Property Value/Appraisals RANT

[deezler]

No . Location doesn't mke any difference.The plan is the plan for any location.If you didn't save enough $ to get the monthly payment to within 25% of take home pay on a 15 yr fixed you don't buy the house

Arg. That just doesn't work though. Have the land already, kids are coming, need to get a house built. I think we'll be forced into a 30 year, but I will make every effort to pay ahead on the principle on a monthly basis (hopefully essentially finishing the loan within 15 years anyway). This way if hard times come along, we can fall back to the lower monthly payment level.

Yes, we'll pay much more to the bank in total mortgage interest over the duration of the loan (if we can't manage to pay ahead aggressively), but you know what? We'll be living in our dream home NOW, not in some dumpy shack for the next 10 years while saving up cash. Until the economy tanks again, I have good confidence that the auto industry will employ me (mechanical engineer). I still can't disagree with his financial principles, but it just doesn't seem realistic to me from where I sit now.

 

[kenmac]

Arg. That just doesn't work though. Have the land already, kids are coming, need to get a house built. I think we'll be forced into a 30 year, but I will make every effort to pay ahead on the principle on a monthly basis (hopefully essentially finishing the loan within 15 years anyway). This way if hard times come along, we can fall back to the lower monthly payment level.

Yes, we'll pay much more to the bank in total mortgage interest over the duration of the loan (if we can't manage to pay ahead aggressively), but you know what? We'll be living in our dream home NOW, not in some dumpy shack for the next 10 years while saving up cash.

.

I'm by no means trying to tell you or,anyone what to do.You have to do what you think is best for you.You don't have to live in a rat hole until you save. Your mind will tell you anything to justify any purchase. You will pay more than just more interst. You also pay PMI if you don't come up with 20% down. What you, or anyone does is their business not mine

 

[NorTracNY]

Arg. That just doesn't work though. Have the land already, kids are coming, need to get a house built. I think we'll be forced into a 30 year, but I will make every effort to pay ahead on the principle on a monthly basis (hopefully essentially finishing the loan within 15 years anyway). This way if hard times come along, we can fall back to the lower monthly payment level.

Yes, we'll pay much more to the bank in total mortgage interest over the duration of the loan (if we can't manage to pay ahead aggressively), but you know what? We'll be living in our dream home NOW, not in some dumpy shack for the next 10 years while saving up cash. Until the economy tanks again, I have good confidence that the auto industry will employ me (mechanical engineer). I still can't disagree with his financial principles, but it just doesn't seem realistic to me from where I sit now.

If you don't have the down payment to make the house work for you, I'd seriously consider staying in an apartment till you have it. I remember how much cheaper it was to live in an apartment. I badly wanted to have a house and land for kids and dogs, but I saw how much I was saving every month staying in an apartment. It shouldn't take long to get that downpayment. The interest is lower on the 15 year too.

 

[Pops15]

No . Location doesn't mke any difference.The plan is the plan for any location.If you didn't save enough $ to get the monthly payment to within 25% of take home pay on a 15 yr fixed you don't buy the house

Location does make a difference. In the county where I live the median price of a house is $147700. Median income is $49266.
20% DP is roughly $29500. 15 years @ 3.5% works out to $998 with 1.25% RE taxes. All that works out to about 25% of GROSS income.
Here's the rub...Underemployment is a big problem here. There are many foreclosures. Rent prices have soared. It's pretty hard to rent any decent house or apartment around here for less than a grand a month. Pay that kind of rent and it's tough to save anything for a down payment, let alone $29500.

 

[sdkubota]

Location does make a difference. In the county where I live the median price of a house is $147700. Median income is $49266.
20% DP is roughly $29500. 15 years @ 3.5% works out to $998 with 1.25% RE taxes. All that works out to about 25% of GROSS income.
Here's the rub...Underemployment is a big problem here. There are many foreclosures. Rent prices have soared. It's pretty hard to rent any decent house or apartment around here for less than a grand a month. Pay that kind of rent and it's tough to save anything for a down payment, let alone $29500.

I don't disagree but many people completely underestimate the costs of building or owning their own home.

 

[MossRoad]

Again, its wants, wants, wants.
We thought about building a 2400 square foot two story "dream" home on our 20 acre. Had the plans ready to go. The very good Amish builder is ready to go and take our 180K. Then he looks me straight in the face and says something like this...

"When your kids are gone you will be living in an empty mausoleum most of the time. The sounds of your footsteps will echo off the walls. You'll wonder why you built such a huge house and not be very happy in your old age."

