Advice for First-Time Home Buyer?

This is not at all a good decision, OP. Sorry, but someone has to tell you.

First, your age has no bearing on the situation. None. Second, if money is at all an issue, you shouldn't be buying a home. You are a putting too little down. Ten percent is nowhere near enough. I wouldn't begin the process until you have at least 30%. Third, you are committing the common mistake of thinking your home expenses are a mortgage, an HOA, an insurance. You have to furnish it, remodel it, maintain it, buy appliances for it, insure it for more than you thought, and then worry about your all your neighbors exerting the same amount of effort, yada, yada. And then you have to turn around and reevaluate of that every five or so years. Fourth, if you are concerned about affording retirement, your money belongs in the market, not in a house. Buying a home severely hobbles your ability to fund your retirement portfolio. And fifth, you don't have the mindset for ownership. At your income and asset level, you need to be enthused to spend a large chunk of time and money in a single location, forgoing transfers and promotions. Buying a house isn't something you ever have to do at all. Investing, however, is. Grow your warchest and you'll easily be able to put 40-50% down in cash and live high on the hog.

Also, because I rambled and forgot to mention it, you have nowhere near the homebuying knowledge required to begin the process. I say this not to chastise you, but to warn you away from making an overwhelming financial decision simply because you feel that you "should" be making it. If you really want to own a home, you can get there. If it causes you too much anxiety, just forgo it.

R1 I'm a but confused by some of what you wrote.

I make a pretty good living, over six figures. I work for a small nonprofit where I have been working for over a decade, and there are no opportunities for transfers, and I don't plan to leave this city. I don't live to work and I'm not aggressively upwardly mobile. I put five percent of my gross salary into retirement and my employer doubles that, so they put in 10 percent for a total of 15 percent.

I would like to put more down. That's a primary reason I waited so long. (I also had very serious health problems in my 30s which took years to figure out and were expensive to treat.) But thirty percent? I have never heard anyone advise needing at least 30 percent down.

If I were to buy a house in the range in which I am looking, it would be about 30 percent of my monthly income and I can swing that and significantly more because I live well below my means.

I appreciate your advice and I will read it again for nuggets, but you have made some rather odd assumptions about my intentions to seek out promotions that would force me to move. That doesn't apply to my life at all.

If you do buy:

1. Right away, put together a list of all the maintenance work your home needs and corresponding local services (sourced from friends and neighbors). There is a ton of small-but-regular maintenance work you need to keep on top of, even in a condo. Changing your air filters, having your water heater checked periodically, etc. My big mistake was falling behind on this and having a bunch of things start falling apart and breaking after ~5 years, then needing repairs all at once. You can ask your home inspector to point out things you’ll need to do as you go around with him on the inspection.

2. Work to develop a good relationship with the people who share your building, however hostile or annoying they may be. You will need them and will have to work with them whether you like them or not.

3. Have any painting or work to the floors done before you move your stuff in. Much easier.

4. Your agent will pressure you to spend at the high end of your budget. Stick to your guns and don’t let this sway you. Similarly, don’t let yourself be pushed by the fear of losing a condo you don’t even really like (“lots of people are making bids, I guess it’s a good one!”).

I'd second putting more down up front as it significantly lowers your monthly mortgage. Also, rates are incredibly low at the moment so this is a good time to pounce on the market to take advantage of them. My advice is location location location! You can renovate and ad amenities, but you can't personally change your neighborhood.

I do understand that maintenance is regular and not cheap. It's another reason I have held off for a long time—not having to do that myself is a convenient luxury.

But I have rented a condo from a private owner for almost six years and I love this neighborhood, I like the building and my apartment, but it is too small to stay in for the long haul, I have some insecurity knowing he could decide to sell and kick me out at any given time, and there are things I'd like to do to make it more "home" and I can't make modifications to someone else's property. I just think I am ready psychologically to buy.

I have never bought into the YOU HAVE TO BE A HOMEOWNER!!!! hype. But now I feel pretty secure and relatively well positioned to buy. Monthly mortgage and associated costs would be only a few hundred more than I spend on rent, and I am presently saving a lot more than that and would feel comfortable with the monthly expenses, even overpaying them.

My one source of insecurity is that I am single and so there is no fallback if I lost my job, no one to carry me.

Buy at the top OP. Great idea.

Remember, OP. In the long run, we are ALL just renting.

[quote] I just think I am ready psychologically to buy.

Then go for it. You're doing the right thing.

Try to buy something that will sell easily if you need to move on. Don't buy some shithole that's been on the market for months. Or some one bedroom box in a bland building. Something that people will always want. Top floor. Good views. Can you afford a small house?

OP, you're getting some OK advice, but a lot of bad advice mixed in. You don't need 20-30% down. In a low interest rate and inflationary environment, you're better off putting your cash elsewhere. You want to have some "skin in the game" and not be underwater on your new home, but don't put all your cash reserves into the down payment and become "house poor." Run the numbers and see what makes sense in terms of balancing equity in the home with liquidity for life expenses. 43 is not old at all. You need a place to live no matter what age you are. Find a house/condo you love and can live in for a good while and start building equity. I do agree with the comment that your home ownership expenses isn't just a mortgage and insurance - factor in maintenance, furniture, emergency expenses, etc. Make sure you can afford the "all in costs" so you are able to sleep at night and have enough of a financial cushion "just in case." Good luck and congrats in advance on home ownership!

It also depends on which state you live in, obey. Don’t invest in some shit hole state.

Parking parking parking.

1. Don’t buy a house with overhanging trees or bushes belonging to somebody else.

2. Don’t buy a house that faces the wrong direction when it comes to snow/ice melting.

R10 Thanks. I would need to buy certain furnishings like curtains, maybe rugs, etc. but not much furniture. I'd be moving from a small one-bedroom (packed with furniture, most of it new) to a small one-bedroom.

But yeah, anticipating maintenance costs is kind of daunting.

I am in Northwest DC. The housing market here tends to be pretty stable because of constant demand and generally high salaries.

Almost no one puts down 20% OP. The most you can put down the better of course, but don't let that be the reason that dissuades you from buying.

Per Business Insider, the average age of a 1st time home buyer is 45, so don't let that bother you either.

I agree, that the older I get, the more I am happy I have a home. Unless you have a rent controlled plan (pretty unusual), then your rent can shoot up at any time. At least with owning, you build equity and can plan on a stable payment.

I do kind of agree with R7 though. It is a seller's market right now. If you don't find what you like, don't buy because you think you "have" to right now.

Condos are nice because if you aren't handy, maintenance can be a real bitch, especially on a single person.

Is this in NYC? I've only heard of co-ops in NY, Boston, Chicago, etc.

Parking and or subway access should be thought of too.

R15 Parking is on my list. Where I live now, I'm in a little pocket near everything but fairly hidden from normal traffic patterns and street parking is almost always available right next to my building. I'm only looking in areas within walking distance (for me, that's about 1.5 miles) from downtown DC because I prefer to walk to work. I only own a car to visit family who live in the suburbs.

Run fast, run hard, run deep from any development that has an HOA, especially if the HOA is managed by Associa, run by a scumbag Republican from Texas. Far too many HOAs are little dictatorships run by people with Hitler/Stalin/Mao fantasies of power.

I consider purchasing a home one of my best decisions ever, yes there are unexpected expenses but I purchased a home I could easily afford for my first home, not my dream home at about 40 years old. I took out a 15 year mortgage and paid it off in 9 years and lived in it for 11 more years mortgage free while I saved more money and was able to purchase my dream home with cash.

My advice even if you take a 30 year mortgage make extra payments because you don't want to still be paying a mortgage in your 70's.

Before I bought I had rented several house, I hate apartments, and like your fear I had the owners decide to sell their homes rather than continue to be landlords.

Watch the topography of the lot, hills are generally bad. Buy in the best location you can afford that meets your needs.

R18 That's my plan, to buy less than I can afford and overpay the mortgage by as much as I can while also saving some to savings for when expenses pop up.

One of the reasons I finally feel prepared is my stage in life. After having serious medical problems and getting through, I've learned about negotiating healthcare, which is a major potential unexpected expense. I know how expensive dental work is. I know reliably how much I spend on food, entertainment, clothing, etc. I own as much furniture as I need, and I have bought things I really like a lot and don't want to replace. I currently spend 21 percent of my gross monthly salary on rent.

I just calculated monthly expenses if I were to buy a condo at the very top of my price range (which I don't expect to spend) with a $670 monthly HOA fee (more than I would pay), plus PMI, taxes, etc. That would come out to 30 percent of my monthly gross income or 46 percent of my take-home pay.

Rule of thumb is to stick within 30% of your take home pay.

Remember with historic low interest rate, you will want to avoid refinancing if possible so make sure you can drop PMI without having to refinance. Otherwise come up with 20% down. And for the love of God don’t buy any with the proper inspections.

Also remember as the property ages, HOA will keep going up. You might in 10-15 years end up with your HOA being twice as much as what it is now, so keep that in mind.

Also, don’t let the bank trick you into an ARM (that’s where the interest rate resets at a predetermined interval). Go fixed rate.

R22 I would rent forever before getting an ARM or balloon mortgage.

And yeah, the HOA thing is a necessary evil, unfortunately, in this circumstance.

And that's the thing about co-ops I don't get. I have seen some listings that say the co-op fee is low and the additional fee will go away once the mortgage is paid off, etc. It makes me feel like a co-op would probably be a bad idea, including for resale one day.

DC housing market trend since 2010.

And thank you to the person who said not to feel pressured by losing "the perfect place." I certainly do latch onto things I want once I see them, but I am also a realist. I have been getting real estate alerts daily for at least three years. I've seen literally hundeds that I loved in pictures. They come and go. I am fine with waiting for something better to come along—that's actually why I am single!

R23– Co-ops are always a bad idea in my book because you have the co-op board having too much control over when and whom you can sell to

OP, I’d put together a list of must haves (dish washer, washing machine/dryer, etc), wishes and deal breakers. It’s been very helpful each time I’ve bought a home. Good luck!

I'm still thrown by the admonishment that no one should buy without a minimum of 30 percent down. Where does that come from?

I remember my grandmother told me when she bought her first house for $20,000, banks did not lend to anyone without 20 percent down, but I know that at some point that standard changed because the pay/real estate cost differential became too large to bear it. But 30 percent?

I'm trying to convince a colleague to buy a place, she is 45, and she's been renting all her life. The goal is to finish paying for our home before we become pensioner, in France the pension is about only half of our salary, paying a rent while being a pensioner is hell.

R29 Pensions for most Americans are...non-existent. We have to save money ourselves, and it has to be invested in the stock market to grow and outpace inflation rates.

We used to have pensions but decades ago, greedy business owners and economists decided it would be better for economic growth if people were forced to literally gamble our futures in stock retirement plans.

My dad worked for the federal government and he was one of the last hired on a traditional retirement pension. He makes 80 percent of his final pay level for the rest of his life, and the amount goes up every year for cost of living.

