Home shows: pet peeve

[bonnie]

I've never purchased a home before, so please tell me if I'm wrong.

I always hate on home shows (House Hunters, Property Virgins and the like) when they talk about their budget. If the house is under their budget the realtor always says something about how they can use the extra money to renovate. For example, the couple says they have a $500,000 budget. They find a house for $400,000. It's not like they are going to just miraculously going to get a mortgage for $500k on a house that has a purchase price $100k lower, right? Am I missing something?

[TrickyBob]

You can get a mortgage for higher than the house price in order to have more on hand to do renovations.

However, I think they are talking cash and not "take out more than the home is worth so you can fix it".

[EmilieMadison]

Oct 1, 2013 11:32:56 GMT -5 pagas said:

A fair number of buyers pay cash for their house. So they have the extra money.

Not on the shows that the OP is talking about. 

[puppyluv]

If you can afford a $500k house and buy a $400k house, you would pay less monthly. That frees up extra money each month that can be spent on renovations.

[pedanticwench]

This is my understanding and I could be wrong:

If you're approved for a loan, you're approved for a loan, whether it's 500k or 100k.

It just depends on whether or not you want to take that extra cash if the house you end up buying is less than the loan for which you were approved.

[EmilieMadison]

Oct 1, 2013 11:34:22 GMT -5 TrickyBob said:

You can get a mortgage for higher than the house price in order to have more on hand to do renovations.

However, I think they are talking cash and not "take out more than the home is worth so you can fix it".

This...doenst make sense. 

[janegold]

I believe that you can't get a mortgage loan for more than the value for which the house is appraised, except in a select few programs. I think the more typical option would be taking out a home equity line of credit.

[WOT?*]

They can get a HELOC, a home improvement loan (based on the improved equity after renovations), save with the lower monthly payments and do renos over time or any of a number of alternatives. But I'm there with you. They're talking buyers into the upper limits of affordability. Thank goodness it's all scripted.

[pedanticwench]

Couldn't the house be appraised at a certain value, but sell for something else?

[pedanticwench]

FYI, I've never bought a house before so I am talking out of my butt, really. And guessing.

[WOT?*]

Oct 1, 2013 11:35:40 GMT -5 pedanticwench said:

This is my understanding and I could be wrong:

If you're approved for a loan, you're approved for a loan, whether it's 500k or 100k.

It just depends on whether or not you want to take that extra cash if the house you end up buying is less than the loan for which you were approved.

Incorrect.  The house needs to appraise at the value of the loan so if the loan goes unpaid they have adequate equity.  Otherwise people can be approved for a loan of $1M, buy a house for $300K and skip with $700K in cash, leaving the bank with a $300K asset.  Banks won't do that.  Banks won't finalize a loan without an appraisal and the appraisal must meet or exceed the value of the loan.

[Deleted]

that annoys me too. to soothe myself, i tell myself that they'll just finance more of the purchase price via the mortgage and use the cash they've saved for the downpayment for the renovations.

[EmilieMadison]

Oct 1, 2013 11:35:40 GMT -5 pedanticwench said:

This is my understanding and I could be wrong:

If you're approved for a loan, you're approved for a loan, whether it's 500k or 100k.

It just depends on whether or not you want to take that extra cash if the house you end up buying is less than the loan for which you were approved.

No, that's not really how it works. 
You can't buy a $200K house and then take out $300K in cash for a total of $500K. The house is the collateral so the bank isnt going to give more than the value of the house. You can choose to borrow up to the total approval amount, or not. But you dont get the difference if you buy a cheaper house. 

[WOT?*]

Oct 1, 2013 11:34:22 GMT -5 TrickyBob said:

You can get a mortgage for higher than the house price in order to have more on hand to do renovations.

However, I think they are talking cash and not "take out more than the home is worth so you can fix it".

This isn't how it works.  The house must appraise at the time of closing at or above the value of the loan.  What would happen is the homeowner, if he has adequate credit (e.g. if he's approved for $500K and only borrows $400K) can apply for a second loan, a home improvement loan, to pay for renovations and upgrades, so technically he is borrowing the $500K he was originally approved for.  However, the second loan, the HI loan, must be used for improvements on the house that will increase the value of the house to at least the $500K of loans, so the additional $100K must result in $100K or more of improvements.  A HI loan is different from a Home Equity loan in that there isn't equity in the house to borrow against, you're borrowing against future equity resulting from the home improvements.

