Buying a house.. should we jump on this?

[geckodani]

Okay. Here are the facts.

1. DH and I have an apartment lease that does not end until May 2010. Subject to our lease, if we move out before May, we will still be responsible for making payments ($775) until they are able to lease the apartment, or until our lease ends.

2. 8K federal first time homebuyer incentive ends soon (must close by Nov 30th).

3. We''re confirming this, but based on our 2008 taxes, we may qualify for an additional 7.5K in state down payment assistance if we buy a house this year. We will NOT qualify based on our 2009 tax estimate.

So. Assuming we qualify for the additional assistance, methinks we should jump on this, even though we''d still owe on the apartment. There''s no guarantee that there will be any federal incentive next year, and we definitely won''t qualify for the state assistance if we buy a house in 2010. We were planning to get a house when our lease is up anyway.

Now here are the emotional bits:

Holy crap we''re going to have to do this FAST.

I hate that we''ll owe money on our crappy apartment. It absolutely kills me.

But - the incentives seem too good to pass up, even though we''ll owe.

Thoughts? I''m freaking, LOL.

 

[Loves Vintage]

Do you have a house in mind already?

Is the apartment in a complex run by a management company or is it in a house owned by an individual? *Technically*, you would be liable for the remaining monthly payments (though the landlord has a duty to mitigate his losses, i.e. use reasonable efforts to find replacement tenants.) Honestly, in neither situation, whether it is a management company or an individual owner, would I pay that much in rent. I would approach the owners (after I found a house and had a contract), tell them I want to leave on such and such date, and would forfeit my security deposit and maybe pay an additional month's rent in exchange for their agreement to terminate the lease early.

If you do not pay the remaining rent, the landlord would have to sue you to recover it. I own a house that I rent out. If my tenant left early, I would not return her security deposit and would send her a letter explaining why, but as to the remaining rent, I would just let it go. People are different though. Some people would bring a legal action, even if it was just one month's rent due. To me, it would not be worth the effort (and I'm a lawyer!!) To some people, it might be. Also, for me, if I knew my tenant wanted to move on and buy property of her own, I would not get in her way by enforcing the lease against her. But, again, that's just the type of person I am. What is your landlord like?

ETA: With those incentives, I would not hesitate!! Time to start looking and fast!!!

 

[geckodani]

Large corporate owned apartment complex. We have already tried to negotiate a buy-out with no success. *sigh* And I get the feeling they would come after us for the money.

That said, we're still talking about $15,500 in incentives, with the maximum amount we'd owe on the apartment being $5,425. We'd still have $10,500 in incentives, money that won't be there next year.

I'm cursing the day I signed this lease, but it made sense at the time!

ETA: We have several houses we want to look at. One in particular that really seems to have everything on our wishlist, at least on paper.

ETAA: DH has character and fitness examination for the bar soon - we can't be getting sued.

 

[Loves Vintage]

Is there an option to sublease?

 

[neatfreak]

GD-Assuming that you do in fact qualify for all the incentives (like make sure your house is expensive enough to qualify for the full $8k) then I say go for it IF YOU FIND A HOUSE YOU LOVE. If you don't-don't do it just for a few thousand dollars. And if it stresses you out-don't do it either.

When you are buying a house a few thousand here or there doesn't make a huge difference and the market might drop again anyway.

That being said, about your rent, you also can usually help mitigate the damages by finding a new tenant. You can advertise, show the place, then go to the complex and say "here's your new tenant". As long as the tenant meets the same standards you did to rent the place, they can't really say no. This is advantagous to you because in many states while they are technically required to mitigate the damages and find a new tenant, if this is a huge complex they can simply put AN AD out for the apartment, but they only have to show yours first if the person coming in to look says 'I want to see 5B". Otherwise they can often (depending on the state) rent yours LAST so that they keep their income stream.

It isn't pretty-but having worked at a tenant rights center I can assure you it happens all the time. So be proactive.

 

[geckodani]

Yes, subleasing is an option, and one that we will definitely consider. And definitely NOT buying a house just for the sake of buying a house. Must love it!

Neatfreak - Good call on making sure we'd qualify for the full 8K. I'll make sure I check on it.

ETA: This is going to stress me out just as much in May, LOL. I'm a spaz.

 

[MichelleCarmen]

ETA - seems most of my questions were answered.

Have you checked your paperwork to see if you can sub-lease or are you thinking it's an option? I haven't seen that option around in a LONG time. Also, again, what is the demand for rentals in your area? Are there many vacant apartments?


