OT: Home Buying Advice

[Ski11585]

Two school district questions for someone buying in the next year or so.

1: What's the best way to assess a school district? I know Zillow and some other sites provide ratings for schools, but I'm not sure how reliable those are.

2: Do you prioritize the rating of a HS over an elementary or middle school? The neighborhood we're currently focused on has a very highly rated HS but the elementary and middle school are so-so.

ETA: For context, I'm not buying in Pittsburgh where I know all the school districts already! So outside of a handful of known commodity areas I'm not going to be buying in, I don't know the school landscape here as much.

 

[pittguy81]

Don't get caught up in "Keeping up with the Jones" and make yourselves house poor.

In the long run living beneath your means will allow you to do all the things you dream about. Living paycheck to paycheck because you felt the need to live in showplace is counter-productive.

 

[pittguy81]

Put me in the camp that says a 15 year note is not smart

Money is historically cheap. The spread between 15 and 30 is not much at all.

But more importantly, a 30 year note with an option to increase payments is the way to go.

I took a 30 year. Certain months, I pay more into principal. Summer months, I make the min and take the family on vacation. In the winter, if the furnace needs repaired or replaced, I have some extra dough.

And if nothing else is going on in my pathetic life, I pay down the principal.

But I'm not locked into it.

We had a 30 year note that we paid off in 17 years.....no refi fees and hassles. If there was a month when extra money to principle was not feasible we weren't locked into a higher payment for a shorter note. As noted the rate spread is marginal at this point in time.

 

[pitt-girl]

Two school district questions for someone buying in the next year or so.

1: What's the best way to assess a school district? I know Zillow and some other sites provide ratings for schools, but I'm not sure how reliable those are.

2: Do you prioritize the rating of a HS over an elementary or middle school? The neighborhood we're currently focused on has a very highly rated HS but the elementary and middle school are so-so.

ETA: For context, I'm not buying in Pittsburgh where I know all the school districts already! So outside of a handful of known commodity areas I'm not going to be buying in, I don't know the school landscape here as much.

There's a lot of different school district rating sites. They all use slightly different methodologies but typically the same ones always bubble to the top just in different positions.

 

[RaleighPittFan]

I've bought two houses, didn't have a realtor either time. Both times, the selling realtor cut their commission to help us come to an agreement on price. They could do that because they were taking commission on both sides.

I had the same thing happen when selling my first house. The buyer didn't have a realtor. We were several thousand away from each other and I told my realtor, I'm not going lower. You provide the concession if you want to close the deal. She did.

So my experience is, if you know what you're doing and have some knowledge, a realtor for the buyer adds little value.

I did the same.

I should have added that in my earlier post about choosing a home inspector. The real estate agent suggested that I use her "guy", but I didn't because I wanted someone looking at the house with only my interest in mind, not the seller's too.

 

[superstein61a]

Two school district questions for someone buying in the next year or so.

1: What's the best way to assess a school district? I know Zillow and some other sites provide ratings for schools, but I'm not sure how reliable those are.

2: Do you prioritize the rating of a HS over an elementary or middle school? The neighborhood we're currently focused on has a very highly rated HS but the elementary and middle school are so-so.

ETA: For context, I'm not buying in Pittsburgh where I know all the school districts already! So outside of a handful of known commodity areas I'm not going to be buying in, I don't know the school landscape here as much.

I like Niche.com because it gives you a wide variety of information - so some things may be more important to you than what is weighted in any ranking. I personally would look at the more objective tangible academic result numbers (vs their letter grades which are more subjective) - for example there is a wide range of actual proficiency levels for reading and math when you look at school districts in Western PA. Those numbers as well as SAT and ACT scores are tangible measurements than can help compare how well a school is doing. But someone else may find some other factors more important

Also depending on the state, looking at data the state collects on each school can be beneficial

 

[pitt90seven]

Two school district questions for someone buying in the next year or so.

1: What's the best way to assess a school district? I know Zillow and some other sites provide ratings for schools, but I'm not sure how reliable those are.

2: Do you prioritize the rating of a HS over an elementary or middle school? The neighborhood we're currently focused on has a very highly rated HS but the elementary and middle school are so-so.

