To all home buyers...

D

dbzeag

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Protege 2001 LX 2.0
I am looking into buying a home. I am 27 with a good fairly stable job. I think it is high time for me to stop renting and get equity. I am living with someone right now that will at least help with utilities.

Now here is the question. How does one go about looking into getting a house? I mean I can look online and get a feel for the features and areas I want in a house, but I am worried about the financing and paperwork part of it.

Now here is the bad news. I have expenses such as student loans, cell phone, car, and insurance. Those total over $500 a month. My car expenses are another $250 on average a month for gas and maintainance, and that also doesn't include food charges.

I have a bit saved up, but not very much. I have a decent 401k but it cuold be better. I don't think I have enough for much down.

So, do I accelerate my payments on the loans I have out now? Do I save up for a large downpayment? Do I go through a realtor?

Help!!!
 
Having just gone thru this process, I can offer a little insight. You can search for houses by using www.mls.com, or through the local news papers website (if they have one). You can use a real estate agent as well. Ask around to friends or coworkers who have bought and find one that they have liked. Go to a bunch of open houses to find out what kind of style and size you'd like, and to see just what kind of condition houses in your price range are.
Speaking of price range, go to a mortgage company and get "pre-approved" before looking around. You'll have to tell them your salary, debts, etc, and they'll tell you what kinds of mortgages you can use and the dollar figure you can go up to. The mortgage process is the most intimidating part of the whole process. Just stick with it, ask lots of questions, and write stuff down. You'll never remember everything they tell you.
I went with an 80/20 loan, which gets rid of mortgage insurance. Mortgage ins. can increase your monthly payment significantly, so the 80/20 is good in that it eliminates that, as well as lowers your down payment. Mine was only 5% of the total house purchase price. I would stay away from anyone telling you that a 'interest only' mortgage is a good idea. True, it'll get you in a house for not much money, but you'll never pay off principal nor build any equity. I think they're a bad idea. (IMO)
I could write all day about this topic, but I think your first step and best bet is to go to a good mortgage company and see what you get pre-approved for. Then you can start looking at properties in that price range and find out if buying is the right move for you at this time. If you do decided to buy, don't get discouraged because it is a long process and it seems like it never ends, but it will. It's a great feeling knowing you own the place you live in.
 
First of all talk to a bank or mortgage company and get and idea of how much would be able to afford for a monthly payment. THere are also online calculators that will determine house payments when you give them interest rates, down payment, and mortgage term (15 year, 30 year, etc.).

An important part of buying a house is shopping around for realtors and banks(or mortgage companies). Before I finalized my financing I took the 'good faith' offer from one bank to two other banks that were quoting low interest rates. I ended up getting lower closing cost and a lower interest rate from my orginal offer.

Also, preapprovals can be giving out over the phone by just giving them some monthly expenses and income, but they usually give you an extremely high number. Also, as a buyer you won't have to pay any realtor fees, the seller pays 3% of the cost to her realtor and 3% to your realtor, so pick a realtor that will actually do some work for you.

Good luck w/ the purchase.

FYI-all interest paid on mortgages and student loans are tax deductible!!! That is a sweet little reward every april.
 
When we bought our house, the first thing we did was figure out how much we could afford using various online resources.

I had a contact with a Realtor from work, so we got him looking for a house that fit our requirements (price, size, etc.)

Next thing we did was drive around in neighborhoods we liked looking for houses in our price range, and then gave that info back to our Realtor to investigate, and get us a showing.

We ended up buying the very first house we looked at (after looking at many others and putting in a bid on a different one and losing it).

It's our first house, and we still live there (almost 4 years now) and I can say that there are some major things missing that we now know to look for. The biggest thing I want is a garage, my wife really wants a large porch/deck... we currently have neither.

Good luck.
 
dbzeag said:
I am looking into buying a home. I am 27 with a good fairly stable job. I think it is high time for me to stop renting and get equity. I am living with someone right now that will at least help with utilities.

Now here is the question. How does one go about looking into getting a house? I mean I can look online and get a feel for the features and areas I want in a house, but I am worried about the financing and paperwork part of it.

Now here is the bad news. I have expenses such as student loans, cell phone, car, and insurance. Those total over $500 a month. My car expenses are another $250 on average a month for gas and maintainance, and that also doesn't include food charges.

I have a bit saved up, but not very much. I have a decent 401k but it cuold be better. I don't think I have enough for much down.

So, do I accelerate my payments on the loans I have out now? Do I save up for a large downpayment? Do I go through a realtor?

Help!!!
Click to expand...