I am an age at which the Social Security agency has told us that Social Security funding will run out before we retire and only a small amount of our benefits (which we pay for throughout our career) will be paid to us,

I expect to live in poverty if I make it to retirement age. It's one of the reasons I am now thinking buying and paying off some kind of home will give me some level of security. I live now in a condo building that was built in the 1930s. It's lovely and I'd say the majority of my neighbors are retired. Many have lived here since at least the 60s or 70s. They seem to really love it here and it has been their home for a long, long time. I would consider buying here but it has a firm "no dogs" policy and I think I will want to adopt a dog at some point.

OP, you might consider hiring a fee-based financial planner to run some scenarios for you. He/she can help advise the pros/cons of high vs low down payments, mortgage rates, mortgage brokers, points, closing costs, etc. I found this was money well spent as I was also trying to figure out how buying a home would impact my eventual retirement plans. Finding a fee-based CFP (make sure they have this designation - means certified financial planner) isn't difficult. Just Google "CFP" and your city. The person I found was someone the local NBC affiliate always had on their morning show to discuss financial tips. I called him, we spoke, and I hired him. He gave me lots of great advice that I still follow 5 years later.

Now is both a good time to buy (low interest rates, mortgages are easy to get) and a bad time (housing has skyrocketed throughout the pandemic and it overinflated IMO). That said, it's a sellers' market at the moment and you're looking at the height of prices. The pandemic will end (or more likely we'll learn to live with it) and the market will cool. Most Realtors are predicting a cooling of the market this year, so unless the perfect opportunity presents itself, I'd wait.

Points are fees that you pay to lower your mortgage interest. Since mortgages are so low at this time, there is no point in paying points. Points are a lenders game that helps them make their profits up front. Bear in mind that the average mortgage is paid off in 7 years (usually through selling and buying something else), so the question to ask yourself is whether the savings in interest over 7 years equals or exceeds the points paid.

Your calculations at R20 are pretty much in line with industry standards. One of the criteria you're experiencing in getting pre-approved is the lender looking at your income and assessing that your monthly costs for home ownership are at or below about a third of your pre-tax income. Bear in mind that mortgage interest is deductible, so that bears significance on how much you can afford and that magical 30% - 33% figure.

Finally, HOAs are not universally bad. I've been through it all, from the nazi-esque overbearing HOAs that drive you insane to my current situation in which the HOA is a well-run, efficient and fair operation that has recently solved a plethora of community problems. Sure, it's infuriating when your HOA tells you that you can't paint your house a slightly difference shade of beige than what is codified in the docs; it's also a big relief when your neighbor paints his house in some god-awful color and the HOA deals with it and with the authority to take care of the problem (or better yet, prevents the neighbor from choosing some inappropriate color, decoration or modification). A helpful hint for prospective buyers is to visit the neighborhood of the home they're interested in and talk to the neighbors. People are outspoken when it comes to HOAs, and they'll give you the lowdown on the prospective HOA.

Finally, hire a Realtor! Do not listen to the haters here who rant about real estate and Realtors in general. Ask your friends and neighbors who they worked with when buying, and read as much as you can before engaging their services. Again, I've been through this more than the average person (I've been buying and selling real estate since I was a teenager), and a good Realtor is worth their weight in gold (and for some of them, that's a lot!). As the buyer, you're not paying the Realtor's fees (the seller always pays the realtors fees) so there is no incentive for you to worry about that on this side of the transaction. Also, everyone was a real estate newbie, and a good Realtor will guide you through the process and make the process a whole lot more manageable.

Good luck!

OP:

Putting down at least 20% of the purchase price means that you do not have to buy mortgage insurance which does NOT PROTECT YOU, but instead your lender.

Thank you, R32! I will likely hire a friend who is a realtor and has done well in the area. And as I understand it, while real estate is inflated throughout the country, it's relatively stable in this area for a number of reasons. It's a city like NYC and prices are consistently high but don't swell up a whole lot in housing bubbles. They do in surrounding suburbs, though. Right now, one-bedroom condos in very nice DC neighborhoods are going for $325k - $450k (and of course some cost more), and HOA fees range from about $350 to $1,200. When I lived in Arlington, Virginia, just outside of DC, back in 2003-4, one-bedroom condos were selling for $500k-$600k before they were built.

R31 Thank you. Any rough idea of what that might cost?

R33 Thanks. I am aware of that

I have sometimes owned condos and sometimes owned houses. I found condos today be a problem, bad boards, bad management, noise or smoking problems with adjoining units, arbitrary enforcement of rules, etc. Owning a home requires spending money maintenance, too, but I always felt better about the decision. And I didn’t have to wait for the committee decision making process, and then communicating with managers, etc.

Sorry about the typos above.

R35 R36

The only other thing I would add is be prepared for the closing costs, which are ridiculous.

Basically a $10K+ fee for the privilege of paying interest to a bank.

If you start with a 30-year, when you can, refinance to a 15-year.

My favorite story from when I was an HOA victim:

Got a package from UPS. The package was about a 9 inch cube cardboard box. I put it in the dumpster outside.

A couple of days later, I get a letter from the HOA manager stating she was going through the dumpster and found the package addressed to me, WHICH HAD NOT BEEN FLATENED, AS PER REGULATIONS. FURTHER VIOLATIONS FROM ME WOULD RESULT IN ME BEING FINED.

I couldn't believe I was paying $400.00 a month to have someone root through the garbage.

A single family home is not an option for me financially in this area and it wouldn't be a good option for me, anyway. I would like to have a garden, but aside from that there would be no upside and all downsides. I don't like and would resent having to maintain a lawn. I don't want to have to keep a large space clean and tidy. Condos seem like a lot less maintenance without having a roof and exterior siding/bricks/stone, a gutter, etc. My sister bought an adorable house a while ago and it has all kinds of problems, the greatest of which is that she is at the end of a town septic drainpipe that so far has clogged up underground three times and spits sewage up from all her drains. That kind of bullshit—no. I don't have kids or pets who need lots of space and a yard and I don't want that kind of maintenance. I figure a condo building of a substantial size has a lot of units and won't have this kind of problem because too many people are affected and will collectively demand resolution. I can get smaller in-unit repairs taken care of. The building I live in now has a full-time handyman who is here primarily to fix building problems but is also available at an hourly rate to fix problems within the unit. It's incredibly convenient and effective. I don't want a suburban house, and houses in nice neighborhoods of DC are all into the millions.

R35 - I agree with you re condos vs. houses. After renting all my life in expensive cities, I'm now also a first-time buyer planning to relocate to a smaller yet still vibrant city. I almost bought a condo but I couldn't reconcile many of the terms of the condo docs or the rules and regulations, or the fact I'd still have shared walls with neighbors. I felt like I was merely another renter, except now I had to provide for all the maintenance of everything inside my own unit while also paying monthly condo fees. I shifted to looking for houses to buy and while I'm a little intimidated by all the space even in a 2 BR, I'm also excited at the possbilities. I was able to up my maximum by $50,000 once condo association fees were removed from the equation. I have good friends who are home owners and real estate agents and they're giving me a lot of good advise specific for my own situation. I'm in my early 60s and plan to retire in few years, but will also become an independent contractor instead of a salaried employee, which is quite appealing to my current employer as they don't want to deal with the headache of salaried employees who live in other states any longer. I'll do 23-25% down, if it's at the high range of my max, closer to 30% if at the lower end.

Anyhow, sorry for the ramble, but solidarity to you, OP. I'm in the same situation, so I appreciate you starting this thread. I do recommend just playing with the alternate idea of buying a house instead of going condo. Just play with it like a game, add single, family detached homes to your feed in locales slightly outisde of your high-cost city. When I did that, I shifted my goal away from condos and townhouses and I've never looked back, even though I'm still viewing properties. Good luck!

One thing to consider if you’re going for condos in DC: if you buy in a large building with amenities, the HOA will likely be more authoritative and distant: you’ll have to follow certain set rules. If you buy in a smaller building (like a rowhouse that’s been split into condos), the HOA will just be you and a handful of neighbors, so it will be much more flexible but also will require you to put work in and get along with your neighbors to do things like fix a rodent issue. In that way it’s closer to the responsibility of owning a whole house.

R41 - oops, I was in the process of typing my comment and didn't see this one from you, OP. Ah well, wishing you the best of luck anyway!

OP I’m in a similar boat - I’m 42 and sick of renting and also work for a nonprofit. But I would never put down 10% on a mortgage - that makes the payments way too high and I don’t want to be paying it off for 35 years. I’m going to wait and save until I can do at least 20%. There is a reason everyone suggests 20%.

I think R1 made very good points even though they aren’t what we want to hear. I’m focusing on investing. It really sucks being over 40 and not owning a place but I know I’m not ready financially. Even though I hate renting.

Anyway - good luck and keep us posted. Where in DC are you looking? I’m from DC but live in NY now (I know, NY market is horrible).

R45 I'm looking in Northwest—Kalorama Triangle, Mount Pleasant, Adams Morgan or Dupont ideally. I'd consider Logan, Woodley Park and maybe Cleveland Park or the Cathedral areas but those would require me to take transportation to work and that would be a considerable additional expense. I really love my current location because I can walk to work.

[quote]I do agree with the comment that your home ownership expenses isn't just a mortgage and insurance - factor in maintenance, furniture, emergency expenses, etc.

Factor in furniture? WTF? Needing furniture is a given. And towels and a toothbrush and toothpaste and food in the cupboard. Someone I expect OP has arrived at age 43 confident that he lives well within his means equally well aware that furniture and the moveable things inside an apartment cost money -- for renters and buyers both.

Anyone who keeps a roof over his head needs furniture. Buying a house doesn't introduce new furniture needs unless he buys something vastly larger than his current case.

As for co-ops, I much prefer them to condos, but it's a different way of thinking of property and your neighbors. A co-op is a corporation in which you become a shareholder, buying X percentage of the whole corporation consulting of it's real estate and financial assets and liabilities. You don't own your apartment and a percentage if the common space, you own a % of the whole and by agreement are given the right to occupy a specific apartment. Buying typically requires a higher investment at least 30% down payment in most cases and up to 100% cash. Co-ops typically take longer to purchase, longer to sell, and often have restrictions on leasing/sub-leasing, length of stay of houseguests, interior alterations, etc. All of which is reflected in the price. Co-op fees usually include real estate tax because the property is taxed as a whole, with the corporation assigning, say, a 6% of the total representation to the resident of Apt X. Everything is a little different, sometimes a lot different, and because everyone owns s portion of everything, shareholders take an interest in everything. It's a different style of dealing with your neighbors than with a condo where a 'fuck you if you don't like it's attitude toward neighbors sometimes prevails. They make sense for old buildings with elaborate lobbies and roof terraces and public spaces and front desk staff and doormen; they make a lot less sense when it's a modern building with few if those other things. Most people have a personality ir sensibility toward ownership that leans strongly in one direction or another: co-op or condo. People concerned about the unexpected expenses, who think their ownership interest should be absolute, and who prefer not to have to be neighborly are usually better matched to condos.