So you are borrowing $400K on a house that appraises for $400K (or a little more since you have cash for a down payment) and then borrowing another $100K on improvements for the house so that when the improvements are made the house will be valued at at least $500K because there are $500K in loans.  Again, banks won't loan more money than they can get back if they have to foreclose (barring things like the real estate bubble.)

Make sense?

[Alyssa]

Those shows like House Hunters annoy me for sillier reasons. Like when they're walking through the house and the wife is bitching about the color of the walls. It's called paint, you can paint over walls. Don't like that there's carpet in the house...rip that shit out! It's cosmetic, it can be changed.

[Deleted]

Oct 1, 2013 11:56:28 GMT -5 kevin arnold said:

Oct 1, 2013 11:51:57 GMT -5 Alyssa said:

Those shows like House Hunters annoy me for sillier reasons. Like when they're walking through the house and the wife is bitching about the color of the walls. It's called paint, you can paint over walls. Don't like that there's carpet in the house...rip that shit out! It's cosmetic, it can be changed.

Lol, yeah this always annoys me.  These shows are so scripted though, so I wonder why they can never come up with anything more interesting or valid to complain about.

especially because i found plenty of random crap to complain about when house hunting.  stuff that isn't fixable for $50 and a smile.  like, i don't know, shared driveways.  shit man, i looked at like 5 houses with shared driveways before my RE got it through his head that I WILL NOT BUY A HOME WITH A SHARED DRIVEWAY EVAH.  it's a thing for me. 

but if i was on househunters, i'd be all "oh, hmm, shared driveway.  might not be ideal.  but have you SEEN the fixtures in the bathroom?  i'd rather DIE than wash my hands at that sink!  they're CHROME!!!!!!!!!!!"

[leeann]

The woman last night didn't like wood trim around the doors. I am not sure what else you would use as trim around the doors?

[BaliHai]

Oct 1, 2013 11:51:57 GMT -5 Alyssa said:

Those shows like House Hunters annoy me for sillier reasons. Like when they're walking through the house and the wife is bitching about the color of the walls. It's called paint, you can paint over walls. Don't like that there's carpet in the house...rip that shit out! It's cosmetic, it can be changed.

YES. I had to stop watching HH because I literally could not take one more of those comments, or "jokes" about "oh look at this giant master bedroom closet for all of *my* clothes! Teehee husband, you get the bathroom linen closet for yours!" Ugh.

[texassmith]

Oct 1, 2013 13:21:17 GMT -5 leeann said:

The woman last night didn't like wood trim around the doors. I am not sure what else you would use as trim around the doors?

I saw that one too. She was just complaining because she wanted it to be painted. Which I 100% agree with, but it's such an easy cosmetic fix that it's not even worth bitching about.

[texassmith]

Oct 1, 2013 11:56:28 GMT -5 kevin arnold said:

Oct 1, 2013 11:51:57 GMT -5 Alyssa said:

Those shows like House Hunters annoy me for sillier reasons. Like when they're walking through the house and the wife is bitching about the color of the walls. It's called paint, you can paint over walls. Don't like that there's carpet in the house...rip that shit out! It's cosmetic, it can be changed.

Lol, yeah this always annoys me.  These shows are so scripted though, so I wonder why they can never come up with anything more interesting or valid to complain about.

They seem so scripted because they are so scripted. The buyers have literally already bought the house when they look at all 3. The other 2 are just filler properties.

My cousin's house was one of the unbought homes on House Hunters. The couple had already closed on the one they chose. Her house wasn't even on the market at the same time as the one they actually bought.

[leeann]

Oct 1, 2013 13:27:21 GMT -5 texassmith said:

Oct 1, 2013 13:21:17 GMT -5 leeann said:

The woman last night didn't like wood trim around the doors. I am not sure what else you would use as trim around the doors?

I saw that one too. She was just complaining because she wanted it to be painted. Which I 100% agree with, but it's such an easy cosmetic fix that it's not even worth bitching about.

That's the thing - she wanted them white - but it's still WOOD lady, it's just white.  So, don't say you don't want wood trim, you want white wood trim.  Her H was a total lunkhead, too.  If he said "man cave" one more time, ARGGGGHHH.

