which house would you choose?

[sosurreal09]

ok done some soul searching and scratched the 2 fam idea. found some really affordable homes in a great area. they both need some work but im hoping it is only cosmetic. i have money saved to fix it up.
our income right now is $2600 a month. we currently rent at $850 a month

one is oober cheap but also very small. its only a 2 br but would work for us right now, however we are planning on having a big family and would have to move in maybe 5 years.
http://www.homesforsaleinma.com/Prop...71087433&crw=5

now this one is definately more bang for my buck and price per square foot is way better, but its also 2x the price...its a 5 br so we could potentially live there forever and build on it we had to.
http://www.homesforsaleinma.com/Prop...1081905&crw=15

i can get either home for about the same mortgage which is cheaper than the rent i am currently paying, however cheaper home is a 15yr mortgage and more expensive home 30yr

[Lil'M]

I would go for the bigger one if you are planning on having a big family. Just my 2 cents. And the yard looks great!

[ParisApril]

I really like the first/cheaper house. Nice lot, nice looking house, small = cheap to heat and easy to clean. House # 1 is inexpensive with the potential to add on later if need be.

We live in 850 sq/ft and have 2 kids, 11 and 5 and they just decided they would like separate rooms. So even if you had a baby tomorrow it would still be a VERY long time before you needed to move or build an addition.

[laura163]

#2's pictures are so fuzzy, I can't tell if there is something wrong with the floors and walls or if it just the picture.

I prefer the 1st.

[34me]

I would probably go with the bigger one if you can swing it. I would block off rooms until you use them. The lot on the smaller one is about half the size as the larger one, leaving very little room to expand.

[yeahwhat]

Are you remembering to calculate taxes, insurance and pmi (if needed) into your mortgage payment estimates? Plus a sinking fund for repairs? The mortgage is just one part of the cost of ownership, while rent is most of the cost of living somewhere.

[sosurreal09]

they both need some work. number 2's floors need to be refinished but number 1 needs all new carpet. all the rooms need to be painted in both homes also.
i have $5000 down and $15000 for repairs.
idk what a sinking fund is.
idk how to calculate those other things or how much they would even be. but i know both mortgages i did were under my rent now so i think we can swing it

[SleeplessMommy]

Are these bank owned homes? There could be "competiton" for them at this price... which means all cash offers win.

I would find a really good home inspector and get opinions on both. Especially, you want to know the condition and efficiency of the furnace and ac (if there). Avoid oil heated houses if you have a choice. Avoid electrically heated houses at all cost in MA.

Also make sure you get inspection and radon contingencies.

What is the basement like in the little house? Does it really have a basement?

[fullofgrace]

Well, I have to answer your question with questions.

Since you are moving fom renting to buying, are you looking for a starter home, or a forever home?
Is the smaller less expensive home on a lot where you can add-on down the line?

I like the second house and yard (esp the yard), but you can always make a small home bigger. You can't make a bigger mortgage smaller. KWIM?

[cschick]

You really need to find out about the taxes. While you can "swing" the mortgages per the online calculation, remember that unless you put 20% down on the houses, your monthly payment to the bank is probably going to be the mortgage PLUS 1/12 of the estimated taxes for the year for tax escrow.

If we escrowed property taxes (we don't, we put down a large downpayment and keep our own property tax account) our monthly mortgage payment would be almost $650/month more than it currently is.

[lolar2]

Haven't looked at the pictures, but from the descriptions I'd go with the cheaper one and then move in five years. You never know, you might have some infertility problems, or decide to space your children out more, or decide not to have a big family after all, and then you'd be paying for the care and maintenance of all that space you weren't using or weren't using yet. If you don't have a home office you can fit a young family of five into a 2-bedroom; the two older ones share a room and the baby sleeps in the parents' room until, say, age 2.

Ditto on the home inspections and on you can make a small house bigger but can't make a big mortgage smaller.

[yeahwhat]

My property/school tax payments would add another $260/month to my mortgage on a house valued at $189 000, so definitely find out about property taxes. Also, are you currently in an apartment or a house? Are you paying all the utilites (water, sewer, heat, electric) or are they covered in rent? Remember that houses are more expensive than apartments to heat because they don't have the benefit of getting heat and insulation from other units around them.

