Figuring out costs of buying and selling a house

[DawnM]

It is daunting isn't it? We are looking at selling in Spring of 2012....so I have a while. I am not the best housekeeper either, although the parts people might see if they popped over are kept up much better! But that won't help during showings!

We have bought and sold 4 homes so far in our marriage....we have paid 6% in realtor fees on the sale, although one realtor only charged 5%.

Then there are some fees involved in the sale and if the buyer asks for any repairs before closing or any allowances at closing, there are those costs.

Our last house we had to pay about $5K in repairs and allowances. I would rather have just come down 5K on the house price, but they wanted it that way. But it was also a 1910 historic house and so we encountered some issues.

I would plan for 6% to 7% of the sale to go to the sale and closing costs.

Dawn

I am NOT an impeccable housekeeper, so the stress of even thinking about getting my house show ready is pretty considerable. The more I think about this, the less I want to move! I'm still going to see what my Realtor comes back with as far as comps for our house and the one we're looking at, but I'm leaning toward staying put at this point!

 

[DawnM]

And did he say how long the mortgage should be at 25%? Dave Ramsey says not more than 25% of your take home pay in mortgage AND taxes and insurance for a 15 year loan.

Dawn

Funny I just watched Clark Howard today who said he suggests not spending more than 1/4th of your gross pay on a home. I think the normal rule of thumb is 1/3rd though. Figure out what that would be for you and don't worry about what the bankers tell you they feel you can afford. I don't think too many are going that far out of range anymore anyway.

We are also looking to move and a realtor friend told me you need a credit score around 720/750 or more and don't go to a mortgage broker go to the bank you choose.

I hope some of that helps. Sorry if I told you more than what you asked but it helped me to know these things.

 

[Swimalie]

And did he say how long the mortgage should be at 25%? Dave Ramsey says not more than 25% of your take home pay in mortgage AND taxes and insurance for a 15 year loan.

Dawn

You don't have to escrow. We don't and never have. Some banks charge a fee if you don't escrow and those banks won't get our business. We figure, even with the pathetic interest rates, I'd rather have the money in my account and let me pay it than the bank keep it.

Clark Howard's method gets my vote. I have been listening to him since 1985 and he has helped me save a lot of money.

 

[DawnM]

No, but you can still budget it into the 25% calculation. My question was to ask if Clark Howard includes that amount (weather or not you have it in your escrow account) AND to ask if he says it is based on a 15 year or 30 year.

Dawn

You don't have to escrow. We don't and never have. Some banks charge a fee if you don't escrow and those banks won't get our business. We figure, even with the pathetic interest rates, I'd rather have the money in my account and let me pay it than the bank keep it.

Clark Howard's method gets my vote. I have been listening to him since 1985 and he has helped me save a lot of money.

 

[DawnM]

Next question: You would pay more in interest just to not have an escrow account? Have you done the math on that? I can't imagine you would come out ahead.

Dawn

You don't have to escrow. We don't and never have. Some banks charge a fee if you don't escrow and those banks won't get our business. We figure, even with the pathetic interest rates, I'd rather have the money in my account and let me pay it than the bank keep it.

Clark Howard's method gets my vote. I have been listening to him since 1985 and he has helped me save a lot of money.

 

[labdogs42]

So, the Clark Howard deal would be if you make $100,000, you spend no more then $25,000 per year on the house payment? So, approx $2000 a month payment? (these are of course, made up, easy to calculate numbers!!)

ETA, you said Clark said gross, not net, right? It looks like the DR calculation is based on net which is a big difference, too.

 

[mommyof2princesses]

You don't have to escrow. We don't and never have. Some banks charge a fee if you don't escrow and those banks won't get our business. We figure, even with the pathetic interest rates, I'd rather have the money in my account and let me pay it than the bank keep it.

Clark Howard's method gets my vote. I have been listening to him since 1985 and he has helped me save a lot of money.

We have owned 2 homes withough escrow and didn't get charged a fee. But, it seems now that just about everyone charges higher interest if you do not have escrow...even though we have a credit score of 830! So, for the first time in our lives, starting in 10 days, we will have escrow. It was worth the percentage to have it.

This is the first time buyign a "used" home. It was a very different experience from buying and building. I think it was a little more stressful with the whole offers, and aggreeing to fix things and all.

 

[Swimalie]

No, but you can still budget it into the 25% calculation. My question was to ask if Clark Howard includes that amount (weather or not you have it in your escrow account) AND to ask if he says it is based on a 15 year or 30 year.

Dawn

I believe Clark Howard bases his on what you can afford but he prefers 15 year for most people. And he does include the extras like taxes and insurance in the 25%.

Next question: You would pay more in interest just to not have an escrow account? Have you done the math on that? I can't imagine you would come out ahead.

Dawn

No, I do not pay more in interest to not have escrow. I actually just refinanced and got a lower rate than friends of mine who are escrowing - at the same time from a similar bank. We didn't pay any extra fees, either. Our FICO score is well over 800 for both my husband and I. We come out ahead. We get our tax bill in the mail and send in a check. Our home owners insurance comes in with our auto insurance.

 

[dfchelbay]

Good ideas! Especially the utility thing. I wonder about that, especially if the new house would have gas or oil or something else for heat (we have electric now).

