• We’re currently investigating an issue related to the forum theme and styling that is impacting page layout and visual formatting. The problem has been identified, and we are actively working on a resolution. There is no impact to user data or functionality, this is strictly a front-end display issue. We’ll post an update once the fix has been deployed. Thanks for your patience while we get this sorted.

Advice for someone looking to purchase a home in the spring (maybe earlier?)

I

Injury

Lifer
I'm hoping to start house hunting early Spring '09, if not earlier.

I've been spending the last year getting my finances in order and I'm flat out tired of renting and not building equity. I've been checking my credit every 4 months rotating from the three agencies and best I can tell, there are no blemishes red flags. My credit score is reported as 761 and has no flags in terms of recent loans or high balances. In terms of debt, I have about $3000 left in student loans and after that, it's strictly monthlies. I pay off all my bills every month.

It is my intention to buy a house that I can start a family in and currently there's nothing on the horizon in terms of having a family, so 2-4 bedrooms is satisfactory for now. I have a friend that is willing to rent a room of the house who currently lives with me and can commit to at least a year-long agreement if we can agree on the price.

I know the area I want, I know that my price range is a little tight for the area but good enough that I can be a little bit picky if I'm willing to walk away if I can't get the price I want and if it takes a little bit longer as a result, that's okay. The only thing I will be out of by waiting is my rent. I'd prefer to building equity from that, but I'm not going to spend $100k+ faster so I don't have to be upset about $450.

I've been tucking money away every week but as prices have gone up on everything it's getting harder to put as much away. With my price range, CURRENTLY I could put about 10% down but not have too much of a savings left. By Spring I expect that (barring being laid off) I will have about 20%, but would prefer to put 10% down and have the remainder for emergencies, etc.

What more should I do from here? Should I definitely hold off on taking any action until Spring or is there anything I can start setting up now? Is it possible to get a loan right now with the economic situation? Should I talk to a mortgage broker or go direct to a few different banks? Should I be talking to them NOW or should I wait until I am 100% ready to buy?

I picked a few books up from the library and have been working my way through them, but most of them have a quite cheery attitude about the economy as none of them are more recent than 2005.


Cliffs:
- Ready to stop renting and start earning equity on a home.
- Considering the economy, what steps should I be taking ~6 months in advance of wanting to be in house of my own?
 
Well jeez, if you can save 10% of the cost of the home in only 6 months while paying rent, I think you'll be fine. :Q But of course you want to hold some in savings in case you get laid off or need to make repairs.
 
Originally posted by: mugs
Well jeez, if you can save 10% of the cost of the home in only 6 months while paying rent, I think you'll be fine. :Q But of course you want to hold some in savings in case you get laid off or need to make repairs.
Click to expand...

Well, the catch is that I'm not making ALL that much, but I'm just currently on a well-budgeted plan to have that amount by that time. It's not the sort of thing that will be able to happen year-round, really.

My little plan involves me putting 35% of every paycheck into savings, 15% of my gross pay into my 401k, and a whole slew of other things that... if I have the goal of six months of this in mind, I'll be able to keep up. But if I just told myself that this is a life-long thing, I would have been done with it after a month.
 
Go talk to a broker, one of the free ones. Dont sign any commitments, but see if you can get pre-approved awhile, it can give you a good idea what you can afford. I am in the proccess of buying my first home, and talking to one and asking a tun of questions helped me understand the proccess a bit more.

I am going with a FHA loan. FHA loans are pretty good for first time buyers. You need 3% down, and maybe another $1000 for different expenses. If you can get the seller to agree you can get 6% seller help on the closing costs, which pretty much covers them all. The main negative to FHA, is the extra inspections are a bit more strict, you are not going to get a "fixxer upper" with a FHA.

When I talked to the broker they ran my credit, I came in right around mid 700s as well. They pre-approved me that day for a heck of alot more than I could afford, so I would not worry about getting a loan.

After you get pre-approved find a realtor, or 2. What ever you do, do not sign a contract with one, there is no need to since you are only buying, not selling. Again, you will learn alot with the first few meetings. Have them look for you, and go on alot of tours, dont feel bad about making them take you on tours, that is their job. You are going to end up paying that person a few thousand dollars, make them work for it.
 
And dont fret the 10% vs 20% I just bought my first home with 10% down. The PMI isnt that bad($25 dollars/month extra) and if you make an extra payment(to principal only) a year it'll be gone quickly. I came away still having a good amount in the bank for emergency/other costs.

Keep in mind once you get the house you'll spend ALOT to furnish/make the house initially livable even if you are currently renting. All told I ended up spending about $1500 dollars to get what I absolutely needed to live in a house. I might spend a little more. But at this point I still have about 4-5 months worth of savings in the bank. As in if I didnt have my job I'd be OK for 4-5 months. Personally I did that because it makes fiscal sense. I had enough for 20% down but went with 10% so I'd have money. You should do the same IMHO.



EDIT: And get yourself a buyer's agent. And get a good one. My agent was awesome, when the sellers tried to screw me at the last second he stepped in and stopped it. I didn't even learn about it until after that fact. To that end be firm with what you want. Don't be wishy-washy, once you know what you are looking for inform your agent of that so he/she knows and will find houses to tour that you'll like.
 
I think now is the time to buy a house as prices are very low; buyers also have more negotiation leverage now. Buy something you can afford with money to save. Consider all expenses, leisure money, and emergency money, not including traditional savings/401k. I dont think it's a good idea to buy a house you could not afford on your own; you will be dependent on someone else's income.
 