[quote] I expect to live in poverty if I make it to retirement age. It's one of the reasons I am now thinking buying and paying off some kind of home will give me some level of security.

OP, why do you expect to live in poverty? Home / condo ownership involves repairs, fluctuating fees, etc.

I would hire someone to crunch your numbers, as suggested above. Tell you what you can comfortably afford, etc.

I like the idea of making extra payments, if you can afford it, to pay off your mortgage.

That said, I used to live in NW DC, in a condo (rented) and enjoyed my time there. You probably know you need to pay attention to which Metro stop you're close to (since you say you don't drive much).

Don’t trust the “can you afford it” calculators…try to go by the old school thought process that one week’s salary should cover the mortgage payment (tax insurance mi etc.)

If you must get MI (I did when I bought my place), make sure to keep an eye on your home value to refinance as soon as you can get the LTV to 80 to be able to drop the mi.

Drive by the house at night before you purchase it (on a weekend preferably)

R42 here again. One thing I will recommend, which seems a given but I want to emphasize it, is to read the Condo docs and the accompanying Rules and Regulations very thorougly, no matter how dull and legalese the wording. If you don't completely understand the implication in a clause, get clarity from your lawyer and ask questions. My situation was such that any maintenance that affected common areas or the structure of the building was handled by the Association. However, there was also the possibility that all owners would be required to pay a percentage of the final repair bill anyway. If an issue originated in my unit and it affected any other units (such as a plumbing issue), I'd still have to pay for a percentage of the overall repairs. There was also a clause that mentioned an annual budge that is drawn up the by Association and/or Board and each unit owner would be responsible for contributing a percentage to that amount in addition to the regular condo fees. It's not always clear what maintenance the association covers complertely in accordance with the monthly fees, and what is an extra financial assessment required by the Association or the Board. My financial obligations and potential fluctuations in payment amounts appeared to be too much at the mercy/whim of the Assocation so I withdrew my offer once these and other terms were explained to me by my lawyer.

R48 Poverty may be a slight exaggeration but not by very much.

I make a good living now and my retirement savings is strong and has been for over a decade. But prior to that, I worked up until age 30 for a tiny nonprofit that didn't offer a 401(k) for years and then did but without matching. So as of age 30, I only had $8,500 in retirement. It was a poorly compensated job but I loved the work and I chose to stay there for too long.

The "rule" for age 40 seems to be to have 3x one's salary saved in retirement, and I check that box at 43. I have a pretty good sum in savings in addition, which is what I would be using for a down payment and closing costs, but I will not spend it all and having nothing in savings no matter how many people say 20 percent is the minimum down payment. Nyet.

My generation has been cheated by the SSA, and that's the basis of my snarky remark about retiring in poverty. We have been effectively taxed for social security benefits and will see a return less than what we pay into it, and I am bitter about that.

I doubt I will actually be impoverished unless my health destroys my savings. As I said, I currently save 15 percent of my gross in a 401(k) and I currently put away about $2k/month into a savings account. I live below my means and retirement projections project a higher need than I really have. What worries me most about retirement is the effect of inflation, which I can't do anything about.

I didn't buy until I was about forty or so. Part of that was I was pre-tenure (was a college professor) and didn't want to buy until I knew whether I would get tenure or not. (I got it at 36.) It took me a year or so to recover from the hellmouth that is the tenure process and I still had significant credit card debt. My mother died and I inherited enough to feel secure buying a small townhouse (40,000 in 1998--I sold it a year ago for 130,000). I never broke six figures (came within 500.00 dollars of it my last year), so it sounds like you are in good shape, though that depends on your location. I was initially only going to put down 5% (was not used to having much cash), but a wise friend urged me to go for 20% to avoid the PMI--money, as he rightly pointed out, you never get back and which, at least then, you would have to refinance to get out of future payments. I did a 20-year mortgage, because the purchase price was so low (its previous owner was a law student who had moved six months previously and, because it was a 1-bedroom unit with the second bedroom space turned into an open loft area, was not moving--when I bought it, it was assessed at 60,000). You do have to be prepared for HOA payments, insurance, and taxes, which took me some getting used to, and I eventually found some of my neighbors pesty and and nosy (people who LIVED to be officers in the HOA--as bad as student council types in high school). But it served me well until I moved into my husband's condo in a different development after selling my own. He paid the mortgage off decades ago, so we have taxes, HOA, and occasional maintenance, and insurance.

I wish I had bought my house earlier--it really turned out to be a better investment than paying rent for the first 8 years I lived here. I don't think I could have swung the down payment without my inheritance, but that reflects the comparatively low pay of college teachers and my own bad money management (my dad was a banker, naturally).

[quote] If an issue originated in my unit and it affected any other units (such as a plumbing issue), I'd still have to pay for a percentage of the overall repairs.

That happened in my condo rental unit last year. The owners of the apartment above were renovating it to sell it and they had construction people in doing something with the plumbing. The ceiling in my kitchen started leaking heavily. I called the building maintenance and he had to break down the door after banging on it. He told me that the people doing repairs opened the water line, left it open and then left and locked the door! He said that he will find someone to repair the ceiling and surrounding area and that the owners of the above unit would be contractually obligated to pay for it. Seems fair to me.

OP, you said you want more space, but you're looking for another 1BR?

If you end up buying something that needs work and if you can afford it, I'd continue to rent until the work is completed. I'd hate to live in a 1BR with ongoing work.

OP, it sounds like you're good to go.

Social Security? No sense being angry about it. You have other sources of retirement income. JMO.

I paid the minimum down (2% back then) with an FHA loan and have no regrets. Houses were cheaper then, so obviously low down payments have bigger implications now. However, at the time it was a perfect option that helped my partner and I jump on buying the place we were renting as soon as it became available. There's general house buying wisdom but only you and your advisors know what best suits your unique situation.

For me, given the variables you mentioned, I'd want more information on the HOA fees piece of the puzzle. I'd want to mitigate against fees being too high in my retirement years.

If I had to do it over, I wish I'd known more about the inspection process. I assumed a sale going through all the usual legal processes would have required a neutral party inspector. I was working with a lender, so you'd think an inspector they agreed to wouldn't be a "seller's" inspector, for lack of an official term. I suspect he turned a blind eye to a couple of not-insignificant issues to help fast-track the sale.

I'd recommend making a weighted list of decision factors. For example, for me the interior layout and physical condition of the place would be top considerations (so maybe they are worth a factor of five), whereas paint's worth a 1, etc.

OP - what do you think of the NOMA/union market area? It looks like so much new construction around there. It was nothing when I was a kid in DC.

This is boring.

R54 Yeah, I am looking for a little more space. My current place is a junior one bedroom that has literally only enough space for a bed (it touches three walls) and a narrow sideboard. So I am basically looking for a place with a "real" bedroom, which is more space but not substantially so. I actually really like my current setup, but if I am going to buy, then I want something that will feel more like a grownup home and not like a compromise.

R56 I don't like that area. It's just a matter of personal taste. As R57 has observed, I am boring. I lived at Meridian Hill/U Street for six years and it was just too noisy and traffic-y for me, with loud drunk people outside at night. Right now, I am next to Rock Creek Park on a beautiful quiet street with mature trees and prewar architecture all around. I absolutely love just wandering around in the spring when everything is in bloom and in November when the ginkos drop their leaves and turn the sidewalks into yellow lead roads. NoMa has been built to be industrial and it's just not my vibe. When I was in my 20s, I would have loved it, but now I am happiest with plants and peace.

R57, there is a little green arrow at the top of your screen pointing to the left. Click it. Click it now before you add another stupid comment.

R57 lol rude.

Thanks OP - interesting!

OP don’t forget to test the structural strength of the house before you buy. The best way to to this is to put ten sticks of dynamite in the basement and light them. A really strong house should survive that just fine.

R55 Thanks. I have made that list. Paint isn't on it because paint is an easy fix. I paint canvases in my downtime for fun and I don't mind painting walls at all.

My big concerns are all related to location, safety and structure, fees, design/layout and parking. Smaller "wants" include things like a gas stove vs electric, high ceilings. "Nice bonus" things include a den space or balcony, etc. As dumb as it may sound to many, the only aesthetic things that may be deal breakers for me are "big white box" apartments and cheap looking parquet floors, which I just hate. I don't want to live in a lifeless rectangle with no character and I don't want to have to buy a new floor just to replace something I don't like the look of.

Thanks, R61, but I don't take advice from convicted felons.

R50, what you're referring to are special assessments (when there is a large unforeseen expense borne by the HOA community) and reserves (the HOA should have enough money in reserve to cover actual and projected maintenance expenses such that routine care of the common property is covered without a special assessment). I've never been subject to a special assessment, but came close when the HOA determined that the windows on one entire side of the high rise needed to be replaced due to a construction fault, but was saved when the HOA sued the developer who lost and paid for the needed repairs; not insignificant as there were about 300 units looking at a special assessment of about $10,000 each). I have been subject to an increase in HOA fees when the board determined that there was not enough in reserve, which is inflated because those reserves should have been collected when they cheaper, and because you're in the position of needing to contribute enough for current expenses plus now the contribution for prior expenses that were deferred.

Nevertheless, review the docs carefully and seek the advice of counsel if there is anything you don't understand. The laws that HOAs must follow are extensive and complex — necessarily — but nothing to be afraid of.

OP, seems like DC has lots of parquet floors. I know you hate them, but maybe see if you can re-do the floor if you like the apt.

R53 - yes in that situation, those unit owners paying for the repair was fair. I was mainly balking at the vaguenss in the condo docs I reviewed pertaining to additional special payments assessed by the Association/Board which could occur "at varying times and in varying amounts" (a direct quote) and which all unit owners would be contractually and legally liable for paying a percentage of whenever these special assessments were deemed required by the Association/Board. There appeared to be a lot of unknown financial variables I'd be agreeing to if I went with this particular condo, and which I ultimately decided would not be to my beneift. Maybe these are typical clauses in all such agreements, but they were not to my liking. I felt like I would essentially be a tenant/renter again with a little more ownership as a treat.

R65 If I really liked everything else and it felt right, I would. I'd just cover with lots of rugs. But they really bug me for some reason. I am generally not very persnickety but that is one thing I am persnickety about for reasons I don't understand myself. But even that I can live with.

[quote] ...the practical implications of buying a condo vs. a co-op. I'm sure there's more I don't understand yet.

NEVER buy into a co-op if it can be avoided.

OP / R67, I had parquet floors in my NW DC apartment (renter). There was a rule that 70% (IIRC) of your floor had to be covered with rugs / carpets. Probably to reduce noise.

