First time home owner advice thread

[Nekochanpurr]

Hey.. i thought this would be a good idea.. Since a lot of girls (hopefully me included in that soon!) will be getting houses soonish or have already bought a home..

What are some things you learned? What advice would you give us that have just thrown ourselves into this madness (heh.)? Loans, HUD homes, down payments. I want to learn about it all. I am looking it up, but it defiantly makes more sense when you talk person to person and are able to ask them questions..

I'm gunna stop rambling now. :D

[NurseLau84]

I would make sure to have all aspects of your finances in check first. Have all the necessary documents ready....W2's, tax returns, etc etc...because the mortgage company needs tons of info from you.
Another thing I will mention is about home inspections. It's crucial to have this done on a home you're interested in. This can run $400 -$700 but is worth the price, trust me. Better that than thousands of dollars later for unseen problems.
As for loans, there are SO many options. We have a 5 year interest only. This means that for the first 5 years, we're just paying interest...no principal. Sounds like it's a bad deal, but for us it meant getting a lower mortgage payment and into a nicer home. Our next home (in about 2.5 years or so) will be on a 30 year fixed, for sure, but this was a good way to get our foot in the door to homeownership. We may not make much money for resale on our townhouse, but that wasn't the goal for our first house since we won't be here for more than 3 to 4 years anyway.
Make sure you can get the best rate. We have a 5.75, which was the best available at the time. Rates fluctuate with economy, etc . Better credit = better interest rate = saving you tons of money.
Another important tip: DO NOT get a car loan or new credit card when mortgage/house shopping. This can be seen as a red flag and that you may be getting in over your head. Wait til you've settled in and then do loan/credit card shopping.
Take your time when looking for a home. We only looked at about 6 or 7 places, but this is because we only wanted a place to own until I graduate (2010). Realize that your first home will more than likely not be your dream home. You have to make compromises.
It will be stressful, fun and crazy. I promise!

[NurseLau84]

Also, we didn't put 20% down. Just beware that if you don't have a 20% down payment, you will have to pay PMI (Private mortgage insurance). PMI goes away once your house value reaches a certain number. Our bills go something like this:
Mortgage: $1300/month
PMI: $80/month
Condo fees: $360/month
Taxes: $250/month (some places pay once per year, we pay monthly)

Obviously, that's without our utility bills, car payments, groceries, etc etc etc
but it should give an idea of how it's broken down. We will be purchasing a single family home next, so that will cut out the condo fees. Also keep in mind that we live on DH's salary alone, I don't work yet. So if you have dual incomes you can usually afford more, depending on salaries.

[sweetvenus]

Make sure you get a fixed rate loan.

Try not to get emotionally attached to any one house. I ended up getting the FIFTH house I put an offer on because people weren't budging on their asking prices and some people decided not to sell at all. I thought house hunting was going to be so much fun, but it was actually really frustrating at times.

This website was super helpful to me: http://michaelbluejay.com/house/index.html

[SerendipityCrafts]

I was a previous home owner with my ex but since that was a number of years ago, apparently I forgot a whole slew of things. Once you find a home, put an offer on a home and buy a home .... the spending isn't over :rofl:

These things are "fresh" to me since I am living it.

I am not sure if this applies to you in the states but .... don't forget to budget for your "welcome" tax (a lovely little bill that we get from the city/town when we buy a home).

Don't forget to budget for closing costs - school & municipal tax adjustments, oil tank refill, notary fees etc.

Don't forget to budget for utilities hookups and then budget a bit more. Our telephone wasn't just a simple hookup since a different company had cut telephone wires which they didn't service. This left needing to get a repairman in.

Budget for stuff you can't imagine - a ladder, a new lock (friggin expensive!!!), incidentals for minor repairs, a rake, a garbage can, a lawnmower, a saw (:rofl:) .... there is no doubt about it - you will discover all kinds of things that are no fun to buy, but are a must.

The moral of the story is to save as much money as you can for the known and the unknown. It's always going to be more expensive than you think.

[NurseLau84]

I knew I forgot something!!!!!!! Our closing costs were almost $4000. Not to mention all the furniture we had to buy.........oh my goodness, our bank account was getting a butt kicking!

[Nekochanpurr]

WOW!! I didn't think we'd get so many replies so fast! Thank you so much. *^^*

Jessica, i'm reading that site now.. Thank you! Its very helpful!

And omg.. i realize that I'd have to buy furniture and stuff (goooooooooo Salvation army!).. But i figured that i could just live on boxes for a while, and furniture that our family doesn't want anymore. How awful is that??!?!
Its mostly the taxes and other things that i'm worried about. We only have about $2,000 in our savings right now.. I know thats not enough, but i figured we could save more while we looked. =/
Will the loan just go for the downpayment? Is that where my savings comes in? Hah. I suck with this stuff!

[sweetvenus]

The market has gone down some since I bought last year, but I hardly had to spend any of my savings. I got a loan that didn't require a down payment and the seller agreed to pay the majority of my closing costs. I paid maybe $1000 out of pocket for everything. So no matter how much you actually have saved, it's still possible to get a house. Just talk to some lenders and see what they say.

[SerendipityCrafts]

The market has gone down some since I bought last year, but I hardly had to spend any of my savings. I got a loan that didn't require a down payment

Correct me if I am wrong** but with the financial/mortgage crisis being what it is, aren't they looking at ending or severely limiting "no down" types of mortgages? I was under the impression that not only would people need to have some sort of minimum down payment but that it might be harder than ever to get a mortgage - ie your credit has to be top notch.

**There is no such thing as 100% mortgage financing in Canada. 5% is the minimum required and with that we must pay a mortgage insurance premium (similar to the PMI as explained above).

[Whitewater]

Save, save, save, save, and then save some more!!!!! You will need to be able to put *something* down as a downpayment. With the current financial situation, I've heard that banks are really leery now about accepting those old sub-prime 0% down, 100% financing loans that got them into so much trouble. I believe many of them are going back to requiring 10-20%.

If you do an FHA loan, it requires 3% down. Depending on how much house you can afford, that could be as much as $7-10,000!!!!!