Havign been through this three times in the last 5 years The first thing you should do is figure out how much house you can afford. How much money do you have to spend on the mortgage, insurance, taxes and repairs every month. How much money do you have saved up and will it cover more than just the fees associated with buying a house. Also where do you live? If it's in one of the market where prices have been skyrocketing for the past few years you probably would be better of renting for a few more years while you pay off your bills and save up money. Also what is your FICO score, since that will determine what interest rate you will pay. Half a percent or more higher will turn in to a lot more money every month and year. how long do you plan to live in the house? What are your reasons for buying a house?
These are many of the questions thatyou need to answer and know beforehand to determine what you really can afford and if you need to buy right now. Personally living int he Los Angeles area I wouldn't buy right now becasue of the run up in prices over the last few years and I have a house that meets my families needs currently. Fgure out some of these answer and post back and I or the others can help you out a lot more. Also try www.realtor.com to get an idea of pricing in your area, I like it better than the mls site but it personal choice.
 
Can I get a mortgage through say ING, work out with the owner, and hire an attorney to clean up any other paperwork I need to do? I think that way would be the cheapest. I can negotiate a cheaper bid because the owner doesnt' have to cough up the 3% for a realtor, and I don't have the expensive closing costs.

There are so many options. I went even so far as looking at howstuffworks.com, only adding more fear into the mix.

How does one look for mortgage companies? What makes a company "good"? Same with banks?
 
as everyone else said, pre-approval from your bank/mortgage company comes first. once you have a price range that suits you, then you can start looking. after that, its all downhill. once we were preapproved and had our interest rate locked in, we found the house we wanted and two weeks later we owned it. another good thing to look around for is first-time homebuyer programs. ours allowed us to finance our closing costs and also put no down payment on the loan.
 
We went with Bank of America for our mortgage, the offered great "first time buyer" rates (6%), and all the Realtors I've talked to said that BOA's had about 1/4 the amount of paperwork compared to other banks and mortgage companies.

Plus the bank treats me like royalty in regards to my personal checking/savings because I have a mortgage through them.
 
Greg S said:
Havign been through this three times in the last 5 years The first thing you should do is figure out how much house you can afford. How much money do you have to spend on the mortgage, insurance, taxes and repairs every month. How much money do you have saved up and will it cover more than just the fees associated with buying a house. Also where do you live? If it's in one of the market where prices have been skyrocketing for the past few years you probably would be better of renting for a few more years while you pay off your bills and save up money. Also what is your FICO score, since that will determine what interest rate you will pay. Half a percent or more higher will turn in to a lot more money every month and year. how long do you plan to live in the house? What are your reasons for buying a house?
These are many of the questions thatyou need to answer and know beforehand to determine what you really can afford and if you need to buy right now. Personally living int he Los Angeles area I wouldn't buy right now becasue of the run up in prices over the last few years and I have a house that meets my families needs currently. Fgure out some of these answer and post back and I or the others can help you out a lot more. Also try www.realtor.com to get an idea of pricing in your area, I like it better than the mls site but it personal choice.
Click to expand...

I take home a bit over $2500 a month. I have about $520 in bills and other loans. I spend about $260 a month on my car to kepe it "fed". Food bill I don't know, but it's not too bad. So that's what I have to work with.

I live in and looking for a place in Cleveland, OH. I have heard there is a 5 year tax abatement for first time home buyers within the Cleveland border, so that's why I am looking there.

I see myself staying there for at least 4 years. The area I am in is growing, but not at an alarming rate. It will be growing even more as Cleveland rebuilds itself.

I don't know my FICO, but it should be pretty good. I have never missed a payment for loans or anything, I have had a credit card with a $10K limit that I have never carried a balance on for 5 years (since cancelled, stupidly). As it stands now, I have 41.5% of my loans withstanding left to pay (car and school).

I have seen a couple places in my area that I am interested in that are running about $125K now. I think that's the price point I am looking at now.
 
sam1 said:
as everyone else said, pre-approval from your bank/mortgage company comes first. once you have a price range that suits you, then you can start looking. after that, its all downhill. once we were preapproved and had our interest rate locked in, we found the house we wanted and two weeks later we owned it. another good thing to look around for is first-time homebuyer programs. ours allowed us to finance our closing costs and also put no down payment on the loan.
Click to expand...
How and where do you find out about those programs?
 
to me, all banks and mortgage companies are relatively the same. they will all have competative rates, so we just picked the company that had the loan officer that tried the hardest to get us the best deal. the first two we went to basically just said, your pre-approved and now your on your own, come back when you have a purchase and sale agreement. so we were pretty lost. the third one we went to we got a great loan officer. he sat us down and talked about our financial situation and walked us through the process of buying. then he helped us get an awesome interest rate and first-time buyer program, and even helped us with our purchase and sale agreement (which they are not technically supposed to do). so i would pick the one that tailors to your needs the best. keep in mind also, that we did not use a realtor, either. the only thing a realtor will really help you with is showing the houses and writing out the purchase and sale agr. i personally see no reason to pay a realtor 6% commission for filling out a standard form, that is pretty much common sense and if anything, an attorney could fill out for much cheaper. if you have an attorney you can have them do the closing also, but i personally just let the title company handle that part.

