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YAHT: Which would you buy?

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YAHT: Which would you buy?

Old 04-28-08, 05:27 PM
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YAHT: Which would you buy?

So I'm in the beginning stages of looking at purchasing a house and If I were to buy one today I've narrowed it down to these 2 (I live in the rural part of the State but surprisingly prices are not that far off from the city). They both have approximately the same price.

A) Single family detached home 2400 square feet w/2-car garage
This is in a very rural area, there is 1 McDonalds,1 Burger King, and 1 grocery store. I think this is 1 of only 2 residential communities in the area

B) Garaged Townhouse 2000 square feet w/2-car garage or 1 car garage with 10 X 11 study room.
This area used to be rural, but within the past few months a new Target, PetSmart, and the biggest Lowe's I've ever seen opened. A drive-thru Starbucks just opened as well. 2 Chain restaurants opened within the past 1.5 years. 4 new residential communities are in the process of being built (I cannot afford the single family detached home though) in addition to the previously built communities. Taxes are higher and there is a $60 monthly HOA fee.

My situation is that I live alone and that I plan to stay in this dwelling for a long time. I have always wanted a detached home (so I can play my home theater as loud as I want) with a backyard fence (as I want to get a dog). However, I also need to take a look at this as an investment. I know that SF homes appreciate better than townhomes but I'm thinking the townhouse may appreciate more (and be easier to sell) because of its location. But if I do go with the townhouse then I'll have to be mindful of my home theater noise and the dog won't have a yard to play in.

Which should I choose?
Old 04-28-08, 05:32 PM
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mbs
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From my (weak) understanding of the real estate market, single-family detached homes are usually quicker to sell versus townhomes.

Don't treat it as an investment and decide which you would rather have. IMO, It isn't worth guessing which are will appreciate the most or what the market will do. Just buy the one you like the best.

Personally, I would choose the detached single-family home.
Old 04-28-08, 05:55 PM
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If you're planning on being in the home for a long time you should get the one that you'll be most happy in, the one where you can do what you want. Don't worry much about appreciation.
Old 04-28-08, 05:59 PM
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I'd probably say A to... But you didn't tell us how far this house if from B. How far is it from your job?

Or can you save a lttlie more and buy a single home in B or just have a higher payment..
Old 04-28-08, 06:11 PM
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Thanks for the responses so far.

They are both the same distance from work, (A) is to the East and (B) is to the South.

I guess I'm just afraid that if I go with the single-family home that if something were to happen & I would have to sell the house, I would not be able to sell it immediately since its in the middle of nowhere.
Old 04-28-08, 06:11 PM
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You didn't mention how far the house is from these other things.

My house is in a 1 horse town with a gas station and grocery store. No big chains. But it is fine since taxes are lower, and I am about 5-10 minutes away from most fast food places.

I would say house.
Old 04-28-08, 06:14 PM
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I'd rather live in a "home" than in an investment property.

And trust me, being able to blast your home theater system without fear of upsetting the neighbors is one of life's great joys.
Old 04-28-08, 06:18 PM
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The house will be about 18 miles from the town of (B), which is where the nearest restaurants & shops are. Buying a house in town (B) is not really an option since its at least $100K higher and getting to the point where I can afford the townhouse is already pushing my maximum limit.

BTW, I'm only looking at new developements because they are all offering $10-$15K in closing costs.
Old 04-28-08, 07:07 PM
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I'd go with A, it sounds like B is an area that is blowing up with development and life will just be hell with so much traffic, people, etc. I'll take a 10 minute drive to live an area where you can still see stars at night, blast your home theater, let your dog bark in your back yard, less crime, etc.

Last edited by John Galt; 04-28-08 at 07:22 PM.
Old 04-28-08, 09:44 PM
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How much land is the Single on ?? If your only 10 ft away from your neighbor like some developments then you still won't have the 'freedom' to blast your theater.
But even that being the case I would go for the Single unless access to the businesses is of high importance to you. If single I would also consider dating/socializing potential... if you live out in nowhere people aren't likely to come visit or drop by nearly as often as when you live nearby.
Old 04-28-08, 11:06 PM
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You're going to get a lot of the same advice, but buy the place you prefer to live in. Unless there's some reason that the house is a staggeringly bad investment, don't even consider investment potential. Anything can happen over time, and perhaps one will be worth more or easier to sell than the other, but is it worth not having the place you want for years of your life just because it might not appreciate as much as somewhere else? Purchasing a house is a scary thing, and you're understandably tentative to pull the trigger, but buy the place you want, turn it into a home you'll enjoy, and be happy.

das
Old 04-28-08, 11:29 PM
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Originally Posted by sinned
The house will be about 18 miles from the town of (B), which is where the nearest restaurants & shops are. Buying a house in town (B) is not really an option since its at least $100K higher and getting to the point where I can afford the townhouse is already pushing my maximum limit.

BTW, I'm only looking at new developements because they are all offering $10-$15K in closing costs.
10 -15 K in closing costs? That seems high. Is there a possibility of buying points?
Old 04-29-08, 01:42 AM
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Originally Posted by sinned
The house will be about 18 miles from the town of (B), which is where the nearest restaurants & shops are. Buying a house in town (B) is not really an option since its at least $100K higher and getting to the point where I can afford the townhouse is already pushing my maximum limit.