Find a first-time homebuyer's class near you and take it. Take it twice, if necessary!

Get the strongest pre-qualification from your mortgage company you can, BEFORE you even hire a real estate agent, much less go house hunting. You need to know how much house you can afford. It's no good saying 'Well, the bank will loan us $375K' if you can only afford $1000/month (which would be, roughly, a little over $100K).

It's all about the monthly mortgage. Don't be fooled by somebody saying 'Oh, this house's mortgage payment is only $400!' They're trying to reel you in with the low $$ amounts. What they're not telling you is that mortgage insurance, homeowners insurance, taxes, fees and other stuff can TRIPLE your mortgage payment. When you figure out how much you can afford for your mortgage payment every month, make sure you figure in the TOTAL amount, not just the mortgage.

And speaking of mortgage payments, when you finally do find a home and close on it, sometime around when you have to make your first payment, talk to your mortgage company and see if they have a program for taking money directly out of your checking account 2x a month or something. Early payments will pay off big in the long run. Our mortgage company did that for us and we're going to pay off our mortgage 8 years early and save *EIGHTY THOUSAND DOLLARS* because we've set it up that they split our monthly payment in half, and then take that money out twice a month, so we're actually paying our mortgage automatically, half at the beginning of the month, half at the end. That's also nice because we don't have to waste money on stamps, or worry about mailing our payment late, or whatever. It's all automatic. We get a monthly statement in the mail, telling us how much we've paid so far, how much we have to go, and how much equity we have so far.

If your mortgage company hasn't got that option, pay at least one extra payment per year on your house. Send a check once a year or pay extra every month, a little bit at a time, and insist that they use the extra to pay off your principal, otherwise you'll just pay interest and never get ahead.

Interest will kill you. On a $100K loan, you'll actually wind up paying about $250K, because of interest. Pay off your principal amount as soon as you can and save yourself some interest!

Oh yeah -- and budget a TON of money for those little things you never had to deal with when you were a renter, like trash pickup. Or buying a lawnmower, or a grill. Or a garden hose. Or holiday decorations. Little things add up. We needed a wet-dry vac! Found a brand new one on Craigslist for $30. Make sure to have some money set aside for those medium-to-large things you can't fix yourself, too.

You will also have higher utilities and costs that you didn't incur before, like heat and water. Plan for that when you figure out your mortgage budget. There's no point in stretching your budget to buy a house when you can't afford to heat it in the winter time.

What people don't tell you is that this process is STRESSFUL. More stressful than anything you will ever deal with in your entire life. I'm not kidding, and I'm not exaggerating. For me, there was more pain and more stress in buying a house than when my marriage ended!!!! I had blood pressures of 165/90!!!

NEVER EVER buy the first house you see, at least, not without looking around before you do. If you do fall in love, great. Shop around after, and see if you fall in love with something else. On the other hand, don't get discouraged if you don't find one right away. One of my friends looked for 6 months and saw over 100 homes. Another looked at 25. Myself and Fiance saw about 40, and we actually bought the very last place we looked at! :)

Oh yeah, and know what mouse or cockroach infestations look like, know what bad mold looks like, do your research about what common home issues look like and how to fix them -- because you don't want to buy a house that looks good on the outside but has a massive load of termites, or a roof that's about to cave in, or a bad foundation, or something. In my state, sellers are required by law to give you what's called a Truth in Housing report, listing everything that's wrong with the property -- but other states don't have that requirement and it's every buyer for themselves. So be a smart buyer and know when to walk away from a property-- or when to run!

And the final thing -- don't be turned off of a property because the paint is hideous or the decor screams 1972. ALL of those things can be changed. You can replace carpet, paint over that hideous green, take down wallpaper, add new curtains, whatever. Look past the terrible decor to the structure of the house! Particularly coming from a renter's perspective -- I'm here to tell you that this house will be YOUR property. You can do whatever the heck you want to with it, so long as you don't break the law. You can paint the living room black, if you want to!!! Don't get stuck thinking like a renter, and thinking that you have to accept whatever decor the house is in when you buy it.

What's most important is whether or not the windows leak or will need to be replaced soon, NOT the fact that they have hideous frilly curtains on them.

Paint is probably the cheapest fix known to man. It's also *really easy* to learn how to paint or replace wallpaper. You don't have to be handy to do that kind of stuff. Being willing to learn to be handy will help you save a TON of money, though, so you might want to consider learning how to use basic tools, and buying some books on basic home repair.


Hope that helps! This is all stuff we learned when we bought a house :) And yeah, it takes some time. We started hunting in early Dec and didn't close until mid-June, so don't be thinking you can do this in 6 weeks.

Good luck!

Whitewater

[SerendipityCrafts]

One more thing to add - live within your means!

Example - just because the bank tells you that you qualify for a $300,000 mortgage doesn't mean that you should sign on the dotted line for that much. Figure out what you would be "comfortable" paying per month (but remember to always plan for emergency money too).

The tortoise wins the race - ie it might be better to lower your home expectations to get something that may not be "all that" but that you can easily afford and grow with, for the next 10 years. First homes are called "starter" homes for a reason - because they are simply a stepping stone to the one that you would have preferred to have :)

[sweetvenus]

Correct me if I am wrong** but with the financial/mortgage crisis being what it is, aren't they looking at ending or severely limiting "no down" types of mortgages? I was under the impression that not only would people need to have some sort of minimum down payment but that it might be harder than ever to get a mortgage - ie your credit has to be top notch.

**There is no such thing as 100% mortgage financing in Canada. 5% is the minimum required and with that we must pay a mortgage insurance premium (similar to the PMI as explained above).

I'm not sure of all the things that have happened since I bought a year ago, that's why I said that I wasn't sure since the market has gone down. But it still is possible to ask the seller to pay for your closing costs, even if banks aren't doing the 100% financing thing anymore. Or it's possible to have closing costs rolled into your loan. Ask your lender specifically about FHA loans.

