First time home buyer advice?

[Golf4food]

What advice can you give first time homebuyers? Things to look out for, things that you might not think about until it is too late, things that you didn't think to budget for ahead of time, hidden costs, etc. Give me the 411.

I know the Budget Board folks will be full of usefull information!

We are seriously considering buying a house soon and I want to be well armed with the full wealth of everyone else's experience!

 

[taraprather]

I was going to ask the same thing. I'm currently waiting to hear back from our mortgage company to find out if we got preapproved for our first home! We should hear back later on today. Wish me luck!!!

 

[Golf4food]

I was going to ask the same thing. I'm currently waiting to hear back from our mortgage company to find out if we got preapproved for our first home! We should hear back later on today. Wish me luck!!!

Ditto fo us! Good luck for both of us.

 

[icartjetta]

My DH and I just closed on our first house 1/30/07 and the only thing I can say is taxes!!!!!!!OUCH

 

[onyx8]

Go get the book Home Buying for Dummies. That will tell you all you need to know!

 

[comicguy]

Make sure that you:

Have a Home Inspection done on the house that you want to buy. it cost about 150-200 dollars but they check things out and tell you what needs to be fixed now, versuses later and things of that nature. It also gives you some negotiation room if an item needs to be fixed(ie roof needs replacing or such)

Shop around for interest rates, when I bought my house last year I did through a state agency at 4.15% for 30 years fixed and no closing cost except 200 dollars.

Make sure to check out the neighborhood, schools, parks, etc... to see if you like it and it meets your needs.

 

[Kate and Pete]

DH and I bought our first house 2.5 years ago - my biggest piece of advice is to hire an inspector to go over the house - get him/her in the attic, basement, on the roof...

We had a friend who said he's inspected lots of houses do it for free (to save a mere $200!) and we've had a ton of problems that an inspector might have seen (to the tune of $6000 out of our pockets!!!!!!).

Do lots of walkthroughs yourself - do a walkthrough 24 hrs. before you close to make sure everything's as it should be. We did - and found a crack in the bathtub that wasn't there before (the house was being lived in by 19 yr old renters - DH suspects a keg...).

Buying a house is stressful - be ready for that part! People kept telling us this, and we listened and were ready for it...BUT - once you're in - it's yours!!!!! Yay!

 

[Not so Dumbo]

I can tell you the things that we have learned through expierence.

Hire your own building inspector, don't use a referal from the realtor
Make sure you buy title insurance
shop around and do your research for the best mortgage
Don't have your hearts set on only one house unless you are willing to pay whatever it takes to get it
Make sure that if the current owners will occupy the residence after close, that you charge them rent that will be due at close and have X amount in writing
After you move in, take your time decorating. If you hurry, you'll end up redoing it in the future at an additional cost

One more thing, whether you have kids or not, check your states sex offender registry list. You don't want to move into a situation that someday you might not be able to get out of. Others may not want to buy your house in the future if that neighbor is still there.

 

[emilyclaire]

When you put in your offer, you have to have some cash-on-hand for "earnest money." This shows the buyer you are truly interested and serious about the deal. The first time I put in an offer on a house it was $1,000.00, but the first time I submitted an offer for a townhome that was being built, it was $1900.00. I have heard that $500 is typically the minimum. This is different than your "down" money that you have to have at closing. You have to have this in your checking account the day you make your first offer. So make sure you have it before you even start looking.

Also, keep your credit in good shape throughout the whole process (duh, right?). But it's a common mistake people make. Just because you get that pre-approval letter doesn't mean things can't change. For instance, if you get a pre-approval in December, put an offer in on January 1st, and have a 30 day closing, you need to actually IMPROVE your credit between 1/1 and 1/31. If you go out and apply for in-store credit cards to buy new furniture, for example, before you actually close, you are damaging your credit and your score will go down before your closing date. If it goes down too much, the mortgage company might not see you as a safe investment and may balk at the table. Just try to keep your whole financial situation the same, if not better, from the beginning to the end of your homebuying process.

Good luck to you! By the way, my husband and I move into our new townhome in June, provided the building goes well. We are so excited!

 

[kellia]

Don't buy anything you can't comfortably afford, because there WILL be extra expenses of things breaking that you didn't plan on!

Your taxes will NOT be what they tell you, they will be higher because they cannot go up very much while someone is living there. So, if you get a house where someone has been living there 20 years, they will go up A LOT!!

Don't worry about the decor. Carpet and paint are not that expensive. However, location, basements, garages cannot be added, or not cheaply for the garage.

Home warranty, inspection (that comes with guarantee), check for insurance rates, they can vary over just a couple miles, age of house, etc.

Also, even if you plan on being there for a long time, look for resale value. Don't buy on a main street, a 2 bed, no basement, etc., if all of the others nearby don't have them or it will be hard to sell. If it has been on the market a while, make sure it isn't because there are features no one wants, or you'll be stuck with it some day.

 

[Golf4food]

One more thing, whether you have kids or not, check your states sex offender registry list. You don't want to move into a situation that someday you might not be able to get out of. Others may not want to buy your house in the future if that neighbor is still there.

Now that is something I never would have thought of - thanks! Very good advice. No kids now, but they are certainly hoped for in the next few years.

And thanks to everyone else as well. Lot's of good stuff. We'll be making a list and checking it twice.