By sinking fund, I just mean, are you going to be able to put some money aside each month to handle the inevitable plumbing, electric, or roof repair? That sort of thing.

[texmati]

we opted for the bigger house, but I wish we hadn't. so much to clean when it's not being used. Also, I know that I'm going to want to move in a few years anyways-- school districts, ect. I say go for the smaller.

[russsk]

I would start working with a lender and get a good faith estimate for each property. Then you can better see the costs associated with each. That 5k will probably mostly go toward closing costs, so you may need to take more from your repair fund for a down payment.

[D_McG]

I agree you need to assess the infrastructure issues (if any). Especially if they are older homes. $15K might not even touch it.

I would buy SMALL and as new as possible (to minimize maintenance issues and heating costs).

[Juvysen]

I vote go smaller and pay down the mortgage as fast as possible to gain some equity, then you'll have a big down payment next time to pad a larger mortgage.

And *definitely* plan for things to go wrong. we've lived in this house for 6 years and it was in "move in condition" when we moved, but since FEBRUARY this year, we've had to replace the furnace and washer, and our dishwasher and fridge and dryer have broken... leaving us with about $5k in repairs/replacements and we need to replace the roof in the next year or so, plus our driveway is crumbling, as of this year. *sigh* We've also had the water heater explode, a couple years ago... that kind of thing.

Also, be prepared for HUGE closing costs. We put $5k down on this house and had to pay upwards of $6k on top of that for closing stuff and tax stuff. We were shocked by that $11k (total) expected on closing.

I think we pay about $300/mo in taxes?

[kate42]

Originally Posted by Juvysen

I vote go smaller and pay down the mortgage as fast as possible to gain some equity, then you'll have a big down payment next time to pad a larger mortgage.


Also, be prepared for HUGE closing costs. We put $5k down on this house and had to pay upwards of $6k on top of that for closing stuff and tax stuff. We were shocked by that $11k (total) expected on closing.

I agree with this! Build equity as quickly as you can. We did that with our first home (put 25% down and paid extra on the principal every month, even if it was only twenty bucks). When we sold that home, we had enough equity in in that we could put down almost 30% on the house we just bought.

And closing costs can blindside you, lol! We were fortunate this time, my DH's company paid closing costs as part of his relocation package...closing was almost $12k. I about croaked when I heard that figure.

[zebra15]

You are not comparing apples to apples here
House #1 is $85.5k and 840 sq ft
House #2 is $162.9k and 2284 sq ft

The taxes are going to be at least 2x as much on the 2nd house. The utilites are going to be much much more on the 2nd house. Both houses look like they need flooring, paint, and some immediate repairs.

There is a huge payment different between 15 yrs and 30 years (the total amount you are going to pay).

You need to have homeowners insurance, probably mortgage insurance, Utilities such as: water, electric, gas, oil??, and the costs are going to be much more than your apartment rental. If you go with #2 these costs just go up.

You need to talk to a mortgage broker and get some solid numbers from them on what you can actually afford.

[Paigekitten]

I would go with the first house. Our house is 880 square feet and we have two kids and my sister living with us. Honestly I don't feel crowded. We can actually afford to heat the place, it's so much easier to clean, taxes are cheaper, maintenance is easier, et cetera.

Plus think of how much LESS you would end up paying in interest with a 15 year loan.

[sosurreal09]

OK i need to get a realtor and al of that i know.

i do rent right a house now at $850 a month plus ALL utilities.

im thinking i can get the little house even cheaper b/c they went from $95,000 to $85,000 rather quickly.

im not too sure anyone will grab either house b/c most people are buying investment properties and this is not an apatment kind of area. so thats a plus for me

the 1st house does not have room to add on but if i do get that and fix it up it MAY be able to sell for alot more in 5+ years....hopefully.

i was thinking of throwing in the closing costs as part of the sale YK like i'll pay the $85,000 if seller pays closing and the inspection goes ok.