[quote] I'd second putting more down up front as it significantly lowers your monthly mortgage. Also, rates are incredibly low at the moment so this is a good time to pounce on the market to take advantage of them. My advice is location location location! You can renovate and ad amenities, but you can't personally change your neighborhood.

In a low interest rate environment (interest rates are still close to historic lows) you put down the MINIMUM amount you can to avoid mortgage insurance -- presently that is 20%. Do not put down more than 20%, it will not get you a lower interest rate and the difference it would make to the monthly payment is negligible.

R55 - oh yeah, the inspection process is extremely important. The inspection my real estate agent arranged turned up a lot of not so obvious issues that could have led to bigger headaches down the line, i.e., electrical and plumbing fixes that were needed, window valances improperly installed, mold patches that had simply been painted over, outlets that didn't work. The association rep was disgruntled about it, but knew we weren't going to proceed until after the second inspection to confirm these issues had been resolved.

I don’t know how you avoid a co-op in Manhattan. Not to hijack this thread (sorry OP) but anyone have advice/thoughts on that?

Ugh, not window valances - there's a term that was used I can't recall, but the windows were not fit properly into the fames and there were gaps not immediately noticeable unless you raised and lowered the window, and suddenly it sat crooked and wouldn't close all the way. Also, there window screens were improperly installed. Needless to say, we eventually did not go with this condo unit. Lots of cheap, poor quality fixes, probably in a rush to flip the unit.

[quote] My one source of insecurity is that I am single and so there is no fallback if I lost my job, no one to carry me.

You'd be in no worse position than you are now. If you lose your job, who will pay your rent? It is far more likely that your lender will offer you payment relief or forbearance than your landlord. He will just evict you. As a homeowner, hopefully your home will appreciate and you will accrue equity in your home. If you have to sell, you can still profit.

There's also something called disability insurance.

[quote] Fourth, if you are concerned about affording retirement, your money belongs in the market, not in a house.

That advice up above might be totally dependent on what your location is. .. For some people, getting into real estate is just as good, if not better than trying to make money in "the market."

Sure it's been mentioned but make sure you check for past Assessments, a bad sign if there are many. Condo board members love to spend your money.

Will never lice in one again. Bought a house with inground pool, barn, stables and 3 acres in small town outside my big city and it is bliss. AND I bought it cash so no mortgage and waste of money condo fee. Bliss. Especially since my last condo experience was a fucking nightmare.

R76 couldn’t agree more

R26 is an idiot. I've lived in 2 co-ops and a condo in DC. I've been a board member for one co-op and the condo and know people who have been on boards of other condos and co-ops. You can't generalize regarding intrusiveness. Both kinds of boards primarily have fiduciary responsibility and usually have enough on their plates with that. Co-op owners tend to be a little more active in their building than condo owners. Co-ops usually have restrictions or disincentives for renting---renting can jeopardize the non-profit nature of co-ops. Condos increasingly are doing this, too, to keep investors from dominating the building. You should make sure that there isn't a lot of deferred maintenance with either kind of building.

Co-ops in DC tend to be at the lower and higher end of the market---"Best Address" type buildings at the high end and buildings that have either always been co-ops or went co-op in the 80s at the lower end---sometimes these are even walk-ups. Fewer lenders will do co-ops. The usual rule of thumb is that co-ops are price below comparable condos but may have slightly higher interest rates. Co-op appreciation has tracked that of condos since the 90s. You often get more space for your money if you look in buildings beyond Cleveland Park along Connecticut Avenue.

One thing that's confusing about co-ops is that there may be an underlying mortgage--paying this is part of the co-op fee. Co-ops take out a mortgage to do major capital expenditures. The underlying mortgage will decrease over time, like any mortgage, so your fee will decline (until they need another underlying mortgage) and your actual equity will increase.

Realtors who don't do co-ops are usually pretty stupid about them. Get an idea who regularly handles units in larger co-ops like the Ontario.

Given your circumstances (stability, contentment, low-maintenance) OP, you have made the right decision and are doing exactly what you should be doing at your age. r1 is simply full of shit. Goodby landlord! In the long-term, home ownership is an excellent investment.

Be certain to get a fixed rate mortgage. Interest rates are great now, but starting to rise a tiny bit. Such a joke. Bought my house in c.1995 with 10% down when interest rates were almost 10%. After the deal closed, my credit rating soared. I then took out a second mortgage at 15% to pay another 10% on the first mortgage and refinanced so that I no longer had to pay PMI. I paid that second in two years. Over time, my income grew and home values increased so that I built equity. I've refinanced several times since and now pay under 3.7%. I keep with 30-year fixed so that my minimum payment is lower in case of difficult times, which has happened, but have in some years paid more on my mortgage or put more into my 401K retirement savings, but the bulk of my nest egg is in home equity and this house has been a cash cow. Paid $244K, but my mortgage is now $500K thanks to a very fun lifestyle (travel), through divorce, cancer, and a period of unemployment. But I will sell it soon for about $2 million when I retire to somewhere cheaper and flatter (I grew old in San Francisco) and no longer have a mortgage and fucking stairs and hills to climb. I love my neighborhood and house, and made the right decision so many years ago, but am ready to move on with no regrets. Home prices have gone up and down, but are up over the long-term.

You've made the correct choices: you like the location, location, location. You know what things are deal-killers.

DC is a desirable city. The human population keeps growing, but the planet stays the same size.

Am excited for you. If I could do it again, I might have bought a bigger place or traded up. You'll figure out what suits you over the years. Also, at age 33 when I bought this now 135-year old fixer cottage, I was arrogant about not paying HOA fees for a condo. Turns out I grew bored and frustrated with doing my own home repairs and gardening by age 40, lol.

I know many guys my age (>60) who are still renting and have no real investments. It's pretty sad. Go for it!

Good luck and keep us posted:)

Live as far away from other condo-people as possible; i.e., corner unit; upper unit; garage between units.

A garage is a must.

Don't fall for the "open floor plan." Messes, smells, privacy---fuhgeddaboutit.

Picture where your TV will go. Is there a cable outlet there?

P S. Don't buy a condo if you don't want monthly fees plus rules set by others.

I lived in an apartment, an urban rowhome, and a townhouse before I swore never to share a wall again, even if I had to live in a hut.

R74 Right now, I have a lot of money in savings and if I lost my job, I could go at least two years without a job and live as I live now. When I put that money into a condo, not only will I have higher expenses and far less cash to carry me in a crisis, but my A+ credit would take a nosedive in the worst case scenario of not being able to pay mortgage.

R81 A garage is not a must for me, and they're very uncommon in DC except in ultra-luxury buildings. The condo building behind mind has one, but one-bedrooms there go for over a million.

As for open floor plans...I'm not fond of them, either. I didn't mention it, but a layout deal breaker for me is a condo in which the kitchen is basically one wall of the living room with a tile floor under the counter. Nope. I like the 1930s buildings not only for the moulding and arches and other aesthetic details but also because the rooms are divided and ceilings are high. I like division of space without feeling claustrophobic.

Buying a house or flat is not the problem - the mortgage can be. You need a plan for when you cannot pay your mortgage - illness, job loss, whatever. Make a realistic worst-case scenario and plan for it too and you'll sleep easier.

I am a very happy homeowner, but I have friends whose homes made them miserable. One of the people I pitied the most had a well-paying job in the media but really wanted to much rather be an artist. (He was a very good photographer. ) However, artistic photography doesn't pay the mortgage. He ended up working a job that never fulfilled him at the price of quitting what he loved, all for a wife he fell out of love with to finance a home he didn't want to come home to anymore. Tragic.

I always lived well within my means, and my down-payment was pretty much 100 %. I do regret not buying sooner, however - it would have saved me a lot of money that I paid in rent over the years when I was young but had a solid above-average income.

[quote]I wish I had bought my house earlier--it really turned out to be a better investment than paying rent for the first 8 years I lived here.

No one ever made money renting a house for 8 years or 18 or 80 years. Not unless they had the sweetest rent control deal of the century AND invested most of their market rate savings regularly every goddamned.month for however many years.

It's not a mystery to calculate expenses related to home ownership: PMI, property insurance, real estate taxes, co-op and condo fees and special assessments, monthly utility costs, routine maintenance, replacement of appliances and mechanical systems on a predictable life cycle (e.g., a condo HVAC system may need replacement in 15 years from installation.) These things horrify nervous first-time buyers, and a year later the "horror" has become "why didn't I do this sooner?" The majority of these expenses are estimated for each listed property on sites like Realtor.com; your realtor should be able to define them more narrowly, down to a history of monthly utility bills.

People keep forcing garages on you. It doesn't sound like you need one. I have one, but rent it out, because I don't own a car.

Buying a condo was the best money decision I ever made. I loved the condo, and was very friendly with the upstairs neighbor. She moved out and sold to someone who bought it as a property to rent - make sure you find out if that can happen. As is often the case, the renters cared less about the property than an owner. So I contacted the agent I used the buy. I sold for 80% more than I bought it for 5 years later - I made no improvement. Best investment I could ever make.

Lol R86 yeah, I mean, some things (safe, nothing hazardous, etc.) are universal musts. Most other "musts" vary among people. I'm kind of amused by people projecting what they would insist on on me. My car is only important to me as a means to get to my family, and I only go out there about once a month. I usually drive to the grocery store, but I walk almost as often, and I walk just about everywhere else or else take Metro or a Lyft if it's within the city but too far to walk.

Again, location is my top priority because I walk almost everywhere I go and so it's not really a matter of "it's pretty there, but it's also pretty farther north and you get more more more for your money there!" Walking around is a big part of my lifestyle as much as it may not be anyone else's. I walk to work and I have a strong preference to remain within a similar radius so I can continue to do so mainly because it is my preferred lifestyle but also because if I didn't, that would become a significant frustration and an added expense. I really love not having to sit in honking traffic twice a day or cram myself into a tin can subway with hostile people who don't want to be there. Most of my coworkers who take Metro are late most of the time because of Metro delays and they come in angry and sometimes even enraged.

So *you* may require a parking garage or a balcony or a smart home or wheelchair access or a doorman and that's great, but those are not requirements for me.

R87 My building allows renters and I find it really interesting that this feels nothing like a rental building. It feels like people's homes. Everyone is respectful and quiet and from what I can see, nearly everybody does abide by rules including one someone clamed above, breaking down and flattening cardboard boxes. There doesn't seem to be any "I'm paying for this and so I can do what I want!" attitude. It's just people treating the building like home.

Between the property taxes and the HOA fees, God help you. My advice: get a small house and hunker down.

The only thing with allowing renters is to look at the percentage of renters vs. owner-residents. Most condos have a stated limit of 15% or 40% etc, but condos that were developed at stressful economic times often forsook the limit, or a developer of the condos held onto a cache of rental units. If the percentage is high and the number of owners.of those units few, it can be bad news if a glut of apartments just like yours come available at the same time you wish to sell.

Many buyers will avoid buildings with a high margin of renters.