ETA: For context, I'm not buying in Pittsburgh where I know all the school districts already! So outside of a handful of known commodity areas I'm not going to be buying in, I don't know the school landscape here as much.

i liked school digger.

 

[Cavalier Panther]

A 15 year mortgage on a $250K home will save you over $100K compared to a 30 year mortgage. Yes, you can pay more per month for the 30 year option, but you will also be tempted to use that money for something else. You will hit financial freedom sooner and more saved for retirement. When your kids stick you in a nursing home, they inherit more.

Sure but investing that same monthly payment in an IRA or a 401k will make you more than 100k over the course of 15 years. You're trading market returns for whatever the 15 year mortgage interest rate is, probably 2.85% or something. People need to keep that opportunity cost in mind.

 

[Panther Holla]

That is terrific advice

I say that from first-hand experience. When I bought my house many years ago -- a Ryan ranch that was about 30 years old at the time -- I learned the hard way. The basement was a little musty and had a linoleum tiled floor. Home inspector didn't find anything amiss. We move in, comes the first big thunderstorm and we find a stream running across the basement floor toward the drain in the low spot -- which had been patched over and relocated to a walled off basement bathroom. Unable to reach the drain, the water pooled in the laundry room.... Several hundred dollars of landscaping, pulling up moldy tile and wall patching later and I had mitigated the problem. Lesson: Homes are full or surprises.

 

[NTOP]

I say that from first-hand experience. When I bought my house many years ago -- a Ryan ranch that was about 30 years old at the time -- I learned the hard way. The basement was a little musty and had a linoleum tiled floor. Home inspector didn't find anything amiss. We move in, comes the first big thunderstorm and we find a stream running across the basement floor toward the drain in the low spot -- which had been patched over and relocated to a walled off basement bathroom. Unable to reach the drain, the water pooled in the laundry room.... Several hundred dollars of landscaping, pulling up moldy tile and wall patching later and I had mitigated the problem. Lesson: Homes are full or surprises.

The only bump we had last year from the inspection was the radon scam. $900 all in. This for a 30 year old, 3,000 sq. ft. home. They'll find something.....and we didn't use the inspector's recommended contractor, who wanted $1600. I had fixed a small seepage in the corners of the garage by adding topsoil around the porch above it and painting it with one coat of Drylock.
Now renting....basically prepaying all maintenance. Love it.

 

[JoseLind13]

Sure but investing that same monthly payment in an IRA or a 401k will make you more than 100k over the course of 15 years. You're trading market returns for whatever the 15 year mortgage interest rate is, probably 2.85% or something. People need to keep that opportunity cost in mind.

If refinancing now you probably bought 5+ years ago went from 4%+ to 2.85% in switching from 30 year to 15 year, so it seems the former rate is the opportunity cost comparison baseline. Most homes are secure appreciating investments and should be handled as integral to retirement planning and financial security. The market value of the home I built only 7 years ago has grown at a far greater rate than my stock portfolio and 401k, even after compounding value of reinvestments is considered. If investing and you find such a known, secure growth opportunity, you likely double down and ensure that you maximize the return. For a home, there are two ways to maximize the return; reduce the investment cost by trimming interest cost or investing in upgrades to further increase the market value, which often don’t have a great return. The decision can vary by situation and the age in life at which you are making the choice.

 

[recruitsreadtheseboards]

Other than the lousy 4.95% interest rate I got, here are some mistakes I made:

1) I didn't take real estate taxes into account. They constitute almost half of my mortgage payments each month. There are towns around me that are as nice or nicer than mine where I could have gotten a similarly-priced home and would be paying half as much in real estate taxes per year.

2) A big yard sounded like a good idea, but it's really just turned into a big pain in the ass. Same thing goes for all the landscaping I've done. But this is obviously a case by case basis, and you might use a big yard more than I have.

3) Being a corner lot kind of sucks. Less privacy, more of people's stuff blowing into your yard, and they've messed up my yard multiple times to access gas lines, drainage systems, the fire hydrant, etc.

4) For an extra 10K, I could have gotten a similar house in a nicer neighborhood. I choose mine because everything was new/clean inside. But a lot of it was done on the cheap. And if you're planning on staying long-term, you're going to have to replace things anyway. But the optics of it being vacant thing definitely made an impression. It wasn't a flip, but an empty house sure looked a lot better than having to see the current owner's stuff in every room. I'd advise to look past that. That stuff will all be gone by the time you move in (obviously).