What kind of apartment are you in? Is it a little building or a huge complex? What is the demand in your area? We moved out before our lease was up and due to location, very little is up for rent. There are NO apartments in our area and one of the big neighborhoods doesn't even permit renting as accoring to the HOA. What we did when we broke our lease is put signs up and took initive in getting the place occupied. It was w/in two weeks! Our rent was alot more though. . .$1,500 per month and we couldn't afford that plus the $1,800 we pay now!

Sorry, if I missed in your other posts. One thing you didn't mention here is if you found a house you like. Have you?

 

[geckodani]

Date: 8/27/2009 11:40:40 AM
Author: MC
ETA - seems most of my questions were answered.

Have you checked your paperwork to see if you can sub-lease or are you thinking it's an option? I haven't seen that option around in a LONG time. Also, again, what is the demand for rentals in your area? Are there many vacant apartments?


What kind of apartment are you in? Is it a little building or a huge complex? What is the demand in your area? We moved out before our lease was up and due to location, very little is up for rent. There are NO apartments in our area and one of the big neighborhoods doesn't even permit renting as accoring to the HOA. What we did when we broke our lease is put signs up and took initive in getting the place occupied. It was w/in two weeks! Our rent was alot more though. . .$1,500 per month and we couldn't afford that plus the $1,800 we pay now!

Sorry, if I missed in your other posts. One thing you didn't mention here is if you found a house you like. Have you?

Hi MC.

We have checked our paperwork, and we can sublease. However, DH and I were discussing it, and the legistical nightmare of such a move would suck.

It's a huge apartment complex. Demand is high in my area, as we are directly across from a university (complex is mostly college kids and local business folks). The ground floor apartment adjacent to ours was leased within a month of it going vacant. We're in a good location in the complex, and I do have high hopes that it would lease again pretty quickly.

We've been sort of scoping out houses out of curiosity, and found one that (at least on paper) has literally EVERYTHING we're looking for, with the possible exception of school district. But since we've got a minimum of 7 years before a hypothetical child (not planning on kids for another few years, but it could happen) would be in school, so that's not a HUGE concern right now.

ETA: I haven't posted before about this, so you're not missing anything.

This is my first holy crap panic induced post, LOL!

 

[geckodani]

I should also add that our apartment has started to show mold in some places, which the complex is bleaching and painting over. It''s one of the reasons we''re considering leaving. We''ve also had major maintenance issues with appliances etc. And I''d hate to sublet an apartment with the potential to have major mold issues.

 

[MichelleCarmen]

Date: 8/27/2009 11:55:26 AM
Author: geckodani
I should also add that our apartment has started to show mold in some places, which the complex is bleaching and painting over. It's one of the reasons we're considering leaving. We've also had major maintenance issues with appliances etc. And I'd hate to sublet an apartment with the potential to have major mold issues.

Sounds like you have nothing to worry about! The apartment should be rented soon. Did the manager give you a form to sign re: mold?

I'm going offline now to make breakfast, so this will be quick, but look up Engrossing Senate Bill (ESB) 5049 (it's Wash. State Law, but possibly something similar exists where you live). Landlords are required to notify tenants about mold. Call someone to see how long they believe the mold was there (was there mold and had it been bleached and painted over before? Is there proof that doing this will kill all the mold, or will it just poke through again at a later point?). Could your manager known, yet not informed you? If there is mold, possibly that would be a way for you to immediately abandon your apartment. Unfortunately I know very little about this. . .the owner we rented from gave us a print out of the law and I didn't read it until just now.

Best of luck finding a home!

 

[lucyandroger]

Hi Geckodani,

Here''s my take on it. If you go see the house that looks great on paper and you LOVE it in person, then I think you should try to make it work. It will definitely be stressful but you''d end up in a great house and in the end, save yourself a ton of cash. It sounds like you would only be responsible for a few months extra rent if you''re in a highly desirable neighborhood. I''m sure there''s someone who would want an apartment just for the spring semester.

BUT, if you can''t find a house you LOVE, then I would just wait it out. If you end up pushing yourselves quickly into a house that you''re not 100% happy with, you''ll just end up spending more in the end to fix it or move somewhere else. Plus, I think it''s worth $15,000 to be in a house you love vs. one that was just available immediately.

Good luck on your house search!

 

[neatfreak]

Date: 8/27/2009 12:01:39 PM
Author: MC

Date: 8/27/2009 11:55:26 AM

Author: geckodani

I should also add that our apartment has started to show mold in some places, which the complex is bleaching and painting over. It''s one of the reasons we''re considering leaving. We''ve also had major maintenance issues with appliances etc. And I''d hate to sublet an apartment with the potential to have major mold issues.

