Its about that time...

[Ominous Gamer]

I've mentioned most of this in bits and pieces in the chatroom, but I figured I'd throw it all out there for everyone. Get some opinions, points of advice, and whatever else you guys and gals think I may need to know or hear. I'm just cutting loose here, don't consider any of the following as bad, or worrisome. I fully expect each step to be slightly more awesome than the previous one.

Its finally been confirmed that my mom is going to lose her house. She has barely made a payment since my dad died (why bother when you know it won't change the end result), and is behind almost $20,000 in payments. After a bankruptcy (filed a day before my dad passed ) and the bank generally not giving a fuck, they are starting the paperwork. Even after all this time, it appears its still going to be a while before she gets the boot. 3 months minimum from what I understand, since it has to go for shortsale for that length. She owns far more than its worth and thats the price shortsales go at.
Everyone involved is happily set in understanding that she will end up living with Brandy and I.

With that in mind, that means finding a new place to roost. A family of 5, plus mom, with a grand total of more pets than I have digits on my body. That means we're looking for an awesome 4 bedroom with bonus rooms, a spacious 5 bedroom, or some sort of mother-in-law addition. Thanks to the housing market around here being in the shitter, we've got plenty to pick from. We're checking out a short sale 6 bedroom with 4,000 sq ft for 197k on Wednesday.

Mom claims she still has a credit rating on the verge of 700 despite the bankruptcy, I'm at 757, and Brandy's is total shit. We all have great work history, but Brandy and I aren't married. So thats going to create some interesting scenrios for the bank. Brandy and I already cover a $1100 rent payment without issue.

Marriage! Its about that time. This is my major personal "time to grow up" mental roadblock, even if nothing drastically changes in my day to day life. Its freaking marriage! Brandy and I have been going at it for 2 and a half years, we've got a kid. This is the next logical step (some say I've got my steps mixed up). Love Brandy I do, gutless at marriage I appear to be. Being unmarried has provided plenty of financial benefits that we take advantage of it, but being married has its own set, and its not like we wouldn't be able to cover the difference it may create in our monthly budget.
Forking over a year's salary (or even a few months) for a wedding however I'm not planning to do. May splurge a bit for a ring, but I've only given her one piece of jewelry before (a ring) and I think it lasted 3 months before it disappeared.


So... yeah. Not sure what my point here is, but this is my life on the verge of becoming drastically different within the next year. Anyone want to drop any pointers on anything, from home buying to parent living (no horror stories Illusions) to tying the knot. Don't want to walk into or sign anything only to discover I missed an obvious problem.

[EyeKhan]

First, don't have kids before you get married. Oh, wait.

[GGT]

Any way you can rent your mom's house? If it's big enough, that might be an option. If the bank isn't helping her refinance or whatever, maybe they'd rather have the property occupied and at least a portion of the rent covering the mortgage....

(And how can she have a credit score around 700 with a bankruptcy?)

[Ominous Gamer]

The house is only 3 bedrooms, I have no interest in saving or sinking money into the house, but it does hold a huge amount of sentimental value for the family. Which I think has played a part in my mom holding onto it for as long as she has. I need to find some time this weekend to break down my wooden fort in the backyard.

My mom and dad filed bankruptcy together, largely in part because of his hospital bills, and only slightly because his care required my mom to cut way back on hours. As far as I understand a lot of the bankruptcy debt was written off under his name, and the small portion left was covered by his life insurance. I assume that means the debts are showing on her report as paid, but with intervention. Instead of everything showing up as written off due to bankruptcy.
I'm curious what part she may play in securing a new loan. Brandy and I are new home owners, she would not be. She would be providing the bulk of the down payment, but how would the bank view her in light of already being underwater and way behind.

[GGT]

You said the bank is "starting paperwork" toward foreclosure. Legally, and state-by-state, the process is complicated. Look up Lis pendens...all the realty I see on-line starts out that way, and banks don't usually give another loan to someone involved that step.

Whether you marry or not, if you qualify for a loan to buy a house, be careful how it's titled.....