5) Not sure if this applies to you, but I wish I had chosen to live near a trail. There is a main drag in my town where people walk their dogs on the sidewalks, but I much prefer nature. Unfortunately, I have to drive somewhere to get to nature, and my dogs do a number on my car (I'm constantly having to clean it out). I'd take them places anyway, because I still like to explore new areas, but sometimes it would be better to have to walk five minutes to get to a trail than have to hop in the car and drive 20+ minutes. This one is a little nitpicky.

And then lastly, I don't think you should do a 15-year mortgage if you can get a similar rate on a 30-year. Just make extra payments when you can, and you can pay the 30-year off in 15 years anyway. Plus you have an added security blanket if you ever can't make the extra payment amounts. Unless the interest rate is significantly better, I see no advantages to 15 years over 30.

Amen. Sounds like we both did alot of the same things. A corner lot sounded great because I got a bigger lot than most for the same price. But it is not private at all, and.......well the 5 winters now I have spent here have been crazy mild, but....I have the equivalent of like 5 houses sidewalk to keep clean of snow and a bus stop for the kids (which I have asked to be moved). Which is a real pain, especially if I travel.

 

[NTOP]

If refinancing now you probably bought 5+ years ago went from 4%+ to 2.85% in switching from 30 year to 15 year, so it seems the former rate is the opportunity cost comparison baseline. Most homes are secure appreciating investments and should be handled as integral to retirement planning and financial security. The market value of the home I built only 7 years ago has grown at a far greater rate than my stock portfolio and 401k, even after compounding value of reinvestments is considered. If investing and you find such a known, secure growth opportunity, you likely double down and ensure that you maximize the return. For a home, there are two ways to maximize the return; reduce the investment cost by trimming interest cost or investing in upgrades to further increase the market value, which often don’t have a great return. The decision can vary by situation and the age in life at which you are making the choice.

Have you subtracted the 7 years of payments from the current value? Folks forget that. The "net" return if you sell it today...minus closing costs, etc.....will be substantially lower than you think. Taxes and interests claimed as deductions only reduce your hard costs by your top bracket.
I always viewed houses I've owned as slightly better than renting.....and a place to put my beer and golf clubs!!

 

[lilspainishflea]

Sure but investing that same monthly payment in an IRA or a 401k will make you more than 100k over the course of 15 years. You're trading market returns for whatever the 15 year mortgage interest rate is, probably 2.85% or something. People need to keep that opportunity cost in mind.

Exactly. $300 per month at 2.85% for 15 years is $66,000 (i.e., the refinance return).

$300 per month at 7% for 15 years is $90,000 (i.e., a low-average return on investment in the market).

You're costing yourself $25,000 or so by paying off the house early instead of putting it in the market. Plus locking yourself out of financial flexibility in case of a job change or life emergency.

 

[Cavalier Panther]

Have you subtracted the 7 years of payments from the current value? Folks forget that. The "net" return if you sell it today...minus closing costs, etc.....will be substantially lower than you think. Taxes and interests claimed as deductions only reduce your hard costs by your top bracket.
I always viewed houses I've owned as slightly better than renting.....and a place to put my beer and golf clubs!!

I think this is the better view. Homes are poor investments. You have to pay taxes, interest, maintenance and repairs costs for years.

Even if your home appreciates 10 % over 5 years, you're out say 4,000 in taxes a year, thousands more in interest, plus a few grand in upkeep even if nothing major went wrong. Then to actually access that cash you'd have to pay thousands in closing and moving costs. I'm settled now and buying is worth it for the space, but I wasn't lamenting renting as throwing away money a few years ago either.

Also, on interest rates, you can get a 30 year under 3.5% without much issue. And a 15 year at maybe 2.85%. It's not a 1 percent difference at any lendor.

 

[SoufOaklin4Life]

Exactly. $300 per month at 2.85% for 15 years is $66,000 (i.e., the refinance return).

$300 per month at 7% for 15 years is $90,000 (i.e., a low-average return on investment in the market).