Sounds like you have nothing to worry about! The apartment should be rented soon. Did the manager give you a form to sign re: mold?


I''m going offline now to make breakfast, so this will be quick, but look up Engrossing Senate Bill (ESB) 5049 (it''s Wash. State Law, but possibly something similar exists where you live). Landlords are required to notify tenants about mold. Call someone to see how long they believe the mold was there (was there mold and had it been bleached and painted over before? Is there proof that doing this will kill all the mold, or will it just poke through again at a later point?). Could your manager known, yet not informed you? If there is mold, possibly that would be a way for you to immediately abandon your apartment. Unfortunately I know very little about this. . .the owner we rented from gave us a print out of the law and I didn''t read it until just now.


Best of luck finding a home!

That''s a state bill right? Maybe GD is in WA and it would apply-but it doesn''t unless she is also in WA. Sorry GD I can''t remember where you are but I wanted to say it was the midwest somewhere...

 

[Aloros]

Given that the apartment is right across from a University, you should have no problem finding a tenant.

I''d say go for it!

 

[geckodani]

Date: 8/27/2009 12:04:11 PM
Author: lucyandroger
Hi Geckodani,

Here''s my take on it. If you go see the house that looks great on paper and you LOVE it in person, then I think you should try to make it work. It will definitely be stressful but you''d end up in a great house and in the end, save yourself a ton of cash. It sounds like you would only be responsible for a few months extra rent if you''re in a highly desirable neighborhood. I''m sure there''s someone who would want an apartment just for the spring semester.

BUT, if you can''t find a house you LOVE, then I would just wait it out. If you end up pushing yourselves quickly into a house that you''re not 100% happy with, you''ll just end up spending more in the end to fix it or move somewhere else. Plus, I think it''s worth $15,000 to be in a house you love vs. one that was just available immediately.

Good luck on your house search!

Definitely! Good points, and I feel the same way. I''m not going to buy a house just to buy a house, no worries.

MC - I''ll have to check into the mold laws. I did take pictures of the mold before they painted over it. Hmmmm.

 

[geckodani]

Date: 8/27/2009 12:05:03 PM
Author: neatfreak

Date: 8/27/2009 12:01:39 PM
Author: MC

Date: 8/27/2009 11:55:26 AM

Author: geckodani

I should also add that our apartment has started to show mold in some places, which the complex is bleaching and painting over. It''s one of the reasons we''re considering leaving. We''ve also had major maintenance issues with appliances etc. And I''d hate to sublet an apartment with the potential to have major mold issues.

Sounds like you have nothing to worry about! The apartment should be rented soon. Did the manager give you a form to sign re: mold?


I''m going offline now to make breakfast, so this will be quick, but look up Engrossing Senate Bill (ESB) 5049 (it''s Wash. State Law, but possibly something similar exists where you live). Landlords are required to notify tenants about mold. Call someone to see how long they believe the mold was there (was there mold and had it been bleached and painted over before? Is there proof that doing this will kill all the mold, or will it just poke through again at a later point?). Could your manager known, yet not informed you? If there is mold, possibly that would be a way for you to immediately abandon your apartment. Unfortunately I know very little about this. . .the owner we rented from gave us a print out of the law and I didn''t read it until just now.


Best of luck finding a home!

That''s a state bill right? Maybe GD is in WA and it would apply-but it doesn''t unless she is also in WA. Sorry GD I can''t remember where you are but I wanted to say it was the midwest somewhere...

We''re in MI, but I''m going to look into it. Our last place made us sign a mold waiver, but I do not believe we did for this one.

Aloros - The more I think about it, the more I agree with that assessment too!

Have I mentioned how much I appreciate you all? Because I do.

 

[geckodani]

No mold laws in Michigan. Meh.

 

[neatfreak]

Date: 8/27/2009 12:34:48 PM
Author: geckodani
No mold laws in Michigan. Meh.

Unfortunately most states don''t. I honestly think your best course of action is to get rental applications from the office and show/advertise it yourself. Then when you have a few apps (or one you think will qualify) send it over to the office. Then in most states they legally can''t try to rent that person a different empty place because they applied for YOURS.

 

[lovegem]

Gecko, Is there any way that you can get someone to take over your lease entirely by giving them an incentive? I ask that because we did that couple years back when DH had to relocate and it got us out of a lease that still got 10 months left.