OP, I know it was stated upthread but please let me shout it from a rooftop: do NOT go with an ARM, even at gunpoint.

Thanks, R92. I wouldn't. I make a decent living and I have very strong credit and so I would be shocked if I didn't qualify for a good rate on a fixed 30-year loan, but if I only qualified for an ARM for some reason, I just wouldn't buy.

I am not the most financially adept person in the world but I am not an idiot and I don't have poor credit and I did learn a lot from horror stories during the Great Recession.

OP to prepare yourself have you been studying the real estate listings for the neighborhoods you’re looking at? Going to open houses? When did you start seriously considering this in relation to when your rental lease ends?

Asking for myself.

A condo building's cap on the number of owners who can rent out their unit is very important. My building (70 units in all) capped it at 10%. Too many renters in a condo building holds down values and can affect your ability to get the best mortgage rates.

OP It sounds like you are already aware of all the advice and suggestions that posters are offering so I'm not sure why you are asking the question.

You will always need a place to live. If you can buy, buy!! Property taxes are low in D.C. Nobody likes HOAs but it sounds like single family in the area you want is not an option so you deal with it. (You can check and see if condos you are interested in do a lot of special assessments-- that's my main problem with them.)

What are you waiting for??

R96 I am asking because I don't know what I don't know.

Well, of course a garage isn't necessary if one doesn't own a car. Unless....storage.

Fair enough, but it really isn't brain surgery. The only time it's a mistake is if you can't afford it.

I think an important thing to know is that you are not locked into a purchase for life. In other words, if you get in and hate the whole situation after 5 years, you can always sell it. You might lose money or you might not, but it won't be the end of the world. It would be a huge surprise for real estate in the DC area to lose money, because even in a recession, the center of the US government is going to continue to operate and the federal government is the biggest employer in the DC area. 20% down sounds about right. Look for the maximum amenities for the smallest HOA fee. That will make it a more desirable purchase in the future. Really look carefully at flood maps etc. Buy a unit on the second floor if possible. DC is prone to heavy rains and there have been devastating floods in nearby Maryland and Virginia towns in heavy storms. To me, 300,000 does not sound expensive for a piece of property in a desirable part of DC. Condos can sell for that amount in my podunk Pacific Northwest city. A garage is a desirable amenity if available and, as someone else mentioned, could be a source of income if you can rent it out to someone else. Try to find out if your condo building is well-capitalized - in other words, is there a substantial fund built up for emergency repairs to the infrastructure - a failing roof, for instance, or a boiler that's going south. Otherwise, there can be a big assessment against all the owners and that would hurt. There is no guarantee that interest rates will stay this low in the future, so buying now you're at least getting cheap mortgage money. That being said, I bought a house in 2014 on that basis, and interest rates haven't really budged in all those years.

I think it's more than OK to take some time to ask questions before buying real property for the first time.

[quote]I am afraid of big financial commitments but think I am going to finally bite the bullet and buy a condo.

Avoiding the big financial commitment of buying an apartment with a mortgage of 30, 20, 15 years is itself a big financial commitment... to pay rent for 30, 20, or 15 years.

One commitment provides equity and the strong likelihood of financial return, the other does not.

R102 Exactly. I wish I would have thought like this sooner.

OP, the thing about buying is that it's a big scare at first, but as time goes by your mortgage gets smaller, while rent gets bigger all around you. After 20 years, if you haven't completely paid it off it's so ludicrously small compared with what people are paying in rent that it doesn't even matter to you.

In the short term, though, you do need to be prepared that interest rates are at an all time low and will eventually rise, so if you can pay extra from early on, do. Otherwise, if you can get a fixed-rate mortgage for the first five years, or at least the first three, I would. After that the value of the condo should have improved to the point where if you did have to sell it you'd make a profit even after expenses. Also, if interest rates are rising so (usually) will wages and the cost of real estate, so after the first 3-5 years you'll probably be paying less in mortgage than you'd pay in rent for the same thing. Some lenders will let you have part fixed, part variable. The advantage of keeping a small part variable is that you can pay extra off that bit.

Regarding parking, you may be able to find a condo where street parking is easy nearby - but that's only for now. If you're in it for 25 years the parking will evaporate over that time (unless you're betting on-call driverless cars will make car ownership obsolete). So if it's important, make sure you get a garage or an off-road parking spot on title.

[quote] Co-ops usually have restrictions or disincentives for renting---renting can jeopardize the non-profit nature of co-ops

Huh? Co-ops are not "non-profits" and their restrictions some put on renting has nothing to do with that.

[quote] [R96] I am asking because I don't know what I don't know.

Based on your commentary, you know much more than a typical first-time homeowner. Most people just dive in without doing research or asking important questions first. Together with the responses in this thread you have as much (perhaps more) information than you would get in an FHA first-time homeowner prep class. The rest will be unique to your circumstances.

OP why would you even consider paying PMI if you don’t absolutely have to? Talk about a waste of money- might as well just have a monthly bonfire and toss bills onto it. At least that would provide warmth and entertainment.

“I am a gay Taurus”

So are you buying a house based on where the planets where when you were born? Why have a real estate agent when it sounds like you should be consulting a gypsy sorcerer.

People are damaging themselves with this astrology crap.

my advice to every home owner is to remember that you don't own the home, it owns you.-

Thanks to everyone who has chimed in!

And yes, I identify as a Taurus because the profile suits me so well. I move slowly and steadily through life. I stand my ground. (I'm stubborn.) I am VERY patient (people have remarked about it all my life) but I have a big personality problem of tolerating behaviors without saying or showing that I don't like them, letting it go too far and then charging at people with my horns lowered, and people never see the temper coming. That is considered characteristic of taureans and so I have embraced my zodiac sign for fun. Why not?

As astrology book that lists a profile for every day of the year describes my birthday as "the day of materialized fantasy," and I love that and so I have integrated it with my outlook. As a painter and a writer, that's what I do: I convert my imagination into words and images.

One other stereotype is that tauruses are domestically inclined/homebodies who not only tend to isolate themselves at home, but who also take great care to surround themselves with aesthetics that make them feel comfortable. That's me. It doesn't have to be high-end, but I have to love it to place it in my home. And this is why the above recommendations about furnishings, etc., while appreciated, are not relevant to me. I may need to buy a few things if I move to a bigger place, but overall I am well situated with furniture and other things I love and with a lot of paintings I made myself, so I won't need to spend much on such things once I move.

R112 Again, why are you ok with paying PMI? That’s just crazy to me.

R113 Because I don't have enough cash for a 20 percent down payment.

Shop around for an excellent building inspector, competent to address fundamental structural and mechanical systems. Most are dimwits who failed at six other careers and cover up their incompetence on serious matters with huge punch lists of comparatively unimportant things: cracked electrical switch plates, loose toilet seat lids, kitchen drawer roller guide doesn't work smoothly...all these things are small nuisances that should be fixed, but they are nickel and dime concerns: $150 and a handyman will fix the lot of them in less than an hour.

Instead look at the age and viability of plumbing, electrical capacity, evidence of water and damp damage, "soft" wood floors with underlying rot, even the roof tiles of an old co-op may be approaching 100 years old and could mean a major assessment to pay for it. A good building inspector first rules out all the genuine headaches and high cost items, then notes the tiny things of much lesser importance. (Run of the mill inspectors concentrate on 163-page punch lists detailing crooked switch plate covers and a faucet that needs a new washer...things that don't arrive to an amount of money worth negotiating the price.

OP, is there nothing you can sell to make up the difference to avoid PMI? If you have an IRA or 401k you may be able to take a loan from them. Better to pay yourself back than do the PM I, IMHO.

Clever and true enough, r110. But after years of maintenance, property taxes, and general upkeep, guess what?

I can sell my "owner."

Digression: I have that book, r112. Check November 5; me to the proverbial "T."

R115 Yeah, that is a big concern of mine and another reason a small condo appeals to me rather than a standalone house. My sister bought an adorably quirky house years ago, built in the 50s with a new addition built on roughly every decade through the 90s. The inspection found a few small things. She moved in and literally two days later, the basement flooded. The lights and appliances flickered and after a couple of months she brought in an electrician and he said the wiring is old and in some parts of the house is a major imminent fire risk and they had to fix that. Then there's the plumbing issue I mentioned above—their house is situated at the end of a long, straight drainage pipe that ships out the entire community's waste, and clogs occur in front of their property and three times now have caused septic waste to flow up through all their drains. I've told her she should sue the guy who inspected the place. (I don't know that anyone would have discovered the sewage issue though since it is in a city pipeline and not the fault of the house's plumbing.)

R116 Yes, I've got a fair amount in my 401(k), certainly enough to cover another 10 percent of the cost of a condo. I've read so much about why borrowing from retirement is a mistake but I just did a quick search and I see that advice is very mixed. I will do more digging. Thank you! THIS is why I'm asking people for advice even if I have thought carefully about various considerations—again, you don't know what you don't know.

I do have a small, very old retirement plan from a former employer that I never transferred and I could cash it out, but that seems like a huge waste of money. It's about $11,500 right now, and I could request a cash payout but after penalties and taxes, that would amount to something like $6,000, certainly not enough to cover much of a down payment.

Don't touch your 401k---getting a good start with that at your age is an important foundation for the future. . Think of your mortgage as a diversification of your portfolio.

[quote]She moved in and literally two days later...

Again, sorry to beat this drum, but a good Realtor guides you through the process and that includes hiring a competent inspector who will look past surface (and cheaply repaired) defects and take a hard look at systems and the home's infrastructure. Moreover, said Realtor should suggest that the buyer require the seller buy a home warranty (and if it becomes a sticking point in negotiations, suggest that the buyer purchase it themselves). On my most recent purchase, that's exactly what my Realtor did, the seller agreed and it paid me back more than my Realtor made in commission within three months.

There was no way the inspector could have foreseen that I'd immediately have two major and one minor systems failures because everything was in good operable condition on the day of inspection, but he did warn that the age of the systems was apparent. Nevertheless, the built-in stove gave up the ghost, the garage door opener motor burned out, and one of the water heaters went kaput, and all three were covered making it all only the inconvenience of having repairs and replacements made. My total out-of-pocket was $300 for three claims... the basic deductible service and administration fee to have the insurance company send out a technician to diagnose and process paperwork. Well, not totally true, as the guy who diagnosed the garage door opener motor failure pointed out that it would only be about $150 more for a whole new system, so the insurance company wrote me a check and I paid the extra to have a whole new opener installed with the added bonus of wifi control and monitoring. Another win-win.

The inspector did his job. My Realtor did his. I got the house with peace of mind (and a new stove, water heater and garage door opener).

