Tips on buying a house?

PeaceLuvVeggies

Hi you guys! So my boyfriend and I have decided to buy our own home, but it won't happen until next year [around December to be exact]. We both have so-so credit [I have good credit, he has bad], which we're working on right now. We love the area that we live in right now [we live with roommates], but we're ready to move on our own, which gives us a year to find a house. I believe the lease is up in late November, early December.

We're thinking about getting a loan from a bank since most houses around here are just "for sale" instead of "for rent" or rent to buy. I was wondering, what is the process of buying a home [from the very beginning if you can explain how to get to the point where we can actually afford one please!]? I've never been good with math, or understood the whole mortgage thing, so if anyone could explain that as well that would be great. Thank you!

And I don't know if this would make a difference or not, but we live in Northeast Philadelphia and are both 24 years old. Thanks!

_Sally_

I would not recommend buying property with a boyfriend with bad credit.

RachelSRoach1

Agree with previous statement... check out Dave Ramsey if you still want to

ladybg81

I would not recommend buying property with a boyfriend with bad credit.

This

Elizabeth_C34

I would not recommend buying property with a boyfriend with bad credit.

Agree.

DON'T DO IT! You can end up completely financially ruined. I know you don't think so, but please please please exercise restraint. If you buy the house, do it on your own with your own income (keep the boyfriend off the deed) and let him live with you.

My husband and I bought our first house in March of 2011. The process is very long and can be very expensive so be sure you have money set aside besides money for your down payment for repairs and other unforseen issues. Realtors, although they can be helpful, were not good for us. We never found one that wasn't just annoying and spamming us with listings we didn't really want to see. We ended up doing it on our own with the help of a property lawyer who helped us draft our offer letter.

My husband is a veteran, so we went to the bank who took our information and W-2's from last year and prequalified us for a certain amount. We did a VA (veteran's affairs) guaranteed loan so our interest rate was very very low. Then we went house shopping. We saw about 60 houses before we found the one we bought. We had a long list of requirements that we just struggled to find. We put an offer in writing and got it reviewed by an attorney to be sure that we had all our bases covered (also had to comply with the VA home loan program) and gave it to the sellers. Because we did not use a realtor, the sellers were willing to negotiate a much lower price for us. Once they accepted the offer, we had a home inspection done as well as a survey and appraisal which cost about $1,500 total. Once that was done, we had to wait for the VA to send out their own appraiser and file a report, at which point we did the closing. When we moved in, we had to do $8,000 in renovations and repairs including $3,500 of electrical work in the kitchen and addition to the house that our inspector missed, the other $4,500 we knew about in advance and were prepared for.

Long story short, it's a hard long and very expensive process. Do NOT go through this with someone who doesn't manage money well unless you want to end up in bankruptsy or foreclosure.

sunkisses

First thing I'd do is Google your state and "first time homebuyer programs". If that doesn't give you cities or counties, Google those as well. You might be eligible for down payment assistance or grants if you qualify.

jakejacobsen

get married or keep renting

Soccer_Chick

Buying a house is a very important step in life and a huge commitment. I truly don't mean to offend, but a weight loss/fitness website may not be the ideal resource for your real estate advice. You should check with your bank or make an appointment with a Realtor.

albinogorilla

Step one:
Get pre-approved for loan to see how much you can afford
(which already sounds problematic for you right now)
Step 2:
Find a house you like
Step 3:
Make an offer
Step 4:
Once offer accepted, full loan application
Step 5:
Home Inspection
Step 6:
If inspection checks out, buy it, if not, back out

spennato

My Wife and I bought our house when we were 25, be prepared to come up with closing costs.......also don't over bid on a house, the seller will always counter offer if they think you are in range. Getting the credit straightened out is important....but you can get approved with 1 good credit and 1 sub par credit. If you need a realtor or a mortgage person let me know. My Brother and Sister in law are in the business. I live outside of Philly.......

MsTanya77

First thing is to get a realtor. The realtor will hook you up w/ a broker to help you get pre-qualified. You must be pre-qualified first. They take your credit and income and come w/ a rough estimate of how much house you can afford. Once that is done, your realtor will look for houses in your price range w/ the specific qualities your're looking for. When you find one you wanna see they will take you out to look. Keep looking til you find one you want, don't settle. Right now w/ housing market being so bad, its a GREAT time to buy a home for cheap. Not sure what your financial situation is, but if you have money saved up that is good, but they do have 100% financing that requires no money down. Also you can get the seller to pay all your closing costs. If you do that, it doesn't leave you much wiggle room to negotiate the price, but it saves you money out of your pocket. They do still have FHA loans that only require 3.5% down. Once you decide on a house, you have to put a contract on it, and the seller has to agree w/ the contract terms. Once that is done, then you have the house appraised. The house must apparaise at or higher than the selling price of the house in order to be financed. Then they will bring you into the bank to do the financing. They are going to ask you for a alot of paper work, bank statements, pay stubs, proof of assets such as 401K, and of course run your credit. Once all of that is approved, then you get your homeowners insurance, give the info to your broker and they contact the closing agency to get your closing package together. It takes about 45 days from time you're approved. The bank will tell you how much to bring to closing. You can have your house inspected, by a certified home inspector, and they look for major issues that could be a problem and let you know what they are. Usually on foreclosed houses the sellers won't pay for the inspection, cause its a bank sale and they just wanna get rid of the house, but you can still get it inspected and pay for it. Once you go to closing, you pay what you need to pay in closing costs, get your keys, your deed, and then thats it. Its your house! Thats the basics, if you have deeper questions, feel free to message me and I will be glad to help you.