[Dreadnaught]

Sorry to hear. But exciting that you may feel it's time to get married -- seems like you have the right reasons if anyone does.

In the past you've talked about how home ownership can be a financial sinkhole. I've come to agree that in some cases it is. Are you sure there isn't a way to rent a place big enough without having to fork up a big downpayment?

That said, prices in your state are pretty cheap. Maybe you could even buy a [sadly ironic] foreclosure property?

Thinking big picture, I think the main question (if you haven't already) is to lay out what your total monthly costs will be in the medium-term. Kids, animals (if they can't/won't be put up for adoption), food, etc.

[termite]

I know nothing about buying a home in Florida, particularly in an economic climate like this but my advice to any home-buyer is "Stick to the plan".

Real Estate agents are experts at getting people to buy a house they never really wanted - so be ready!

Make a list of what you really want. (Go to the bank first and see what you can afford, never borrow as much as the bank is willing to lend you.)
For example:

• Price range (spend less than the bank is willing to lend you - ALWAYS)
• Size of house (no. of rooms, bathrooms, games room, garage etc)
• Size of block (land)
• Street type - this is critical, if you want to live on a quiet street don't buy the "perfect" house on a fucking highway. You cannot move the house, unless its a trailer and if its a trailer, you're fucked anyway...
• Schools
• Nearby amenities
• Anything else you and your family consider "Important" - don't forget to ask the kids, sometimes they see the world through clearer eyes!

The biggest mistake I made with my first home was not sticking to the plan - you may have guessed I ended up with a house on a busy road, it was awful in too many ways. I now live on a nice cul-de-sac with underground power, manicured gardens, nice neighbours and everyone in the street gets along well enough. The lesson was costly, though if I hadn't bought and sold the first house I would never have got the one I'm in so I'm fairly philosophical about it.

Marrying Brandy is your call - personally from what we've learned about you and her here, marraige is just a formality as you are, for all intents and purposes already married - just no certificate to honour the event.

Good luck dude.

[Ominous Gamer]

Thanks for the advise termite!

Whether you marry or not, if you qualify for a loan to buy a house, be careful how it's titled.....

Thanks to Brandy's crappy credit, the important stuff, like our cars, go in my name, and her income goes in under "other forms of income" as rent she pays to me. A house is whole other ballgame, and again its one giant ass guessing game for me until i sit down with a bank.

Sorry to hear. But exciting that you may feel it's time to get married -- seems like you have the right reasons if anyone does.

In the past you've talked about how home ownership can be a financial sinkhole. I've come to agree that in some cases it is. Are you sure there isn't a way to rent a place big enough without having to fork up a big downpayment?

That said, prices in your state are pretty cheap. Maybe you could even buy a [sadly ironic] foreclosure property?

Thinking big picture, I think the main question (if you haven't already) is to lay out what your total monthly costs will be in the medium-term. Kids, animals (if they can't/won't be put up for adoption), food, etc.

Its slim pickings for renting larger properties without getting into the OMG rich level areas of town. 6 people is rough enough looking for, but the numbers of pets, pretty much makes renting impossible.
Now that prices are adjusting to be more realistic, buying isn't looking so bad. Huge number of ~$200,000 homes either in my immediate area from the 60s, out in the new developments as brand new homes, or sprinkled around the county as foreclosures (like I'm one we will be viewing next week). I don't want an older home, location be damned, but I don't have to have a newer home, especially since that just about force me into a HOA, and fuck that idea.

I don't want pets, but I think my mom would disown me before putting one up for adoption, but she has agreed she won't be taking any more in, even after these die.

[GGT]

OG, weren't you they guy touting renting as almost always better than owning? That may still hold true ya know. Not to burst your enthusiasm or anything, but this economy is pretty fubar. Florida's especially. Even if you put 20% down, if the house drops in value 20% over the next couple of years, you'll be "underwater". You need to figure out if that matters to you or not. Some things to calculate:

1) That chunk of down payment cash, could it be used better another way? Could it be the cash you may need for other things down the road (orthodontia, medical bills, a vacation, a car, another child)?

