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Question(s) for you homeowners

Discussion in 'Off Topic [BG]' started by Bob Clayton, Jan 1, 2017.

  1. Bob Clayton

    Bob Clayton My P doesn’t have flats or tort Staff Member Supporting Member

    Aug 14, 2001
    Philly Suburbs
    Wife and I are planning to buy a house later this year. Both of us will be first time homebuyers, so we're not exactly experts on the subject. Any tips or tricks for us when talking to realtors and stuff like that? We have a decent amount saved up for a down payment, trying to get as close to 20% as possible. We've noticed some foreclosures in the area. We've heard good things and bad things about them, any personal insight?

    Also, our current lease is up at the end of August. Realistically speaking when should we start seriously looking at houses?

    Thanks in advance.
  2. blastoff99

    blastoff99 Moderator Staff Member Supporting Member

    Dec 17, 2011
    SW WA, USA

    Take a first time home buyers class. There is likely one available through a local credit union. Successful completion will get you a head full of things to think about, a few contacts, and maybe even a better rate through a local bank.
  3. MJ5150

    MJ5150 Moderator Staff Member Supporting Member

    Apr 12, 2001
    Olympia, WA
    The foreclosures I've dealt with required upgrades and/or repairs.
    If you don't have those types of skills, the costs there can add up quickly.

  4. Brad Johnson

    Brad Johnson Supporting Member

    Mar 8, 2000
    Gaithersburg, Md
    DR Strings
    Great advice. There are typically special programs for first time homebuyers that you can take advantage of.

    Winter is typically a buyers' market. It never hurts to look.
  5. I don't know about the US sytem(s) so cannot help re the process. I do suggest you both think about what you want in your house and area. The three main things about buying a house are location, location and location (!). Once you have that, also be prepared to compromise on some things - finding the house that fits exactly what you want is very difficult to achieve. Especially if you have a time frame to work within.

    Also, be prepared to look at houses your realtor suggests, even if they are not on your want list. A good realtor should be able to find things you did not consider but will work well for you. Don't rely on internet searches only.
  6. pcake

    pcake Supporting Member

    Sep 20, 2011
    Los Angeleez
    something most people i know don't get is that the asking price on the house listings sometimes have little or nothing to do with what the house sells for. go to sites like zillow.com, redfin.com and look at all the houses in your neighborhoods for sale, but if one is listed for $500,000, that doesn't mean it won't get big up another $250,000 by potential buyers making offers.

    next, you don't need a real estate agent to find your listings. we used redfin - once you get used to their search filters you can narrow in on everything you're looking for. you can also see recent sold prices to get a realistic idea of what houses are selling for in your chosen neighborhoods. and redfin gets the new listings from the real estate MLS faster than the other sites, do you'll know within minutes of new listings that fit your criteria if you set up email notifications.

    when - and not before - you're ready to start looking, get pre-approved by a lender - not prequalified, which is general - but pre-approved, which should be the equivalent of actually applying for a loan but without the loan. a lot of real estate agents and sellers won't consider your offer without that. it will also let your lender tell you the max loan they can give you in advance, so you know the max you can offer. and before you do this, find a loan broker, bank or lender you're sure is the one you want to work with. i found banks were much more of a pain in the butt and took longer to work through the loan. and we lost the first place we had an accepted offer on due to a less experienced loan broker.

    my daughter is in mortgages, and she says that the number one thing that makes mortgages take longer or fall through is that people take forever getting their paperwork in order. you'll want to have 6 months of paystubs, at least 2 years of tax papers, your i.d.s, a copy of your latest bank statement to confirm you have the money for your down and for escrow and other expenses. if you have deposited ANY money that isn't a paycheck, you'll need to know what it is and to explain it in writing. my husband's bonus required a letter from his job. the money i deposited from my late mother's trust required a letter and paperwork from the trust. having everything like this in hand can speed up the underwriting process so you can close in a timely manner. when you place an offer, or when you get a counter offer, it will include the amount of time in escrow. if it goes over, you can lose your place or pay daily fees.

    find a real estate agent who has the time to answer your questions. we had one who was busy, busy, busy, and she didn't have the time to get offers right out nor did she have time to get back to us on our questions quickly. we're lucky - we found someone after a few agents who were a poor fit who is totally nice, very quick to respond and very honest. your offers will be complex forms, so having someone who can take care of that right away means you won't have an offer come in ahead of yours. an accepted offer means massive reams of forms, so finding a real estate agent who uses DocuSign can make your life incredibly easier - instead of having your agent email you tons of papers you must print, sign and send back, you do it all online.