[Nekochanpurr]

Whoa! This is a LOT of great info!! O_O

We actually might be going below what we could, lol. We make about $30,000 together.. And are looking to get a house at maybe $60,000 the highest. We are poor and we know it. :D But right now in our area we can get at least a two or three bedroom house for that amount. We are also planning on taking my mom with us when we look at houses, she knows what to look for (mostly because it mostly happened to our old house, lol!!) so i think its a good idea. I'm mostly worried about plumbing. NO WAY do i want to pay to have that replaced!!
Do you think i'm out of my league?? We plan on at least saving anothert $1,000 before we see something we'll probably like (because we'll be going back and forth.. JUST to make sure..). Once i get a house, thats it.. Its mine, for-evah. Heh.

[SerendipityCrafts]

I'm not sure of all the things that have happened since I bought a year ago, that's why I said that I wasn't sure since the market has gone down.

We feel uber fortunate to have bought when we did as well :) I wonder if we would have been as qualified now as we were just this past August. We also cashed in some investments before the dive to go towards our down payment.

[Tadswife]

It is deffinalty a buyers market at the moment. Interest rates are great. But my thing would be to
* watch interest rates. When we started to look the interest rate was 5.25, a month later it was 5.75. It fluctuates alot. We ended at a 6% only because the mortage componey screwed up on paper work and marked us for 6%. They could have fixed it for us and give us our 5.75 we were locked into, but that would of required coming back another day. So they gave us a check for what we would have payed for interest in 7 years. So we took the 6% and the nice check for interest :) we got a 15 year fixed loan.
* Someone mentioned doing fixed... PLEASE DO A FIXED. DO NOT DO AND APR! If you get an APR long your mortage will fluctuate instead of being one set total every month.
* Property taxes, you will get the option with your mortage broker or bank to see if you want them to "escrow" your property tax. Which means they will put the money you put toward property taxes into a little savings account and you will pay for it with your mortage. Example.. our mortage is $686 and property taxes are $300 dollars so we pay about $986 a month. At the end of the year, who ever gives you your mortage loan will mail you a check for what you have paid towards your propery taxes and you just pay the differance.
* Down payment!!!!!!!!!! is a must. I am not a fan of 0% financing. Me and my dh had that option we put money down! It helpes bring down the mortage payments

* Get preapproval from who ever gives you the loan, that is the only way you can put a put down an offer. And shop around for the best rates before selecting a lender, alot of them may be differant. We went through two or three before we settled with who we did.
* Once again.. do not settle for your first home! We looked at aleast 20-25 before we settled in our town house condo!:bbeek: but we figured we would be living here for a long while we better like it..
* And of course like others have said, set up an account or something for unexpected bills. They happen. We have been fortunate to not have anything major go in our home. But it will and we have our emergancy fund all ready to go! The only major thing we had to do was change the locks, fix the washer and get a new thingy a bobber for our water pipe. But my sister has a home and it got flooded with all the rain we had in June.
* go into this with an open mind. If you find somthing you like, keep looking and till your absolutly sure you want the home you like.
* Closing... the faster you can close, usually the better chance you have of getting the home you like. You will not know if someone else has allready made a bid on the home you like. But if they want to do the closing later then you do, and the homeowners really want to sell their home, you will be more likely to get it..
GOOD LUCK..
Sorry I rambled on..

[NurseLau84]

It is deffinalty a buyers market at the moment. Interest rates are great. But my thing would be to
* watch interest rates. When we started to look the interest rate was 5.25, a month later it was 5.75. It fluctuates alot. We ended at a 6% only because the mortage componey screwed up on paper work and marked us for 6%. They could have fixed it for us and give us our 5.75 we were locked into, but that would of required coming back another day. So they gave us a check for what we would have payed for interest in 7 years. So we took the 6% and the nice check for interest :) we got a 15 year fixed loan.
* Someone mentioned doing fixed... PLEASE DO A FIXED. DO NOT DO AND APR! If you get an APR long your mortage will fluctuate instead of being one set total every month.
* Property taxes, you will get the option with your mortage broker or bank to see if you want them to "escrow" your property tax. Which means they will put the money you put toward property taxes into a little savings account and you will pay for it with your mortage. Example.. our mortage is $686 and property taxes are $300 dollars so we pay about $986 a month. At the end of the year, who ever gives you your mortage loan will mail you a check for what you have paid towards your propery taxes and you just pay the differance.
* Down payment!!!!!!!!!! is a must. I am not a fan of 0% financing. Me and my dh had that option we put money down! It helpes bring down the mortage payments

* Get preapproval from who ever gives you the loan, that is the only way you can put a put down an offer. And shop around for the best rates before selecting a lender, alot of them may be differant. We went through two or three before we settled with who we did.
* Once again.. do not settle for your first home! We looked at aleast 20-25 before we settled in our town house condo!:bbeek: but we figured we would be living here for a long while we better like it..
* And of course like others have said, set up an account or something for unexpected bills. They happen. We have been fortunate to not have anything major go in our home. But it will and we have our emergancy fund all ready to go! The only major thing we had to do was change the locks, fix the washer and get a new thingy a bobber for our water pipe. But my sister has a home and it got flooded with all the rain we had in June.
* go into this with an open mind. If you find somthing you like, keep looking and till your absolutly sure you want the home you like.
* Closing... the faster you can close, usually the better chance you have of getting the home you like. You will not know if someone else has allready made a bid on the home you like. But if they want to do the closing later then you do, and the homeowners really want to sell their home, you will be more likely to get it..
GOOD LUCK..
Sorry I rambled on..

Just fixing your typo: ARM not APR:)
And I definitely agree, do not get an ARM (adjustable rate mortgage). This is part of the reason for the abundance of foreclosures right now. With an ARM, your rate can fluctuate to an extent that you eventually may not be able to afford your home. Fixed rate is the way to go. There are many loan options that include a fixed rate, such as the one DH and I opted for (see a few posts back).
And yes, I agree with having money aside for emergencies. They will happen, trust me. DH and I didn't even start looking for houses until we had a large amount of money in our savings.

