Tips on buying a house?

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Replies

  • Snelllee
    Snelllee Posts: 23 Member
    QUOTE:

    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.






    Thank you :):)
  • _Timmeh_
    _Timmeh_ Posts: 2,096 Member
    Harsh? Maybe, sounds like a lot have learned some lessons in life and are trying to pass that on.
    We used a realtor that was friends of a friend, guy was horrible. One time we made arrangements to meet him to look at a house, took off early from work, my parents were in town so they wanted to take a look. WE get to the house just about to go in...and he says oh by the way this one is sold.
    Ask around for real feedback.
    I agree with taking some time to clean up his credit. It can make a world of difference.
    Don't pay any attention to assessed value! Counties don't update that frequently enough. Our current house was assessed at twice the market value. Assessment changed after we bought it.
    The realtor can pull up comparable sales in the neighborhood or you can research it yourself.
  • TromaRon
    TromaRon Posts: 228 Member
    If you really want to own a home, move to Detroit or Memphis. Homes are ridiculously cheap and you can get in on the ground floor of a city slowly coming back to life. You can seriously buy a decent home in Detroit for 10-20k. Might not be a good neighborhood, but the prices are tempting.
  • daffodilsoup
    daffodilsoup Posts: 1,972 Member
    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.

    The people giving you loans, etc. are not going to care whether it's "his fault or not", point is it's his credit and it's not good.

    Your responses to people's experiences and advice make you sound like you're fifteen.
  • TitanianEternal
    TitanianEternal Posts: 16
    only advice is look at LOTS of houses dont just see one and settle or only look at one cause you think you love it, look at alot and see whats out there. there are some very good deals out there and there are some very bad ones, but i agree that most people should not go in with boyfriends but its different for everyone...good luck!
  • PeaceLuvVeggies
    PeaceLuvVeggies Posts: 375 Member
    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)

    Thank you so much for this.
  • mleoni092708
    mleoni092708 Posts: 629 Member
    My husband and I bought our first house at age 21 (a few months before our wedding). Here are a few thoughts I have for you:

    House shopping was fun but stressful-way more stressful than I thought it'd be. Trust your gut and get a good realtor. If you feel like they're not doing a good job for you, fire them :)

    I'm sure you know this but a home inspection is very important. There will be 2 sets of negotiations. One to determine a sales price of the house, then after the inspection, negotiations over the results (if you want them to fix something, etc). So lots of ups and downs. If the deal falls through, don't worry. Happened to us, and it was the best possible thing. Found a better, cheaper house and all worked out great.

    When making an offer, most will want an earnest check-meaning say $500 or $1000 check to them to show you are serious. So just be prepared to have that ready ahead of time.

    Hm what else? I'd say do as much research as you can about the process and don't be afraid to ask the realtor lots of questions and explain everything. They use a lot of industry terms that can be confusing.

    Best of luck to you!
  • NiciS72
    NiciS72 Posts: 1,043 Member
    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.

    While I totally agree in theory about this I do have another slant on this situation. Had I followed this advice I would not be married to my husband for 13+ years. When we met he had horrible credit. His situation was different than most, but you need to understand that not all people with bad credit are bad with money/unsavable. My husband was VERY POOR and like most college kids in the 90's was given A LOT of credit cards. His parents were not paying for school but they told him to have his statements sent to their house and they would make the payments. Long story short, they NEVER made a single payment on his cards/bills that he had sent to their house while he was away at school. He moved in with me, I took over the finances and taught him what to do with everything. We have been homeowners for 9.5 years and happily married for 13+.

    My advice is that if you love him and he knows what he did wrong(if he did) and follows the path to fix things go for it.
  • odusgolp
    odusgolp Posts: 10,477 Member
    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)

    I'm curious about your 20% down question and the MMKT Acct... As a first time homebuyer (which it clearly seems the OP is), should she qualify for a loan (FHA for example) that requires a much smaller downpayment, perhaps 3%?

    I realize 20% would be lovely, but somewhat unlikely in this case?


    Also, OP: EVERYTHING on that credit report will need to be "closed." Meaning if he had something go to collections, it must be paid, or so old that it's no longer an open outstanding debt. If there is anything unpaid lingering out there on either credit report, it must be dealt with months before applying for a mortgage.
  • odusgolp
    odusgolp Posts: 10,477 Member
    And just my two cents, although it's your life to live. Buy the house in your name only. Do not include him in the mortgage (meaning you also can not include his income). But it's a more responsible approach to this situation given his finances. Live with him all you want, but a joint mortgage could actually hurt you.

    While the comments may seem harsh, it's from a place of honesty. I hope you can see that.
  • MissingMinnesota
    MissingMinnesota Posts: 7,486 Member
    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)

    I'm curious about your 20% down question and the MMKT Acct... As a first time homebuyer (which it clearly seems the OP is), should she qualify for a loan (FHA for example) that requires a much smaller downpayment, perhaps 3%?

    I realize 20% would be lovely, but somewhat unlikely in this case?


