question concering buying a house

[dazco]

This is embarrassing to ask, as it's a pretty stupid question. But i know nothing about this and i need to know....aside from yearly property tax, there is no sales tax is there? I can't imagine that, but like i said i'm clueless about the whole process.

And while i'm asking, aside from loan interest (if i do this i may be paying cash or just taking a small loan) what other costs are there besides yearly taxes, insurance that are notable amounts?

 

[DaveM]

When purchasing a property there are no stupid question as it is a huge commitment and you need to know all the ins and outs. I cannot answer any of these questions as you know we work differently to you guys but it will be interesting for me to see how far we do differ in this.

 

[otherwise]

When purchasing a property there are no stupid question as it is a huge commitment and you need to know all the ins and outs. I cannot answer any of these questions as you know we work differently to you guys but it will be interesting for me to see how far we do differ in this.

Agree with Daves comments, I'll watch this one with interest.

I can make a couple of comments that are universal.
Make up your mind are you doing business or buying a dream home for the rest of your life.
If the latter the only thing that matters is can I afford it.
If the former are you going to live in it or rent out?
Depending on your intention I may have a few additional comments.

 

[hemibee]

For you? I don't know but in Texas the answer would be no sales tax.

Now we have property taxes, MUD (Municipal Utility District) Taxes (in some areas of the state but not all), school property taxes, Hospital District Taxes (in some areas of the state but not all), College District Taxes (in some areas of the state but not all) Emergency Services Taxes (in some areas of the state but not all) and one or two others that don't come to mind right now. All of these are payed annually.

 

[CarlS]

Dale, maintenance is an ongoing and expensive item. Replacement of major appliances, air conditioning/heating maintenance, roof replacement, painting, lawn maintenance, routine repairs, termite bond and inspections (annual in some parts of the country), and last but certainly not least, property taxes. Some of these are not yearly and occur over time; but when they do occur, they take a hunk of change.

 

[The Seeker]

Your local courthouse should be able to tell you ALL the taxes that are due for that particular piece of property.....like the exact amounts of school, county, and local real estate taxes.

I don't know of anywhere that has a sales tax on real estate, but of course I don't know all State's tax codes either.

Then as you said there's property insurance. Most bank loans on a house will require it. Homeowner's insurance doesn't cover floods so if it's in a flood area, you can get cheap federal flood insurance.

Give some thought about getting a mortgage in lieu of paying all cash as you can deduct it from your Federal taxes.

You may also want to hire a home inspector to be sure there's no hidden problems (termites, bad roof, furnace problems, etc.). If there are any, you can either negotiate the price or the seller can repair them.

A really great place to get information particular to your area is www.city-data.com message board. There is a section on buying a house and/or you can go to your location and just post your questions under a heading like: Newbie Home Buyer Questions

 

[CarlS]

Your local courthouse should be able to tell you ALL the taxes that are due for that particular piece of property.....like the exact amounts of school, county, and local real estate taxes.

I don't know of anywhere that has a sales tax on real estate, but of course I don't know all State's tax codes either.

Then as you said there's property insurance. Most bank loans on a house will require it. Homeowner's insurance doesn't cover floods so if it's in a flood area, you can get cheap federal flood insurance.

Give some thought about getting a mortgage in lieu of paying all cash as you can deduct it from your Federal taxes.

You may also want to hire a home inspector to be sure there's no hidden problems (termites, bad roof, furnace problems, etc.). If there are any, you can either negotiate the price or the seller can repair them.

That is spot on advice. Most lenders require a home inspection. A couple of hundred dollars spent for the inspection is well worth it.

 

[dazco]

I've thought long and hard about all the rest. I know the property tax rate and figure that in with the rest as well as insurance. Repairs is another thing i know, but i've also kept that in mind. I was mainly worried about whether there would be a sales tax even tho i have never heard of that. It would have made it much harder, as i'm on the very edge of being able to do this as is. My dilemma is that in order to stay close enough to commute i will need a loan and that worries me due to the fact if i lost my job i will never be able to find another making near as much. I'd be screwed. Whereas if i move further out i can afford a house cash outright and still have a sizable bank account left. (yes, theres that big a price diff ! It's crazy) But then it's too far to commute.

I need to get out of this renting BS. It's just not possible for me to live in a rental situation happily. I need to be the master of my destiny as diggs go. But no solution is going to be easy or not fraught with fear and anxiety. but it's now or never because once the housing market begins to recover even a bit i'm out.

Give some thought about getting a mortgage in lieu of paying all cash as you can deduct it from your Federal taxes

What kind of savings are we talking about? i know you can't say w/o the costs involved, but lets say i take a 100k loan for 15 years. Very approximately what kind of money back in the pocket are we talking? Several hundred a year?

 

[The Seeker]

Well, the bank or mortgage company will want a down payment of between 10-15%. Then depending on the particulars of the mortgage, you could write-off that much yearly. It would increase your tax refund.