[MrsDM]

Well, since FH and I bought a condo two years ago and just recently put it on the market and will be putting in an offer on a new house hopefully within days, I am full of information!

Obvously like others said, fixed rate is the way to go. Getting a pre-approval through your bank is also good with the way the economy is.

Again, along the lines of the economy, interest rates are up and down. Once you get a good rate, you can lock in the interest rate with your lender (after being approved) for a set period of time. Its best to do this when you have a closing date set because if you don't close within that set period of time, you face penalties.

Keep in mind that if you are borrowing $100,000, you will have to add in property taxes, PMI insurance, association fees (when applicable) and of course interest on that loan. I find that realtor.com's mortgage calculator is a good way to break down the payments to see what we are looking at:
http://www.realtor.com/FindHome/MortCalcPop.asp

Don't settle! We bought our condo because it was good enough at the time. If we would have bought a bouse, we would have been more content now then we are in our condo. When you walk into a house/condo or whatever, you will just get this feeling of excitment like, "Oh this is so the right house!"

Correct me if I am wrong** but with the financial/mortgage crisis being what it is, aren't they looking at ending or severely limiting "no down" types of mortgages? I was under the impression that not only would people need to have some sort of minimum down payment but that it might be harder than ever to get a mortgage - ie your credit has to be top notch.

**There is no such thing as 100% mortgage financing in Canada. 5% is the minimum required and with that we must pay a mortgage insurance premium (similar to the PMI as explained above).

We got pre-approved through two different lenders. One being a mortgage company and the other being a credit union. The credit union still offers 0% down loans, but the other mortgage company said they were practically unheard of. So, you may have to shop around to find lenders who offer 0% down. But, keep in mind that your interest rates will be higher because of it. Again, use that calculator to compare rates/monthly payments. You also have to look at the house that you are potentially buying to see where your money would be better spent.

What I didn't know: USDA (yes, beef) has loans. Certain states/rural areas qualify and there is some good perks. You have income limits and such, but you don't have to pay PMI insurance.

[lize566]

We bought our first house almost two years ago, and did a couple of things that everyone has said to not do lol! Granted, the market was in a much better place two years ago, but we did a zero down loan, b/c that's was the only way we were going to get into a house. We also bought the first house we looked at. Okay second, I guess, but the first one we looked at was before we were actually serious about buying. I feel in love with the house, it was everything I wanted, plus stuff I thought I wouldn't get in my first house (like 2 bathrooms, a garage). We used the first time home buyer program, which allowed us to not put any down. We do have to PMI, but like I said, it was the only way and we really didn't want to rent and we obviously wanted our own place when we got married.

So basically I have two peices of advice. Do your research on different programs your state offers b/c every state is different. Also, find someone you trust but is not overly invested to answer questions. My MIL's boyfriend is in the real estate business so he know how it all works, but didn't really have any vested interested in us buying this house, so he was honest with us. The process is going to be different for everyone, so just be patient, but know what you want and be realistic about it.

Oh and about the furniture-we only bought one piece of furniture and it was from a yard sale. Every other piece came from family members or friends lol! Nothing to be ashamed of. We made it work and it didn't cost us anything!

[Tadswife]

Just fixing your typo: ARM not APR:)
And I definitely agree, do not get an ARM (adjustable rate mortgage). This is part of the reason for the abundance of foreclosures right now. With an ARM, your rate can fluctuate to an extent that you eventually may not be able to afford your home. Fixed rate is the way to go. There are many loan options that include a fixed rate, such as the one DH and I opted for (see a few posts back).
And yes, I agree with having money aside for emergencies. They will happen, trust me. DH and I didn't even start looking for houses until we had a large amount of money in our savings.

Thank you for fixing my typo...have I ever mentioned I cant spell..he he:irked:

[Nekochanpurr]

Sadness. I got some great news here folks.. Steve called me Friday while i was at the anime convention... He got laid off. They 'might' bring him back sometime Jan next yr. >.< So erm.. No house for me anytime in the near future. :(

However.. i still love this thread. I really really love all this info! It'll be awesome when we can eventually afford something. Hopefully prices aren't up at that point...

[RosieAngel]

Here's my pro tip: If family or close friends' families are talking about getting rid of furniture or other high-ticket items they don't want, ask if you can take it! We got loads of nice stuff for free this way!

[gwenshack]

I've owned a condo for four years now, and I can definitely say I was NOT ready to own. Financially, I had it, but in terms of maintenance and understanding what certain clues are that something is awry in the home before a problem gets bad - I had no idea. My advice would be to have someone you trust who really understands home maintenance, plumbing, construction, etc check everything thoroughly. Obviously you have the home inspected as well, but it would have really helped me to have somebody looking out for my best interest say "hey, that looks like it might be a problem - you should look into that or maybe have it replaced just in case" or "hey, there should be caulk there instead of grout - that could become a problem..."

If I were to do it all over again, that would definitely be something I would do differently.

And also to reitterate what a lot of the other ladies said - it's almost always more expensive than you think it'll end up being.

[Nekochanpurr]

Good advice.

[saltyveruca]

I just have to share my excitement!

I haven't talked about this because it's been in the works for some time, and I wasn't really sure when we'd actually do it, but...JD and I will be buying a house within the next few months. If we're really on the ball, we might be doing it within the next month, moving in around Christmastime. It would be crazy, but I am so ready to do this!

We've been shopping since before our wedding, but things are finally falling into place. It's bittersweet, but my grandfather died a few months ago, leaving me with an inheritance that has made this decision a lot more comfortable. I've heard that the housing market is reaching a low here in Houston within the next few months. AND one of my good friends just passed the bar and has received a RE license, so he is going to act both as our agent and lawyer. He's been in the RE business and is a freaking shark, and his girlfriend is also one of my best friends...and she will be the one helping us actually locate a house. Awesome.

The thing I am most excited about? With the price range we're looking at, we will be able to afford....drumroll....a 15 year fixed rate mortgage! We will be DONE by the time I am 40. Before our kids are in college. Well before it's time to retire. I am seriously falling over myself with joy about this.

[Nekochanpurr]

I'm sorry about your grandpa.