I wouldn't hesitate to buy most condos or co-ops without an inspection, but that's from the experience of buying quite a few properties and knowing where trouble can be found and where it won't. Condos and co-ops simply have fewer things to worry about. If you plan to make extensive structural changes (not just updating the appliances, or replacing a countertop or other largely cosmetic work) I would hire not a building inspector but a trusted general contractor, preferably one familiar with the building; they can speak to what the building and the board and neighbors will tolerate if you have plans for a massive kitchen extractor or something unusual, and their advice is far better than an inspectors. It doesn't sound like you are the do the place over top to bottom sort, and if the building has some age to it it's easy to suss out if the plumbing is in good shape e=overall or if everyone is on edge waiting for another big round of major repairs. Talk to the seller and potential neighbors and board members to get a sense of big projects that may be in the offing that may require a special assessment. Otherwise, what do you have to worry about really? Most systems are in whole or part, the building's responsibility; you simply don't have the worry about a lot of the things that the owner of a house has to worry about. I won't say a building inspection is unimportant, but it's far less important for a condo or co-op than for a house.

Maybe my loan was just odd, but my PMI is around $80 a month or almost $1000 a year,

Yeah $1K is $1K, but my townhome has consistently gone up in value more than $1K a year. It is a wash at worst,

I spend $1K a year on far worse things.

I don’t get why people are so against it.

[quote]I don’t get why people are so against it [PMI]

Agreed, there's little point to making a religion out of avoiding PMI. It's a calculated cost of buying s house, avoidable fir some. By the same logic, one could argue that paying all cash for a house avoids both PMI *and* mortgage interest *and* makes it a snap to buy a house.

Not everyone has the cash to do that, and not everyone has sufficient cash that they don't mind being tied up in that way. Likewise some people can produce a 10% down payment with relative ease but a 20% down payment is very difficult or impossible.

I prefer buying real estate with all cash, knowing that it makes me more mindful of not overspending and because I don't mind having the money in equity and growing real estate value rather than investments. Other people have other opinions of no less validity for their situation.

I would stretch to find 20% down instead if 10%, but it's not the end of the world if an otherwise prudent buyer doesn't.

Yeah, OP here, I have accepted PMI as an unfortunate necessity because I don't have $80,000 lying around, which apparently most DLers do.

PMI on a $410 condo would be $230 per month. That's real money, but I have no car payment and I'm only considering places with HOA fees around $450 and under. The difference in HOA and car payments that many people pay alone pretty much make up the difference. I also don't go out a whole lot, I almost never drink, and I spend less on a lot of things that many people throw money away on. As I said, I am really only looking at properties within walking distance to my job. If I drove, parking alone would be $420 per month, much more than mortgage insurance, and that's money down the toilet.

Something I didn't see mentioned above, is that you can always prepay your mortgage without penalty. Meaning, you can take out a 30 year mortgage, and after that first house-poor year (when you are buying furniture, etc, and have used up most of your savings to buy the place), you start to have extra cash again, you could add $150 to each month's mortgage payment and could pay off your mortgage in 15 years instead of 30. The advantage is that you are probably in a lower interest mortgage with a 30 year, and yet you are not locked into making a higher payment every month - only when you are feeling flush enough to do so. If you do have PMI, you would also get to the point of having enough equity in the property to get rid of that much sooner. However, I'd wait to do this until you are certain that this is the property you want to be in for the long haul. There's no particular advantage to prepaying the mortgage if you are sure you'll only be there for 5 years.

I have done this with rental properties, prepaying mortgages, and when a fire forced me to move, I had a paid-off house to go to, which was a huge stress-reliever to me. My second rental property will pay off in about 2 years (it was a rental bought in 2014). After that, rents become an income stream for retirement.

I'm not in the US so I'll leave all the loan advice to someone else. The one thing I would say is to buy as much space as you can, even if you have to sacrifice other things such as location. You can renovate a house, add a new kitchen, make the bathroom beautiful but it is impossible to add more space and a lack of it will piss you off long term.

True, R127. You could also use that same strategy by taking out an interest-only loan, which will have much lower monthly payments, and then start making extra payments to pay it down (so you have more equity) when you can later. With a 30 -year mortgage, in the first few years very little of the monthly payment goes towards equity anyway.

The only issue you might have is that many banks aren't as willing to give interest -loans anymore.

OP, if you have not already thought of it, consider having a walk-in shower instead of a tub.

You sound as if you are thinking ahead to when you are older and walk-in shower is much more convenient, and sometimes necessary. If the unit you want has a tube, consider replacing it after you buy and before you move in (save the mess).

I know several people who have made the replacement and are very happy they did. If you are someone who prefers showers to tub baths, even better.

As for reselling your unit in the future, the shower instead of a tub is a selling point for many prospective buyers.

Good luck with your move.

[quote] the shower instead of a tub is a selling point

Not for me. In fact it would fall into the (major) ‘con’ category to me as a prospective buyer.

The tub supposedly appeals to female buyers, but in a robust market like DC it probably doesn't matter very much.

I'm a real estate investor. Own several properties. Here's my best advice: Put 25% down (or at least 20%) and get a 15 year loan, not a 30. A 15 year loan isn't much more in monthly payment than a 30 year and slashes what you'll pay over the course of your loan by a ton.

Buy now. Interest rates going up this year. Don't wait.

I'll add a note for the aging amongst us.

Having cared for my infirm mother the 6 months prior to her death, and having just turned 72 myself, I wish I had a full bathroom (large shower) on the ground floor, not just a powder room.

And hallways and doorways suitable for a wheelchair.

Nobody expects the Spanish Inquisition. Until you're 80.

I'm just saying, there's a LOT more to consider and realize and foresee than mere finances. There's living.

And, OP, you walk to work now? Pray to stay ambulatory without any aid. (I am, but try to be thankful daily.)

OP, on the aging question, be sure your new place is in a building with an elevator. Two would be better.

In my building, elevator repairs were scheduled for a 2 week period which was a hardship for many older residents in the building on floors above 2.

With 2 elevators, repairs on one leaves the other still usable.

I am also seeing more buildings that have their own generator for use during power outages or weather emergencies.

This thread has been so helpful. I've been going back and forth on condos vs. house for months now (I'm a first time buyer too), and the tips and cautions posted provide excellent input for me. I'm sort of leaning toward condos now, but I don't want a huge complex, anything from 4 units to maybe 20 at most. That pares down my options, but I want what I want. For houses, everything has so much square footage that it's exhausting just imagining all the upkeep (not to mention yard work) involved. I've lived in small 1Br or studio apts all my life so this process is as intimidating as it is exciting.

I agree - it’s a great thread

I live in a condo development. There are about 30 buildings with 7 condos per building. My neighbors are, for the most part, quiet and respectful.

My condo fee has been the same for last 6 years, due to good financial management. I've had special assessment for things like redoing the pool or snow removal costs going over budget due to the weather. They do have rules, though. When I had my balcony door replaced, I had to have the color approved. I also had to get approval for the pet-proof screens in the windows because they are a tad darker than regular metal screens. The roof, siding, windows have all been replaced within the last 7 years; the balconies are being replaced now but the project has taken about a year. My HOA fee includes grounds keeping, snow removal, and garbage and recycling pick ups.

I didn't put down 20% when I bought my condo and did pay PMI for about 5 years or so. I paid $132k in 1999 and am down to just over $99k right now. I do pay extra on my mortgage and have been doing that for about 5 years. My condo is probably worth about $260k. I've had the main bathroom and the kitchen updated. The whole place has been painted and re-carpeted twice (never use Home Depot for carpet installation). I have the second bathroom to update and will use some of equity in my home to do it. I'm not removing my tub. If someone with a child moves in, they won't want my place as the main bathroom only has a shower stall.

Not to hijack the thread but has anyone has any had experience with Bathfitters?

[quote] Here's my best advice: Put 25% down (or at least 20%) and get a 15 year loan, not a 30.

Also: Take out a small loan, between one and five million, from your dad.

It helps if you win the lottery a few times.

Don't buy gold-plated fixtures. Solid 24-karat only. It's more fragile, but don't be poor.

[quote] get a 15 year loan, not a 30.

I’d rather get a 30 year and make extra payments on the principal when I can. That still allows you to pay it off early but with more flexibility than locking yourself into a 15 year.

R141, I agree. That's what I did.

I took the lower rate for the 30 year mortgage in case my employment situation changed or there were unexpected expenses that might impact my ability to pay the higher monthly payment of the 15 year mortgage.

Fortunately I encountered no such problem and I paid the 30 year mortgage off in around 15 years by adding extra money toward the principal most months. I had a copy of the amortization schedule and would note down per month how much of the principal I was paying down.

Adding to my post at R142, it is very important to make sure when adding additional money toward the principal that you are sure that you indicate that the extra money is to be applied to the principal and not to the next upcoming standard monthly payments.

A variation on paying extra every month is to debit half your mortgage payment every 2 weeks, and pay monthly. You'll have an extra payment every year without much effort which can go toward the principal.

If you prepay your mortgage, which is what I have done with my real estate purchases, start your prepayment plan early on, as amortization of the debt is worked out according to remaining debt. In other words, as you pay down the debt, even in relatively small amounts, the subsequent debt, which always includes interest, is lowering with each payment, especially because in the first several years of a mortgage, the vast majority of your mortgage payment goes towards interest.

You will generally get far greater capital appreciation from a house than an apartment, OP. So if you can afford it, always go for the former. Pay no attention to R1. They're an idiot.

R146: That may be true in some markets but it's not true in Washington DC.

Moreover, OP has hinted at his price range "one-bedroom condos in very nice DC neighborhoods are going for $325k - $450k (and of course some cost more), and HOA fees range from about $350 to $1,200." That range has no intersection with the cost of a single family house in a very nice DC neighborhood.

[quote]The median price for a single-family home that sold last month in the District crossed the $1 million level for the first time ever, at $1.1 million. That’s up 24.2% from a year ago. [11/2020]

And he never suggests that he wants a house. Not everyone does, and not everyone buys a home purely for its potential capital appreciation (not a huge worry in DC, time would suggest.)

R1 is completely ridiculous. Everyone would be living on the streets if it were up to him. 30% down amongst the host of other bad advice you gave? Shut the fuck up, idiot.

I’m 51 and still rent in Manhattan. I haven’t made the decision to buy something (outside of Manhattan) yet and I don’t know if it ever will. I realize i’m tossing money away by renting, but I can just get up and go whenever I want and nothing is my responsibility when it comes to maintenance. Maybe not the good life for some, but it works for me. My luck if I bought a property then I would have to repair the roof, the driveway, the termites, the old electrical system, and the plumbing. Who has an extra 20k just sitting around waiting for the next household problem to be addressed? Who has 200k just sitting around waiting to be liquidated for a down payment and closing costs, with not a cent left over? I know some do, but not everyone does. I’d say it’s really not for everyone.

We’re moving out of a condo after five years. We will never live in one again, and after personal experience and seeing the collapse in Florida, I would NEVER suggest condo living to anyone. HOA fees are ridiculous and are never fixed. They will constantly rise like taxes, and that’s NOT counting if a major repair arises like a roof where you can easily be assessed tens of thousands of dollars, and you MUST pay or you can be thrown out and your apartment seized.