2) How secure is your job and/or income for the next five years? What would unemployment or lower wages or having to relocate look like....can you afford to be "tethered" to a home mortgage that might be illiquid?

3) Do you have enough cash on hand to pay for 6 months of living expenses, and/or a new roof (emergency funds), without needing to use credit cards or take a loan?

4) Will you stay in that house/neighborhood/school district for at least five years?

5) Are you prepared to spend the time and money on home maintenance and upkeep, with a wife, 3 young children, and an elderly mother? (To fit all that in with kids' homework, baseball or ballet or whatever.)

6) Be prepared for times you'll have to choose between new games for yourself, something for the kids, a vet for the pets, or a plumber for major problems. It will happen.

7) Add in property taxes, hazard insurance, utility bills, and transportation costs when you calculate monthly housing expenses. (I consider miles driven/gas/insurance part of where a house is located and a housing expense.) Then add 10% to be on the safe side. To be even safer, don't let that amount go over 25% of your take-home pay.

8) Don't forget escrow requirements if the mortgage servicer pays the property tax or homeowner's insurance bill. Ask about down payments for utility companies. Some of those can run hundreds of dollars. *edit* And closing costs! Realtors and banks are never very good at that....to them you're just the guy with the checkbook.


I'm sure there's more to add to your List....you sure you want big mouths like me commenting?

[Supermarioman]

Man, If you're doing all of this right now I feel really bad about wasting your time with my silly questions.

Anyway, here's my advice.
Keep it simple. Don't buy more house, car, or whatever then you need.
Save as much as you can, clip coupons, whatever. Just get money saved.

That's all I have, to be honest.

[GGT]

Oh yeah, another thing! Know your flood plain, 100 year flood history, and the hurricane/tropical storm history in that area. Can you even get flood or hurricane coverage? That's a whole other ball 'o wax....those hazard policies can reject even wind damage, so read the fine print very carefully. Make sure it's valued for future time of replacement (not the appraised value at time of purchase).

[Ominous Gamer]

Those are nothing mario, don't worry about it

Unless we find some sort of holyshit awesome deal in this area, its highly unlikely we will end up in a flood zone. Grew up in one, mom lives in one, and I currently rent in one.
26 years of insurance, and not a damn thing to show for it.

[littlelolligagged]

My current advice is to throw away everything you own rather than moving it.

[GGT]

So what kind of homeowner's insurance are lenders requiring in FL these days, to get the mortgage, whether you're in a flood zone or not?

And if you put less than 20% down, do they require PMI also? PA does. (That's the policy to protect the bank in case you default on your loan, but don't get me started on THAT tangent )

[Catgrrl]

I agree with you; don't worry about spending money on a huge wedding. I don't know about Fl, but here in VA it's like $50 for the justice of the peace to marry you. I think the license itself was less than that. You could do it at the courthouse, or he could meet you at a nearby park if you want a nicer setting. All you need is two witnesses to sign the papers.
You can get the kids involved if you want and have a nice simple ceremony.
Huge weddings are really not all they're cracked up to be anyway, the importance is to show your love in your own way.
EDIT: Also, the wedding band themselves are super cheap! My wedding band was only $40, a simple gold band. I like simple His was a little more, about $100, because it was a thicker band obviously. Now I have no idea how much the engagement ring was...nor do I want to.

Don't have much advice on the house stuff; when we bought ours I let hubby take care of alot of it because he is much better at that sort of thing. It's a nerve wracking process. Other than childbirth, it's probably the most emotionally draining thing I've done. Getting married was a breeze for me, however.

The one thing I can reiterate from previous posts: don't spend as much as the bank will approve you. We got approved for twice what we actually were willing to spend on a house. (This was 2007, back when we both were full-time and no baby) Good thing too, because if we had bought a house anywhere near what we were approved for, we would be living on day old bread and water, and have no cable TV. Which would make me an unhappy housewife!