There are two ways to do it that may protect you. 1. have the person sign the lease and give 2 post-dated checks to the apt complex to help pay the new tenant''s rent (if it is huge apt complex, they may not want to do that for you). 2. Or, you can wait for the confirmation from the apt manager to tell you that they have receive everything from the new tenant and you are officially out of the hook, then give the new tenant some cash (again, could be 1 or 2 months worth of rent depends on your initial agreement).

When we did that, we gave a small amount of money (only $200 to help them move). How much money you are willing to give really depends on how desirable your area is and most importantly, timing. If you are willing to give up $5k to get off your term, then you may want to give 1 or 2 months free rent to the new tenant.

 

[geckodani]

Neatfreak, lovegem - I''ll definitely look into it. I still would feel bad about renting a potentially moldy apartment. That said, it''s still a good idea.

 

[geckodani]

Date: 8/27/2009 12:38:43 PM
Author: lovegem
Gecko, Is there any way that you can get someone to take over your lease entirely by giving them an incentive? I ask that because we did that couple years back when DH had to relocate and it got us out of a lease that still got 10 months left.

There are two ways to do it that may protect you. 1. have the person sign the lease and give 2 post-dated checks to the apt complex to help pay the new tenant''s rent (if it is huge apt complex, they may not want to do that for you). 2. Or, you can wait for the confirmation from the apt manager to tell you that they have receive everything from the new tenant and you are officially out of the hook, then give the new tenant some cash (again, could be 1 or 2 months worth of rent depends on your initial agreement).

When we did that, we gave a small amount of money (only $200 to help them move). How much money you are willing to give really depends on how desirable your area is and most importantly, timing. If you are willing to give up $5k to get off your term, then you may want to give 1 or 2 months free rent to the new tenant.

Good point.

 

[D&T]

Don''t let deadlines determine when you are ready to buy, but if you were already thinking about it, and you can sublease (per your agreement- check your lease agreement, sometimes, you might have to pay a fee on top of it, but not much) then you''re off to the races, provided you find a suitable home. Good Luck Dani!

 

[geckodani]

Well. Might be a moot point anyway. Looks like we might not qualify for one of the incentives after all.

 

[D&T]

Date: 8/27/2009 3:12:21 PM
Author: geckodani
Well. Might be a moot point anyway. Looks like we might not qualify for one of the incentives after all.

aww bummer Dani

did you already ask your potential lender about it?

 

[geckodani]

Date: 8/27/2009 3:15:48 PM
Author: D&T

Date: 8/27/2009 3:12:21 PM
Author: geckodani
Well. Might be a moot point anyway. Looks like we might not qualify for one of the incentives after all.

aww bummer Dani

did you already ask your potential lender about it?

The hubs is in the process of talking witha potential lender. Now there's hope again. LOL. This is craziness.

ETA: Okay, more than just a glimmer now. Definite hopage here.

 

[Italiahaircolor]

Date: 8/27/2009 3:38:36 PM
Author: geckodani

Date: 8/27/2009 3:15:48 PM
Author: D&T

Date: 8/27/2009 3:12:21 PM
Author: geckodani
Well. Might be a moot point anyway. Looks like we might not qualify for one of the incentives after all.

aww bummer Dani

did you already ask your potential lender about it?

The hubs is in the process of talking witha potential lender. Now there''s hope again. LOL. This is craziness.

ETA: Okay, more than just a glimmer now. Definite hopage here.

I hope this works out for you! Homeownership is wonderful, and exciting!! I am definately throwing dust at you right now.

 

[geckodani]

Date: 8/27/2009 4:51:38 PM
Author: Italiahaircolor

I hope this works out for you! Homeownership is wonderful, and exciting!! I am definately throwing dust at you right now.

Thanks Italiah! It''ll work out in the end, even if we don''t manage to qualify for everything.

We have calls in to lenders, and a meeting set up with a realtor. We spoke with her last night, and unfortunately a lot of the houses in our price range are short sales, which are anything but short to close on! So we may miss the Nov 30th deadline for closing. Basically if we can''t find something we love ASAP that we could close on before Nov 30th, we''re going to back off and take our time for a May closing. Apparantly the paperwork for some of the bank owned properties can take that long anyway! So... that''s where we''re at!

I really do hope we''re able to take advantage of all the incentives. But if we''re not, so be it. DH and I aren''t the DIY types (well, I can do little things, but big projects would require the cavalry) so that''s a concern too.

I''ll keep you all posted, and thanks so much for helping me get my head sorted out!

 

[Italiahaircolor]

Date: 8/28/2009 8:47:10 AM
Author: geckodani

Date: 8/27/2009 4:51:38 PM
Author: Italiahaircolor

I hope this works out for you! Homeownership is wonderful, and exciting!! I am definately throwing dust at you right now.