He talked us out of building. He suggested we build a smaller home. Instead, we had another baby and bought a larger used home and had the builder put on a new roof and siding. He was very happy for us. We have the land waiting but have concentrated on raising children well, rather than the possibility of crushing debt in a financial catastrophe.

 

[Pops15]

35-40% debt to income is too high. Try to scale back your plans. Maybe finish the basement later instead of when you build. Laminate counter tops instead of solid surface. Vinyl floors in the kitchen and baths instead of ceramic. You can build a very nice quality house and still cut some costs. 30 year mortgage isn't the end of the world. Like you say you can always pay ahead.....but you need to have the discipline to do it.
I've always opted for a longer term loan and made extra payments. I'd say with the economy of today no one's job is safe. Proceed with caution!

 

[deezler]

I'm by no means trying to tell you or,anyone what to do.You have to do what you think is best for you.You don't have to live in a rat hole until you save. Your mind will tell you anything to justify any purchase. You will pay more than just more interst. You also pay PMI if you don't come up with 20% down. What you, or anyone does is their business not mine

Oh, I know. Just responding to no one in particular (myself, really). But you do strike a chord with the statement about false justification. I am guilty of that too often.

I don't have to worry about 20% down and PMI though, my lender for the vacant land has already shown that they can approve me for a loan size larger than the actual construction costs, thereby covering the down payment. Zero due at closing to start construction, no PMI.

Pops15, I hear ya.

 

[kenmac]

I'm saying the plan ( 25% of take home pay) is still the same ( I understand it means more $ down with the higher priced home) weather you are buying a 147700.00 home or a 50000.00 home.For me If that's all I made and the homes cost that much for that county.I would have to purchase a home in another county.If the 147700.00 homes don't sell they will have to drop the price if, they wish to sell the homes in that price range. It would be very difficult for me to make it with a 49266 income and a house that cost 147700.taxes utilities maintance,something needs replacing, etc, Murphy and his 3 cusions broke, desprate and stupid will move in with me. You know , everyone here is free do do as they please

 

[Pops15]

I don't disagree but many people completely underestimate the costs of building or owning their own home.

I'm a contractor. I totally agree!
Several years ago my BIL and his wife asked me for a price on building a house on some property they owned. The house was going to be for my SIL parents. They didn't like my price. BIL, his brother and some of their buddies built it. Ran into all kinds of problems and had to do things over because they didn't know the codes. Everything cost more than they figured. Everything took longer than they figured. I ran into SIL's father at Lowes. They were far from finished and way over my quote. After the house was done they hired someone to move allot of dirt. BIL was complaining that it was costing $12K. I told him that was included in my quote. When it was all said and done they spent an extra $30K and took 6 months longer than I would have to complete the house.
A few years go by and they decide to build a new house for themselves. They asked me for a quote on framing it and said it had to be closed in by July 1. I was booked up and told them I could have it closed in by August. Nope, they wanted it done by July 1. The contractor they hired told them he'd have it closed in by July. They had a 4th of july party. I enjoyed harassing my BIL about the house not being closed in. They didn't even have all the walls up. Contractor didn't get it closed in until mid September. Took my BIL another 8 months to finish it. LOL

 

[Pops15]

I'm saying the plan ( 25% of take home pay) is still the same ( I understand it means more $ down with the higher priced home) weather you are buying a 147700.00 home or a 50000.00 home.For me If that's all I made and the homes cost that much for that county.I would have to purchase a home in another county.If the 147700.00 homes don't sell they will have to drop the price if, they wish to sell the homes in that price range. It would be very difficult for me to make it with a 49266 income and a house that cost 147700.taxes utilities maintance,something needs replacing, etc, Murphy and his 3 cusions broke, desprate and stupid will move in with me. You know , everyone here is free do do as they please

I agree that it's a good plan, heck, it's a great plan but not always workable. Not everyone has the option of moving to another area. But let's look at that. Move north and the costs are much higher. Move the other directions and the employment prospects dwindle but the housing costs are lower. Move to save on housing but end up spending more on transportation. Lots of people stuck in a bad situation.

 

[murphy1244]

I bought my house at a Sheriffs sale cause the owner tried to play the market and lost big.

 

[sdkubota]

I good way o turn a 30 yr loan into a 15 year is to just add the next months principle to the standard payment. In the beginning it might be $100 or so but later on will obviously be quite large. Hopefully your income will have improved to cover it.

The nicest home in the world does not equal ones good health or a being in a loving relationship. Be thankful for what you have instead of what you think you need. All the money in the world won't buy you happiness or health.

