Advice for buying my first place?

SSG Private RallyPoint Member — Fri, 12 Jan 2018 17:07:11 -0500

I am currently a specialist in the Illinois Army National Guard. I am a community college student who will be joining ROTC and transferring to Illinois State University with plans of receiving the Universities GRFD 2 year scholarship which includes:

-100% tuition/fees OR room/board ($5,000/semester)
-$1,200/year book allowance
-E5 pay grade (Drill)
-Eligible to retain GI Bill if completed AIT
-Eligible to receive the SMP Kicker Bonus ($350/month) if completed AIT

When considering my living options I thought "Why rent a place and give my money to someone else when I can invest it back in myself?" So, I took to the internet. Over the passed couple of months i've been searching and scouring, trying my best to find a property that suits me. I think I found one that is a good fit.

Here is the monetary breakdown:
+62,500 (estimated purchase price)
+5,000 (estimated taxes and escrow?)

I am assuming it will be somewhere shy of 70,000...

-20,000 (x4 semesters)
-5,500 (Down Payment)
-8,400 (Friend rents out a room for two years)
-8,400 (paying rent to myself out of WORKING money)

70,000 COST - 42,300 OVER TWO YEARS leaves me at a balance of around 30,000.

I get it... there are expense, insurance, utilities... I am not factoring in already saved money and work money...

Here's the catch: My two younger siblings plan on going to the same University and with having a property near campus they can wave having to live in university dorms saving my parents upwards of 40,000... As soon as I graduate, one will be incoming, and as soon as she graduates the other will...

It's a no brainer for me, I am extremely confident I can have the place paid off in 6-8 years.

MY QUESTION TODAY IS... WHAT IS THE BEST PLACE TO GET A MORTGAGE? BROKER...BANK...CREDIT UNION?
WHAT ARE THINGS I SHOULD CONSIDER BEFORE BUYING A PLACE?
DO YOU THINK THAT IT'S A GOOD INVESTMENT IDEA?
WHAT DO YOU WISH YOU KNEW BEFORE YOU BOUGHT YOUR FIRST PROPERTY?

Note: I am 20 with 3 years TIS... I am not eligible for a VA Loan

Response by SGT Private RallyPoint Member made Jan 12 at 2018 5:16 PM

SGT Private RallyPoint Member — Fri, 12 Jan 2018 17:16:48 -0500

There is a lot to consider. Especially as a student. Ensure you know if you meet all the requirements to earn that money from the military, and what it requires to keep it. Without doing VA, you’ll have to pick between a FHA loan or conventional. FHA will require smaller down payment, but mortgage insurance (difference than homeowners) to be paid too.

Response by SFC Stephen P. made Jan 12 at 2018 6:29 PM

SFC Stephen P. — Fri, 12 Jan 2018 18:29:47 -0500

1. You're not mentioning interest or insurance in your calculations. It is a big part of your mortgage, especially at the beginning.
2. Your plan with your siblings is worrisome. You're essentially starting a business relationship with family, and that rarely goes well unless formal hierarchies are already established and applicable. In this case, bad idea. Same goes for business relationships with friends.

I've been a landlord for over 10 years; you need to be able to emotionally divest from the property and the tenants. It is an investment and not a home; they are customers and not friends.
3. The quality of home you're looking at (location and price) is not what I would recommend for long term.
4. Sales markets can often be really tough. I bought a house in 05 thinking I would sell it when I PCSed. I still own it as a rental, because nobody is buying in that town.

5. The advantages of dorms should not be discounted. They will provide better safety, closer proximity to class, and more reliable remedies should something break (like say a furnace or water heater). That piece of mind is worth a lot.

My advice is buy a house when you have a 20% down payment saved, you find a house you like, and you have a steady job in the area. Considering you are currently a student, it is unlikely you will be employed in the vicinity of your studies. If you commission into the active component, you won't be there long after graduation anyway.

Response by Sgt Private RallyPoint Member made Jan 12 at 2018 6:31 PM

Sgt Private RallyPoint Member — Fri, 12 Jan 2018 18:31:02 -0500

SSG Private RallyPoint Member Buying a home is a good investment. Have the home inspected by a Certified Home Inspector. Expect that you will annual unexpected expenses, so make sure that you have additional money saved for these expenses.

http://www.homeinspector.org/HomeInspectionNews/home-inspection-checklist-for-buyers-or-sellers.5-17-2016.1234/Details/Story

Home Inspection Checklist for Buyers or Sellers | American Society of Home Inspectors, ASHI

When buying – or selling – a home, make sure a professional home inspector is part of the transaction. Nosy people can be really annoying if they are always sticking their nose in other people’s business! But if you are buying a house, a home inspector is one super nosy person you definitely want to bring along, well before signing on the dotted line.

Response by MAJ Private RallyPoint Member made Jan 15 at 2018 8:34 AM

MAJ Private RallyPoint Member — Mon, 15 Jan 2018 08:34:56 -0500

Is it safe to assume that you'll be staying the NG after you commission? If not, I'd be careful about buying a home. Being a landlord is tough but it's even tougher if you're out of the state/country. And not everywhere the Army sends you has great internet/phone service. Just food for thought.