BTW, I'm only looking at new developements because they are all offering $10-$15K in closing costs.
another option would be to do what i did, and get a loan where there are no loan fees, they pay a bunch of other fees as well. i saved about 1.5-2% of the loan amount. the downside is that the rate is a little higher. i locked in my rate at 6% /w 0 points a few weeks ago. then bought down to 5.5% @ 1.9 points, so i end up about the same as other places with more competitive rates. i bought points with the money the seller put towards the closing costs. but you should check with your realtor to verify for your situation.

with regards to what to pick, if you plan on living there for a while, i say buy what you really want, so long as it's not a foreseeable major disaster. also, in SF, distance might not be as big of a factor as the amount of time your commute is. personally, i'd pick a detached house because you have a little more privacy. but without knowing the specifics, it's hard to really make an accurate suggestion.

what does the HOA for the townhouse do? just maintain the common ground? does it include insurance for the structure (exterior)?
Old 04-29-08, 12:05 PM
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Originally Posted by stp115
10 -15 K in closing costs? That seems high. Is there a possibility of buying points?
I should have said that they would contribute $10-$15K towards closing costs.

The HOA fee goes towards the maintenance of the pool, plus snow removal and grass cutting.

Thanks for all the advice so far. I wish it were an easier decision for me. At least I'm not buying immediately so I have a couple more months to think it over. The thing with the house is that if the town it was in was nice then it would be no problem but its an old town with old houses and basically the town is blah. I would not call it a rundown town but its not green pastures and nice clean roads either.
Old 04-29-08, 12:07 PM
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Originally Posted by sinned
I should have said that they would contribute $10-$15K towards closing costs.
But given the cost of closing costs, isn't this a silly statement? They could say they would contribute $50K to closing costs, but cannot pay more than the actual costs. Unless we are talking about a million dollar home, I don't see how closing costs could even approach $10K.
Old 04-29-08, 12:08 PM
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Another vote for buy what you want to live in, not an investment. I don't like living in rural areas, but if it's close enough to a bigger metro area, I'd let it slide.
Old 04-29-08, 01:25 PM
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Originally Posted by mbs
But given the cost of closing costs, isn't this a silly statement? They could say they would contribute $50K to closing costs, but cannot pay more than the actual costs. Unless we are talking about a million dollar home, I don't see how closing costs could even approach $10K.
They all have told me to expect the closing costs to be 6% of the purchase price. So for a $275000 home that is $16500. Isn't it a rule of thumb that cloding costs are 6% of the purchase price of a new home? (yes, I'm a first time homebuyer).
Old 04-29-08, 01:50 PM
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Originally Posted by sinned
They all have told me to expect the closing costs to be 6% of the purchase price. So for a $275000 home that is $16500. Isn't it a rule of thumb that cloding costs are 6% of the purchase price of a new home? (yes, I'm a first time homebuyer).
I'm also a first time homebuyer (I put in an offer on a property last week), but my closing costs are going to be close to 1% (this was from two banks). I guess I was thinking that 1% was normal.
Old 04-29-08, 01:51 PM
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Originally Posted by sinned
They all have told me to expect the closing costs to be 6% of the purchase price. So for a $275000 home that is $16500. Isn't it a rule of thumb that cloding costs are 6% of the purchase price of a new home? (yes, I'm a first time homebuyer).
Closing costs vary, but 6% seems to be on the high side. A realtor who's more familiar with your area should be able to advise you better though.

Personally, my closing costs where about 3% of the selling price, including the interest rate buydown. If I didn't buy down, my closing costs would be about 1.5%. Keep in mind though that as i stated before, my lender paid all loan fees and some other fees as well.
Old 04-29-08, 02:03 PM
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Well now I'm a little bit more confused but I guess the possibility that I would pay less than 6% closing is good news. The builders who gave me the 6% quote was K.Hovnanian and Lennar. I'm not sure now if Richmond American told me the same thing. Lennar actuually gave me a GFE, and closing costs were like $18K on a $265K townhouse (this included the "loan discount" which I take to be the loan origination fee plus all the tax & other pre-payments).
Old 04-29-08, 02:51 PM
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that's almost 6.8%, which def. seems high to me. you do not have to buy the house directly through them, you can get your own realtor. in fact, i would recommend it, since they can advise you better, perhaps negotiate a better deal as well. talk to your family and friends and find someone who's trustworthy. also, you don't have to get the loan through them, you should shop around to see what the best loan is for you. keep in mind the fees as well as the interest rate.

and loan discount fee is different than loan origination fee. a loan origination fee is the fee to process the loan. the loan discount fee is the fee to buy down the interest rate. buying down the interest rate allows you to pay a little less per month. however, if you don't have that much money up front, then you don't have to buy down the interest rate.
Old 04-29-08, 03:11 PM
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Another thing to consider: if you live near only 1 option for groceries, gas, etc. you will probably be paying more for those things.
Old 04-29-08, 03:14 PM
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Closing costs can vary widely. Unless you and the person you're comparing yourself to are in the exact same situation credit-wise, income-wise, asset-wise, and time-wise (doing it at the same time), there's not much of a point in "comparing" between one place and the other and assuming that the other party can get that as well.
Old 04-29-08, 03:29 PM
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These are both cookie-cutter developments? What's the lot size? If it's measured in square feet instead of fractions of an acre, you might be able to stand on the wall and touch both your house and your neighbor's house at the same time. How restrictive are the HOA rules and the covenants? Around here, new developments have restrictions on the color of the paint, the size of the lawn, and everything else.

Find out what's going into the next chunk of land. Is it a mobile home park? A 24-hour Super Walmart? Will the road in front of the development turn into a retail strip with six lanes and a traffic light every hundred yards?
Old 04-29-08, 03:30 PM
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go talk to a few banks or mortgage brokers

there was a story this morning that AIG will stop insuring condos in hundreds of declining markets and that other mortgage insurers will likely follow

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