Thanks Italiah! It''ll work out in the end, even if we don''t manage to qualify for everything.

We have calls in to lenders, and a meeting set up with a realtor. We spoke with her last night, and unfortunately a lot of the houses in our price range are short sales, which are anything but short to close on! So we may miss the Nov 30th deadline for closing. Basically if we can''t find something we love ASAP that we could close on before Nov 30th, we''re going to back off and take our time for a May closing. Apparantly the paperwork for some of the bank owned properties can take that long anyway! So... that''s where we''re at!

I really do hope we''re able to take advantage of all the incentives. But if we''re not, so be it. DH and I aren''t the DIY types (well, I can do little things, but big projects would require the cavalry) so that''s a concern too.

I''ll keep you all posted, and thanks so much for helping me get my head sorted out!

So smart! I am thrilled to hear that you''re shopping smart. Going in knowing your limitations as far as repairs, understanding that short sales are really oxymorons, and that you shouldn''t be buying under the gun will help you a lot in the process. Yes the incentives are great...but if you get roped into a short sale, which is going to be sold "as is" and you aren''t fully aware of all the nuts and bolt problems--that 14k is going to go in the blink of an eye, esspecially if you''re hiring manpower.

Keep us posted...we''re always here to weigh in and help out!!!

 

[geckodani]

Date: 8/28/2009 10:33:57 AM
Author: Italiahaircolor

So smart! I am thrilled to hear that you''re shopping smart. Going in knowing your limitations as far as repairs, understanding that short sales are really oxymorons, and that you shouldn''t be buying under the gun will help you a lot in the process. Yes the incentives are great...but if you get roped into a short sale, which is going to be sold ''as is'' and you aren''t fully aware of all the nuts and bolt problems--that 14k is going to go in the blink of an eye, esspecially if you''re hiring manpower.

Keep us posted...we''re always here to weigh in and help out!!!

This is one of the things I adore about PS! Well, we''re well on our way now! Wheeee!

I am still freaked, but the DH just finished law school and is leaning towards going into real estate, so this doesn''t freak him out at all. He understands it all, LOL.

It''s an odd role reversal. Usually he''s panicking and I''m being reasonable. This time it''s the other way around. Odd.

"As is" = run screaming!!! LOL!

 

[NewEnglandLady]

Gecko, I know the incentives are enticing, but definitely don''t buy based solely on those. I know our realtor keeps bringing up the $8K tax credit, but it''s a drop in the bucket. My feeling is that if you need the $8K to afford the house, it''s a sign you''re stretching too far. It reminds me of the Clash for Clunkers program on a bigger scale--20% of people who participated in that program regret it because they''re struggling with the montly payments.

It''s fantastic that your DH is comfortable with the process of this, though! And it sounds like you guys are doing a ton of homework, which I feel is the biggest part. We''re also in the pre-approval process and I feel like I''ve spent hours mulling over all the details. And this is just the beginning!I wish you tons of luck!

 

[geckodani]

Date: 8/28/2009 12:24:30 PM
Author: NewEnglandLady
Gecko, I know the incentives are enticing, but definitely don't buy based solely on those. I know our realtor keeps bringing up the $8K tax credit, but it's a drop in the bucket. My feeling is that if you need the $8K to afford the house, it's a sign you're stretching too far. It reminds me of the Clash for Clunkers program on a bigger scale--20% of people who participated in that program regret it because they're struggling with the montly payments.

It's fantastic that your DH is comfortable with the process of this, though! And it sounds like you guys are doing a ton of homework, which I feel is the biggest part. We're also in the pre-approval process and I feel like I've spent hours mulling over all the details. And this is just the beginning!I wish you tons of luck!

Best of luck to you as well! It's just such a BIG deal!

The only reason we'd need the 8k is because of paying on the apartment. If we wait until the lease is up, it's no problem, since we do have down payment money in the bank.

The $7500 MSHDA down payment assistance is really a 0% interest loan, due when we either sell the house or pay off the mortgage. Which is nice and all, and it would help make the monthly payments lower, but it's not "free money" like so many people seem to think. It's a loan, not a gift. *shrug* We're trucking along.

The hubs just cracked me up. He wasn't getting answers from potential lenders. So he sent a mass email to all the FHA approved MSHDA lenders, with all their addresses clearly visible in the email, and basically sat back to see who responded.

Whe have 6 potentials now, including a guy that's close, and seems to have a good personality, based on his email response.