ITT Give me some practical advice on buying a home

[Scooter]

Also look at 15 and 20 year mortgages. They don't cost all that much more month to month and will save you a TON over the term of the loan vs. a 30 year mortgage. My house will be paid off in about 6 years, can't wait.

[Limewater]

Me and molly talked to someone at Community America Credit Union. They filled us with some good info. Right now we are looking at an FHA Loan (as I only have enough money for a 3.5% downpayment unless I cash out my IRA which I don't want to do but will). Right now my gf doesn't have a job (she is in school full time and finishes this semester). I am a delivery driver (most of my money is in tips). So we are waiting till Molly gets a job (see is a shoe in for job photographing newborns in the local hospital). Somehow I have good credit (lady at the credit union said my credit scores was in the 800s). I am totally going with a fixed 30 year loan.

It sounds like you already live together, but I would suggest getting married first before buying a house together.

Also, I suggest buying a house that you can afford on your current salary alone. You said your girlfriend is currently unemployed, and sometimes people can screw you over on "sure things". I have a friend whose wife is a special ed teacher. After her first year at a new school on a one-year contract, the principal essentially promised to keep her on the next year, so she shouldn't go looking for a new position. The new year rolled around and they hired someone else. Also, if y'all think you might have kids in the future, she may want to be a stay-at-home mom. It's much better to have that option and not use it than to force her to go back to work when she doesn't want to just because you are burdened with too much house.

Also, I don't know the rules where you are, but be sure to get a good inspection, and budget money for repairs. You never know what will come up.

Also, if you can at all stand it, save like crazy until you can put at least 10% down, preferably 20%. At 20%, you can dodge PMI, I believe.

But I'm pretty risk-averse. I wouldn't buy a house in the middle of a major transitional point in my life.

[gtmtnbiker]

Also look at 15 and 20 year mortgages. They don't cost all that much more month to month and will save you a TON over the term of the loan vs. a 30 year mortgage. My house will be paid off in about 6 years, can't wait.

You can still do the same thing with a 30 year mortgage by prepaying principal. Granted a 15 year mortage usually will have a slightly better interest rate than a 30 year mortage but the difference is not that great (1/8 pt?).

Let's say that you have a mortgage of $100K at 6% interest. For a 30 year mortage, the mortgage P&I will be $600/month (doesn't include escrow or PMI). For a 15 year mortgage, let's say the interest rate is 5.875% (1/8 pt discount). Your mortgage P&I will be $837/month. That's about 1/3 more than the 30 year mortgage monthly payment which might be too much for people starting out to handle.

[Inazuma]

Marriage and buying a house. Those are some massive life changing decisions and it's extremely important to think things through before deciding.

If you are going to get married, make sure you get a prenuptial agreement. I know it costs money to get one, but it's well worth it in case things don't work out. It also serves nicely as a lie detector for your future wife. Also, if you happen to make a lot more money later in life and you are able to upgrade to a younger model, you will be happy you got it.

As for the house, just make sure you can really afford it. I don't know much about the details related to house buying but generally speaking, make sure you look at the big picture, compare the pros/cons, plan ahead and form backup plans.

Good luck with everything.

[Hobie-wan]

If you are going to get married, make sure you get a prenuptial agreement. I know it costs money to get one, but it's well worth it in case things don't work out. It also serves nicely as a lie detector for your future wife. Also, if you happen to make a lot more money later in life and you are able to upgrade to a younger model, you will be happy you got it.

Or, you know, you could have a relationship built on trust and getting to know the other person properly first.

[gtmtnbiker]

As for the house, just make sure you can really afford it. I don't know much about the details related to house buying but generally speaking, make sure you look at the big picture, compare the pros/cons, plan ahead and form backup plans.

I suggest coming up with a new budget that factors in the costs of the new house, mortgage payment, etc. Make sure your current compensation covers it.

Don't try to stretch to buy more house than you can afford or even a house at all.