    Also, OP: EVERYTHING on that credit report will need to be "closed." Meaning if he had something go to collections, it must be paid, or so old that it's no longer an open outstanding debt. If there is anything unpaid lingering out there on either credit report, it must be dealt with months before applying for a mortgage.

    I said a traditional mortgage lender that is excluding FHA/VA and Government asseted loans.

    The 20% is if you don't have 20% you shouldn't be buying a house. I am sorry if that rubs people the wrong way but in this economy we have not seen the bottom of the housing market. If you don't put 20% down you are more then likely going to be upside down in your house within 2 years.

    Also you don't want to close all your accounts you need at least 3 open trade lines that have been active for the last 12 months., with one active for at least 24 months. Also closing all your accounts can lower your credit score as it shows you don't have credit that you can use and you are not using your credit wisely.
  • ItsCasey
    ItsCasey Posts: 4,021 Member
    I think she meant "closed" as in you've paid off what you owe, not "closed" as in cancelling a credit card and closing your account.

    And the 20% down thing is a good rule for people who don't have much stability (e.g. their job requires them to move a lot, they don't like to stay in one place for very long, etc.), but if you've got some job security and aren't itching to move any time soon, there is no need to save 20% for a down payment. Most people would have to continue throwing money away on rent for years to be able to save that kind of money, and that doesn't make much sense. You can always make extra payments on the principal a few times a year if you want to make faster progress on increasing your equity.
  • MissingMinnesota
    MissingMinnesota Posts: 7,486 Member
    I think she meant "closed" as in you've paid off what you owe, not "closed" as in cancelling a credit card and closing your account.

    And the 20% down thing is a good rule for people who don't have much stability (e.g. their job requires them to move a lot, they don't like to stay in one place for very long, etc.), but if you've got some job security and aren't itching to move any time soon, there is no need to save 20% for a down payment. Most people would have to continue throwing money away on rent for years to be able to save that kind of money, and that doesn't make much sense. You can always make extra payments on the principal a few times a year if you want to make faster progress on increasing your equity.

    I like how you say throwing your money away on rent but think about it you are renting the house you "buy" from the mortgage company as it isn't yours until you own it free and clear, so in escence you are renting it from the mortgage company. You miss payments you are out of a house if you own or rent. Its better to save those "extra payments" for a year or two to save up enough for 20% down.

    BTW I am one of those people that didn't save for the 20% down and now can't even refinance my house since it is worth 75% of what I owe on it.
  • TubbsMcGee
    TubbsMcGee Posts: 1,058 Member
    I would not recommend buying property with a boyfriend with bad credit.

    Exactly.

    If he can't manage his money now, what makes you think he'll be able to help out with the mortgage, bills AND pay off his debts?

    I don't have any problem with you buying a house with your boyfriend (after all, I bought a house with my guy when we were 20) but until you're both completely aware of how a mortgage works, are sure that you have a decent down payment and have monthly budgets, I wouldn't suggest looking at houses any time in the near future.

    Sorry to burst your bubble
  • odusgolp
    odusgolp Posts: 10,477 Member
    I think she meant "closed" as in you've paid off what you owe, not "closed" as in cancelling a credit card and closing your account.

    Yes sorry, I didn't mean closing good standing accounts, just collections issues.

    And I understand your point about 20%. I just wanted to point out that's not mandatory to the OP.

    My opinion would not be to buy in her case, but if she only wants to know the requirements, I think it's best to be honest that 20% is not a requirement for all loans.
  • monroe61
    monroe61 Posts: 620 Member
    Buying a home is very stressful but make sure you decide exactly what you want before you even go looking! And that you and your SO agree :)

    Like others posted try and look up a mortgage calculator and see what you can afford with just your income and with your income together if you do plan on being married by the time you buy the house!

    My situation is the other way around my husband has good credit, I have bad (due to credit card issues when I was a teenager) "He" bought our house based on his income and credit alone. And we were married already for 3 years.

    Sit down together figure out what your budget is now and what you think you might have left over. Because if you have an apartment now you can about triple the utility cost for your house. And then if you plan on having cable or anything like that too.

    We got pre-approved for like $160k...no way were we doing that! So we bought a house for $120k and our payment is about $955/month including tax and insurance. We only put 3% down because we got a FHA loan. We also borrowed the down payment from 401k which I know people will gasp when they read that but we are very young and have a LONG time until retirement and you are paying yourself back all the money and interest :)

    They is extra costs to account for also like appraisers, home inspectors, earnest deposit...etc!

    Anyway best of luck to you and your bf...hope you find the house of your dreams :)
  • odusgolp
    odusgolp Posts: 10,477 Member
    I would try and also calculate your benefits to buying over renting. Here's a sample link.

    http://www.nytimes.com/interactive/business/buy-rent-calculator.html

    In many cases, in this economy, it is actually more beneficial to rent. Although homeownership looks attractive for first-time homebuyers given the market, it still needs to be very carefully weighed.