OMG!!! I'm seriously really excited for you!!! :D YAY!! Congrats!

[Brian's Bride]

Salty! I want to share in your excitement! We're starting to look FOR REAL now, too! This weekend we're looking at five homes. We have our downpayment in order and know our price range, and REALLY excited to find our home. Our lease goes through February, but if we can close in January I would be happy with only paying an extra month's rent. Yay!!! Prices are down in our area, too. And with it being winter, people aren't going to want to pay for a mortgage on top of their Christmas bills and will hopefully wheel and deal. I'm hoping to score a great deal!!

[Nekochanpurr]

Good luck to you as well!!

[Goin2thechapel]

Okay, here are some things that I didn't know before buying our house last year:

1. Pay off all credit cards that are from a store (walmart, victoria secrets, Etc) but keep those open that are financed through banks. But don't close all of them out!!! You need to have some open and active credit when finding a mortgage. This increases your credit score and allows for a better rate etc...

2. Closing costs are RIDICULOUS! Ours were 5,739! We put it in our Purchase and Sales agreement (P&S) that the seller pay all closing costs...So that was money that we didn't need right up front.

3. We have two mortgages. One is a 30 year fixed and the other is a 15 year. This elimates PMI (private mortgage insurance) for us and elimated our need for a downpayment.

4. SHOP AROUND for mortgages! That's when you'll get the best deals.

5. When you're "pre approved" for a certain amount make sure it's not more than you can really handle. Also this pre approval that banks give you really comes into play when making an offer on the home. Say there is a house that you really want and it's $300,000
and you were approved for 320,000. When you go to make an offer on a house for 280,000...they'll see that you were preapproved for OVER 300,000 meaning that you can afford the 300,000 and they might not go down on thier asking price.

Here's a small breakdown of our house buying experience...I hope it helps :)

Our home's asking price was originally $292,000. After MONTHS on the market it dropped to $262,000. We offered 250,000 and closing costs. They accepted. Taxes on our property is 4,800 per year which gets paid monthly into an escrow account.

Monthly expenses
1st mortage: 1300.00
2nd mortgage: 500.00
Taxes : 500.00

Total Monthly Mortgage payment = $2,300

Then the sewer bill, water bill, etc that comes in quarterly... Plus the other things like heat, cable, electricity etc...

Our bills EASILY add up to about 4,000 per month!


Being a homeowner is SOOOO expensive!!!


Hope this helps

[MrsDM]

3. We have two mortgages. One is a 30 year fixed and the other is a 15 year. This elimates PMI (private mortgage insurance) for us and elimated our need for a downpayment.


I don't know if this is just in my area, but spliting the mortgage up is hard to do today because of the economy. I think we could still do 80% on one loan 15% on another and 5% down. But even at that, its still hard to find a lendor willing to do that.

[NurseLau84]

I was looking on MLS this weekend and realized that if we had waited a few months, we could have saved over $50,000 on our first home purchase. Yes, FIFTY THOUSAND. The market is horrible and prices are at an all-time low.
That money would save us about $500/month. Doesn't sound like much, but that would really help, especially when my books for this semester were $750!!!

I am so p*ssed! :bbeek:

[wpv82]

this is all great info. thanks guys!

[saltyveruca]

We went out looking at homes on Thursday and today, and we have absolutely fallen in love with one!!! It's a short sale and an incredible deal. We're hiring an inspector to check it out (and hopefully not break my heart) tomorrow. Wish us luck! I think this is the one. :bbeek:

[Nekochanpurr]

Oh boy!!! Good luck!! We want pics if you get it!! :D

[MrsDM]

We went out looking at homes on Thursday and today, and we have absolutely fallen in love with one!!! It's a short sale and an incredible deal. We're hiring an inspector to check it out (and hopefully not break my heart) tomorrow. Wish us luck! I think this is the one. :bbeek:

Good luck! I hope everything turns out for you!

I know this is hard, but try not to get too excited. We put an offer in on a house a month ago, long story short, we didn't get the house and I was heart broken. In my mind, we were living there, having parties and it was decorated to my liking. It was so disappointing!!!

[Brian's Bride]

My realtor said to be weary of short sales. You can get to the closing and have the bank deny the transaction. He said it's a very "iffy" process. You can pay for the inspections and not have it go through, and sometimes the process can take months. I'm not trying to be a Debbie Downer, I sincerely hope it works out for you! :)

[NurseLau84]

My realtor said to be weary of short sales. You can get to the closing and have the bank deny the transaction. He said it's a very "iffy" process. You can pay for the inspections and not have it go through, and sometimes the process can take months. I'm not trying to be a Debbie Downer, I sincerely hope it works out for you! :)

I agree. We looked at several houses that were short sales, but got fed up because we didn't want to wait 3 months just to see if our offer was approved.
Good luck, though...I hope you get it and that it's a speedy process!:chimp:

[saltyveruca]

Oh I know, I know. I have been doing lots of research on short sales. I think I'd run if it were any other house. This one is just exceptionally cute and it's an absolute steal. We're also in a position to be patient, as we're in a month to month lease contract and I am happy to let my down payment fester and build interest in my high yield savings account in the meantime.

I've found out that almost no one does a formal inspection until after the offer is made, so today we're going back to look at it with my dad who knows a lot about home maintenance and get his gut feeling for this one, and another one we really like to figure out if they are worth pursuing. I will let you all know how it goes today!

[Goin2thechapel]

good Luck!!!!!!!!1 Finger's are crossed!!!!!!

[SerendipityCrafts]

Pardon my ignorance of "your ways" :rofl: but is a short sale, the sale of a house that has been repossessed- ie the bank owns it?

[saltyveruca]

Pardon my ignorance of "your ways" :rofl: but is a short sale, the sale of a house that has been repossessed- ie the bank owns it?

Not yet. Basically the homeowner can't keep up with payments, and if they don't sell it, will ultimately end up going into foreclosure and become bank owned. They are selling the house for "short" of what they owe on it. It works for the homeowner because they can walk away clean (usually, although sometimes they still owe) and it works for the bank because they don't have to go through the foreclosure process that eats up a lot of money and time anyway.

