara:

Regarding down payment, if you can afford, do 20% down and no additional PMI expenses; if you cannot do 20% down or could do 20% down but will run out of all cash, wise to do 15% down and have PMI for 5%. It will not take very long to pay off the 5% PMI.

Generally accepted standard is, the monthly mortgage should be at or lower than 25% of you monthly pre-tax income.

Ideally speaking, for a family of 4 and on and off visiting guests, 4 bed rooms; an office; plus formal living and everyday living rooms; formal and everyday dinning areas -- but it might be difficult to get all of these in one house. So, might have to do come adjustment/compromising.

Its a personal choice that depends of several factors (like builder, pricing, availability, locality etc.) whether to get a brand new house or fairly new but pre-owned house. If you can find a new house that is within your budget and meets all your requirements/expectations, by all means - new constructions have (usually) newer and latest amenities; newer appliances like air condition, heater, microwave, dishwasher, over/cook-tops, some even have refrigerators. New appliances have warranties and usually last a few years without any minor/major issues if handled with basic care.

Area wise, I think anything around or above 2500 square feet should be adequate for a family of 4. 2 stores will provide more area and space in both levels but like you've listed comes with pros/cons.

Depending on where you live, need to take care of lawn: lawn mow (something you can do by yourself), in the summer, usually 2 times a month. Gardening, planting, yard work, depending on your level of interest -- the more additions/upgrades you add to your yards, the more regular maintenance work will be required. Watering, in the summer time, usually 3 times a week.

Home owner's warranty for appliances: usually they have a charge of around 60$ for visit calls (standard in mid west) for diagnosis and minor fixing, also covers follow-up if needed; if it requires equipment change or replacement, this is not covered under basic home owner's warranty. The basic warranty costs around 500$plus 60$ for technician charge per visit. Even if you do not have warranty, it will cost around the same (or slightly more depending on the job) if you call a well reviewed technician from Angie's list. Hit or miss personal choice.

Hope this provides you with some insights.

Good Luck!

 
Posted on 06-07-16 10:46 AM     [Snapshot: 491]     Reply [Subscribe]
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The school rating is THE first priority if you have / planning for the kids. you can go online / google and search for the school rating by the zip code.
 
Posted on 06-08-16 8:06 AM     [Snapshot: 751]     Reply [Subscribe]
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thank you supersix, tutepani. appreciate your inputs.
 
Posted on 06-08-16 3:42 PM     [Snapshot: 921]     Reply [Subscribe]
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offtopic , but does anyone have experience building rather than buyin their own home ?
 


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