heres a quick break down of the process:
1. preapproval
2. find a house
3. fill out purchase and sale agr (basic form detailing terms of the sale)
4. order title report/policy from title company (your lender should do this)
5. set up homeowners insurance (a must have, and usually required by the lender)
6. closing

if your title company does the closing, then they will also manage all of the monies, which is well worth the closing costs imo. the title company will first do the report and send the prelim to the lender. once the lender has that and all is good, a deed and deed of trust/mortgage will be drawn up and sent to the tc, along with a check or wire to the title companies trust account. The tc will "close" the loan, having the seller sign the deed and the buyer sign the DOT. once all is done, they will disburse the funds and then you officially own the property.

Good luck!

btw...if you need any more help, i work at a title company, so i kinda have the inside track on everything and will be happy to help however i can.
 
dbzeag said:
How and where do you find out about those programs?
Click to expand...

a good mortgage broker/loan officer will know all about them. just ask. if they dont know of any, or arent willing to help you find one, find a new lender! like i said, it took us a couple tries to find a good one, but once we did it all fell into place relatively easily.
 
sam1 said:
to me, all banks and mortgage companies are relatively the same. they will all have competative rates, so we just picked the company that had the loan officer that tried the hardest to get us the best deal. the first two we went to basically just said, your pre-approved and now your on your own, come back when you have a purchase and sale agreement. so we were pretty lost. the third one we went to we got a great loan officer. he sat us down and talked about our financial situation and walked us through the process of buying. then he helped us get an awesome interest rate and first-time buyer program, and even helped us with our purchase and sale agreement (which they are not technically supposed to do). so i would pick the one that tailors to your needs the best. keep in mind also, that we did not use a realtor, either. the only thing a realtor will really help you with is showing the houses and writing out the purchase and sale agr. i personally see no reason to pay a realtor 6% commission for filling out a standard form, that is pretty much common sense and if anything, an attorney could fill out for much cheaper. if you have an attorney you can have them do the closing also, but i personally just let the title company handle that part.

heres a quick break down of the process:
1. preapproval
2. find a house
3. fill out purchase and sale agr (basic form detailing terms of the sale)
4. order title report/policy from title company (your lender should do this)
5. set up homeowners insurance (a must have, and usually required by the lender)
6. closing

if your title company does the closing, then they will also manage all of the monies, which is well worth the closing costs imo. the title company will first do the report and send the prelim to the lender. once the lender has that and all is good, a deed and deed of trust/mortgage will be drawn up and sent to the tc, along with a check or wire to the title companies trust account. The tc will "close" the loan, having the seller sign the deed and the buyer sign the DOT. once all is done, they will disburse the funds and then you officially own the property.

Good luck!

btw...if you need any more help, i work at a title company, so i kinda have the inside track on everything and will be happy to help however i can.
Click to expand...

Thanks for your help. The first thing I am going to do is talk to my bank and as a general ballpark see what I qualify for. When they pull my credit records, they can then tell me what I should be doing or if I need to fix anything. I will see how that goes and report back ;)
 
Yea we just put down 5% and got an 80/20 loan. We took out a mortgage to cover the 80%, then took out a loan to cover the other 20%. Out of the total 100% we only put down 5%... but to the mortgage, it looks like we put down 20%. You get the 20% loan first using your 5% as a downpayment... then use that total amount to put down on the 80% mortgage. If you put down 20% on your mortgage, you will not get charged with PMI.. a govt. fee of some sorts that gets tacked on every month. Hope that makes sense. We pay only a little more a month than renting, and at least we have something to show for. Now we are able to save $$ each month so on our next house we can put down 20% cash and not have to worry about the second loan.
Get pre-approved !
 
I have seen a couple places in my area that I am interested in that are running about $125K now. I think that's the price point I am looking at now.[/QUOTE]

damn 125k for a house that's awesome. You can even buy the bathroom of a small condo here in LA. =p
 
Would I get any benefit from declaring a domestic partner? I can't get married, but would that help rates or any part of the buying part?
 
i have a 80/20 double mortgage with w 6.80 blended rate.....

5/1 arm and i will keep my eyes open for a fixed 30 year mortgage over the next couple years. i did not want to pay the PMI points or put a lot down because i had no money!

heard the rates are going to rocket up next year, but we will see?
 
Make sure its in a good / decent area so resale will be good. Especially if you plan to have kids in this house.
 
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