They are a pain in the butt as a buyer, because you have to get the seller to approve your offer, and then the bank that they have their mortgage with has to approve it as well because that's what they'll ultimately end up getting from the house (possibly two banks or more if the seller has multiple mortgages). You also have to watch out for liens and back taxes. Makes me *really* happy that my agent/friend is a lawyer.

I have no illusions that this will be an easy process but I am always doing things the hard way, so why would this be different? :winktongue:

[SerendipityCrafts]

Sounds complicated. So, if someone can't keep up with the payments - why not just sell the house ..... why involve the bank?

Or do you have to assume the balance of the mortgage with their financial institution?

In some instances, we can put an offer on a house and assume their mortgage (if their interest rates are good for example) and yes, we would have to pass credit with their bank but on that same property we can also go to our lender and arrange our own financing.

[Kfancii]

Sounds complicated. So, if someone can't keep up with the payments - why not just sell the house ..... why involve the bank?

Or do you have to assume the balance of the mortgage with their financial institution?

In some instances, we can put an offer on a house and assume their mortgage (if their interest rates are good for example) and yes, we would have to pass credit with their bank but on that same property we can also go to our lender and arrange our own financing.

I don't think in a short sale you have to assume the balance of their mortgage or use their bank, but the bank has to give the okay for the negotiated price since they will not be paid off in full and the bank will lose money.

As far as selling the house outright- the owner probably is out of time to have the house on the market to get a fair price for it. Also, many of these owners are upside down on the mortgage meaning they owe way more than the house is worth. Take my house for example - I currently owe about $85K on it and have it on the market for $94,900 - knowing full well that I won't get that for it. (And I'm not really upside down, just the market dropping has dropped the value of my home significantly) I figure that if I get an offer of $89,000 - I will have to come in with $5,000 out of pocket to cover all the fees associated with selling the house. In essence, I am losing that $5000.00 - now the difference between what I am doing and a short sale is that I'm losing the money, not the bank, but I keep my credit rating. I can currently make the payments on my house, so I'm up to date on the loan and have as much time as I need to sell the house. If I were behind on the mortgage and facing foreclosure, it would probably be a smaller loss for the bank if they let me sell the house for $70K than if I was foreclosed on and they got nothing for it.

[saltyveruca]

Things are going slowly (of course) but we finally got the go ahead to get a second visit so my dad can give it his stamp of approval. We're checking it out tomorrow night. I am just glad that we should know whether it's worth the trouble, or not something we need to waste time on pursuing.

I have a feeling this is just one of many trials with this homebuying process that will be testing my patience in the future. :snide:

[NurseLau84]

I don't think in a short sale you have to assume the balance of their mortgage or use their bank, but the bank has to give the okay for the negotiated price since they will not be paid off in full and the bank will lose money.

As far as selling the house outright- the owner probably is out of time to have the house on the market to get a fair price for it. Also, many of these owners are upside down on the mortgage meaning they owe way more than the house is worth. Take my house for example - I currently owe about $85K on it and have it on the market for $94,900 - knowing full well that I won't get that for it. (And I'm not really upside down, just the market dropping has dropped the value of my home significantly) I figure that if I get an offer of $89,000 - I will have to come in with $5,000 out of pocket to cover all the fees associated with selling the house. In essence, I am losing that $5000.00 - now the difference between what I am doing and a short sale is that I'm losing the money, not the bank, but I keep my credit rating. I can currently make the payments on my house, so I'm up to date on the loan and have as much time as I need to sell the house. If I were behind on the mortgage and facing foreclosure, it would probably be a smaller loss for the bank if they let me sell the house for $70K than if I was foreclosed on and they got nothing for it.

Holy cow!!!! $94K for a HOUSE?! We need to move to your area....:)

[saltyveruca]

So the showing got canceled tonight. No explanation why. Frustrating!! But we rescheduled for Monday during the day. I am hoping this will still work out, but I'm looking at other houses to keep our options open.

[SerendipityCrafts]

I don't think in a short sale you have to assume the balance of their mortgage or use their bank, but the bank has to give the okay for the negotiated price since they will not be paid off in full and the bank will lose money.

Ahhhhhh I am pretty sure that we can't do that here. If a buyer can't sell it or find someone to assume their mortgage (ie take on what is owing and perhaps just a bit more), the bank will repossess and sell it (without any type of legal warranty / as is) for whatever they can get.

[70707Bride]

We bought a house in August. Not really sure what advice to give, but we weren't required to have flood insurance because the river is far enough away, blah blah blah. But the river flooded last summer and we had a ton of rain and snow besides that, and our basement flooded. Its not a nice, finished basement by any means, but the previous owners never said anything about it flooding before when there was a lot of rain. I guess advice I would give is, even if you think its a dumb question, ask the owners anyway!

[Nekochanpurr]

Oh oh, good news here! Steve got his unemployment checks a bit ago.. So he finally had enough money to shove some back into the savings... While we were at the bank, i switched my direct deposit so that $20 out of every paycheck goes straight into my savings. Steve will also be putting more $$ into the savings if/when he gets his job back.. We might be able to start looking by the end of the year if we can stack away enough!!! :D

[70707Bride]

That's great that you can save money now! I would love to save more, but its just hard right now.

[Nekochanpurr]

It is really hard!! But i'm forcing myself... Hopefully i don't screw myself over! lol But i had to do it forcefully, or it wouldn't get into my savings..

[70707Bride]

That's good that you are forcing yourself to save. I wanted to get on a budget for this year but we never sat down to figure one out. We are doing a little better at not charging so much though.

[Nekochanpurr]

haha, we actually had the oposite problem.. I didn't want to charge at ALL! Thats why most of our savings got ate.. Stupid money!

[vicky_vicky]

Its good you dont charge any credit cards. Avoid it like hell at least for this period. I do it only when its absolutely nessesary or if it is an emergency.