Since it's a foreclosure, just be careful. Make sure that you get that home inspection if you can regardless. And everything in writing! Even the most minute detail. Though I don't know if you can specify things like you can with regular sale, like making sure appliances stay and whatnot. I've always heard pretty negative things about foreclosures with regard to the shape of the homes after previous owners leave, but I do understand that's not always the case.

Anyway, good luck!

[termite]

Ditto for avoiding a big wedding - Our wedding was friends & family in a garden, exchange vows, sign the certificates and party on!!! Cost ~$1500 and this was paid by both families (fuck that father of the bride crap).

I have a cousin that spent in excess of $30k on her wedding, the next day the wedding is over, you're $30k poorer and the husband/wife is the same person you were already with so why the fuck did you spend $30k?!?!

If you're going to buy a house, make it the priority for as much of your money as possible to be paid off the mortgage - not sure about the USofA but on my mortgage every cent I pay extra (which reduces the principle sum and therefore the interest and therefore the life of the loan) can be redrawn later free of charge - it is like money in the bank that reduces your mortgage. You don't want to get into the habit of redrawing money though for obvious reasons but paying extra is a good way to cut the life of the loan.

Also, paying a mortgage weekly or fortnightly reduces the loan faster than paying monthly since the interest is added monthly but calculated daily therefore the more often you make payments the less you will have to pay back over the life of the mortgage. It can be a significant saving and worth asking about - remember I don't know squat about the money lending conventions in the US but I can't imagine it is that different.

For example: If my minimum payment is $600 per month and I choose to pay $200 per week instead I will pay off $10400 in 12 months (Plus interest) instead of $7200. That means the principal sum owed will be reduced by a further $3200 in one year alone. That is a huge difference when you consider that the interest is applied to the lesser amount. This just snowballs if you can maintain the extra payments for at least the first 5 years of a 25 year loan - you will most likely pay it off in 18 or 20 years depending on the sum and the extra payments.

Of course the temptation to redraw that money is a danger, make sure you only do so for something major (if at all), do NOT redraw money to buy a fucking Spiderman collectors action figure from Ebay. (even if it is a bargain )

[GGT]

termite, the US has a (relatively recent) history of getting borrowers to think of their mortgage as rent they can "get back when they sell, plus a profit". Not something to be paid off. We can't deduct the mortgage interest from our income taxes if we don't have a mortgage, see. Mortgage burning parties died a long time ago. IMO if banks were required to show amortization schedules over the life of the loan, it could be different. That would show that over 30 years we end up paying for about three houses instead of one. But again, it was encouraged that we think of houses as assets that had more value once we sell (flip) them, than if we live in them for a long, long time.

[termite]

termite, the US has a (relatively recent) history of getting borrowers to think of their mortgage as rent they can "get back when they sell, plus a profit". Not something to be paid off. We can't deduct the mortgage interest from our income taxes if we don't have a mortgage, see. Mortgage burning parties died a long time ago. IMO if banks were required to show amortization schedules over the life of the loan, it could be different. That would show that over 30 years we end up paying for about three houses instead of one. But again, it was encouraged that we think of houses as assets that had more value once we sell (flip) them, than if we live in them for a long, long time.

Yeah, well that's just stupid.

Everyone has different priorities of course but mine is to own my home sooner rather than later - being retired with a mortgage (rent?) payment is kinda fucked so I'll pass on the lame duck approach to payments.

We have "bright sparks" here borrowing money for investment properties and making "Interest Only" payments, they think they're rich because they have 2 or 3 or 10 investment properties but they don't own them and never will. If they ever sell them they will get stung with backended capital gains tax and if the bubble bursts and prices drop significantly they will be stuck with properties they don't own, cannot sell, and won't pay for.

I will own my home, I have no great interest in becoming a real estate baron, just a comfortable home in a good area which I don't owe anything on.

[GGT]

Of course it's stupid. It's the American Way!

I was stupid too, in hindsight. Thought we were setting down roots and buying a family "homestead" property, where we'd live until the day we died. The kind of place for children to grow up in and then our grandchildren to visit, Thanksgiving dinners for a dozen or more. Too big for just a retired old couple, but large enough for extended family. Boy, did THAT turn out to be wrong.

