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-   -   Buying a house - anything to be wary of (https://britishexpats.com/forum/usa-57/buying-house-anything-wary-895734/)

Chesten Apr 21st 2017 2:09 am

Buying a house - anything to be wary of
 
Apologies if this is just a dumb question but I'd like to tap into your wisdom.

Recap: moved to TN in Feb. 2 young kids below school age. H1b/ H4 visas til Jan 29 2020, green card sponsorship on the cards.
Home rented out in UK.

We're in a relatively cheap area for property ownership whereas renting feels high (all relative. I've seen what eye-watering amounts some of you pay).

I have money from an inheritance so we can put a 20% deposit down and we've been pre approved for a product by the credit union my husband banks with. We're intending to buy ASAP.

In a nutshell, are there pitfalls/ unintended consequences (primarily tax) we should consider? Any reason this would be a bad strategy?

We're not planning to sell either home in the foreseeable. I imagine my future is in the UK (a green card might alter that). If we were to sell anything, it would be the US property (assuming we do buy one) but our idea currently would be to rent it out if we returned home.

Finally, are we likely to encounter difficulties in finalising the mortgage (does pre-approval count for much?)

ddsrph Apr 21st 2017 12:13 pm

Re: Buying a house - anything to be wary of
 

Originally Posted by Chesten (Post 12234472)
Apologies if this is just a dumb question but I'd like to tap into your wisdom.

Recap: moved to TN in Feb. 2 young kids below school age. H1b/ H4 visas til Jan 29 2020, green card sponsorship on the cards.
Home rented out in UK.

We're in a relatively cheap area for property ownership whereas renting feels high (all relative. I've seen what eye-watering amounts some of you pay).

I have money from an inheritance so we can put a 20% deposit down and we've been pre approved for a product by the credit union my husband banks with. We're intending to buy ASAP.

In a nutshell, are there pitfalls/ unintended consequences (primarily tax) we should consider? Any reason this would be a bad strategy?

We're not planning to sell either home in the foreseeable. I imagine my future is in the UK (a green card might alter that). If we were to sell anything, it would be the US property (assuming we do buy one) but our idea currently would be to rent it out if we returned home.

Finally, are we likely to encounter difficulties in finalising the mortgage (does pre-approval count for much?)


I live in Tennessee, Tullahoma, about 140 miles to your west. I have been building a new house over the past
Two years and listed our old house to sell last week, hoping to sell in a couple months. We had three offers in
two days, sold for 10k over asking price. The rapid growth in Nashville, and towns nearby are pushing people down our way which is 60 miles south of Nashville. If your market in Knoxville area is also competitive having
A pre-approval for loan will mean you can move fast and have your offer approved over others with possible
mortgage issues.
I would take time to really look around area before buying and buy something you could be happy living in for many years if you decide to stay. Working in Oak Ridge gives a wide area to commute from, meaning you don't
Have to live that close to Knoxville. As far as taxes, property tax in Tennessee is fairly low. If you live in the house for three years and then sell you don't have to pay any capital gains unless the house is over a certain value.
Overall how has Tennessee been working out for you?

Jerseygirl Apr 21st 2017 12:18 pm

Re: Buying a house - anything to be wary of
 

Originally Posted by Chesten (Post 12234472)
Apologies if this is just a dumb question but I'd like to tap into your wisdom.

Recap: moved to TN in Feb. 2 young kids below school age. H1b/ H4 visas til Jan 29 2020, green card sponsorship on the cards.
Home rented out in UK.

We're in a relatively cheap area for property ownership whereas renting feels high (all relative. I've seen what eye-watering amounts some of you pay).

I have money from an inheritance so we can put a 20% deposit down and we've been pre approved for a product by the credit union my husband banks with. We're intending to buy ASAP.

In a nutshell, are there pitfalls/ unintended consequences (primarily tax) we should consider? Any reason this would be a bad strategy?

We're not planning to sell either home in the foreseeable. I imagine my future is in the UK (a green card might alter that). If we were to sell anything, it would be the US property (assuming we do buy one) but our idea currently would be to rent it out if we returned home.

Finally, are we likely to encounter difficulties in finalising the mortgage (does pre-approval count for much?)


We usually advise people not to buy until you become a permanent resident. Until then your stay in the US is temporary and several of our members have run into problems and have had to leave the US PDQ. Problems such as losing their job, problems getting their visas renewed etc.

Selling a home is expensive...realtors fees often in the region of 6%. Houses are generally more expensive to maintain than the brick built houses in the U.K.

Just to add...we had one member who was in the processing of renewing their visas. US Immigration made an error and the visa hadn't been renewed before the original one had expired. There was no leeway...they had to leave the US even though it was immigration's fault. The family are happily living back in the UK.

Rete Apr 21st 2017 12:49 pm

Re: Buying a house - anything to be wary of
 
I would have to side with JG on this. With a visa that only allows you until 2020 to be in the US, you would not recoup the monies spent on buying a home in the US if you have to sell sooner than 5 years from purchase date. That's appear to be the general rule. As for renting, it is not only a matter of finding reliable and responsible tenants but the maintenance of the home and grounds and the fee to the realtors or manager who will oversee collection of rents, repair of property, grounds keeping, etc. that will eat you alive.

Does your current employer anticipate filing for green cards for the you and the family? If not, then you have no basis for staying in the US. I hate to say this but with the current political climate regarding H1-B visas and the like, I would not feel secure even lasting out the current timeline of your visa.

tom169 Apr 21st 2017 1:00 pm

Re: Buying a house - anything to be wary of
 
When attaining a mortgage there are two types of letters - pre approval and pre qualification.

Make sure you get pre-approved. In a fast moving market this holds more weight as it usually means a more thorough look into your background.

