House buying

[LastSVXintheChi]

I'm looking to buy my first place to live and was looking for advice...i dont want to do an apartment because I dont want to through my money away every month.

Im looking at foreclosures mainly right now they are kind of fixer uppers but not so bad that you couldnt live comfortably though....what am I going to need to get started and for peoe to take me serious?

Thanks in advance

[Landshark]

Originally Posted by LastSVXintheChi

Im looking at foreclosures mainly right now they are kind of fixer uppers but not so bad that you couldnt live comfortably though....what am I going to need to get started and for peoe to take me serious?

Thanks in advance

you'll need a good credit score, and a decent down payment. don't buy more house than you can afford.

when you do buy, have a nice wad of cash set aside in addition to any money you have budgeted for improvement and repairs (had my furnace die in the middle of winter in my last house.)

get a good home inspector, and watch "Holmes Improvement"!

[Cam]

If your serious about buying a house, the first step is to get pre-approved for your home lone. Who you choose is up to you. Look into FHA programs, unless you have about 10% to put as a down payment. FHA programs typically require 3.5% down to close.

Next step is finding a real-estate agent. If possible in your area, try to get sellers concessions (it means the seller pays closing costs, which is about an additional 3-5% of the cost of the home). Try to find a real estate agent who is patient, and has been around for a while. Experience is everything right now, since there are so many people who have gotten into it the last 10 years, and so many who failed to do well. If you can find someone who has been around for 20 years or so, they will have a better feel for the market, what you'll be able to take on (project-wise and in other areas as well).

Also, overspend a bit. This is mostly true if you have a very dependable job, and one that you can manipulate your wage at(overtime, etc.). The reason I say this is because if you have to eat top ramen and hot pockets for a year to get by, you will not regret it since you'll have more/nicer house to live at. I do not recommend doing this if you have any sort of uncertainty with your career.

The last bit of advice I want to give you is be patient. Everyone will tell you this, but it mostly has to be learned the hard way. You'll probably find a place you love, and someone will make an offer on it before you. Or the sellers will entertain multiple offers and you will not be able to compete. Just walk away from those, there are many fish in the sea.

Good luck on your house hunting! ( I just closed on my first home and no matter how stressful it gets, the end result is very much worth it!)

[svxcess]

To get the most favorable interest rate, most lenders would want to see great credit scores, no missed or late payments over the past 12 months, a secure job and a down payment of at least 20%.

There are government programs that let you put down substantionally less, but

Skirting the traditional 20% down payment means a mandatory additional expense: private mortgage insurance.

PMI might not seem like a big deal, but it comes with a few hitches. This insurance typically costs between 0.5% to 1% of the entire loan amount on an annual basis. In other words, a $150,000 loan at a 1% insurance rate adds an extra $125 per month to your monthly payment.

The insurance protects your lender against the possibility of you defaulting on the property and can be charged until as much as 50% of the loan is paid off.

The good news is PMI is currently tax deductible for married couples jointly making up to $110,000 annually.

.

[Green1995SVX]

Foreclosures are fine (I bought a foreclosure and got a great deal), but avoid short sales. Banks are notoriously difficult to deal with involving these. I have several friends who attempted to buy short sales and eventually gave up as the banks made it so difficult.

[Landshark]

Originally Posted by Cam

If your serious about buying a house, the first step is to get pre-approved for your home lone. Who you choose is up to you. Look into FHA programs, unless you have about 10% to put as a down payment. FHA programs typically require 3.5% down to close.

Next step is finding a real-estate agent. If possible in your area, try to get sellers concessions (it means the seller pays closing costs, which is about an additional 3-5% of the cost of the home). Try to find a real estate agent who is patient, and has been around for a while. Experience is everything right now, since there are so many people who have gotten into it the last 10 years, and so many who failed to do well. If you can find someone who has been around for 20 years or so, they will have a better feel for the market, what you'll be able to take on (project-wise and in other areas as well).

Also, overspend a bit. This is mostly true if you have a very dependable job, and one that you can manipulate your wage at(overtime, etc.). The reason I say this is because if you have to eat top ramen and hot pockets for a year to get by, you will not regret it since you'll have more/nicer house to live at. I do not recommend doing this if you have any sort of uncertainty with your career.

The last bit of advice I want to give you is be patient. Everyone will tell you this, but it mostly has to be learned the hard way. You'll probably find a place you love, and someone will make an offer on it before you. Or the sellers will entertain multiple offers and you will not be able to compete. Just walk away from those, there are many fish in the sea.

Good luck on your house hunting! ( I just closed on my first home and no matter how stressful it gets, the end result is very much worth it!)

This sounds like the fast track to foreclosure to me.

If you dont have at least 20% to put down, you arent ready to buy a house yet. Whats going to happen after a year of eating ramen noodles and living like a hobo? Same big mortgage payment.

[Green1995SVX]

Originally Posted by Landshark

This sounds like the fast track to foreclosure to me.

If you dont have at least 20% to put down, you arent ready to buy a house yet. Whats going to happen after a year of eating ramen noodles and living like a hobo? Same big mortgage payment.

Overspend a bit, and only put 3.5% down? This sounds more like "dont do this" than advice.

[Cam]

Depends on what your job situation is like. With rates as low as they are, you don't have as much to gain from putting 20% down. About 30 years ago when interest rates were over 10%, it was definately much more advantageous to get as much principal out of the way quickly. Also, with my job I get periodic raises and know when and how much money I will make. You also have to take into account the area I live in. 20% down here is serious coin, not like the Midwest (for example) where you can get a decent house for 100k.

And putting 3.5% down doesn't necessarily mean that's all that person can afford. It was a financial decision for me. Why would I put 40k down when I could put 7? To save 100 dollars a month? It doesnt make sense with the plans I have for this house.

I agree that you don't want to rush into it without being ready but those programs are in place for first time homebuyers so that they can get into a place and afford to fix it up. House prices are so high these days that most first time home buyers don't have anywhere close to 20% for a down payment. Even if the housing bubble did pop. At least, that's the situation up here.

[immortal_suby]

Have a plan for your first house. Do you plan to live in it for 2 years, 5 years, 10 years? Have that in mind when you pick your mortgage.

Best thing we did on our first home was to make sure it was something we could sell very quickly when the time came. Pick a nice neighborhood, nice location, and make sure the price you pay for the amount of house will leave you with a fair return when you do sell. We were able to sell our first home within 2 weeks of listing. They kicked us out of the house it sold so quick.

I'd advise against buying on the upper end of what you can afford. Buy at the middle or lower end of what you can afford. It will make your life much easier and you won't have to eat ramen and drink natural light.

[dcarrb]

Simple old-school formula for what you can comfortably afford (and this applies to a mortgage or rent): Your monthly payment shouldn't exceed one week's gross pay.

I wouldn't worry about a big down payment. It might be a better play to divert your down payment cash to get the bigger "fixer-upper" projects out of the way. Fixer-uppers have a notorious way of never really getting fixed-up, once real life intervenes.

Good luck.
dcb

[LastSVXintheChi]

thanks for the advice guys...i am actually looking at 100k houses at the moment and a lot of them dont look too bad...im also looking at houses for rent because from what i hear a lot of the time when people rent out houses it is because they cant sell it and they end up offering it to buy after a year or 2 if you are in good standing....

is this true?