Our house is on the build and we got a morgage for the 100% of the value of the house. We have a decent interest rate at least for now. The rate will be stable for 5 years so no early surprises. The monthly fee of the house is almost the double we would pay to rent an apartment.
But we are building our own house and we will have a garden.

[saltyveruca]

Yayayayayayay!

Just found out that we put in the highest offer for our short sale house, and we should be seeing an approval on it. Who knows when exactly, but this is really good news!

[MrsDM]

Oh oh, good news here! Steve got his unemployment checks a bit ago.. So he finally had enough money to shove some back into the savings... While we were at the bank, i switched my direct deposit so that $20 out of every paycheck goes straight into my savings. Steve will also be putting more $$ into the savings if/when he gets his job back.. We might be able to start looking by the end of the year if we can stack away enough!!! :D

Stacy - that is such a good idea about automatically putting money into savings. FH does that and what you see can't make you want it. Before you know it, that $20 will add up so fast!

[SerendipityCrafts]

Smart move Stacy. :) It's amazing how fast a little $$ can add up and if you find that you can easily do without $20 a paycheck ... maybe increase it bit by bit.

Yayayayayayay!

Just found out that we put in the highest offer for our short sale house, and we should be seeing an approval on it. Who knows when exactly, but this is really good news!

Yeah!!!!!!!! Post some pics as soon you can.

[saltyveruca]

I hope this doesn't jinx us! Here's some photos of the hopefully soon to be new house!

http://farm4.static.flickr.com/3403/3197735315_c83585e559.jpg?v=0

http://farm4.static.flickr.com/3393/3197741045_51b208a084.jpg?v=0

http://farm4.static.flickr.com/3124/3197724467_da227e1c02.jpg?v=0

http://farm4.static.flickr.com/3452/3197715465_cceeb22dc4.jpg?v=0

[saltyveruca]

http://farm4.static.flickr.com/3443/3198565712_7f91cb9e67.jpg?v=0

The cabinets and stuff need some love, but there is a SUPER CUTE hutch hidden by the refrigerator in this photo.
http://farm4.static.flickr.com/3328/3197727933_3e6be16c1a.jpg?v=0

http://farm4.static.flickr.com/3373/3197730003_d21a3b7171.jpg?v=0

The current owners are kind of messy...but note the huge tub right next to a window! Bubble baths, here I come...
http://farm4.static.flickr.com/3455/3197739067_bace842991.jpg?v=0

[Nekochanpurr]

That house is BEAUTIFUL!!!!!!!!!! I'm prayin' you get it!!!! :D ::crosses fingers::

[dleggs15]

That is a very nice house you are very lucky especially to find a short sale in good condition!

First time home buying is very stressful me and my fiance purchased our first house 4 or 5 years ago I was 19 and he was 23 and it was a foreclosure so we ended up getting a very good deal and then when we sold it made a good hunk of change off of it. We moved to SC and built our own house then and now we moved again to GA in the process of selling our house and are hoping to buy our 3rd house in the next couple of months!

One thing is take your time because with the market the way it is you have lots of options and you might want to consider a short sale house there are a lot out there and you could get a lot of house for your money! Most stuff has already been covered but make sure to always have a home inspection. I know right now they are not offering 100% financing anymore for first time home buyers my best friend is trying to purchase a house from a relative and she is having one heck of a time doing it! they did tell her she would only need 3 1/2 % down though. Just call different lenders and talk to them and make sure you are 100% comfortable with what you are goign to pay for the house! you don't want to be so strapped you never have extra money to do things here and there and not be able to fix problems that might arise in the house or anything else in your life! I'm 24 now and my fiance is 28 and I have learned a lot about the process of home buying and it can be very, very stressful but in the end you will be so happy!

[MrsDM]

WOW! That house is amazing!! Keeping my fingers crossed!

If it makes you feel any better, we are in negotiations right now too. We accepted the counter offer on the house we love, so thats done, but now we are going back and forth with the people who want to buy our condo. So, I definitely know how frustrating and nerve racking this whole thing is!!!! Hang in there!

[70707Bride]

That house is really nice! Hope you get it!

[saltyveruca]

Thanks for the good wishes ladies! It still may take some time to find out officially about the approval, but I am so happy that things are going in the right direction!

The house does need some work-a bit of drywall, siding, garage doors, a leaky sink...I could go on. But there are no MAJOR problems and we could be happy and comfortable moving in right away!

[Nekochanpurr]

Ok so.. I found out my coworker also works at a mortgage place. And his buddy is a realitor. He works with DHAs? i think? Anyway, i'm keeping my options open and stuff, and not just trusting anything he says.. But i'm pretty amused. It'd be sweet if i got a deal. XD

[MrsDM]

Ok so.. I found out my coworker also works at a mortgage place. And his buddy is a realitor. He works with DHAs? i think? Anyway, i'm keeping my options open and stuff, and not just trusting anything he says.. But i'm pretty amused. It'd be sweet if i got a deal. XD

Could it be FHAs? Its a type of loan.

[Nekochanpurr]

Could it be FHAs? Its a type of loan.


Haha.. Maybe thats it. Are they any good. XD I want to kind of snoop so i don't get screwed. Hes a nice guy, but a little too trusting toward other people.

[Whitewater]

The realtor or the FHA? :)

FHA's are a decent way to go for first time homebuyers -- that's how we were able to afford our home. The acronym stands for Federal Housing Administration, and the big thing about an FHA loan is that they are guarenteed by the federal government, which tends to make a bank feel more secure in offering you the loan you need. If you default, the lender still gets their money. That's how we were able to get more out of Countrywide . . . if we had had just a regular ol' loan, we NEVER would have been able to get the banks to trust us enough to give us enough money!

The other nice thing about FHA is that most of the time, you only have to come up with 3% for a downpayment, and typically a lot less for your closing costs too, since the sellers typically pay for most if not all of the closing costs.

