Living in a New Home and Within Your Means

Even after you move into your new home, you should continue tracking your expenses for at least a year. (Actually, I think you should track your expenses forever.)

Over the course of the first year you live in your new home, you will see how your expenses rise and fall with the seasons, and you will get a real sense of how much you're spending to live the way you do. If you decide you need to tighten your belt, you will have a year's worth of household expenses to look back on and help you decide where to cut.

Q: I am thinking about purchasing a house built in 1909. The house is structurally sound and has very sturdy oak floors and solid walls. The roof is only about seven years old and still in good condition. There is a bit of old water damage on the ceilings, but it is more cosmetic than anything else. The wiring is up to date, but the plumbing is in bad condition.

The house has six bedrooms, two bathrooms, two living rooms (both with fireplaces), a sunroom, kitchen and dinning room, along with a partial basement and a full attic with a tall ceiling. The owners are asking $70,000. Does this sound like a good purchase?

A: I have no way of knowing whether this house is listed correctly at $70,000. Depending on where the house is located, it could be a fabulous bargain or ridiculously overpriced.

You also have to consider what problems you're having with the plumbing. If you have to dig a new sewer line to the street, build a new septic field, or replace all of the plumbing in the house, you could be talking about spending anywhere from $20,000 to $100,000.

You also didn't mention how much, if any, land comes with the property. Do you get 10 acres, or is it on a tiny city garden lot?

The best way to know whether this house, or any house, is worth the asking price is to look at what comparable homes in the area have sold for in the past three months. If no homes have sold, then you should look back to sales within the past six months. If you look for sales comps any further back than that, you risk unfairly comparing your property to sales that were closed before the housing crisis.

Once you thoroughly explore the local market, you will be able to tell whether you're being offered the bargain of a lifetime, a good deal, or something that you should pass on.

Q: I closed on a home in July. The builder said I have a one-year warranty for repairs.

Now the builder can't be reached to make repairs. I haven't had the inspection I was supposed to have after living in the home for 90 days. Also, the builder was to provide a longer warranty for my home, which was returned by the warranty company unprocessed. The payment toward that warranty to be provided by the builder is on my HUD-1 closing form.

What legal recourse do I have to get the builder to honor the warranties? I waited until I was 50 years old to buy a home, and now I don't want the house.