    For me, I found that I can rent my current apartment - a 1500 square foot historic "condominium" - for such a steal that it makes much more sense to put money away for a downpayment. I've been a homeowner since I was 23 and actually have chosen to rent. I pay no utilities but basic electric (not heat, water/sewer, gas or trash/recycling - that's easily $300/month), have no upkeep expenses, no maintenance expenses, and am within walking distance to work which is saving me $400 in gas (based on where I previously owned). Think all your options through :)
  • Tori_356
    Tori_356 Posts: 510 Member
    yeah get married. i know you can't MAKE this happen but wait for marriage to happen firs then think about buying a house with someone - or just buy one on your own...he can live with you...he has bad credit anyways so.

    i would not buy a house with my boyfriend although i love him a lot, we've been together and living together for 5 years. i wanna be married first. more official and less chance that he would walk away, i would walk away, etc. although i am already his "domestic partner" and receive health insurance, dental insurance, and vision insurance through his employer.
  • Tori_356
    Tori_356 Posts: 510 Member
    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 property with him.
  • outtanms
    outtanms Posts: 237 Member
    www.daveramsey.com I am now debt free except for my house by simply following his plan. It is awesome and it works.
  • Hellbent_Heidi
    Hellbent_Heidi Posts: 3,669 Member
    get married or keep renting
    Or YOU buy the house yourself with your good credit, and have it in your name. With some of the deals available in this current market, you might be able to do that easily. My husband bought our house with his ex (big mistake), then they rolled her credit card debt into a home equity loan (even bigger mistake). When they split up, he had to buy her out of half the house, and still got stuck with the balance of the H.E. loan. Its probably a bad idea to buy with someone you aren't married to. Good Luck though....
  • Hellbent_Heidi
    Hellbent_Heidi Posts: 3,669 Member
    If you really want to own a home, move to Detroit or Memphis. Homes are ridiculously cheap and you can get in on the ground floor of a city slowly coming back to life. You can seriously buy a decent home in Detroit for 10-20k. Might not be a good neighborhood, but the prices are tempting.
    Oh Lord, DON'T move to Detroit! I live in the suburbs of Detroit, and most Detroiters don't even want to live in the city! I think "slowly" coming back to life might be an overestimation for a city that is burned out, tapped out financially, and crime ridden! $10-20K is not a deal when you'll be broken into weekly, and probably burned down by the next Halloween, if not sooner.
  • Ocarina
    Ocarina Posts: 1,550 Member
    I will say that I am 23, married, and renting and LOVE it! I think buying a house is an easily financial death. It's SO expensive. And you never truly own the house until you pay it off. Plus you can rent some pretty nice places for the same cost of owning a house! I would really think ahead before making such a commitment. I love having upkeep, water, sewer, trash, internet, cable, lawn care paid and I use their washer/dryer and appliances and if they break they will pay for it. I also am within walking distance of gym/school/downtown all for the measly price of $720 a month. Where would I be for that price with a house? I'd be 45 minutes away in a shack on a farm barely making it. Screw that! Sorry lol.... I'm a HUGE rent advocate at this age. :wink:
  • fitplease
    fitplease Posts: 647 Member
    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.

    I agree. Your signing onto a house with him will not improve his credit score, although it may drag yours down. He is not your husband, so why take a chance?
  • amysj303
    amysj303 Posts: 5,086 Member
    I will say that I am 23, married, and renting and LOVE it! I think buying a house is an easily financial death. It's SO expensive. And you never truly own the house until you pay it off. Plus you can rent some pretty nice places for the same cost of owning a house! I would really think ahead before making such a commitment. I love having upkeep, water, sewer, trash, internet, cable, lawn care paid and I use their washer/dryer and appliances and if they break they will pay for it. I also am within walking distance of gym/school/downtown all for the measly price of $720 a month. Where would I be for that price with a house? I'd be 45 minutes away in a shack on a farm barely making it. Screw that! Sorry lol.... I'm a HUGE rent advocate at this age. :wink:
    you make a good point, too. A lot of people complain they are "throwing money away" on rent. But housing is not the investment it might have been at one time. I bought a condo in 2001, spent $5k on downpayment, spent $1000 per month on a mortgage, another $100 per month on HOA fees, had to pay to fix/replace appliances and after 6 years I sold the place for exactly what I bought it for. All the equity was eaten up in closing costs and realtor fees and I had to replace the furnace to ensure the sale. I could have rented for the same $1000 per month, and left my $5k in the bank, earning interest and be better off.
    Still, I bought another house...
  • 0PhAtDaDdY
    0PhAtDaDdY Posts: 569 Member
    It's all about the rate, lower rate better off you are. Fixed Rate MUST BE a FIXED Rate...
    Closing Cost must ne·go·ti·ate (negotiate)
    PMI Insurance (Private Mortgage Insurance) Rip Off You do not want it....

    No matter how much smoke the blow up you ...............beep..

    Remember
    Rate
    Closing Cost
    PMI

    Good Luck lot's of great house deals, if house is 150,000.00 offer 100,000.00, the ball is in the buyer's court right now...
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