You're costing yourself $25,000 or so by paying off the house early instead of putting it in the market. Plus locking yourself out of financial flexibility in case of a job change or life emergency.

Plus the interest is the primary tax deduction you have .

 

[Gunga_Galunga]

I think this is the better view. Homes are poor investments. You have to pay taxes, interest, maintenance and repairs costs for years.

Even if your home appreciates 10 % over 5 years, you're out say 4,000 in taxes a year, thousands more in interest, plus a few grand in upkeep even if nothing major went wrong. Then to actually access that cash you'd have to pay thousands in closing and moving costs. I'm settled now and buying is worth it for the space, but I wasn't lamenting renting as throwing away money a few years ago either.

Also, on interest rates, you can get a 30 year under 3.5% without much issue. And a 15 year at maybe 2.85%. It's not a 1 percent difference at any lendor.

I disagree with this. Whether you want to believe it or not, you're paying the taxes on a rental as well. You're also paying for the upkeep, the owners financing, and their profit.

I viewed rent as throwing money away and would rather pay a mortgage where I'm at least banking the principal.

Renting makes sense for short term situations and for people with no savings to put down.

 

[TheSpecialSauce]

We refinanced a few months ago, and got a 15 year at 2.5 locked in. We ended up saving 25k over the long haul.

There is very little difference between a 30 and 15 year right now, so a new home owner should go with the 30 year mortgage.

 

[vikings1980]

I live in my car.

 

[Gunga_Galunga]

I live in my car.

I've seen your palace.

 

[PA_Panther]

Long two days and have seen a few to many houses the past two days. We have two new ones tomorrow but more than likely will end up in the Franklin Park/McCandless area if everything works out.

Lady and I poured some strong drinks, put the houses in three tiers and anything that both had a 1/1 Or 1/2 we ranked and have narrowed in on two.

Again thanks to everyone with the help, suggestion and everything else! That’s what makes this place so great

 

[beiglepanther]

Try not to buy a house where there are a lot of prostitutes or drug dealers around, this tends to hurt re sale value

 

[SoufOaklin4Life]

Try not to buy a house where there are a lot of prostitutes or drug dealers around, this tends to hurt re sale value

Don’t shit where you eat, huh?

 

[Las Panteras]

Long two days and have seen a few to many houses the past two days. We have two new ones tomorrow but more than likely will end up in the Franklin Park/McCandless area if everything works out.

Lady and I poured some strong drinks, put the houses in three tiers and anything that both had a 1/1 Or 1/2 we ranked and have narrowed in on two.

Again thanks to everyone with the help, suggestion and everything else! That’s what makes this place so great

Btw,

I.mentioned in an earlier post that the appraiser that did my refinance played baseball at Pitt

One of the things he said was never stop shopping for a mortgage rate, even if approved as rates may have dropped since you started the house hunting process. You may be able to re-do your application at better terms.

That seems to be where we are today, as rates have dropped a bit on mortgages in the past 2-3 weeks.

It may not be a bad idea to ask your bank or mortgage rep to re-visit current rates.

 

[vikings1980]

I've seen your palace.

And I have seen yours.

 

[pittmeister]

Don't get caught up in "Keeping up with the Jones" and make yourselves house poor.

In the long run living beneath your means will allow you to do all the things you dream about. Living paycheck to paycheck because you felt the need to live in showplace is counter-productive.

Outstanding advice. Living under my means allowed me to save more money and invest in my retirement funds. I am now semi retired at an early age just working for medical insurance. Life is good.

 

[Slick Manager of Champs]

Yards are not overrated

Pools are

Even today

Just curious, do you have kids? Since without kids, I don't really see the need for a huge backyard. What do you do with yours? Sit on the deck and look at it?

Pools are awesome for the heat stretch we had last week, but I can see your point especially in the Northeast where the backyard pool season is only 3 months.

 

[Las Panteras]

Just curious, do you have kids? Since without kids, I don't really see the need for a huge backyard. What do you do with yours? Sit on the deck and look at it?

Pools are awesome for the heat stretch we had last week, but I can see your point especially in the Northeast where the backyard pool season is only 3 months.

Here is your answer. Assuming we are talking the suburbs.

