Comments on: Buying a Home, part two: Making the Offer http://www.getrichslowly.org/blog/2006/09/21/buying-a-home-part-two-making-the-offer/ personal finance that makes cents Sun, 08 Nov 2009 13:22:05 +0000 http://wordpress.org/?v=2.7.1 hourly 1 By: Jennifer http://www.getrichslowly.org/blog/2006/09/21/buying-a-home-part-two-making-the-offer/#comment-8640 Jennifer Sat, 23 Sep 2006 14:00:08 +0000 http://www.getrichslowly.org/blog/2006/09/21/buying-a-home-part-two-making-the-offer/#comment-8640 My husband and I just bought a house in April and it was the most stressful thing we have done. Some things we did to make the finances of it a little better: 1. We had a considerable amount of savings for a down payment. We also had two small remaining debts- one of our cars and a student loan. We calculated that if we put that $ down on the house our payments would have been about $30/month less on the mortgage but if we used it to pay off those two remaining debts that was more than $400/month in payments. 2. We got the total amount of our mortgage + escrow + whatever from the bank in advance and divided it into 4 equal parts. Then set direct deposits of 1/4 of the mortgage from the paycheck to go into joint savings account just for the mortgage. This guarantees two things: A. our mortgage is always the first thing we pay and B. since we are both payed bi-weekly instead of twice monthly, we get a total of 13 mortgage payments worth of deposits to make an extra principal-only payment every year. Plus, there were 6 weeks between closing and the first payment so we accumulated buffer out of the gate. It really makes me feel less stress knowing the money for the mortgage is always accounted for before everything else. My husband and I just bought a house in April and it was the most stressful thing we have done. Some things we did to make the finances of it a little better:
1. We had a considerable amount of savings for a down payment. We also had two small remaining debts- one of our cars and a student loan. We calculated that if we put that $ down on the house our payments would have been about $30/month less on the mortgage but if we used it to pay off those two remaining debts that was more than $400/month in payments.
2. We got the total amount of our mortgage + escrow + whatever from the bank in advance and divided it into 4 equal parts. Then set direct deposits of 1/4 of the mortgage from the paycheck to go into joint savings account just for the mortgage. This guarantees two things: A. our mortgage is always the first thing we pay and B. since we are both payed bi-weekly instead of twice monthly, we get a total of 13 mortgage payments worth of deposits to make an extra principal-only payment every year. Plus, there were 6 weeks between closing and the first payment so we accumulated buffer out of the gate. It really makes me feel less stress knowing the money for the mortgage is always accounted for before everything else.

]]> By: Roger http://www.getrichslowly.org/blog/2006/09/21/buying-a-home-part-two-making-the-offer/#comment-8599 Roger Sat, 23 Sep 2006 06:16:23 +0000 http://www.getrichslowly.org/blog/2006/09/21/buying-a-home-part-two-making-the-offer/#comment-8599 Don't forget you will be getting a tax credit for the interest portion of the mortgage payment. On $1150, I bet that is at least $1000 in the early part of the loan. If you're in a 25% tax bracket, that means you essentially will be "given back" $250 of that per month. If the money would be helpful on a monthly basis as opposed to a year-end refund (and I hate refunds, it just means the government borrowed your money interest-free), you can adjust your witholdings at work. But please check in with a tax planner before blithely following my recommendations. Don’t forget you will be getting a tax credit for the interest portion of the mortgage payment. On $1150, I bet that is at least $1000 in the early part of the loan. If you’re in a 25% tax bracket, that means you essentially will be “given back” $250 of that per month. If the money would be helpful on a monthly basis as opposed to a year-end refund (and I hate refunds, it just means the government borrowed your money interest-free), you can adjust your witholdings at work.

But please check in with a tax planner before blithely following my recommendations.

]]> By: Larry Nusbaum http://www.getrichslowly.org/blog/2006/09/21/buying-a-home-part-two-making-the-offer/#comment-8529 Larry Nusbaum Fri, 22 Sep 2006 13:53:33 +0000 http://www.getrichslowly.org/blog/2006/09/21/buying-a-home-part-two-making-the-offer/#comment-8529 I would add that the moment you transition from renter to owner you hav eto call tradespeople and pay for all repairs: Have a slush fund for repairs of about $4000 Also, to avoid a lot of pain, make sure the foundation is reinforced concrete, one (newer) roof on the house with working gutters, updated electric, and updated cooper pipes. Then, have the seller buy a you a home warranty plan. Never hire unlicensed heating/electrical tradespeople. I would add that the moment you transition from renter to owner you hav eto call tradespeople and pay for all repairs: Have a slush fund for repairs of about $4000

Also, to avoid a lot of pain, make sure the foundation is reinforced concrete, one (newer) roof on the house with working gutters, updated electric, and updated cooper pipes. Then, have the seller buy a you a home warranty plan.

Never hire unlicensed heating/electrical tradespeople.

]]> By: Duane Gran http://www.getrichslowly.org/blog/2006/09/21/buying-a-home-part-two-making-the-offer/#comment-8525 Duane Gran Fri, 22 Sep 2006 13:19:22 +0000 http://www.getrichslowly.org/blog/2006/09/21/buying-a-home-part-two-making-the-offer/#comment-8525 It sounds like the potential buyer has evaluated the cost side of the equation, but the income side appears to be murky. Before making such an important change to the monthly outflow I would do some serious calculations about expected income. The human resources department at the company can probably confirm the fitness of the calculation, but they will probably be hesitant to make a firm prediction. It sounds like the potential buyer has evaluated the cost side of the equation, but the income side appears to be murky. Before making such an important change to the monthly outflow I would do some serious calculations about expected income. The human resources department at the company can probably confirm the fitness of the calculation, but they will probably be hesitant to make a firm prediction.

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