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I'm 20 years old and I'm looking to buy a house within 6 months to a year. Besides having 20% down, what other tips would you recommend for a first-time home buyer? Also, is there anything that I need to look out for?
Yeah, I would say there's a couple of things to keep in mind. I think it's great that you're putting 20% down. We would say to do a deal where your payment is no more than 25% of your take-home, and that's taxes, insurance all included, in a conventional loan. I love that you're putting 20% down, because then you can avoid PMI, which is private mortgage insurance, and it's just an additional cost there. But with 20% down you can avoid that. I feel like you're in pretty good shape. Other than that, it sounds pretty good to me.
Yeah, a couple of things, good idea, good question. By the way, 15-year fixed rate, 25% of your take-home pay. Always, everyone, anytime you buy a piece of real estate, get title insurance, 100% of the time. Anytime you're buying a piece of property that is not a traditional subdivision lot, meaning it's very, very predictable, always get a survey. So if you bought three acres and it turned out to be 1.75, that's why you get a survey on it. Now, if you've got a standard subdivision lot that is pre-platted and has changed hands three or four times, you don't have to worry about that, it is what it is. But if you're buying something otherwise, get a survey, get title insurance, get a home inspection. Get a home inspection. You're 20 years old, you're not an expert on much of anything in that house, unless you just happen to be an electrician or something, and then you would be right. But yeah, get a home inspection, period. I've bought and sold several thousand pieces of real estate. I get a home inspection. The last house I bought, I got one. I can go in there and scratch around in the crawl space and try to figure it out, but for what it costs, let somebody else do it, right? That's the thing.
Don't buy a house that is a great price but is ugly from the street. My first house I bought, I got a great deal, and this house was ugly from the street. There's no fixing ugly. You can't fix ugly. It's still going to be ugly. Well, we could, no. Don't try to fix ugly. Ugly is, you just look like, oh, had plastic surgery and you shouldn't have bothered. Oh, don't do it. You just can't fix it. Leave it alone. It's not a good buy, because if you get a good buy on it, when you get ready to sell it, you have an ugly house, and you're going to give somebody else a good deal, because nobody wants an ugly house. So there's a reason it was cheap when you bought it, and there'll be a reason it's cheap when you sell it.
That's also true with the actual floor plan. I rented a house one time, and it was a four-bedroom, but to get to one of the bedrooms you had to walk through the other bedroom. Oh yeah, that's terrible. We used to call these country-built houses, where you just keep adding on, adding on, adding on, and there was actually no plan from the beginning. So be careful with that kind of stuff. You can get excited, particularly on your first buy, so try to buy something that's a little bit boring. That's good advice. Don't try to reinvent the wheel: "I'm going to do a rehab." Oh God, no. Well, you could pick something that has things you can fix, like if the carpet's super ugly, or there are things that are outdated, you can change that. You can put gutters up, that's fine. But don't tell me you've got to change the, no, I've got to tear it out, I've got to add on, no, no, no, no. Just boring means less risk going in and less risk going out. A nice little house with a little picket fence and little bushes out front, and when you look at it from the street, everybody goes, oh, that's cute. That's where you want to start.
What do you think about corner lots? When we bought in our neighborhood before we came here, we thought we had a good lot, because we were on the corner by the gate, and for us it was great. We thought, oh, we could take the dog out, it's easy access. But when we got ready to sell, it sold for less.
Corner lots are a mixed blessing, because generally corner lots present well from the street, but you have no freaking backyard. You've got this little tiny triangle back there where they cram the house back inside at a 45-degree angle. It depends on the subdivision, it depends on the lot size, all those kinds of things, but generally speaking you get a nice presentation from the front and then you're pinched in the back. Yeah, that's generally what you get. So watch for that. It's not the end of the world, but watch for it. Again, if you've got a concern when you're looking at it, know that the buyer, when you get ready to sell, is going to have the same concern. So just don't get so excited that you rationalize your way into stupidity. I know a guy who's done that a lot in his life, and that's how he has a radio show. So be careful.