PeaceLuvVeggies

Wow, the first comments are incredibly harsh. So basically I should just dump the love of my life because he has bad credit? Yeah, I'll do that thanks.

MsTanya77

get married or keep renting

I agree w/ this statement 100%. You can run into real problems buying a house w/ someone you're not married to.

amysj303

My husband and I bought our house before we were married and I had owned before. I think you should spend 6 months saving for the down-payment, you'll need 3% of the purchase price for most mortgages, possibly more. A realtor could help you a lot, since they might know more about your market, you might see if your bank offers any kind of home-buying class and credit repair info. There are other costs, like closing costs and inspection costs, too.
Sometimes things can happen quickly, but if you are making an offer on a home that is in foreclosure it can take months for banks to respond, it is very difficult in many cases to coordinate your lease and your home purchase, and it doesn't sound like you would be able to go month-to-month with your rental very easily, which is what I did.
Another thing I would warn against is that it was possible for us to be approved for a lot larger loan but we knew what we could afford and didn't get lured into something that would have been a struggle to make the payment, so be realistic about what you can pay every month.
Those payment calculators at a lot of sites are not accurate, they might be estimating the payment based on the amount borrowed and the interest rate, but they do not include a lot of the other costs associated with your monthly payment like taxes and property-mortgage insurance.

PeaceLuvVeggies

get married or keep renting

I agree w/ this statement 100%. You can run into real problems buying a house w/ someone you're not married to.

By the time we get a house, we'll be married to each other. Thank you

Elizabeth_C34

Wow, the first comments are incredibly harsh. So basically I should just dump the love of my life because he has bad credit? Yeah, I'll do that thanks.

No. Just don't buy a house with him or get married. I will say that although you love the guy, having bad credit is a big big deal as a married couple. Your credit is tied to each other at that point, so my advice would be to wait until his credit clears up (and yours gets better) then think about buying a home.

PeaceLuvVeggies

May I add also that it was not his fault he has bad credit. He previously lived with a girlfriend who thought that it was of poor taste to not dine in fine restaurants, wear designer clothes, buy designer handbags, and basically just spend money they did not have.

Elizabeth_C34

May I add also that it was not his fault he has bad credit. He previously lived with a girlfriend who thought that it was of poor taste to not dine in fine restaurants, wear designer clothes, buy designer handbags, and basically just spend money they did not have.

That is his fault for spending money he didn't have and not saying "no." It's not the girlfriend's credit that was ruined but his.

PeaceLuvVeggies

Okay I give up. Elizabeth I cannot win with you.

Elizabeth_C34

Okay I give up. Elizabeth I cannot win with you.

I'm not trying to "win" but just trying to be honest here and help you out. The truth is that financially, his credit is bad due to his bad decisions with money. That is the way the world works. It's not saying he's a bad horrible person. I'm sure he's awesome and just made mistakes. We all do it, but it's something you need to think about if you are going to make this kind of very large financial commitment with someone.

Momkat65

Do not make an offer on a house until you know what the assessed value is, this should be available online as it is public record.
Reason being- you do not want to make an offer that is super-inflated compared to the assessors office value.

When making an offer on a home always, always always put some type of contingency in the offer. That way, you can back out based on the contingencies you have imposed.

Make sure you have a good downpayment. 20% will save you tons od money in the longrun on mortgage insurance

Good Luck!

rosebarnalice

Honey, as a former real estate agent and former mortgage loan officer, I urge you to STOP right where you are, and not even THINK about buying a house until you understand the math behind mortgages.

As a place to start, try a couple of web sites [I suggest doing a google search on "interest over the life of a mortgage"] and playing with a couple of mortgage calculators; visit some financial guru web sites-- Dave Ramsey or Suze Orzman are good places to start. You can also find books in the library with titles like, "house buying for dummies" and the like. Do yourself a favor, and make the investment in yourself of the time, effort, and self-education of understanding what the hell you're doing before you buy a house. If you aren't willing to spend some time in the library or some time with a book or with a real estate agent until you REALLY understand what you're doing, then you're NOT ready to buy a house.


I would also urge you to seriously reconsider purchasing a home with a boyfriend to whom you are not married and who has bad credit. No matter what your personal relationship, if you are not married, purchasing a home together makes your relationship a simply a business partnership and nothing more. And in that partnership, you will be viewed as the financially responsible one and he will be viewed as the liability. You wouldn't take out a large business loan with a with a business partner with bad credit, would you??

yoshi91610

It shouldn't matter why he has bad credit, you shouldn't have to explain yourself OP, the question was NOT should I buy a house with someone who has sub-par credit, it was how to go about buying one step by step.

I think some people on here answered with a great answer and ignore the ones that have nothing to do with what you asked.

