Buying a Home!!

ladytinkerbell99

Ok. Accountant talking here. Biggest piece of advice: Know EXACTLY what you are going to paying every month.

This sounds easy, but it isn't. For example, you will pay more for a $180,000 house on 4 acres than for a 195,000 on half an acre. Insurance and property taxes are something you seriously need to consider.

What we did- the realtor sent us listings. These listings have the real estate taxes on it. I used the interest rate we were prequalified for, and used online calculators to figure out how much the mortgage payment was. Then, I added $100 for PMI, $50 for homeowners insurance, and 1/12 of the real estate taxes (a months worth), rounded that up, and added it to the total. I printed each listing, and wrote how much our monthly payment would be. If we could afford it, I showed it to my fiance. If we couldn't afford it, it got tossed.

We live in NH on 3 acres. My Principal and interest is $950 a month. My total bill is $1,710. Just for reference.

Also, realize your utilities will likely double. For example, we were in a 1,000 sq ft apartment and paid about $100 in electric and gas. Now, we pay about $200. And we don't have to pay for water and sewer.

Final bits of financial advice. Your mortgage payment should not be more than 20% of your NET salary. AKA- what goes into your checking account every month. You WILL qualify for more than that, but don't do it! We qualified for $450,000, and could afford $200,000. And finally, make sure you have at least $1,500 left in your savings account when all is said and done. **** is going to break. And it will break in the first week. And it's going to suck. But you need to fix it. And you can't be house poor.

Message me if you have any specific questions. Good luck! Enjoy the process!

^ Excellent advice. :flowerforyou:

bbriscoe13

Def get a good inspector! Makes ure he/she knows what he is talking about.

Do your own research of the neighborhood (market value). I have dealt with some horrile appraisers.

Don't get a fixer upper unless you have the money and time up front to do it. I have been living in our fixer upper for 4 years and it isn't even close to being done. We pay out of pocket and both have full time jobs on top of my husband getting his bachelors and me my masters. Also realize that it SUCKS living in the reno. I warn everyone. It is NOT fun. Espeailly because you can get a new house for the same price or cheaper (in the long run) than a fixer upper (where I live anyway).

Make sure you know what you can afford. The banks don't care or know about your other bills.

Good luck. It is super stressful!

pearceda

Lots of good advice here so far. Without knowing all the particulars in your case the advice I would offer is:

1) be careful of what the bank says you can "affrord". They use a standard percentage for your payment around debt control. Usually a 40% TDSR or a 32% GDSR. This is great, but not in real life. We (I have a wife and two pre-teen girls) are running at around 25% TDSR and there is not a lot of money left over at teh end of teh month. Now we are putting money away for Retirement, Education, and Insurance that the bank will not factor in your TDSR (Total Debt service ratio). Groceries have risen in cost over the last couple of years. One of my daughters is very active in sports--plays on high calibre soccer and basketball teams, that require travel for games. My other daughter is into dance, which requires monthly payments also. Me and my spouse both travel a lot for work so our gas bill is higher than most. I think you can see pisture here...we did not want to be "house poor" to the point that we had to give up on our other goals and plans.

2) Never, Never buy mortgage insurance from your lender. Buy your own individual policies from a Life insurance company. Advantages are that you own the policy, you have level insurance benefit (you get a decreasing benefit from the lender) and underwriting is done at time of issue, so you knwo the policy is in force (with a lender underwriting is done at time of death, so they could deny your claim and just pay back your premium.). I would buy a term policy to match your amortization of your mortgage so then you have a policy in effect for the life of your mortgage.

3) shorter you can take your martgage the better in the long run. Now what benefits you have in your mortgage. Negoiate a higher lump sum payment percentage...you may never use it but having it will allow you to pay back more on your principal. They usually offer 10%, but you can get that bumped up to 15%-20% with a little bit of haggling. Also try and get soem flexibilty in doubling up or increasing payments, this will again allow you some flexibilty in paying back teh mortgage quicker. I would also use accerlated bi-weekly payments if possible.

4) consider other lenders other than the banks. I belong to a Credit Union and find it better than a bank. I am an owner and get a percentage back every year from the business I do with them.

5) have fun finding your house!

MED2012COLORADO

This is some really good advice! Taking notes. Good luck on your home search.

kellybean14

You're going to get a lot of responses!

My fiance and I just bought our first home and it wasn't nearly as scary as we thought it would be. We'd encourage you to:

1. Work with a realtor
2. Shop around for interest rates
3. Only consider a home that you can afford on one salary

How exciting for you both! Good luck in your search. Buying a home is one of the smartest investments you can make (if you do it within your budget)! :flowerforyou:

jcpmoore

Know your budget really well. Know exactly how much you can spend in advance, including a cushion for price inflation later. There's few things worse than buying the most house you can afford and then realize that electricity for it is over your budget or something similar. Don't mortgage yourselves to the max-keep it reasonable. I'm quite relieved that my husband and I did this when we bought our house. He later took a 30% pay cut from work, then spent 9 months unemployed later. Neither occurrence broke us because we left a cushion.

Birdie

Only buy a home if you have a huge downpayment and the monthly payment will be less than your current rent. Because the up keep on a home is expensive. No matter how good you think your house is and even if it passed inspection something will happen that you will need to fix.

goddessofsewing

Look to see what programs are out there to help. We went through a sweat equity program (similar to what Habitat for Humanity does) to build our house. Because we did a lot of the physical labor it dropped the price of the house AND we learned how to fix and maintain it. We had a supervisor to train us and make sure quality was maintained. The homes were built to better than EnergyStar standards, so our utilities are low. You can search for mutual self-help programs in you area.

If building isn't something you're interested in there are also programs like NeighborWorks (http://www.nw.org/network/Utilities/NWOLookup.asp) that have good options. Some friends of mine purchased through them and love it. You can find free prospective homeowner classes that will teach you lots of good stuff. Look into those. We're loving being in our own home.

grmpy1

We just moved into our home 3 months ago. There are too many things to think about all at once so you need to make a lot of lists. Take lots of notes on each house you look at and take pictures of everything. Most of all take your time!

Everyone says location. It is huge, but not only that it can make your life miserable if you don't really check things out. We checked several locations and narrowed it down to 2 areas we thought we would be happy with. The location we finally went with had a lot of pros...close to fire station, close to schools, close to hospital, a few miles to the airport. You guessed it...each one is also a huge CON! The sirens are going all day and night, the airplane flight pattern changes daily making its way directly over our house and the school that is close...is too close. The parents block our road and driveway dropping off and picking up kids every day. So when you look at your location look twice and three times! Different times of day and night, different days of the week. Your sleep and well being may depend on it!

RGv2

Work with a realtor, especially if you know one. Tell them what you want.

Know what you can afford. It's tough to get pre-qualified for insane amounts now (unlike 2003 when I pre-qualified for 375K when looking to buy a 200K house).

Contact the utility providers. They can give you the average usage and price for the property. Then you'll have a really good idea of what you'll be paying.

Know what you want. I know someone said to remodel after you move in. If you or your husband don't know how to do it or aren't handy, it'll be a wash in the cost when you hire someone to come in and do the work or fix what you screwed up.

Don't settle...See above.

Understand the taxes and tax structure. Look up the taxes on that property and see what way it has trended over the past 5-10 years. If you're in a small community with little business or industry, the tax burdent will fall on the home owner (property taxes), so keep that in mind as well.