    READ EVERYTHING! even if you think you won't understand it, you usually will, and if you don't, ask about it.

    before you start actively looking, do some research. find a home inspector with good reviews and find out what his process involves and what he charges. if you're buying a house as opposed to a condo, you may also need a pool inspector and a fireplace inspector. we did much better using the inspector i found versus using the inspection company our agent's firm uses.

    and good luck! looking for a home can be stressful, but it can also be lots of fun. we looked for a full year before we found the place we're in now. which leads me to something a lot of people don't do - sit down, make a list of what you NEED in your house, what you want, what you don't want, and what you're willing to compromise on. ultimately we gave up some square footage to live near my son and my husband's work, and while sometimes we wish we had 300 more square feet, we're satisfied we made the right decision for us.

    also here in california escrow generally takes a month. if you have paperwork issues or the sellers take their time with paperwork, it can take two months. i suggest you start looking for your place sooner rather than later - if it takes you 4 to 6 months to find your house and 1 1/2 months in escrow,

    all the foreclosures we saw had mold. you wouldn't believe how expensive mold remediation is! we were quoted $32,000 for one place, and it wasn't the moldiest we saw. many of the foreclosures had had deferred maintenance - expensive stuff, sometimes - damaged carpets and floors, and a couple had deliberate damage from the owners who were angry about the foreclosures. also where i am, the foreclosure auctions aren't easy to get in on, and you usually have to pay the entire price on the spot if you win. it's not a game for the inexperienced.
    Last edited: Jan 2, 2017
    GregC, hrodbert696 and Tbone76 like this.
  7. TOOL460002

    TOOL460002 Supporting Member

    Nov 4, 2004
    Santa Cruz CA
    The most helpful part for me was getting a quality realtor. A friend recommended a guy, aso he was a first time buyer as well, and this realtor tended to work with first time buyers quite a bit. He knew the realtor selling the house I ended up with, which saved money and time and when you have more than one interested party it makes a difference. So I would try to get a quality reference however you can.

    As far as how long it took, I started looking in the middle of January and was moved in early March. Once we found the place it was only two weeks to officially move in, but that is really quick. I would expect a month from the time you write a check plus however long to actually find the place. If April is your target I would want to be bidding in the middle of February in case you get outbid. You may not get your first choice depending on the demand in your area.

    Oh, I used zillo a bunch until I realized it was horribly out of date. Most of what they listed was already sold. It was nice to get an idea of what is out there and what to pay, but I would say get in with a good realtor asap.
    Goatrope likes this.
  8. Jloch86


    Aug 1, 2016
    New Jersey
    I bought a house last year. It's not that big a deal really. Since you brought up that you have 20% to put down, I won't go into detail about asking your realtor to look for a USDA loan instead of a FHA loan because with USDA loans you don't have to put any money down.

    It's more the logistics of the thing. Lots of paper work, appointments, phone calls, etc (I had my wife do all that. If I'm paying the bills every month, you can set up a few meetings with realtors, lawyers, inspectors, sellers, and loan officers).

    It took us four realtors and two years because deals fall through, other buyers make better offers, and just finding a place good enough takes time. It seems endless, especially on the day you close. About a two/three inch thick stack of nonsense papers you have to sign. Took almost four hours. If there's one thing I can tell you, DEMAND A FIXED RATE MORTGAGE!!!

    Congratulations, btw. I think having your own home to go to where you make the rules is grossly underrated (maybe that's because it took me 29 years to get the keys to my own place). There's nothing better than paying a few kids from the neighborhood to do your yard work while you sit inside with the AC and learn Donna Lee. It's a lot of responsibility, but it's worth every penny.
    twinjet and rapidfirerob like this.
  9. pedroims


    Dec 19, 2007
    Mi advice is: Get a 15y mortgage, avoid the 30y like the plague. The difference in the monthly payment is minimal.
  10. guy n. cognito

    guy n. cognito Secret Agent Member Supporting Member

    Dec 28, 2005
    Nashville, TN
    Lots of good advice....and some not do good here.

    • Avoid "first time homebuyers" programs. These are typically for those that lack the ability to go conventional and are buying at the low end of the market.
    • Use a realtor: their fees are paid by the seller, so why not!
    • Buy location. You can always upgrade a home, but they are pretty hard to move.
    • Foreclosures.....well, if you want to save a tiny bit of money to buy a house "as-is" that was neglected by both its owner and the bank for some unknown period of time...go ahead.
    • Prequalify: it's essential.
  11. two fingers

    two fingers Opinionated blowhard. But not mad about it. Gold Supporting Member

    Feb 7, 2005
    Eastern NC USA
    All of these. I used to be a realtor when I thought I would like renting and flipping.

    Plus, winter is a buyers' market. Flowers aren't blooming and grass is dormant. Curb appeal is lost. So most people selling in winter need to sell.

    Have a good poker face. Do not let your wife go into a house and gasp and say "Oh my God this is BEEEEEYOOOOOOOTUHFUL! It's PEEEEEEERFECT for us honey!" Everyone involved will get dollar signs in their eyes. Act unemotional even if you are emotional about it.