It's very much a buyer's market right now. You can get virtually anything you want.

Get a pre-approval from a mortgage broker.
Get a realtor.

Don't forget to jump up and down in kitchens and bathrooms. Feel for rotted floors when you do. 🙂
 
(Begin rant.) Great preparations so far...I would suggest you shift your focus a little bit. Do you expect you will stay in this home (some say it's "the average" for first-time buyers?) less than 5 years? Do you expect to be married and have kids while in this house? You may want to consider the schools even if you think the home will be short-term. What if your situation changes and you're in the house for much longer than you anticipate? Lots of buyers will consider schools, park district, and proximity to shopping and mass transportation (among other things) so you should consider those factors too, even if they don't necessarily apply to you now. Information about school rankings is publicly available. Also, keep in mind the golden rule of location, location, location. You can change the house but you can never change the location. Bring along an architect or someone who works in home construction/remodeling if you know anyone like that. He/she may be able to point out opportunities for upgrading or remodeling a home that might not be in tip-top "move-in" condition. Many families are not willing to live through remodeling, so you have an advantage there if you can live with the disruption/mess. Since it's a buyer's market, the seller and the seller's real estate agent will do everything they can to package the home up as pretty as possible, as well as hiding flaws. Try to see through this by focusing on the fundamentals of the home...room sizes, closet sizes, quality of construction, age of the home, HVAC and mechanical systems etc. Also, you should make a list of the MUST HAVEs and the NICE-TO-HAVEs, so that you can check-off those things as you look at houses. Ask your agent about taking pics with a digital camera while you take a tour of various homes. You would be surprised how much you forget after walking out the door. Lastly, if you're close to pulling the trigger, take one suggestion and do this: visit the house at least 2 or 3 times during one 24hr period and sit in your car for 15-30min each time. Pretend you're talking on your cell phone or something. Take notice of the activity in the neighborhood. At 5:30pm on a weekday are there tons of cars driving through the neighborhood? Are cars taking shortcuts right past the house to avoid traffic at a major intersection close by? Next, what's the neighborhood like at 9:30 or 10:00 at night? Are there neighbors repairing cars in their garages with the radios blasting? Are kids running around the streets unsupervised? Going through such a process might help you identify something unusual that you might not notice in a typical visit when you're focused on the house itself. And good luck. (End rant.)
 
Originally posted by: courtjester123
(Begin rant.) Great preparations so far...I would suggest you shift your focus a little bit. Do you expect you will stay in this home (some say it's "the average" for first-time buyers?) less than 5 years? Do you expect to be married and have kids while in this house? You may want to consider the schools even if you think the home will be short-term. What if your situation changes and you're in the house for much longer than you anticipate? Lots of buyers will consider schools, park district, and proximity to shopping and mass transportation (among other things) so you should consider those factors too, even if they don't necessarily apply to you now. Information about school rankings is publicly available. Also, keep in mind the golden rule of location, location, location. You can change the house but you can never change the location. Bring along an architect or someone who works in home construction/remodeling if you know anyone like that. He/she may be able to point out opportunities for upgrading or remodeling a home that might not be in tip-top "move-in" condition. Many families are not willing to live through remodeling, so you have an advantage there if you can live with the disruption/mess. Since it's a buyer's market, the seller and the seller's real estate agent will do everything they can to package the home up as pretty as possible, as well as hiding flaws. Try to see through this by focusing on the fundamentals of the home...room sizes, closet sizes, quality of construction, age of the home, HVAC and mechanical systems etc. Also, you should make a list of the MUST HAVEs and the NICE-TO-HAVEs, so that you can check-off those things as you look at houses. Ask your agent about taking pics with a digital camera while you take a tour of various homes. You would be surprised how much you forget after walking out the door. Lastly, if you're close to pulling the trigger, take one suggestion and do this: visit the house at least 2 or 3 times during one 24hr period and sit in your car for 15-30min each time. Pretend you're talking on your cell phone or something. Take notice of the activity in the neighborhood. At 5:30pm on a weekday are there tons of cars driving through the neighborhood? Are cars taking shortcuts right past the house to avoid traffic at a major intersection close by? Next, what's the neighborhood like at 9:30 or 10:00 at night? Are there neighbors repairing cars in their garages with the radios blasting? Are kids running around the streets unsupervised? Going through such a process might help you identify something unusual that you might not notice in a typical visit when you're focused on the house itself. And good luck. (End rant.)
Click to expand...

Thanks for the advice.

The neighborhood is the same neighborhood I've been living in for about 3 years now. I'm already committed to MAYBE having 2 houses in my lifetime. The area parks are great, everything is within walking distance and currently it's a 12-15 minute drive to work.

The majority of homes in the area are 75-100 years old and most of them at least 2 bedrooms but many of them have upwards of 4 to 6. There are a lot of two-family homes in the area and I'm not opposed to one at all. There is a local college nearby (with a couple more a little bit further away) and, based on how fast places went when I was looking for a place to rent, you can almost choose who to rent to. So that option is open to help supplement a mortgage.

This area is one that has a great outlook and I wouldn't even question why I'm living there until I'm at least 40. In terms of raising a family, I'd have no problem starting a family in this area. I don't have a girlfriend at this point, so I think I'm safe to say that barring a shotgun wedding or a random hookup pregnancy scare I won't have to be to concerned with schools for a minimum of 6-10 years.

In general, I'm quite committed to the area.
 
You must log in or register to reply here.

TRENDING THREADS

Back
Top