Calling all home owners.

AbigailMS

SO and I are SERIOUSLY considering buying my older sister's house this spring, since she'll be graduating pharmacy school and moving back home. He and I are pretty sure we can handle the mortgage and monthly bills.

Its recommended for the mortgage to be around 28% of your income, and it will be about 30% of ours, however we will be completely debt free as of this summer, and my father is going to give us the down payment as a loan of sorts (he did this for my sister as well) so that we can get a better rate. 

My question is, what are some expenses that we should be aware of? Anything else we should take into consideration? 

The house is in amazing shape, new carpet, new roof, brand new bathroom, new hot water heater. and we've calculated the mortgage with escrow and ins. Thanks in advance for all your help!

Hazel_B

Make sure you keep in mind how much property taxes are.

AbigailMS

noted! thanks!

becunning2

And insurance on the house.

And repairs/maintenance to the house, increase in utilities (if the space is larger), etc.

Buying a house is fabulous--but you don't want to be "mortgage poor" because your disposable income (even without debt) is going to your house.

Do you still want to have money for vacations?  For weekends away?  Or eating at restaurants?

These are ALL things you should consider before buying a house that will easily take up a 1/3 of your income (and that's BEFORE maintenance). 

I'm all for home ownership, but don't buy more home than you can afford.

bakes218

Taxes and closing costs. My parents helped us with a down payment also but closing costs can run $15K. Most people forget about that. You have to have that money at your closing.

Also, if you are not married I would talk to an attorney about the legal aspects of purchasing a home together. You want to make sure you are protected in case it doesn't not work out as planned.

IMO, purchasing a home with a BF is not the best idea.

paintgirl

This is not necessarily home ownership-related but it becomes even more important when you're on the line for a mortgage. Do you have an emergency fund of at least 6 months of your expenses, including the added money for the mortgage?

I admit I didn't have that big of an emergency fund when I bought my house but I worked for the government at the time and my job was very secure. (It was still a stupid move.) These days, 6 months is actually a little low for an emergency fund. I keep 9 months.

This will give you some breathing room if one of you is laid off or there is an emergency of some sort. Also, I second the recommendation to talk with an attorney. I don't think it's a horrible idea if you plan on getting married or co-habiting permanently but I would get legal advice.

Hazel_B

This is in additional to Bakes' closing costs. Keep in mind the cost to hook-up and move your utilities from one address to another. In my experience, each of them has a different perspective - my gas's perspective was we trust you until you give us a reason not to, meanwhile electricity's was we want $x in a downpayment before me even hook you up. It'll be the same for insurance, I think mine was 2 months in advance. 

On a month to month basis you'll be fine, but those upfront costs can be a surprise.

MLekathLEEN

Not sure how it works with selling to a sibling (or anyone in that case) but you may have to get city appraisals and make any repairs to the home before you can close or move in. Plus I'd keep a emergency fund if you get laid off (like Paint said) or have any unexpected fixes that may come along.

AbigailMS

Normally I have around 10K in savings, but i'm paying for school right now, I keep about 3 months at the moment, but that is actually on the list, to save up some more just in case money. We both have ridiculously stable jobs, but it's really important JUST IN CASE. lol

I have stock that i'm going to cash in for the closing costs. My sister said when she bought the house they were around 1K and i'm estimating 3x that to be safe. 

Insurance is included in the mortgage calculation, however I hadn't thought of the lawyer. We've been together nearly 4 years, and we're combining finances and getting engaged this spring. What should I actually talk to him about? Both of our names will be on the mortgage, but i'm not sure what else there is.

bakes218

Just make sure that is you break up you are protected. I know so many people who were left with these mortgages all on their own when the BF or GF left the home. It ruins your credit and can be a huge problem financially. When you are married those protections are somewhat automatic.

Also, I have never heard of anyone paying closing costs of on 1K. That sounds extremely low. You might want to make sure you work with a realtor who can guide you through a lot of this. I don't think 1K would even pay for your title insurance or lawyer.

Insurance might be rolled into the mortgage your second year but you have to pay the homeowner's  insurance and first year property taxes up front. I think you may be getting bad advice honestly.

Good luck though.

jemmini6

FI bought his house before we met (moved in only 4 days before we met), but the things that are included in the monthly mortgage payment are the actual mortgage, homeowners insurance, title insurance, property taxes (this is why your payment can adjust, so just be aware of the current rates and any possible rate changes).

Additional expenses can include utilities (don't forget to think about seasonal changes, our electric gets REALLY high in the summers), HOA fees, landscaping, etc.  Also don't forget that you will need to furnish an entire house.  When FI first moved in, he had a couch, a tv stand, and a bed w/frame (no headboard).  We had to purchase a master bedroom set, a living room set, a dining room set, spare bedroom furniture, office furniture, etc.

jemmini6

I also agree with talking with an attorney to set up an arrangement for you guys to purchase a home together.  I'd also recommend asking tax advice from a CPA (since you guys aren't married, who will claim the interest deductions on your income taxes, etc)

AbigailMS

Thanks again, and we're gonna talk to both of our parents some more, as well as a lawyer!