Now, 3% instead of 10, 15 or 20% may sound like a good deal, but you have to take into account how much cash you have and how much you can afford a month for your house. We paid $107,000 for our house and make (combined) about $50,000 a year. We paid 3% down (through Fiance's 401K and some massive help from my parents!) and we also wound up paying about $1800 in closing costs in cash (which was totally something we SHOULDN'T have had to do but the seller screwed us over, so we had no choice but to do it -- we were in a contract and couldn't get out of it, and they told us this *as we sat down for closing* . . . anyway . . .make sure to read the fine print and get a mortgage consultant who knows his stuff!!! Without my parents, we wouldn't have had enough money).

Our monthly payment is just over $1000/month, including all the insurance and the fees and so on. Our actual house payment, however, is only about $600 -- so look out for that too. When you go to buy a house, somewhere on or near the listing they'll say 'Wow! You could buy this great house for only $400/month!' but what they DON'T tell you is that the $400 is only the house payment. Not interest, not insurance, not fees . . . so figure out how much house you can afford monthly and how much cash you can scrape up for your downpayment. Even 3% is a lot of money . . . for us it was $3210.

Oh yeah, and don't forget about all those bills you'll have to pay once you're homeowners, figure that into your 'this is how much house we can afford' budget. Because even though water and trash are cheap, heating and A/C aren't!! And you'll have to mow your lawn, shovel your snow, fix your own issues (I highly recommend taking those free/cheap classes Home Depot offers, or get a book and teach yourself how to do simple home repair . . . you'll need those skills!), replace your own lightbulbs (a house has a TON of lightbulbs, our lightbulb buget is about $20/month!), and -- and this is a big one -- buy your own appliances. Also repair them! And even if you do get lucky and appliances come with the house, like ours did, our washer and dryer are a good 15 years old, and will probably need to be replaced sometime in the next 3-5 years. And we needed to buy and install a dishwasher. Luckily we found a rock solid dishwasher on Craigslist for $40, and a friend installed it for free, but otherwise we would have shelled out $400.

How much house you can afford should take into consideration insurance and extra fees associated with your mortgage, your budget for extra bills, how much you can afford for home maintenance and things like buying a lawn mower, and whether or not you can put away any money each month for the 'Oh, ****, the sink just got clogged' Emergency Repair Fund.

As it is, we feel we made a good decision. It was $900/month to rent our duplex anyway, so adding another $100, plus figuring in the extra bills that we would be responsible for was something our budget could handle. And we got so much more for that extra $100!!

Our monthly bills didn't increase that much in the summer time after we became homeowners -- but heating this house in the winter is pushing our budget to its limits. We knew that and planned for it, but still. It's still a very good trade -- a house is an important investment if you want to build wealth for retirement, and it gives us freedom now, to paint the walls black or have parties or pets or whatever, and security (not to mention a much better living space!!!) for our future. We also got into a program through our lender wherein we'll pay off 8 years early and save ourselves $80,000 in interest, so we'll pay off 21.5 years from now, instead of 29.5 years from now. We will always have a place to live, and by the time Fiance retires, the house will be paid off -- so we won't have to worry about that $1000/month. And since it's automatically withdrawn from Fiance's checking account, we don't have to worry about late fees, missing a payment, or having his credit score drop because we were idiots.

HTH! We'd recommend a FHA loan in a heartbeat, if you can get it. The only hitch is that the FHA sends out an inspector to independently inspect the home and see if it's worth your loan amount -- and ours squeaked by on the skin of its teeth!! Which probably won't be an issue for you, our house was a foreclosure and had been vacant for two years, so there were issues!


Whitewater

[Nekochanpurr]

Yeah, he said they deal with foreclosures, i believe. Thanks for all the info, Whitewater!! :D We are actually looking into a smaller house. We only ask for about 1,000 sq ft or larger, lol. Probably not going to get that much bigger. The highest we are going to try and pay is about $70,000.. Which is really do-able in Michigan! I've already told the guy i work with he better be adding things like taxes, utilities.. Because i work at Kroger! LOL! Luckily, we lived in a house until i was about 20 something, and mom lost it to bankrupcy. So.. We know most house stuff. I also have no problems buying things like a dining room table at salvation army. Of course, it'll still be a while.. I'm really hoping Steve gets called back to his job..

[Whitewater]

Yeah, rummage and garage sales and buying second-hand will be your money savers :) I don't mind admitting that the comfy real leather couch we have in the basement was a rummage sale purchase!

And you're lucky to live in Michigan, I know that home values there have dropped to rock-bottom prices -- not so hot if you own a home, but the ideal situation if you're first-time homebuyers and haven't got a property to sell first. You could probably get a lovely house for $90-95K, which is a bit higher than what your budget is, but even with your budget, you can probably find something that will suit and not need too much work. What we paid for our home is actually about half of its tax value -- but they're still taxing us as though we bought it at over 200K! *grrrr*.

You're doing the right thing now, though, saving up and being patient. It's the best way to go about trying to make this major purchase. Even my own parents, as wealthy as they are, had to spend the first 5 years of their married life in a small apartment in Milwaukee! Everybody's gotta start at the bottom :) And it took Fiance 7 years at his job to have enough in his 401K. But don't worry, you'll get there eventually!


Whitewater

[Nekochanpurr]

Yeah.. Our apartment kind of sucks, but i'll deal! We are holing away anything we can get our hands on at the moment. If Steve gets his job back then i think we'll be able to go at it by the end of this year. We'll hopefully do well. I'm cool as long as its not electrical or plumbing. Most other stuff (unless its like, the roof) friends and family could probably help us. I like older houses with a little love. :D I'm just greedy and want a basement.. And hopefully it'll have a garage!! lol

[70707Bride]

I think I forgot to say that we got $3200 in grant money to put toward the down payment. Check to see if lenders have grant money available. Also, Chris said we might be able to get 10% of our home loan back with our tax money. We would have to pay it back of course.

[Jacobs_Girl]

I want to include that if you buy new contruction and the house is under forclosure you might have liens on your property. I just learned about this, the closing Attorney is suppose to check and make sure there are non. But sometimes liens dont get reported right away and if the attorney does not catch it then you will be stuck the lien on your house until the debt is paid off.

There is something called a title insurance provided by your lender. Which in our case its going to cost us $434 and it is based on how much you purchase your house and area.