I'm not even sure you will qualify for a mortgage to be underwritten. As I don't have a green card yet (awaiting AOS) I had to provide a copy of my NOA and also a signed affidavit stating that I am intending to reside in the USA for the lifetime of the loan.

As a first time home buyer there was some expenses I didn't know too much about up front. This is where you need a decent amount of liquid cash in addition to the down payment:

- Due diligence money (we gave the seller $500)
- Earnest Money (about 1%)
- Home inspection
- HVAC inspection
- Structural engineer
- Termite inspection
- Radon inspection
- Attorney fees

It all adds up.

Nutek Apr 21st 2017 1:06 pm

Re: Buying a house - anything to be wary of
 
Zero chance I would purchase a house without that green card firmly in hand.

MidAtlantic Apr 21st 2017 1:35 pm

Re: Buying a house - anything to be wary of
 
I go along with others in saying that I would not purchase until I had the green card.

Chesten Apr 21st 2017 1:57 pm

Re: Buying a house - anything to be wary of
 
Thank you everyone. Some very sobering food for thought which I'll share with my husband.

petitefrancaise Apr 21st 2017 2:00 pm

Re: Buying a house - anything to be wary of
 
Another vote for waiting until the green card arrives.

Chesten Apr 21st 2017 2:10 pm

Re: Buying a house - anything to be wary of
 

Originally Posted by ddsrph (Post 12234749)
Overall how has Tennessee been working out for you?

Hey thanks for asking. I'm liking it more than I expected - had a major wobble before we moved. It's v pretty, spring is just lovely. People are chattier than I'm used to. I'm finding them friendly and helpful rather than overbearing.

I'm having a hard time with food when eating out (I'm veggie, but also the prevailing palate seems WAY sweeter than I'm used to). So eating out not really a pleasure for me. I miss Bistro types. Early days anyway.

We're not church goers but no one has commented on that!

The erratic weather is interesting.

My biggest adjustment is a state of mind with regards H4. Hope green card is forthcoming and not recruitment hot air.

Pulaski Apr 21st 2017 3:05 pm

Re: Buying a house - anything to be wary of
 
I would not rent out a home that I couldn't drive to/ visit within a reasonable time i.e. in an hour or so, or in an evening after work. I wouldn't rent out a home in another state, unless it was close by, and certainly not in another country. I happily sold our home in London when we left the UK.

Also, bear in mind that US homes take a lot of repairs and maintenance, so if you're regularly paying a plumber, electrician, or handyman to fix things, not to mention painting between tenants and a new roof and AC system every 15-20 years, you won't make much money from renting, and house prices in cheaper markets like Tennessee don't increase much in value either.

Giantaxe Apr 21st 2017 4:00 pm

Re: Buying a house - anything to be wary of
 

Originally Posted by Nutek (Post 12234809)
Zero chance I would purchase a house without that green card firmly in hand.

I bought before I even arrived in the country. But that was way back when when the financial and political environment was very different from today's. It worked out for me, but if I were doing it now there is no way I would buy before I had a green card.

Rete Apr 21st 2017 6:24 pm

Re: Buying a house - anything to be wary of
 

Originally Posted by tom169 (Post 12234803)
When attaining a mortgage there are two types of letters - pre approval and pre qualification.

Make sure you get pre-approved. In a fast moving market this holds more weight as it usually means a more thorough look into your background.

I'm not even sure you will qualify for a mortgage to be underwritten. As I don't have a green card yet (awaiting AOS) I had to provide a copy of my NOA and also a signed affidavit stating that I am intending to reside in the USA for the lifetime of the loan.

As a first time home buyer there was some expenses I didn't know too much about up front. This is where you need a decent amount of liquid cash in addition to the down payment:

- Due diligence money (we gave the seller $500)
- Earnest Money (about 1%)
- Home inspection
- HVAC inspection
- Structural engineer
- Termite inspection
- Radon inspection
- Attorney fees

It all adds up.

Bought our house 4 years ago here in Mississippi:

- Due diligence money (we gave the seller $500) - Whatever for? We didn't.
- Earnest Money (about 1%) What for? We didn't.
- Home inspection Yes
- HVAC inspection No. This is part of the home inspection
- Structural engineer Nope. Part of home inspection
- Termite inspection Again, part of home inspection
- Radon inspection Not necessary in this state.
- Attorney fees Got soaked for that

tom169 Apr 21st 2017 6:39 pm

Re: Buying a house - anything to be wary of
 

Originally Posted by Rete (Post 12235100)
Bought our house 4 years ago here in Mississippi:

- Due diligence money (we gave the seller $500) - Whatever for? We didn't.
- Earnest Money (about 1%) What for? We didn't.
- Home inspection Yes
- HVAC inspection No. This is part of the home inspection
- Structural engineer Nope. Part of home inspection
- Termite inspection Again, part of home inspection
- Radon inspection Not necessary in this state.
- Attorney fees Got soaked for that

Perhaps these customs are NC specific?

Due diligence money is given to the seller in return for taking the house off the market whilst you perform due diligence (e.g. the inspections).

HVAC inspection in our case was required as there were issues with the HVAC system and the general inspector cannot provide a quote etc to fix it.

Structural engineer and foundation inspection isn't required, but it's certainly good to have done. The general home inspection won't check beyond the surface for any issues.

Termite and radon inspection (purchased together) here are done by a specialist company too.

Pulaski Apr 21st 2017 7:01 pm

Re: Buying a house - anything to be wary of
 

Originally Posted by Rete (Post 12235100)
- Due diligence money (we gave the s- Earnest Money (about 1%) What for? We didn't. ....

You do it in a competitive market to show commitment to the purchase. Obviously it would be different if you live where nobody else wants to! :sneaky:


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