That being said, We are hoping to buy a house eventually, but we don't know where to start either so luckily for us we will be staying on base housing (hubby is in the military)

Snelllee

I would do what a previous poster said and google first time homebuyer programs and I would also spend some time cleaning up his credit if you don't want to buy the home by yourself. It took me 2 years to clean up my credit mistakes, and it sucked, but I've been living in my home that I just bought by myself for 3 months now! The patience to clean up my credit qualified me for a no money down, no closing cost loan with an awesome interest rate in a payment that I can easily manage. Plus I don't have any other payments to worry about besides my mortgage. Also, ask your friends, parents, coworkers, etc who they used as a realtor. You can get hooked up with someone who will really be helpful and not pushy.

MissingMinnesota

This is coming from a mortgage underwriter.

Your debt to income including the mortgage, taxes, insurance and HOA dues should not be over 36% (45% at a streach but most people forget about housing expenses like electricity, water, sewer, etc that you don't have as a renter, also debt to income is based on gross income not net and most peoples take home is only about 70%)

If you don't have a 680+ credit score don't try to get a mortgage with a traditional lender.

Have at least 20% down saved up, put that money into a money market account 2 months prior to applying for mortgage with no deposits or deductions out of that account other then for the down payment or direct deposits from your job. (verifying assets is the hardest part about qualify for a mortgage now of days)

Have 2 years w2s and current paystubs ready to provide (if s/e 2 years tax returns)

cobracars

Wow, the first comments are incredibly harsh. So basically I should just dump the love of my life because he has bad credit? Yeah, I'll do that thanks.

They did NOT say to dump him. They said don't buy a house with him. BIG difference. Many, many, many, many people have gotten in trouble taking out a 30 year committment on a house they can barely afford and then the smallest financial setback sends you crashing down in flames. Learn from their mistakes and don't make the same mistakes.

Get pre-approved for a mortgage, in which they will tell you how much you can afford. If they say you qualify for $200,000 house, don't go any higher than $150,000. They make money off loaning you money, the more they loan the more they make. Don't trust them.

Incidentally, I am paying around $1,000 per month on a $90,000 loan. That was after I put a $25,000 deposit on the house. The monthly payment includes interest paid on your loan, a small amount towards reducing the loan, some money set aside to pay your homeowners insurance, and money set aside to pay your taxes. Its referred to as PITI...prinicipal, interest, taxes, insurance. A typical monthly payment might b1 $100 towards the balance (prinicpal) of the loan, $600 towards interest, $100 towards taxes, and $50 towards insurance. That comes to about $850. Plus you need money for electricity, heat, phone, and probably cable tv.

I have another house I am paying $1750 per month. $1100 goes to reducing the loan, $100 towards interest, the rest is taxes. I am at the end of that loan and the house will be paid off in 10 months. The closer you get to the end the larger share of your monthly payment goes towards the principal. In the beginning it was about $100 to the loan and $1000 to the interest.

So if right now you are paying $1000 - $1200 in rent, you can certainly afford a starter home.

cobracars

I would do what a previous poster said and google first time homebuyer programs and I would also spend some time cleaning up his credit if you don't want to buy the home by yourself. It took me 2 years to clean up my credit mistakes, and it sucked, but I've been living in my home that I just bought by myself for 3 months now! The patience to clean up my credit qualified me for a no money down, no closing cost loan with an awesome interest rate in a payment that I can easily manage. Plus I don't have any other payments to worry about besides my mortgage. Also, ask your friends, parents, coworkers, etc who they used as a realtor. You can get hooked up with someone who will really be helpful and not pushy.

Not to hijack the thread, but WAY TO GO! CONGRATULATIONS! You did a marvelous job...I'm impressed!
This is wonderful advice and lessons well learned....a wise person would learn much from this.

LuckyLeprechaun

Wow, the first comments are incredibly harsh. So basically I should just dump the love of my life because he has bad credit? Yeah, I'll do that thanks.

nobody said to dump him! They said not to put his name on your house.

Or, even better, spend the next year fixing and improving both of your credit scores.

And save as much as possible, because there is no such thing as 100% financing anymore. You will need a good down payment, and the worse the credit scores, the more you will need.

koosdel

Wow, the first comments are incredibly harsh. So basically I should just dump the love of my life because he has bad credit? Yeah, I'll do that thanks.

I agree with "wow"

taso42

Step one:
Get pre-approved for loan to see how much you can afford
(which already sounds problematic for you right now)
Step 2:
Find a house you like
Step 3:
Make an offer
Step 4:
Once offer accepted, full loan application
Step 5:
Home Inspection
Step 6:
If inspection checks out, buy it, if not, back out

Pretty much this. I would also suggest hiring a realtor as step 1.5....

californiansun

YOU will be making a HUGE mistake. HUGE.

1. He has bad credit
2. He frivolously spent money on his girlfriend, he could have said no, she didn't have a gun to his forehead.
3. The previous statement shows he is NOT responsible, had no backbone and spends money on stupid things.
4. YOU AREN'T MARRIED.

I lived with my boyfriend too, not married, huge mistake.

Good luck!