[Being]

Neighborhoods change too and usually not for the better. People retire and their property becomes an investment property (read rental) and you have a completely different neighborhood than the one you bought into.

[GGT]

Neighborhoods change too and usually not for the better. People retire and their property becomes an investment property (read rental) and you have a completely different neighborhood than the one you bought into.

In America, that's where school district lines come into play. The neighborhoods that fill up with seniors or become "rentals" don't have good schools. The ones that have good schools also have young parents drooling to buy their house. The best neighborhoods have a mix of growing old with growing new families, moving out and moving in, so things can move in flux without ruination.

[termite]

We can't deduct the mortgage interest from our income taxes if we don't have a mortgage, see.

This bit is bothering me.

The sheer stupidity of sacrificing an asset, or equity in a mortgaged asset just to get a tax deduction. To treat your mortgage as rent with no intention of paying it off creates a money pit with no bottom and no asset (or limited equity) when you retire - so you sell whatever small portion you have paid for and hope like hell that prices don't fall before you sell, only to end up homeless and asset-less and renting somewhere else....

When I do business I have a fairly simple philosophy - I don't spend money to avoid tax, I don't earn less to avoid tax and I don't sacrifice an asset to avoid tax. It may be simple but it is sensible, sure there are tax minimisation schemes that may or may not save me a few bucks in tax but if I view paying tax as just another cost of doing business I can save all the headaches of trying to avoid it. Businesses become insolvent, investors get irate and executives go to jail - all in the name of avoiding (minimising) payment of taxes.

When it comes to minimising taxes, if it seems too good to be true it probably is.

[GGT]

This bit is bothering me.

The sheer stupidity of sacrificing an asset, or equity in a mortgaged asset just to get a tax deduction. To treat your mortgage as rent with no intention of paying it off creates a money pit with no bottom and no asset (or limited equity) when you retire - so you sell whatever small portion you have paid for and hope like hell that prices don't fall before you sell, only to end up homeless and asset-less and renting somewhere else....

When I do business I have a fairly simple philosophy - I don't spend money to avoid tax, I don't earn less to avoid tax and I don't sacrifice an asset to avoid tax. It may be simple but it is sensible, sure there are tax minimisation schemes that may or may not save me a few bucks in tax but if I view paying tax as just another cost of doing business I can save all the headaches of trying to avoid it. Businesses become insolvent, investors get irate and executives go to jail - all in the name of avoiding (minimising) payment of taxes.

When it comes to minimising taxes, if it seems too good to be true it probably is.

I like your philosophy.

Surely you notice the number of US posters who are practically obsessed with taxes? Deductions, tax rates, changes in tax codes, debating the damn Bush tax cuts from ten years ago that were designed to expire...even to the point of defending businesses who won't move forward for "fear of unknown taxes". Or men who consider marriage a tax liability.

I see this as an ethical/moral issue, but philosophy is the better term. You just expressed what no one else would in my silly taxation and morality thread.

[Being]

This bit is bothering me.

The sheer stupidity of sacrificing an asset, or equity in a mortgaged asset just to get a tax deduction. To treat your mortgage as rent with no intention of paying it off creates a money pit with no bottom and no asset (or limited equity) when you retire - so you sell whatever small portion you have paid for and hope like hell that prices don't fall before you sell, only to end up homeless and asset-less and renting somewhere else....

When I do business I have a fairly simple philosophy - I don't spend money to avoid tax, I don't earn less to avoid tax and I don't sacrifice an asset to avoid tax. It may be simple but it is sensible, sure there are tax minimisation schemes that may or may not save me a few bucks in tax but if I view paying tax as just another cost of doing business I can save all the headaches of trying to avoid it. Businesses become insolvent, investors get irate and executives go to jail - all in the name of avoiding (minimising) payment of taxes.

When it comes to minimising taxes, if it seems too good to be true it probably is.

But you never "own" your property. Even after you pay off the mortgage you will continue paying "rent" to the government.

[oldmunchkin]

Og, I know little about buying in this market, but can tell you a little from the seller's side.