If you have a nice yard. Usable, private.....reasonably level (usable)

It doesnt matter what type of house is on it .

In southwestern Pennsylvania, if you have a usable rear yard the property is going to be in demand.

All one has to do is look down on Pittsburgh when flying into the airport to see how few homes have a pool.

Around these parts,

Yard>pool

Not even close.

 

[Slick Manager of Champs]

Here is your answer. Assuming we are talking the suburbs.

If you have a nice yard. Usable, private.....reasonably level (usable)

It doesnt matter what type of house is on it .

In southwestern Pennsylvania, if you have a usable rear yard the property is going to be in demand.

All one has to do is look down on Pittsburgh when flying into the airport to see how few homes have a pool.

Around these parts,

Yard>pool

Not even close.

that's a good point in terms of adding to the equity. Just not sure it's worth the effort needed to maintain that equity.

 

[Dan1911]

Don’t shit where you eat, huh?

Elites don’t. They preach diversity and inclusion and make rules they don’t follow and live in retreats far removed from the unwashed masses they pretend to love.

 

[JoseLind13]

Have you subtracted the 7 years of payments from the current value? Folks forget that. The "net" return if you sell it today...minus closing costs, etc.....will be substantially lower than you think. Taxes and interests claimed as deductions only reduce your hard costs by your top bracket.
I always viewed houses I've owned as slightly better than renting.....and a place to put my beer and golf clubs!!

7 years of payments is generated equity in the investment, not a reduction to the net return. You are effectively paying taxes and interest on behalf the owner in your rental rates, without the deduction benefit, so it's not like anyone is magically avoiding those costs by renting; they are just not itemized in the rent and you end up with zero equity at the end of the rental agreement. Even after I paid 5% realtor commissions, upkeep, and improvements (and very minimal seller closing costs) on my prior home sale, the net return was sizable and certainly much better than renting in the same neighborhood and around par with return of a moderate risk investment with the monthly payments. To have it end up only slightly better than renting, I would have to had overpaid for the home, sold during housing market crash, or lived in a non-appreciating neighborhood.

 

[NTOP]

7 years of payments is generated equity in the investment, not a reduction to the net return. You are effectively paying taxes and interest on behalf the owner in your rental rates, without the deduction benefit, so it's not like anyone is magically avoiding those costs by renting; they are just not itemized in the rent and you end up with zero equity at the end of the rental agreement. Even after I paid 5% realtor commissions, upkeep, and improvements (and very minimal seller closing costs) on my prior home sale, the net return was sizable and certainly much better than renting in the same neighborhood and around par with return of a moderate risk investment with the monthly payments. To have it end up only slightly better than renting, I would have to had overpaid for the home, sold during housing market crash, or lived in a non-appreciating neighborhood.

We did well with our house sale, too. But "net return" issale proceeds minus basis. All your taxes and interest are paid in cash, and count as "basis" minus the net of those after the effect of the deductions.
Our decision to rent was based on our ages and the knowledge that the sale proceeds would produce higher returns than a modest, smaller home ever would, we'd have access to the cash while we live, and our 4 kids, scattered from AZ to the UK, wouldn't have to dispose of the home. I realize we prepay taxes, but we have no maintenance costs other than utilities (inescapable), and we have only a small deposit tied up. Personal situations made the decision easy. So far, the invested cash has done pretty well, we have a terrific advisor.

 

[The_Bastard_Of_Benedum]

The Fiancé and I have finally gotten our pre-approval letter from our lender after shopping around. What is some advice that you guys have for us and the entire process?

1. You can change things about the house, but you can NOT change the property it is on. If you don't like the slope, or water pools in it constantly, those are difficult to change
2. If you don't buy a house that you really want and are excited to live in, then you never stop looking at houses even if you bought one. You can do that, if you and your spouse have a plan to move on in a few years or a decade, but don't do it if you plan on staying put.

 

[pittguy81]

We did well with our house sale, too. But "net return" issale proceeds minus basis. All your taxes and interest are paid in cash, and count as "basis" minus the net of those after the effect of the deductions.
Our decision to rent was based on our ages and the knowledge that the sale proceeds would produce higher returns than a modest, smaller home ever would, we'd have access to the cash while we live, and our 4 kids, scattered from AZ to the UK, wouldn't have to dispose of the home. I realize we prepay taxes, but we have no maintenance costs other than utilities (inescapable), and we have only a small deposit tied up. Personal situations made the decision easy. So far, the invested cash has done pretty well, we have a terrific advisor.