[daisybuchannan]

I have a random house/mortgage question, and the whole mortgage approval process is foggy to me.

A friend of mine just put her house on the market for WAY more than the comps in her neighborhood. I understand that when you've put a lot of time and money into a house it's hard to list it for less than you "feel" it's worth. But- when the home is appraised, if the appraisal comes back let's say- 100k less than the list or purchase price, the mortgage company won't give the approval, right?

Does that question make sense? I just can't figure out why they'd do that.

[leeann]

Oct 1, 2013 13:35:17 GMT -5 daisybuchannan said:

I have a random house/mortgage question, and the whole mortgage approval process is foggy to me.

A friend of mine just put her house on the market for WAY more than the comps in her neighborhood. I understand that when you've put a lot of time and money into a house it's hard to list it for less than you "feel" it's worth. But- when the home is appraised, if the appraisal comes back let's say- 100k less than the list or purchase price, the mortgage company won't give the approval, right?

Does that question make sense? I just can't figure out why they'd do that.

Correct.  If you have cash, you could put more down, but the mortgage company will only finance based on the appraisal. 

[daisybuchannan]

Oct 1, 2013 13:37:54 GMT -5 killercupcake said:

Oct 1, 2013 13:35:17 GMT -5 daisybuchannan said:

I have a random house/mortgage question, and the whole mortgage approval process is foggy to me.

A friend of mine just put her house on the market for WAY more than the comps in her neighborhood. I understand that when you've put a lot of time and money into a house it's hard to list it for less than you "feel" it's worth. But- when the home is appraised, if the appraisal comes back let's say- 100k less than the list or purchase price, the mortgage company won't give the approval, right?

Does that question make sense? I just can't figure out why they'd do that.

Right. I think there's a way around it, but I'm not totally sure. 

We were hoping our house appraised at less than what we were going to pay for it so the builder would have to adjust the price. lol 

This is what I remember about our home buying process too.

I just don't understand why they would do that. Apparently the real estate agent thought their price was too high, and the comps at that price are 1,000 more sq ft. Weird.

[Deleted]

You can also get a renovation loan if the buyer/home qualifies for it.

[Deleted]

Oct 1, 2013 11:51:57 GMT -5 Alyssa said:

Those shows like House Hunters annoy me for sillier reasons. Like when they're walking through the house and the wife is bitching about the color of the walls. It's called paint, you can paint over walls. Don't like that there's carpet in the house...rip that shit out! It's cosmetic, it can be changed.

I n eed to start a drinking game for each time they gasp in excitment over stainless steel appliances and granite countertops on HH. I always hope that SS goes hopelessly out of style just because of assholes on that show.

[shopgirl07]

You guys, it's just something they say on the show. Unless you're paying cash for the house, you're not going to have all this extra cash lying around if you go "under" your budget. You would have whatever the difference is in your down payment and then whatever you save per month on a lesser mortgage could be put towards reno. You can't get a home equity loan if your home has no equity.

[malibu]

Oct 1, 2013 11:51:57 GMT -5 Alyssa said:

Those shows like House Hunters annoy me for sillier reasons. Like when they're walking through the house and the wife is bitching about the color of the walls. It's called paint, you can paint over walls. Don't like that there's carpet in the house...rip that shit out! It's cosmetic, it can be changed.

I yell at the people on these shows when they do this - like, top of my lungs yell.

It's a $30 can of paint, fuckers.

If we worried only about cosmetic changes when we bought our house, we'd still be in an apartment.

[daisybuchannan]

Oct 1, 2013 13:46:19 GMT -5 @tambcat said:

Well, sometimes the "cosmetic" things that they complain about would be expensive or a pain in the ass to fix. Repaint a bedroom? No big deal. New flooring, new counters, stuff like that? I would prefer the house to already have what I was looking for. Even extensive painting, I would prefer not to have to do/pay somebody to do. Like, bright red paint in a living room with a high ceiling and a bunch of weird angles. I would comment on that too!

YES.

We bought our house thinking "it's all cosmetic, no big deal!", and then had pretty much the entire house (walls/trim/doors) painted, carpets removed, hardwoods refinished, vanities replaces, etc. It was a huge expense, and not some minor cosmetic issue.