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buying a house
- Thread starter pontifex
- Start date
1) Good credit
2) Depending on 1, down payment
3) Prices of house in your area
4) Debt? monthly payments on CC, Car, loans, etc
I would guess from what you said, that with good credit, and low to no monthly debts, you could afford a house in the 100-120k range max, but it just depends on your monthly expenses and where you live
I am trying to go through the process and it's pretty overwhelming. At the base of it, though, it's straightforward, there are just lots of details. There are programs for first-time home buyers that you may want to investigate - a friend of mine recently bought a house using some program for first-time home buyers, and apparently his experience was super easy.
One thing I had a mortgage guy try to hand off to me was an 'interest only' or 'negative amortization' loan. This is an EVIL lending product that basically finances the purchase price, and has you only paying interest. It offers a low monthly rate, but you don't actually get ahead on the loan.
What you can get for your money is highly variable. If you're making $30K and have $5K for down payment in southern California, then you ain't getting much. If you have the same amount of money in, say, rural Mississippi, then you can get into a property. How much house you can buy varies based on your requirements.
Quick overview of what I've been through so far, though I'm not done yet and probably could have done better:
First of all, decided that I wanted to get into a house. There are expenses of home ownership that you don't get when renting, as well as upkeep stuff. In my rental, I don't cut the grass, don't care about painting or fixing the roof, et c. As a homeowner, I will have to take care of that stuff. Anyhow, I thought and thought and ended up deciding that the investment value of the house, and owning my own land, were worth the hassle.
Next, I had to determine what I could spend. This Bankrate calculator helped. Basically you figure out what your known expenses are -- student loans, credit card payments, car note, et c -- and based on that and your income you get a kind of rule-of-thumb number for your budget. Then I took that and actually plugged it into a best-guess budget. I play pessimist with all my numbers and figure that gives me a little safety margin.
Once I know the approximate amount I could afford, I started looking at properties. Fell in love with a couple, found lots of so-so stuff, lots of stuff that I could not afford, and LOTS of dumps. Eventually found one that fit the bill and started haggling.
I picked an older house. A fried of mine picked new construction in a new subdivision. I have a house in play that's got charm and quirks. The new house is fresh, but farther out of town. I get what's there, and haggle with the seller over price and repairs to be completed before closing. My friend gets a decorating allowance and a list of options for the finishing of the house.
At this point, I've had my prospective house inspected, and am awaiting a follow-up electrical inspection to confirm the wiring is good. My friend is just waiting for the building to complete. I've met with a mortgage guy and will pick a loan soon.
Once all the details are ironed out we will draft a final contract and close.
If you retain an agent, then many of these tasks are just taken care of for you. In exchange, the real estate agents normally get 6 percent of the sale price of the house. Neither I nor the sellers have an agent so we have significantly more work to do, but we don't cut in agents on the deal. I don't know how bright of an idea this is. Since (of course) I have car trouble, tooth trouble, and a high workload right now, it would be really cool for somebody to be taking care of all this.
One thing I don't like much is the fact that EVERYTHING is negotiable.
I have read several reasonable-sounding articles on Searchlight Crusade that make good points about the process. I also spent some time in a bookstore and bought a book about buying houses. There are lots of calculators and such online that can provide some idea of what you can spend. I'm trying really hard to not be 'house poor' -- that is, to have a nice house but spend so much on it that I can't afford anything else, and am one car breakdown away from credit card hell.
I am positive there are people online here who have better information. One thing that helped me is that I have a buddy who used to be an accountant. Making a date with him, and showing up with a couple of T-bones and a case of beer was probably the BEST investment I made in terms of getting a handle on what I could afford. And, tasty.
One thing I had a mortgage guy try to hand off to me was an 'interest only' or 'negative amortization' loan. This is an EVIL lending product that basically finances the purchase price, and has you only paying interest. It offers a low monthly rate, but you don't actually get ahead on the loan.
What you can get for your money is highly variable. If you're making $30K and have $5K for down payment in southern California, then you ain't getting much. If you have the same amount of money in, say, rural Mississippi, then you can get into a property. How much house you can buy varies based on your requirements.
Quick overview of what I've been through so far, though I'm not done yet and probably could have done better:
First of all, decided that I wanted to get into a house. There are expenses of home ownership that you don't get when renting, as well as upkeep stuff. In my rental, I don't cut the grass, don't care about painting or fixing the roof, et c. As a homeowner, I will have to take care of that stuff. Anyhow, I thought and thought and ended up deciding that the investment value of the house, and owning my own land, were worth the hassle.
Next, I had to determine what I could spend. This Bankrate calculator helped. Basically you figure out what your known expenses are -- student loans, credit card payments, car note, et c -- and based on that and your income you get a kind of rule-of-thumb number for your budget. Then I took that and actually plugged it into a best-guess budget. I play pessimist with all my numbers and figure that gives me a little safety margin.
Once I know the approximate amount I could afford, I started looking at properties. Fell in love with a couple, found lots of so-so stuff, lots of stuff that I could not afford, and LOTS of dumps. Eventually found one that fit the bill and started haggling.
I picked an older house. A fried of mine picked new construction in a new subdivision. I have a house in play that's got charm and quirks. The new house is fresh, but farther out of town. I get what's there, and haggle with the seller over price and repairs to be completed before closing. My friend gets a decorating allowance and a list of options for the finishing of the house.
At this point, I've had my prospective house inspected, and am awaiting a follow-up electrical inspection to confirm the wiring is good. My friend is just waiting for the building to complete. I've met with a mortgage guy and will pick a loan soon.
Once all the details are ironed out we will draft a final contract and close.
If you retain an agent, then many of these tasks are just taken care of for you. In exchange, the real estate agents normally get 6 percent of the sale price of the house. Neither I nor the sellers have an agent so we have significantly more work to do, but we don't cut in agents on the deal. I don't know how bright of an idea this is. Since (of course) I have car trouble, tooth trouble, and a high workload right now, it would be really cool for somebody to be taking care of all this.
One thing I don't like much is the fact that EVERYTHING is negotiable.
I have read several reasonable-sounding articles on Searchlight Crusade that make good points about the process. I also spent some time in a bookstore and bought a book about buying houses. There are lots of calculators and such online that can provide some idea of what you can spend. I'm trying really hard to not be 'house poor' -- that is, to have a nice house but spend so much on it that I can't afford anything else, and am one car breakdown away from credit card hell.
I am positive there are people online here who have better information. One thing that helped me is that I have a buddy who used to be an accountant. Making a date with him, and showing up with a couple of T-bones and a case of beer was probably the BEST investment I made in terms of getting a handle on what I could afford. And, tasty.
pontifex
Lifer
so basically i would just get a loan to pay for the house (i'd get a little extra so i could get furniture and stuff since i have none), use that to make a down payment, and then just pay the bank the monthly payment? or doesn't it work that way?
i really don't want to get an apartment for multiple reasons. the main one being that if i'm going to be paying $500+ per month i better damn well own whatever i'm paying for at the end.
i really don't want to get an apartment for multiple reasons. the main one being that if i'm going to be paying $500+ per month i better damn well own whatever i'm paying for at the end.
pontifex
Lifer
obviously it can go higher, i've seen few for close to 300k, but they are really really big and nice homes.
i live in a small town, rural, lower income area too, so that probably drops the price a bit too
its just going to be me for now, so i don't need anything big. i'd prefer a smaller house anyway. what i'm thinking is maybe 2 bedrooms, kitchen, living room. basement would be nice for storing stuff. really, i guess thats all i need.
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