DO THIS...we did not. Boy were we surprised with how much it costs to heat, cool, and irrigation of this home. Our utilities are as much as the mortgage per month. Especially the heat and water. We had no idea that the cost of water in the township we live in is so expensive. We have paid bills as much as $1,000...and no there was no leak....and no, we do not have a pool, and there are only two of us living in this house. Don't even get me started on the property taxes here...they're just $200 shy of another mortgage payment each month. Ugh!

ETA - We do not have an escrow account either. When we bought the house, we didn't want an escrow account. We would pay the taxes and homeowners insurance ourselves. We were punished with a fee of I think $200 or $250 for NOT having an escrow account. There was no mortgage interest rate increase or anything like that. Just that one time penalty fee.

 

[angwill]

Thanks for clarifying Clark Howards methods for buying a home. I had just seen him on his show and didn't catch everything he said.

 

[angwill]

Any suggestions on good mortgage companies?

 

[quentina]

Whoa. Somehow I missed a few posts there. Not sure how I did that. As for the Cg thing, I won't be making $250,000 or $500, 000 on the sale, so that's good. (well, it would be lovely if I was making that much, but we're not even close!)



Well, my son actually goes to Catholic school, so we're looking closer to his school, so that's good. And he's only in kindy, so no major friend losses at stake.



We do have a realtor and we need to talk to the bank. I'm just always suspicious that they will try to talk me into more house than I can truly afford.

Every time I get this idea to move, I end up coming back around to thinking that maybe I should just stay put! Moving seems like SO much work! If I had to move, it would be one thing, but to willingly pack up all this crap and take it somewhere else (or worse, pay movers to move it) just seems so insane! We'll see where we end up, we did see some nice houses the other day.

As we are neighbors, I need to ask where are you looking at (area). There is an amazing forclosure near me (I knew the owner). House is new (less than 3 years old), she just put a $40,000 basement remodel into it. 3 bedroom....2.5 baths..2 car garage, finished basement. Not sure what she paid, I would say over 300,000.....going for $180,000. If I didn't just buy this one, I would be moving there. PM me if you want location etc.

 

[Molliday]

You don't have to escrow. We don't and never have. Some banks charge a fee if you don't escrow and those banks won't get our business. We figure, even with the pathetic interest rates, I'd rather have the money in my account and let me pay it than the bank keep it.

Clark Howard's method gets my vote. I have been listening to him since 1985 and he has helped me save a lot of money.

A lot of lenders are requiring an escrow account now, unless you put 20% down, or more. It used to be that you could waive it, but that's no longer the case.

A LOT has changed in the past year. We're due to close in the spring on a new house. You would not believe the hoops we've had to jump through, and we have impeccable credit and a good income.

Based off of what we've had to submit, and the requirements we've had to meet, it would be very difficult to get more of a mortgage than you could afford.

 

[rbork]

OP - here's my 2 cents to answer your original questions. Find a good seasoned real estate agent in your area. One that actually SELLS homes in your area. They have experience in getting you to the table. A good one will meet with you and go over your questions and let you know what to expect.
If you decide to sell, price it right. Don't waste DOM with to high price in this market. Everything is sitting a long time and bottom line you want a solid offer that gets you to the table. Take emotion out of the equation and start decluttering. Less to tidy for showing if there's not alot of "stuff".
Good Luck with your decision.

 

[FINFAN]

best info I can offer is not to be shocked if you have to drop 20,000 (or more) from what you think your "rock bottom " sale price is for your current home, and also for 3-5 grand in "mysterious" costs...everything from eating out, possible hiring a cleaning service from time to time,getting carpets professionally cleaned, updating items in your current home, immediate needs in the next home, you get the idea. Gone are the days of putting your house on the market, heading to WDW for a vacation and getting offers while you are gone and your home is clean ( how sweet would THAT be?) We will eventally be downsizing within the next 3-10 years, and it will take us 3 years to be able to afford the items we pretty much will have to/ need to do, new roof ,furnace/water heater, windows, carpet, stove, overall painting and refinishing the hardwood floors. Our home will be 17 years this month. Thise items will be a huge cost to us, plus realtor fees, we are looking at numbers close to 50,000 to move, but our taxes here are getting insane, and most of those items will have to be done even if we stay so really, have to face them anyway. I would make sure you have a SOLID contract on your current home first, if not a finalized sale...you can ask if you can rent back from your new owners, or rent B4 buying a new home...again, it can happen that way so budget for a double move...if it is smooth, great, but I would budget for any scenario. Keeping a place clean is hard, es[ecialy with little ones, homework, dinner, and buyers today want perfect, and updated...basically move in ready or the opposite, the forclosure that is dirt cheap and allows them to make repairs before even moving in. You can sell, it will take some time, a lot of patience and a sense of humor. One thing that MAY help get you thru it? Budget for a trip to WDW once you make your transition..lol.....the brass ring!

 

[labdogs42]

As much as I'd love a fourth bedroom and a bigger yard, we have come to the conclusion that it just isn't worth the major hassle that buying, selling, and moving would be right now. You guys really made some good points and made me think about some things that hadn't occurred to me.


Also, it turns out that our taxes are some of the lowest in the greater Lehigh Valley area. I really had no idea how low until I started looking around. WOW! We are getting a real deal where we live. Can't overlook that!