Basically, you get to write off all the mortgage interest and some mortgages are all interest for the first so many years before you begin to pay down the principal. So the amount you'd write off would decline over time. Other mortgages aren't structured that way. You'll need to check with several lenders on how they do it. Ask around.

I really do recommend asking people in your area at that City-Data forum. It's an excellent place for accurate information.

 

[CarlS]

AJ is giving you good advice. Look at it this way. You are paying rent; house payments are rent that you are paying the mortgage company. You get no return on your rent except a pile of receipts. With house payments you are gaining equity in the house that you can recover later. The interest is deducted from your gross income on your federal tax return. This lowers your taxable income and results in a savings that you do not get from paying rent.

Yes, you could lose your job and lose your house. If you lost your job could you afford your rent? Same situation.

 

[DaveM]

12 Year ago when I wanted to purchase my house my ex boss said to me wait as you never know what may happen. Well I never listen to him and purchased it. If I had of waited even a month the way property prices rocketed I would have never been able to afford purchasing anything near it. So when do you stop waiting and do the deed.

 

[dazco]

If you lost your job could you afford your rent? Same situation.

Thats always in the equasion. It's also why i'd like to buy outright because the total monthy "rent" (prop tax/ins) I could afford even one the small SS amount i will be eligible for in a few years.

I'll tell you exactly what 2 plans i have been considering for a long time.

1)-move to the are i mentioned where i can afford a to buy a house outright cash but cannot commute. The cost would only be 50 to 70% of my savings. So i would be left with a considerable sum and SS in a few years. Could hopefully find a menial job, but even w/o that i could survive if my health doesn't take a dive. (yes, i do have to take risks no matter what i do) Total monthly cost for insurance and prop tax would be probably around $400/mo.

2)-move closer and have a long but tolerable commute (30 miles each way) and pay 2.5-3 times as much for a house and have to take out a loan. I would put a huge down, probably enough to drop the loan to $100k and have enough left for some furniture and a small saving for payments should i lose the job. if i lose my job i'm screwed unless i can sell the house quickly w/o too big a loss.

I'm not very happy about either scenario, but i'm not just unhappy about renting, i'm damn near suicidal. It's pure hell. So i need to get the H out and get into a situation i have some control of. I just can't easily act on either decision when i fear them both. So i'm trying to figure out as close as i can whet this is going to cost me in order to hopefully have a better idea of which if either would not be a mistake i will regret.

 

[DaveM]

Well in option one if you cannot get to work then what?

 

[CarlS]

I suggest that you put about 30% down and finance the rest. Then save that money in the event hard times come and/or make double payments. If you were to lose your job, you have savings to fall back on to make payments while you sell your house or renegotiate with the mortgage company. The mortgage company does not want to repossess your house. They will work with you if the unexpected happens.

If you choose to move out of the area and have no comparable job prospects, you might be better off to buy outright and then look for a job.

 

[dazco]

Well in option one if you cannot get to work then what?

Social security and i would also have about 1/2 my savings left, so retire more or less ! I mean, i would always be looking but between SS and my savings i doubt i would outlive that. And worse case i run out of savings and eat cat food. What can I say.......i am not set up to retire and eventually i'm gonna be in a very dire situation if i don't have a home. At least with a bed i can always find a way to survive. W/O one i can't. My job isn't secure either even tho i've been here going on 11 years. This place will toss you out in an instant because you looked at someone wrong.

i'm just getting closer and closer to what could be a very bad situation if i don't do something soon, and add to that i cannot what i have to go thru with this renting BS anymore and I really have to do something. I've been avoiding it and i just worry more and more as time goes by.

 

[The Seeker]

I concur with Carl's last suggestion 100%

 

[dazco]

I concur with Carl's last suggestion 100%

I do too, especially on the last sentence which was one of my 2 options i've been considering. It's incredible, but i can but a house that would go for $275-375k in an area about 30 miles from work for about $100k if i move 60 miles from work ! Not even exaggerating slightly there. And in the area close to work where i live now that same house would go for $500-600k. what a difference 60 miles makes ! Maybe if i find a house 60 miles further yet again, they may just pay ME to take it.

 

[The Seeker]

I haven't bought any real estate since the late 1980's so things have changed (like the amount of the downpayment expected).

I really Do advise you go to City-Data and not be bashful about asking questions there. People are very helpful there especially if you tell them it's new to you.

Get info both in your local area about local taxes,etc. and in the area about buying a house in general....you'll see how it's broken down into sections when you get there.

 

[dazco]

I definately will, thanks

 

[DaveM]

I don't know when I was looking for a house my first concern was finding one in the best location I could afford and I did not mind if it was a bit of a fix me up. I finally did find a house in a suburb that that I thought I would never be able to purchase a house in for it being just too expensive. The house was a bit of a fix me up and the day I moved in so did the builders to start renovations. Today even if my salary had to double what I earn now I would still not be able to afford to purchase my house at the going rate. So for me location was a prime factor when looking.