People really don’t understand how condos work and they think they are protected from expenses or they’re shared. No, not really. You are taking on maintenance of the ENTIRE building, and you still have to share walls, ceilings, floors and common spaces with really stupid neighbors who will bitch about every little expense while the building falls into disarray. It’s a complete nightmare. I don’t understand how people could manage to retire in a condo with the rising cost of HOAs and taxes. Despite paying off your mortgage, in thirty years you could easily be paying double your mortgage payment on HOA fees and taxes and like I said, that’s NOT including assessments which many people have to take loans out for, and by the way, when you’re seventy no banks will loan you money for HOA expenses so you’ll be digging into your retirement or equity if you don’t have it set aside.

You need to make absolutely sure your board and building is financially ROCK SOLID and that you can financially handle what will inevitably come in terms of building and apartment repairs and the rising of fees.

And really, this is just the tip of the iceberg in terms of condo living. There are so many other issues.

Of course, R150. I would only buy in an older condo or co-op, with both the building and the condo/co-op status long established. Too big a complex and the value of your apartment is always determined by comparables in the same building. Conversely, if the building is quite small a roof replacement is not spread about 20 or 60 owners but among 4 or 6 , say, and the costs can be crippling; you are subject to big fluctuations in spending and in difficulty with fellow board members (in a condo/co-op that has only a handful of units, everyone is a board member at you will learn too much about each others' views toward free spending or miserliness.)

In an old established building, the fees tend to be higher but they also tend to have higher reserves of cash (getting the board to spend them instead of issuing special assessments is another matter), and they tend to have found a good rhythm of spending and planning for major renovations and changes. A long period of sound management means it's easy for a prospective buyer to figure out what major improvements have been made, and what expenses and renovations loom in the future, and to get a sense of how past major expenses have been handled by the board and residents. New condos inevitably begin with one set of figures that are likely to change substantially in a fairly short period of years.

Also, are you taking into consideration climate change? Why is this never part of the conversation? DC is literally a swamp by the ocean that will most likely be under water in 20-30 years. One good hurricane and DC is fucked, seat of US government or not. One of the reasons we’re leaving our condo is it’s too close to the shore and we don’t want to be part of a panicked land grab as things become clearer. We’re moving north and up into higher elevations.

I’m really not understanding why people, even liberals and Democrats who are generally more well informed about these things, aren’t factoring this into their home buying plans. It should be a major consideration.

R152: OP is looking in neighborhoods that are far from anyplace threatened by rising waters and frankly, so is most of the federal government. There are places in much more eminent threat of climate change such as low lying parts of NYC, New Orleans, coastal Florida and places that essentially are deserts like LA.

R145 seems to the person who endlessly prattles on about buying houses. There certainly are places where condos don't appreciate or only do it in spurts. Atlanta was like that when I lived there and it kept me from buying a condo, although I would have preferred living in one because of my travel schedule. OTOH, even in places like that you are building equity rather than giving money to a landlord. Also, there are no guarantees in any kind of real estate and home ownership is usually more expensive than people guess----all that realtor talk about being cheaper than renting (true in the long run but often not in the short run) is nonsense. You really should budget the equivalent of a condo fee for a house because you'll spend at least that much on maintenance (buying garden/lawn tools, repairs, big ticket periodic items like house painting or a roof).

I had a very simple reason for buying a house: I couldn't take hearing my wall-neighbors one more minute longer than I had to.

R152 Real estate websites like Redfin list flood risks and everywhere I am considering has no or low flood risk. Where I presently live, which is a condo building in a neighborhood I like, we are right on the edge of the Rock Creek Park valley, which plunges steeply and quite deeply, and this is a high area about halfway up an incline that continues to the National Cathedral. Water flows downward, and flooding occurs a lot in DC as you say, but not here. The ocean would need to rise many meters, not inches, to reach this area, and that's not likely to happen within 30 years. If it does, then our lives are really screwed, my real estate investment notwithstanding.

R149 I hear you. Similar boat here in NY.

I have lived in both a coop (NYC) and a condo (CT). Both had their issues and I would be reluctant to buy into a condo again. We are currently renting and I am loving it! My money is not tied up and subject to a decrease in home prices (yes, it has happened to us and it can happen again) and maintenance is nothing I ever have to worry about. I want my money to be freed up to use for travel (if we can ever travel again, that is, due to COVID) once I retire and not held hostage in real estate. But I am also 66...

All currently used FEMA flood maps and maps on Redfin are pretty much outdated and do not take in the current state of climate change. Hurricane Ida was a huge wake up call in that regard, and DC is in that general area where rain and sea rise are going to hit hard.

OP don't buy a 1 Bedroom. Buy a 2. Seriously. It adds value to the property. And do not listen to anyone who tells you it's a bad decision to buy, It's not. With condos you need to look at how well built they are and how old they are. You also need to look at how many units there are in the complex. I don't know where you are thinking of buying but I'd try to avoid the very old, high rises. The physical plant is old and always needs some repair so they do special assessments that can be pretty high. I bought a condo because I could no longer afford the rents. They were getting so high it was ridiculous and you got nothing for it. Buying is better. Try to find something that is less than 12 stories. Preferably 3-6 stories and also look at ranch and townhouse condos. Older complexes tend to have higher HOAs.

I would seriously consider putting 21% down. No PMI. Buy now before the interest rates go up. Read your Condo by laws so you know what they require. Ask about when they last had a special assessment. Also ask whether they are currently discussion a special assessment and how often their association meets.

It is also helpful to find out if they have contacted with a property management company. Look the company up and find out if there are complaints. Find out about parking and security. Most condo associations also require the owners to have a certain level of homeowners insurance. Best of luck. You're being smart to buy a little less than what you can afford.

I bought my condo 4 years ago and I am very glad I did.

R159 I appreciate your advice. I really do.

But I have to ask: Why do so many people here not understand limitations imposed by not having a lot of money to spend? It's WAY easier to say "don't buy a one bedroom; buy 2" and "put down 21%" than to do it when you only have a certain amount of cash in the bank, only make a certain salary and have no home equity to apply to the purchase.

People here talk about huge financial decisions—always buy more and bigger and more expensive!!!—as if they are decisions of convenience and not bound by real-world restrictions.

Why is this? Are most of the people here extremely wealthy?

I'm R139. As someone else posted, look carefully at your closing costs. Sure, my mortgage payment was low but I also needed to pay my property taxes and escrow along with the HOA and property taxes.

My initial mortgage payments were about $200 more per month than I was initially led to believe they would be. Since I didn't go for the max mortgage I was approved for, I had some breathing room but some initial home improvements had to wait. Also, I was unaware that I had to refund a partial property tax payment because we close mid-quarter. Be sure to ask about things like that. I have a girlfriend who wrote "bad checks" because she wasn't told about the property tax and oil delivery payments she would have to make. She had no money left for these "surprise" costs. She was able to cover the checks because her closing was a day before her pay day.

While renting has its benefits (my sister just calls the office to have her smoke detector batteries replaced or the stove or toilet tended to), she pays more in rent that I pay in mortgage and escrow for my property taxes. Before anyone asks, my mortgage company is my bank and they remit my property taxes. Some mortgage companies may not require that so that's something to look into. If the mortgage company/bank pays your property taxes, they have to have a reserve from which to pay them. It could save you a couple hundred dollars per year.

Regarding potential flooding, I just came across this on a listing on Redfin. It warns about future flooding risks over the coming 25 years because of climate change.

Yes, 2 bedrooms are likely appreciate more than 1 bedrooms. If you can't afford two bedrooms, it's not the end of the world. You're getting a lot of stock advice (e.g., avoid PMIs, go for a shorter term, houses > condos, don't get rid of a tub) which is fine, but they don't apply to everyone and isn't always practical to follow. The idea that you should buy a house, for example, is ludicrous given the price of a house in DC and what you've told us about your resources.

I live in the Logan area and own a 1 bedroom. It has appreciated just fine. The co-ops I've previously owned in Adams Morgan have also appreciated. I have a shower, not a tub. I sold a previous place that had a shower not a tub and the absence of a tub never came up from people who looked at the place. Take into account that "conventional wisdom" can be ignored in many cases.

You sound like a long-term owner who knows their resources and their needs. Buy what you want. Live with the mortgage limits (PMI, 30 year working better in the short run), but see if you can pay down on a regular basis. A long-term commitment makes you a good candidate for a co-op which has some advantages (often cheaper to buy, fewer renters, more engagement in the building).

The single population of DC is more than 36% (compared to 45% in San Francisco, 23% in McAllen TX, and 39% in NYC metro areas). If you look at DC itself (not the larger metro area), the number is very fucking high: 76% of adults under 40 never married according to this U.S. Census item.

OP will be more than fine in buying a one-bedroom apartment in Washington DC.

Well obviously the market dictates a lot. For example, yes, a one Bedroom in the D.C. area is going to appreciate just fine. There's a demand for them. ( A 2 & 2 may provide an opportunity for a roommate in D.C.) I was going on what OP said about his situation in his opening post. That is why I suggested a two bedroom instead of a one B. And that does not necessarily mean you'd automatically pay more. And in my experience some times closing costs are negotiable. But you have to shop around. The key is to find a really good realtor. I went though 5 realtors before I found one I felt I could trust who was experienced and knowledgeable.

I buy myself something really nice each month with the money I am saving by having no HOA/condo fees anymore. Will never live in one again. It's not that every neighbor is an asshole bitch -- but all you need is one to make your life miserable.

R161, any time I've ever had a mortgage done (on my 5th purchase now - not concurrently! lol) they sent me multiple loan closure statements with any changing costs, whether up or down. I knew to the penny what the loan would cost me before we closed. Recently, the seller offered credits instead of fixing a few things as he was running out of time. We accepted, and our mortgage manager gave us the updated closing costs within an hour. That's something for OP to remember to do, read every email and document they send, because there can be surprises. And, OP, up until it's the "final" time to change your down payment, don't be afraid to do so! I just changed mine two days before closing.

That's good to hear, R167. Some real estate attorneys are not that thorough.

Where, in this market, are sellers giving credits for anything? This is the hottest seller’s market in history. Sellers are making zero concessions. Inspections are rare. Buyers have almost zero leverage. Why give the buyer anything when you can take the easiest and best offer? Houses are selling within a day of being on the market, or before the house is even ON the market, sight unseen. This is happening nationwide. We’re putting our place on the market this week and we expect to have a contract in a few days. We will be taking the offers without inspection so we can move quickly. Then we’re buying, and we pretty much expect and are prepared to pay over asking and to receive no concessions. The market is still that heated.

R169, I am the person whose seller gave credits. Our inspection showed some problems which buyer agreed to fix (via amended contract). He fixed 90% of them via professionals but a few days before closing one of his people caught Covid and could not complete the tasks. The remaining items were costed out and he offered that credit in lieu of finding someone else to fix. We both agreed and I got the credit instead. We had paid about 2% over list and they did not sell "As is", so we both got a good deal, with us getting professional fixes, and them selling the house in under 2 hours on the market. Pays to have reasonable people on both sides these days. So that's how this buyer got seller credit.