MrsCatfish

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_not-engaged-yet_calling-home-owners?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:136Discussion:916f5a7a-380b-4a9a-979a-c073f10e44f0Post:16b188a2-b19d-4ed8-b9c8-47760e994f57">Calling all home owners.</a>:
[QUOTE]SO and I are SERIOUSLY considering buying my older sister's house this spring, since she'll be graduating pharmacy school and moving back home. He and I are pretty sure we can handle the mortgage and monthly bills. Its recommended for the mortgage to be around 28% of your income, and it will be about 30% of ours, however we will be completely debt free as of this summer, and my father is going to give us the down payment as a loan of sorts (he did this for my sister as well) so that we can get a better rate.  My question is, what are some expenses that we should be aware of? Anything else we should take into consideration?  The house is in amazing shape, new carpet, new roof, brand new bathroom, new hot water heater. and we've calculated the mortgage with escrow and ins. Thanks in advance for all your help!
Posted by AbigailMS[/QUOTE]

<div>If you're in OKC, then you're near me.  I bought a house last May.</div><div>
</div><div>The one thing I'd really be sure to consider is property taxes, since, at least in OK, they're based on the last time the property was appraised and what tax rates were then.  The last time my house was appraised was in 1998, and I know property tax rates have gone up since then, so my property taxes will go up this year.</div><div>
</div><div>Shop around for your home insurance--that's one thing I didn't do quite as well as I wished I would have.  See if you can go through the same insurance company as your auto insurance--I bundled mine and saved almost $700.</div><div>
</div><div>I'm rushing off to class, but that's all I can think about right now...PM me if you want to talk more.  I will say that buying a house was a relatively painless process once I decided what house to buy and what bank/realtor to go through.  Granted, pretty much everything's broken since then...but I did buy a 70 year old house.</div>

[Deleted User]

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_not-engaged-yet_calling-home-owners?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:136Discussion:916f5a7a-380b-4a9a-979a-c073f10e44f0Post:5b08ac6b-778e-496e-b538-4ca3f9e9b7e5">Re: Calling all home owners.</a>:
[QUOTE]Normally I have around 10K in savings, but i'm paying for school right now, I keep about 3 months at the moment, but that is actually on the list, to save up some more just in case money. We both have ridiculously stable jobs, but it's really important JUST IN CASE. lol I have stock that i'm going to cash in for the closing costs. My sister said when she bought the house they were around 1K and i'm estimating 3x that to be safe.  Insurance is included in the mortgage calculation, however I hadn't thought of the lawyer. We've been together nearly 4 years, and we're combining finances and getting engaged this spring. What should I actually talk to him about? Both of our names will be on the mortgage, but i'm not sure what else there is.
Posted by AbigailMS[/QUOTE]

i'm in the OKC area as well.  we're using arvest as our lender.  they have low rates, keep your mortgage in-house, low closing costs, etc.  i recommend you check them out.  if you want i can give you the name of my contact.  she's GREAT.

my costs IN ADDITION to my downpayments are $6400.  that includes inspections, closing closts, discount points, transferring utitlities, etc.  you have to pay in advance on the homeowner's insurance ( 3 months, i think ), utilities/deposits, inspections, PMI (mortgage insurance)...  

don't underestimate up-front costs.  talk to a lender about all that.  they can give you an estimate of what the costs will be. 

AbigailMS

Thanks! Arvest is our bank! Can we get a loan from the branch in our hometown? I'll probably be PMing both of you later!

[Deleted User]

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_not-engaged-yet_calling-home-owners?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:136Discussion:916f5a7a-380b-4a9a-979a-c073f10e44f0Post:35c75874-a8db-4876-8636-c12d79e47d25">Re: Calling all home owners.</a>:
[QUOTE]Thanks! Arvest is our bank! Can we get a loan from the branch in our hometown? I'll probably be PMing both of you later!
Posted by AbigailMS[/QUOTE]

i'm not an Arvest customer (besides my mortgage, now).  it was really easy to work with her.  Elaine Hightower.  you can google her, and find her website.

Ember01

Everyone's advice is great... My 2 cents...

Do you have to buy the home together? When I bought my house, my dad agreed to pay for the down payment and closing costs as long as I was the only name on the mortgage (I had been dating my ex-FI for about 6 years at that point). I threw a fit because of course we would always be together and why was my dad being such a downer. But, that was his rule and I had to abide if I wanted the down payment. My dad said if we got married the house became his also, so why put his name on it before marriage. A year later, he proposed. 6 months later I broke it off. If we had bought the house together, I would have been up a creek without a paddle. Now, the house is a little expensive for me (Luckily I have generous parents who can help), but the house is mine.

Seriously consider protecting your assets.

joiner521

We redid a bunch of stuff in our home. If everything is ok........get the lights and direct tv on, LOL,