So you were under the capital gains threshold? Interesting choice....something to think about

 

[NTOP]

So you were under the capital gains threshold? Interesting choice....something to think about

Yep. Everyone's situation is different. This was easy for us. The tough part was finding a place suited for older folks, but not an apartment, and with a corporate landlord. Cut our space in half, which is all were using for the last 10 years. All on one floor, 2-car garage.

 

[Las Panteras]

While this thread began as insights to BUYING a home, it probably is worth discussing selling.

In this crazy market, where limited inventory leads to crazy prices, do you really need a realtor representing you?

I mean....in our neighborhood, homes are gone in hours. It seems these homes sell themselves, and we live in a pretty modest area.

A realtor to sell a home that sells itself at 6-7% commission or,

An attorney to protect you at far less?

 

[pittguy81]

Yep. Everyone's situation is different. This was easy for us. The tough part was finding a place suited for older folks, but not an apartment, and with a corporate landlord. Cut our space in half, which is all were using for the last 10 years. All on one floor, 2-car garage.

I don't have a huge property...about 3/4 acre with a lot of mature trees....and the yard work/landscaping/gardening that was easy and fun at 40 is not as easy and not nearly as fun at 60. I told my wife the yard gets bigger every damn year......

 

[TheChair]

While this thread began as insights to BUYING a home, it probably is worth discussing selling.

In this crazy market, where limited inventory leads to crazy prices, do you really need a realtor representing you?

I mean....in our neighborhood, homes are gone in hours. It seems these homes sell themselves, and we live in a pretty modest area.

A realtor to sell a home that sells itself at 6-7% commission or,

An attorney to protect you at far less?

I think that it is a great question (your first question).

It is very dependent upon your skill set as to whether you need a realtor or not. That is a hard question to answer. For most people, if they have the right realtor, I think it is mostly worth the price because they likely would not have gotten the same cash less 6% anyway (I am not a realtor, btw).

Attorneys have vastly different skill sets and most of them really specialize in paperwork and that is it. So, putting a lot of hopes in them without a realtor, to me, could be a big lose proposition.

I have a close friend that has an RE Fund/IB background (also is an attorney) and looking to liquidate some residential positions that he owns (so, his timing is good). He is very, very advanced and still utilizing a realtor situationally.

As to the topic of selling, I mean, if you sell the house, you are looking for a house to move into (presumably) in a seller's market. That generally is not a good position unless you want to downsize or make the sort of geographical shift to make the cost of living difference worthwhile (moving from DC or SF to Pittsburgh or even Philadelphia is a big cost of living drop from the home cost for the most part).

 

[BurghGuy68]

Advice I was given and followed...

1. Buy a little more than you can afford, because your income will likely increase over time and you won't have to upgrade later.
- Glad I did this...built a 2400 sq ft Ryan home in Jan 1999 in West A schools, and it is now worth double what I paid. Taxes are low for the Pittsburgh area, esp for Allegheny County.
2. Agree on the PMI advice...Borrow from your parents if you can to avoid the 20% PMI, and pay them back. My dad did this for me.
3. Get a 30 year mortgage and make 1 extra payment a year to get it to 23 years, while investing heavily in the stock market with disposable income.
4. Refinance to 15 year after around 10 years or so when making decent money.
5. Save for kids' college the whole time.

Good luck!

 

[pitt-girl]

Long two days and have seen a few to many houses the past two days. We have two new ones tomorrow but more than likely will end up in the Franklin Park/McCandless area if everything works out.

Lady and I poured some strong drinks, put the houses in three tiers and anything that both had a 1/1 Or 1/2 we ranked and have narrowed in on two.

Again thanks to everyone with the help, suggestion and everything else! That’s what makes this place so great

I live in Franklin Park. Bought in 1995 and our home has tripled in value. A ton of new development with gorgeous homes which is always attractive, but if you can find an older home in an established neighborhood it's also a great investment.

Good Luck!