You were lucky. That’s not happening with most sales. As you said, you had to pay 2% over list, so it made financial sense for him to make easy repairs.

Even in DC, there are sales that don't conform to the kinds of national trends reported in places like USA Today.

RE: Two bedrooms. Posters clearly have not seen what often constitutes a 2 bedroom condo in DC. Especially among newer buildings, the second bedroom is barely larger than a walk-in closet and not suitable for a roommate arrangement. I've also seen 2 bedrooms where the master bedroom is the only decent sized room in the unit. The logical thing to do would be to break down the wall to the other bedroom but, of course, you would lose the value of calling it a 2 bedroom. In older buildings, these would have been 1 bedroom+den or dining room, but usually with less claustrophobic floorplans.

R169 it just took my friend a month to sell her house in LA and there are 2 homes in my parents’ neighborhood in suburban DC that have been for sale for weeks.

Not everything is selling within 1 day.

Make sure your area has building inspectors OP.

My relatives told me the area was a great deal until I learned that they don't have anyone in the BI category.

The house should've never have been sold to a customer.

What, R174?

The OP is in Washington DC. They have building inspectors there. And hot bad col running water indoors, even.

Building inspectors are among the least qualified people anyone would ever willingly admit to his home, let alone pay them. What yurt in the Mongolian steppes do your family call home that there are no building inspectors?

This is one of the best threads on DL. It's great that there are good arguments both for buying and not buying. As an expat in Europe, I've grown so attached to the place I rent that I'm tempted to approach my landlord with an offer. I don't know how common this is. Has anyone ever bought their rental?

Then your friend must have property with exceptional issues R173, because the past few months are historic with January setting up to be unprecedented in terms of sales. Your anecdotal evidence doesn’t extend to the real world.

R177 - your Redfin article says this: “Homes that sold were on the market for a median of 27 days, down from 35 days a year earlier.”

So my “anecdotal evidence” does extend to the real world.

My friend’s home did not have exceptional issues. She sold it for $1.2 million after a month - which was $400k more than she bought it for in 2018. This was in December.

lol you’re literally not proving your point r178.

BYE

I used to be a realtor. One of the things you lean in real estate school is that houses that are priced in the $600,000 range and above always take longer to sell. As a rule of thumb the more expensive a house is the longer it takes. OTOH, if the house is a candidate for demolition and it's a piece of shit with myriad of problems and it's selling for $100,000 o under, (because of the land) then it may sit for a while. But right now the market is so hot in metro Atlanta, people are getting in bidding wars and houses are selling for above "ask."

R179: The mean time on the market is basically a month which fits R178's anecdote. You're also forgetting that markets can be very localized. In my area, 2 bedrooms sell quickly but larger units can take much longer. People often can afford a house instead, although it might have to be in a different neighborhood. Townhouses often appeal to a different demographic than high rises and there are submarkets in DC that have historical quirks like the older mostly co-op buildings in SW DC which have huge co-op fees because they've been catching up on deferred maintenance but relatively low selling prices---a truly long-term owner will come out ahead, a short-term owner won't. The post WWII buildings in the Connecticut Avenue corridor often are good buys because they offer more space than newer buildings but lack the cache of the pre-WWIIs.

While historically the biggest profits have been in the highest end of real estate, (not necessarily in percentage, but simply in dollars), in the current market there is crazy amount of profit happening at the lowest end. For instance, I bought a total fixer as a rental house in 2014 for $74,000. Yes, I had to put $40,000 into it to make it desirable to rent, but also upgraded the previously unfinished basement to turn a 2 bedroom, one bath house into a 3 bedroom/ 2 bathroom house. Now according to zillow it's worth $300,000, and I don't doubt that that's a real number, giving what's going on with real estate in my Pacific Northwest second-tier city. I don't intent to sell it, because it's nearly paid off and I want the permanent income stream as part of my retirement income, but that 8 year trajectory is showing a 300% increase in profit if I were to sell it. Realistically, the biggest housing demand is at the lowest end of the market, where there are many more people needing/desiring housing.

R182: Your scenario might work in a distant suburb of no interest to OP, but it hasn't been viable in for someone like him in DC since the 1990s. And even then, it would have meant buying in an area that might lack easy access to public transportation. There also is a gamble because neighborhoods often don't take off in price---lower end areas that did take off circa 1998 in DC often had stagnated for many years even though gentrifiers were entering them. A realtor tried to steer me toward a small row house in an area like that and I considered some outlying neighborhoods that had public transit but not other amenities. There's a good chance that prices have taken off in your areas because private equity and its smaller time imitators have been buying rental properties in places like inner ring suburbs all over the country. In the process, these houses are becoming unaffordable or at least unreachable through conventional mortgages for normal people.

Thanks, r183. I wasn't really directing my comment to or about OP, but responding to someone else above about how long it takes to sell houses in certain price ranges. I would agree with a lot you say, although I have a friend who did quite well buying properties in DC in the 80s and 90s and selling them over the past 5-8 years. A lot of them were in marginal areas that have perked up. The house that she has kept is on F street NE, but as she tells it, it was a somewhat scary neighborhood when she first moved there and that was only 20 years ago. Now it is much more stabilized and her house there is valued about 1.1 million. I think she bought it for about 500,000.

OP back again, now with questions about the frustrating buying process.

I got pre-approved online for a mortgage from a reputable last month. I did some research and identified a company that was rated very highly both in publications and by consumer-rights nonprofits. The BBB lists them as A+. They were easy to work with via phone, but are not located in my state. I knew the credit inquiry would ding my credit score, but it actually dropped by 12 points, which surprised me.

I then enlisted a longtime acquaintance who is a realtor, and he has been explaining more to me, but also has strongly encouraged me to go with one of his preferred local lenders. He says that he prefers to work with local banks he knows to trust and because they have a relationship, they move quickly, whereas large lenders are slow to respond and deals can be lost because of them. He was so pushy about this a few weeks ago that I cut him off and told him I'll consider talking to one of his people, but I already have a pre-approval and I'm just looking. He backed off a bit but has told me he was going to set me up to talk to one of his lender friends and he has not yet done so.

I went to an open house two days ago that I liked, and I went back with my realtor friend yesterday. We also saw another property. He sent me paperwork about the one I like, yada yada, and said there's one low offer on it and it is priced well, so I'd be in a pretty good position if I wanted to make an offer, but no pressure.

Since I've never done this before, I asked what making an offer would entail. What exactly do I need to do? He said "the first step would be to submit an application" and he went on and on. I asked who I would be submitting an application to--the condo building? The seller? He said no, like I told you, you'd talk to my friend and they'd need to see your income statements, bank statements, etc. And I said, "are you talking about a loan application to be pre-approved for a mortgage?" He said, "I understand why you'd be frustrated because you feel like you've already done that." And I was like, "I am already pre-approved. I have a letter, I have a lender who would talk to the seller, and time is *somewhat* of a concern. Am I positioned to make an offer now?" And he went back to the hard sell and telling me why a local lender is better because they move faster and the seller will always prefer a local lender who they know over another mortgage company.

At that point, I got really frustrated and that was the end of that call.

I like this guy personally, but I am getting a very uncomfortable vibe about the lender situation.

Can anyone enlighten me regarding my instinct is right or wrong on this?

More below...

He did tell me the first time he was giving me the hard sell that "it is literally illegal for the lender and the agent to have any kind of financial relationship--kickbacks or anything else--and I would literally go to jail if I did that. I don't have personal incentive except that it's easier to work with local lenders, they're faster and less likely to lose a property, and I know I can trust the people I work with."

I'm not totally opposed to considering it, as I told him, but I REALLY do not respond well to feeling pressured by other people to follow their orders/"recommendations" about my own money, much less the highest-stakes money decision of my life other than my retirement fund. I've never experienced such a hard sell about anything except one time when I was buying a car, and when that happened, I told the salesman to back down and stop trying to sell me something I didn't want when I knew what I wanted. He said OK, then he didn't stop, and I walked away. I would prefer not to coldly walk away from a friend, but I am willing to do it. However, if there's any chance he really is being pushy in my best interest--if working with a local bank is that much of an advantage in buying, for example--then I need to know that and I can be more understanding. I have major issues with feeling like someone is trying to control me, and my night was sleepless because of it.

Thanks for any advice.

OP/R185/R186: Your instinct is correct, your agent friend is being pushy. From my experience, seasoned realtors may tell you of lender contacts with who they have had success for their clients in achieving favorable loan terms, fast approval, someone comfortable taking the time to explain the process and options for a novice buyer, etc. Those suggestions are sometimes good, sometimes not.

Mortgage brokers cultivate agents and seem to have more industry lunches than a Multi-Level Marketing concern. And they talk about their relationships as if they were magical, but really it's just two different people doing two different jobs for two different companies; there's not one bit of magic to it. Both realtors and mortgage brokers are your best fucking friend ever until they secure a deal, then I find that their attention flags and they are not so quick to answer calls and messages about the nagging little details that someone has to sort. (With realtors it's even worse when you contract with one to sell your house; unless it's an exclusive, they figure their work is done after the first open house weekend and just sit back and let other realtors do their job, figuring they are only going to get half of the 6% (a split commission) most of the time.) Neither mortgage lenders nor realtors impress me as a class, and a good realtor who understands what you want and how you like to look is a real prize if you find one. It's a pushy business by its nature.

In your case, you have the letter from a lender, you are positioned to make an offer. In the end, you can accept the terms of the lender with whom you've dealt, or you can find another lender willing to match or improve on their terms. You have a little less time, but mortgage lenders will generally jump to meet a deadline if you want to compare offers or secure a loan from another source other than the one who pre-approved you.

In your position I would be firm with your friend and say that you would like to continue with him but that you want to proceed with the letter you have in hand. If your friend wants to suggest a contact who might find you a better deal after your contract is signed, why not? But I wouldn't make that a starting (over) point. He's too invested in you dealing with a particular lender and there's no evidence that that's to your obvious benefit.

What matters are the terms you get. Mortgage brokers often change companies. And your mortgage may be sold to another lender after closing. I've financed 7 times 9Including refinancing) and 4 of the seven were sold. Two were through credit unions and were sold to Fannie Mae, but continued to be serviced by the credit unions (they did the billing). One was with a mortgage company and went to Bank of America which also did the servicing. I forget who got the fourth. The one area where you have control is the terms---rate, points, etc. and that should be your focus, along with your comfort with the broker and company who originate the loan.

Working with a friend on your purchase creates a dual relationship---business and friendship doesn't always work out and you need the freedom to set limits and say "no".

If you have a weird feeling about this in your gut OP proceed with caution.

And agree that it seems messy working with a friend on this level.