    Get a buyer's agent. Again, all commission will be paid by the seller. Do NOT simply call the agent listing the property. They have a fiduciary obligation to get the SELLER the most money they can for the house. Where a buyer's agent has a fiduciary obligation to get YOU the best price. Have someone you work with during the whole process. He/she will get paid by splitting the seller's commission so you are out zero dollars.
    hrodbert696 likes this.
  12. T_Bone_TL


    Jan 10, 2013
    NW Mass/SW VT
    First and foremost - don't fall in love with a house to the point that you start compensating for its defects before you've bought it. It's not a gift horse, look it in the mouth, and be ready to walk away even if you loved it at first sight. There are other houses out there. This one can be a VERY expensive lesson. If you find that you absolutely love the first thing you look at, go look at 10 more - if you still like the first one best, and it's not got "bad teeth" (expensive problems you'll need to solve) then you'll know it's the best of at least 11...

    Get a loan that does not have any pre-payment penalty - and overpay your payments. Mortgage math is staggering - your early payments are almost all interest. If you can toss extra money that gets applied to the principal to those payments it makes a BIG difference in the overall length and cost of the loan. Perhaps you can only swing the house you want on a 30 year loan - but if paying it off early is no harm, no foul you can pay it off as fast as you can come up with the money.

    Looking further into math, the "tax advantages" of having a big honking mortgage are best looked at with skepticism. The standard deduction is pretty sizable for MFJ couples, the tax advantage only applies if you are paying more than that in interest & taxes, and it's a deduction, not a credit. There may be some sort of first time homebuyer's credit, though...? The math in favor of paying it off as fast as you can manage is rather stark these days, with my money in the bank paying 0.10-0.25% but mortgages still being 5 or 6% (I think, don't got one now, could be a hair less presently.) In the old days banks managed to live just fine paying 5% on savings and charging 6% on mortgages :rollno: but I guess they are greedier now.

    Pay attention to the property taxes. As a renter, you probably haven't seen those directly. When you stop renting and buy a house, it's common to assume that you'll stop paying "rent" - this is not quite the case - property taxes feel a whole lot like rent, and at this point I've certainly paid more in taxes ON my land than I paid to buy it in the first place. Of course this gets the local kids educated (mostly) and the road plowed and all that sort of thing, but it can come as a bit of a shock if you though you were getting off the $ treadmill. Generally if you are mortgaged to the hilt this will all be rolled into your mortgage payment under escrow, but when the happy day that you pay off you loan comes, you'll still need to pay the taxes or they'll take your house away and auction it off. Crossing a town line can make a big difference in your property tax burden (depending on how your local tax laws work.)

    You should probably start looking now. You'll get an idea of the local market and neighborhoods and all that good stuff without a ton of pressure - pressure can be expensive. You might also want to scope out options for storage and short-term rentals if you find that you may have some lack of perfect timing on the end of your lease and the move in date on your new house. In some cases you might be able to reant your new house while it's still not yours, if it's vacant, while the terms are settled, but in some cases you can't do that, and you should have a plan B. For me, an ideal purchase date would look like June or July if you can swing mortgage AND rent for a few months, so you can do anything you might need to do at the new place without all your crud in it, and move in slowly and sanely - but if you can't afford that you might be shooting closer to the time your lease is up, and perhaps storing a bunch of your furniture (rent much cheaper than a whole apartment) so it's not in the way while you paint or whatever before really moving in.

    Finally, remember that the real estate agent is working for the seller unless otherwise arranged and paid for by you (a buyers agent.) It's common to miss that point, as you think they are working for you, to find you a house, but they are in fact working for 6% of the sales price (typically) and you are simply a means to that end. They may be nice people, that surely helps to get their job done, but ultimately they are trying to move houses and get paid. Nothing wrong with that, but you may need to consider it when listening to their advice.
    Last edited: Jan 2, 2017
    hrodbert696 likes this.
  13. INTP


    Nov 28, 2003
    Dallas, TX
    Combine this with not buying the most expensive house you can afford. I've met many people who spent so much on the house that they had nothing left over to live their lives. And don't forget to add in things like property taxes and maintenance. When you buy a house, you're signing up for those things, too.

    It might be tempting to think that a brand new house will not have maintenance issues. You should get a warranty from the builder, but that can often mean a battle when things go wrong. They're not in the maintenance business, and their attitude will be that they're done with it once you take the keys. And they also use "contractor grade" everything, from the light switches to the major components like HVAC. I'm not trying to scare you, just saying that it's easy to forget that while a house is might be considered an asset, it costs money to keep it in shape. Plan accordingly.
  14. Roland GR 88

    Roland GR 88

    Sep 16, 2013
    Get a comprehensive building inspection done and don't let the agent dismiss the findings in any way. Your inspector is likely an ex carpenter or engineer of some kind. (and should be) Your agent is not.
    devo_stevo likes this.
  15. First time buyers often make silly mistakes - My son went open plan, brand new home, converted from an old mill into apartments. Quality finishes, quality hardware, quality carpets included. Well designed expensive style kitchen, big garden - ground floor, so ideal for their dogs, and no stairs.