[alexis524]

good stuff gtmtnbiker, alot of buyers tend to over look the extra housing expenses beyond the principle and interest payment. As a first time homebuyer, you will most likely be required to escrow your taxes and insurance along with your principal and interest payment each month. That can make a HUGE difference in affordability. Where i live, Real Estate taxes range anywhere from $1,000/year ($90/mo) up to $8,000/year ($667/mo). Your bank will factor the actual tax and insurance information into things making sure things are affordable for you. Also, you can check on HUD's website for a utility chart to help you see how much you can expect to pay for each utility that is broken down per each kind of housing type and number of bedrooms too. You'll have heating and cooling costs, gas, electric, trash, recycling, water and sewer costs each month. Last but not least, get a property inspection after your sales agreement has been signed. It will give you an honest evaluation of the condition of the house and what, if any corrections need attention. It's peace of mind. It'll cost you about $300 or so, but if there are any serious repair items that was not mentioned, the inspection will allow you to negotiate a lower price or out of the sales agreement all together allowing you to get your deposit back. It seems like alot of work, but trust me, it's well worth it in the end knowing you were thorough.

[GamerMON]

good stuff gtmtnbiker, alot of buyers tend to over look the extra housing expenses beyond the principle and interest payment. As a first time homebuyer, you will most likely be required to escrow your taxes and insurance along with your principal and interest payment each month. That can make a HUGE difference in affordability. Where i live, Real Estate taxes range anywhere from $1,000/year ($90/mo) up to $8,000/year ($667/mo). Your bank will factor the actual tax and insurance information into things making sure things are affordable for you. Also, you can check on HUD's website for a utility chart to help you see how much you can expect to pay for each utility that is broken down per each kind of housing type and number of bedrooms too. You'll have heating and cooling costs, gas, electric, trash, recycling, water and sewer costs each month. Last but not least, get a property inspection after your sales agreement has been signed. It will give you an honest evaluation of the condition of the house and what, if any corrections need attention. It's peace of mind. It'll cost you about $300 or so, but if there are any serious repair items that was not mentioned, the inspection will allow you to negotiate a lower price or out of the sales agreement all together allowing you to get your deposit back. It seems like alot of work, but trust me, it's well worth it in the end knowing you were thorough.

So far the taxes have ranged from $999 to $3000 a year. I am totally putting that in perspective. I talked to my broker about my IRA. He said I could use the money in my account to purchase my first home with no penalties from uncle sam (and I wouldn't have to pay the taxes till next year same time I get the $8k tax credit). This would allow me to make a 20% down payment on a 50k home. The problem? All the 50k homes are foreclosures. Don't get me wrong I like to gamble (when I can afford it but this time I can not). We are considering a foreclosure for $46,900. We haven't seen a property condition report or had a home inspection yet (it does need paint, carpet, tlc, etc. Our real estate agent called us this mourning saying we need to put down $1000 Earnest money. I don't feel comfortable doing this as A it is a foreclosure sold "as is" (being burned on ebay for $20 I can stand but $1000/possibly $46,900 no way, B link below said foreclosed homes under 50k usually ask $500 Earnest money, C if something is seriously wrong they aren't going to fix it.

http://www.the-hud-home-expert.com/HUDhouseforsale.html

opinions/comments

[xxstatic]

We are considering a foreclosure for $46,900. We haven't seen a property condition report or had a home inspection yet (it does need paint, carpet, tlc, etc. Our real estate agent called us this mourning saying we need to put down $1000 Earnest money. I don't feel comfortable doing this as A it is a foreclosure sold "as is" (being burned on ebay for $20 I can stand but $1000/possibly $46,900 no way, B link below said foreclosed homes under 50k usually ask $500 Earnest money, C if something is seriously wrong they aren't going to fix it.

http://www.the-hud-home-expert.com/HUDhouseforsale.html

opinions/comments

My house was a foreclosure, I bought it in July 09.
Put down 1K earnest money, (basically it tells the escrow company your a serious buyer)
Closed escrow 2 weeks after the offer was accepted, house is 10 years old and we paid 105K, it only needed some cleaning and 1 shower head....

Don't be afraid, have a good inspector check out any house you may be serious about, I eneded up getting $900 back after we closed escrow as we asked the seller(bank owned) to pick up 5K in closing costs, and with the 8K I basically paid out of my pocket $300 to get my house...oh and no money down as I used my VA benefit...former Army...

[GamerMON]

Update: the 46,900 house got sold before we made our bid. Now that I actually understand earnest money, I will be willing to fork it over next house we find.