 

[kenmac]

I agree that it's a good plan, heck, it's a great plan but not always workable. Not everyone has the option of moving to another area. But let's look at that. Move north and the costs are much higher. Move the other directions and the employment prospects dwindle but the housing costs are lower. Move to save on housing but end up spending more on transportation. Lots of people stuck in a bad situation.

I have no dog in the fight . I would not be buying a house for that much only making 49K
Transportation cost would be min compaired getting into a house that you end up loosing.Look at all the foreclosures where people bought homes that they couldn't afford.Buy a house for 147 K only making 49 K and something is going to give

 

[Opti-Mist]

In my neck of the woods a maximum of 5 acres is included in a house appraisal. My place has 85+ acres and 1650 feet of lake frontage. 80 acres and the lake frontage is excluded (the lake frontage is far enough from the house that the 5 acres rule excludes it). Oh yeah, the 900 foot driveway gets priority. Go figure.

 

[Pops15]

I have no dog in the fight . I would not be buying a house for that much only making 49K
Transportation cost would be min compaired getting into a house that you end up loosing.Look at all the foreclosures where people bought homes that they couldn't afford.Buy a house for 147 K only making 49 K and something is going to give

I agree it's not a good idea but if someone doesn't have other bills they might make it. The recession has hit this area especially hard. High unemployment. Higher under employment. High gas prices.
Thankfully we don't owe anyone anything. That's a very good feeling!

 

[kenmac]

The recession has hit this area especially hard. High unemployment. Higher under employment. High gas prices.

I don't know what the unemployment rate is for your area,but ours was at 9.3% jan 2011. Our new Governor said when he was elected that he wouldn,t accept a salary until the state got back to 5.2% employment. I don't know where we are at this time ,but the gov. still doesn't take a salary so, It's not at 5.2%. Gas prices here as of today reg. unleaded 319 per gal. My business is not even close to what was & may never be,but,I'll be just fine

 

[vtsnowedin]

One thing to consider when borrowing for that dream home in the country is the future price of gas. It may well stay at $4.00 and even go to $8.00 or $12.00 and if it does then all parcels that are more then walking distance to a rail or bus line will drop in value by half or more. It won't make any difference if you don't have to commute in town to work the market will be set by those that do.

 

[dmccarty]

One thing to consider when borrowing for that dream home in the country is the future price of gas. It may well stay at $4.00 and even go to $8.00 or $12.00 and if it does then all parcels that are more then walking distance to a rail or bus line will drop in value by half or more. It won't make any difference if you don't have to commute in town to work the market will be set by those that do.

Good point but the flip side to rural property is generally the property tax is MUCH less than being in the city. I know our rural house which is twice the size of the old city house but worth far more AND our property cost HALF as much in property tax. The difference in property tax pays for a LOT of fuel. If we had lived near a rail line, the property tax would have been much higher because of the higher valuations. Even driving far more miles today and with much higher fuel prices we are still ahead money wise because of the lower property tax bill. Now, these numbers are based on what the city house USED to cost in property tax vs what the current rural bill. I am sure the city house has MUCH higher property taxes today.

Another much higher cost in the city is water, sewer and garbage collection. We paid $50-125 a month for water, sewer and garbage years ago. I bet it is much higher now. Just that monthly bill more than pays for our extra cost driving to work. Don't get me started about the sorry a...ss garbage haulers tormenting our dogs and ALWAYS leaving trash on the ground....

Later,
Dan

 

[vtsnowedin]

Good point but the flip side to rural property is generally the property tax is MUCH less than being in the city. I know our rural house which is twice the size of the old city house but worth far more AND our property cost HALF as much in property tax. The difference in property tax pays for a LOT of fuel. If we had lived near a rail line, the property tax would have been much higher because of the higher valuations. Even driving far more miles today and with much higher fuel prices we are still ahead money wise because of the lower property tax bill. Now, these numbers are based on what the city house USED to cost in property tax vs what the current rural bill. I am sure the city house has MUCH higher property taxes today.

Another much higher cost in the city is water, sewer and garbage collection. We paid $50-125 a month for water, sewer and garbage years ago. I bet it is much higher now. Just that monthly bill more than pays for our extra cost driving to work. Don't get me started about the sorry a...ss garbage haulers tormenting our dogs and ALWAYS leaving trash on the ground....

Later,
Dan

Property taxes are set by the town budget divided by the value of all the property in the town "The Grand List" A well run city with a lot of commercial property can have tax rates well below average and a poorly run rural town that tries to provide city services like trash collection without some industry or commercial property to support it can have very high tax rates. I think the benchmark for what is low or high is two percent of what you could really sell it for today. that would be school, town and county taxes combined. More then two percent your getting ripped off less then two percent keep quiet and reelect those in charge.