    They missed the fact there was no storage, having no upstairs - and just one cupboard with the central heating boiler, so one hoover and it was full. Having open plan kitchen, dining area, single bedroom and lounge meant the only privacy and peace and quiet was often the bedroom. Put the dishwasher or washing machine on and you couldn't hear the TV, or talk on the phone. Looked amazing - but hopeless to live in! They are now one year later just into house number two, with separate bedrooms, lounge, kitchen and dining room and an upstairs!
  16. A wife will always buy a house based on what the bathroom, kitchen and bedrooms look like. And all the other cosmetic eye-candy..

    Upon arriving at possible house, split from wife and look at things like hill drainage slope, foundation, roof, electrical and panel, water in basement,level floors etc etc....all the actual important stuff.
    devo_stevo, Johnny Crab and slobake like this.
  17. slobake

    slobake resident ... something Supporting Member

    Have as much as you can towards a down payment as possible. Scrimp and save do whatever you need to put money into the initial payment, you want to bring the principle down as much as you can. When we bought our house the lender told us it was better to carry a larger loan. He told us that we get to write off the interest on our taxes. We researched that and found out that statement is not entirely true. Sure you will get to write off some of the interest but not that much. In a sense the lender was telling us that for every dollar of interest we paid them that we would get a dime back. That didn't sound like a good deal to me. I would rather not give the bank my money in the first place.
    When you buy the house be prepared for sticker shock when you sign the final papers. I thought I knew how much we were paying for our house but the final papers added in all the interest and other costs. Over the life of the loan the final price was over twice the amount we paid. Of course back then a 7.5 percent rate was considered a good deal. We had a clause in the loan that allowed us to re-finance without a penalty. When interest rates fell we got a much better rate with my credit union. There are things you can do. If you can pay extra into the principle every month. That will bring the final cost down.
    I also got a credit card at Sears because I needed to buy tools. If you can do even minor repairs to your house it will save you a lot of money. If you can do re-models all the better. At minimum you should know how to unclog drains, patch walls and paint. Unless you have enough extra cash to pay someone else to do it for you.
    I realize that I bought my home a long time ago and things have changed since then. I hope it turns out well for you.
    hrodbert696 and T_Bone_TL like this.
  18. slobake

    slobake resident ... something Supporting Member

    Yup, forgot about all of that, good points. The foundation is huge, if that is bad you are inheriting a very large problem. Hire you own person to inspect the house. Get references and or recommendations for the person/company. Not all inspectors are equal. Don't completely trust the inspector hired by the seller. They have to stay honest and legit but they might have the sellers' interests in mind.
    devo_stevo likes this.
  19. fingerguy

    fingerguy Banned

    Aug 2, 2016
    Well first congratulations.

    My advice really depends on your cash flow. I myself and many others call their first home their starter home, but if you invest in it, and pay it off as much as you can it can be your only home, and use the extra money to get a retirement/vacation home. If I could do it all over again that is what I would do.

    Also, while fix em uppers sound all great and stuff, they can also be headaches. My first home was that and I didn't know it. From taking every step one can take to get their well fixed (and we finally did) to just about every problem you can have with a septic tank without having to change it (which we did before buying it). To a lawn that floods, people riding horses in the woods where we live. To having so much land it takes me 3hrs with a normal riding mower and push mower plus weed wacker. Oh don't let me mention about the wood burning fireplace that was a complete fire hazzard: you had to see it for yourself to really grasp the issue but that too we got resolved. What else...oh the garage door openers, having to redo the bathroom, install central air, needing new windows and so much more.

    Then we bought our 2nd home and it was a lot larger and had all this fancy schmancy stuff and we hated it. Why? Because it was not cozy like our first home.

    So with all that said, try to get a home with the least amount of work needed or at least if work is needed it's something that can be done in time. Try to stay there as long as you can and invest in a vacation/retirement home. Meaning a place where you would want to live at when that time comes and/or might want to just relocate to in time.

    Good luck and enjoy it for these are some of the best times in your lives.
  20. frnjplayer


    Feb 3, 2014
    Lots of good info on money and inspection here. Also, know your skill set. Are you an electrician or do you have some knowledge in that area? Plumber? Can you paint a room or paint a house. Any skill you have that will work in the maintenance or renovation world will save you a boatload of money. Alternatively, trying to do things that are outside your skill set without help or instruction can cost you more money than the original problem would have. Be honest with yourself.

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