 

[Chicago526]

My biggest piece of advice: What you really can afford and what your realator/mortgage lender tell you that you can afford are VERY DIFFERANT NUMBERS.

What monthly amount can you afford (including mortgage, property taxes, homeowners insurance) to spend on a house each month and still pay your other bills (and remember, utilities and home maintence costs are going to go up as well, so factor that into your budget too). Got that number? Okay, work it backwards, what loan can you get for that amount of monthly payment? That will tell you what house you can afford. There are mortgage calculators out there that will help you figure it all out (type in your desired payment, interest rate you think you'll get, down payment amount, homeowners insurance costs, and it will do the math for you), just search Google for "mortgage payment calculator" and you should get dozens of links.

My rule of thumb is that our monthly house payment should be around 25% of our take home pay, give or take a percentage point. Remember, you're going to have a lot of expenses that go along with the house, plus all the normal stuff like cars, clothes, food, retirement/college saving, vacations etc. You don't want to be house poor!

 

[Golf4food]

Don't buy... no basement, etc.

Here in Florida we call basements "indoor swimming pools"

Sorry, I couldn't resist.

 

[emilymad]

This a great thread! Lots of good advise!

When I bought my first house I didn't pay enough attention to the little things. Like how the house only had one cable jack which was really a wire through the floor. Luckily we knew someone who knew how to run cable through the walls. The cable company gave us an estimate that was A LOT of money. While this wasn't a deal breaker, we didn't budget for a lot of the small expenses for improvements. Another example, we had to replace all of the door knobs. Who thinks of that?? It added up to be a couple of hundred bucks.

Also our "good faith" money was $5,000 so I guess it varies.

Good Luck!

 

[snowman]

Check with your local or state housing authority. You may find that they offer new buyer classes for certain income ranges. You may also find that you qualify for first time buyers programs thru your state agencies.

Also - be sure to use a buyer broker. The realtor showing the house works for the seller and only has their interest at heart. A buyer broker works for you and gets paid at closing.

As has been said before - check your credit before you try for an approval and when you find the house you want to make an offer on hire your own building inspector. Don't rely on the showing agent to recommend one.

We bought our first house almost 3 years ago and it was a paper tiger, but worth every bit of time and aggrevation.

 

[AllesonWonderland]

Buying a house is stressful - be ready for that part!

Ditto this! Our first time buying experience was VERY stressful. LOTS to work out with the bank. It seemed every other day there was something wrong or they needed more info, etc. I was always scratching my head why their 'formulas' were saying we might not be able to afford the house when the house payment was less than the rent we were having no trouble paying. But, we paid off all our credit cards (just out of college) to get that house and haven't carried a balance since. So there was a bright spot through it all. And after going through it once it was amazing how easy the process was the next time...and the time after that. LOL

Good luck to you!

 

[Tazicket]

Since I'm Golf4food's DW, I figure I should subscribe. Thanks for all the advice so far! It's very helpful! Keep it coming!

 

[kellia]

Here in Florida we call basements "indoor swimming pools"

Sorry, I couldn't resist.

LOL, I know it varies across the country, but here in Michigan most houses have them and it is very hard to sell a house without one! Unless you live on a lake!

Friends of ours moved from the south where they didn't have basements, so didn't think anything of buying a house without one. They tried a few times to sell it, but couldn't because no on else wanted it.

 

[OceanAnnie]

You got a lot of great advice. The only thing I can add is check out this website: www.upromise.com if you choose a real estate agency that works with Upromise (and you are registered) you can get a large amount back from the purchase of your home. I think they give you back a % of their commission. Something like that.

There are conditions. You have to be registered (it's free), you have to have a company that participates (the information is online), and you have to tell the company's agent you are a member of Upromise and would like the benefit applied to your transaction before you begin.

Whenever I see these type of questions, I let people know about it. Even though I was signed up for Upromise I didn't know about the real estate aspect. When I sold my house, I lost out on the opportunity!

Anyway, it's worth looking into.

 

[Nascia]

I would say to have the title search done before you pay for any inspections or appraisals. We didn't think about it and our lender waited until the appraisal ($325) and inspection ($425) were done before he ordered the title search. The title search ($55 cancellation fee) showed a major problem 2 days before closing, the house had several liens on it and it was currently being foreclosed on . Needless to say, we didn't get the house and are now suing the sellers for the costs we are out plus we can't get our earnest money until everything is settled. We were also advised to turn on the utilities because we were ready to go, thought they were too, (the sellers had turned everything completely off so we couldn't just tranfer service) and it would take a few days for the utility companies to make it out, so we're out the nonrefundable connection fees for those too. They straight up lied, both on the disclosure and throughout the sales process, and had conviniently moved out of state and became very difficult for our agent to get in touch with.

We've learned from our experience, we will definitely be using a lawyer when we do decide to buy. Our buyers agent was great until the problem came up and we decided to walk. Then she started getting really pushy and kept asking us to wait a couple more days and it would be settled. Well we waited about 2 weeks, until the 27th and then walked. We had to be out of our place by the 1st and couldn't wait any longer. She then tried to get my DH to sign a release "to get our earnest money back." Guess she thought I wouldn't read it, but I did and good thing too. It was a release for the money and relieved all parties of any liability (ummm no, I want our $800+ back). She then said it could have all been avoided if we would have just bought the house.