1. Make absolutely certain you go thru a reputable Land and Title company! This will ensure that things go smoothly for both you and the seller. (Whether you buy a repo or not.)

2. As has been said quite a number of times, spend less than the bank is willing to loan you! My ex-brother-in-law is in deep shit right now because, when he and his wife bought their home in Denver, his in-laws were going to be living with them. With 2 full-time jobs, and 2 rather nice retirement incomes, they got in over their heads. Now that both the in-laws have died, and him losing his job, they can't make the damned payments! Of course, that is the house that his bitch wife just had to have!

3. Keep your payments down as low as you can possibly get them. It's better to have extra money and put it into savings or make an extra payment than to wonder where the hell you are going to get that extra $300 you need for the payment!

4. For the first few years, put any extra money into savings! You never know when you will have an emergency and need the money. It's so much easier to withdraw money from a savings account, or cash in a CD, or whatever, than it is to go get a loan for a new roof or whatever. Children are wonderful at eating up any extra money by breaking an arm or leg or whatever, at the absolutely worst time, like when you really can't afford it!

As to the wedding, it seems it will be just a formality for you and Brandy, so don't go overboard. Sure, buy her a nice engagement ring, but don't break the bank. My first engagement/wedding ring set cost a whole whopping $600. Of course, in 1982 that was quite a bit of money, especially for us, but still. Next two weddings, I didn't have an engagement ring at all, and my wedding ring was my great-grandmother's engagement ring! Fourth time, he had bought me a beautiful black hills gold ring for a birthday gift the year before. I used that for my engagement ring, and we went to Wal-Mart and bought plain gold bands. I think the total cost, including the BHG ring was around $150!

I had the nice, white wedding the first time. The next time, I got married on the court house lawn in Sturgis. Third time was in my parent's living room, and the last one was in the church, on Sunday afternoon, on my parent's anniversary! I guess the point here is, all four were lovely ceremonies, but they all said the same thing! You don't have to be extravagant to have a lovely wedding.

Whatever happens...good luck and all my best wishes!

[Aimless]

OG you are going to have an online wedding though aren't you? So that strangers on the internet can peek in

[Catgrrl]

^

Ya, I don't know why people think that they shouldn't pay off their house sooner than later, I guess maybe the whole equity loan thing? Dunno. Even on one salary we still try to put a few hundred dollars extra towards principle each month. Hoping to pay it off in 19 years instead of the 30. This hopefully will be our permanent home, barring any circumstances that would change that (jobs, "surprise" babies, natural disasters) We like to be debt-free types.

[termite]

But you never "own" your property. Even after you pay off the mortgage you will continue paying "rent" to the government.

Not sure what your getting at here so I'll take a guess that you're talking about land tax or something. The simple answer is I don't pay any tax on my property, I pay local Government rates (council rates) which are less about the property and more about local Government services such as waste disposal and municipal projects.

In the land of milk & honey we don't pay taxes on the family home*, only on investment properties (in which you are not the occupier).

Unless there was some other "rent" you were referring to, perhaps you could be more specific - remember I am not in Amerika which I did point out early in the piece, my position is based on my local scenario.

*There may be a land tax in New South Wales, not sure and I CBF looking it up.
*We do pay Stamp Duty, which is a one off percentage based "transfer fee" when you purchase your home, first home buyers are exempt from stamp duty in my State.

[termite]

^

Ya, I don't know why people think that they shouldn't pay off their house sooner than later, I guess maybe the whole equity loan thing? Dunno.

It seems you Amerikans have some curious taxation laws, which would appear are intended to keep you in debt.

[Catgrrl]

Pretty much.

There is a real estate tax, based on the value of your home. In my area, it is $0.99 per $1000. So if you have a $200,000 home, you are paying just under $2000 annually. And ya, it's meant to go towards government services. Paying for local government employees, schools, safety, etc.

Here we also have to pay personal property tax on our cars, supposedly to help pay for the roads we use. Considering the conditions of our road (horrible), I can assume that it hasn't actually being going towards that but to some other mysterious place.