Help Me Buy a House:FINAL Update

[Opti]

The obvious downside of just using the realtor is they want a sale to make money. They are not experts in real estate law either. I've used both in the past when I have bought or sold a house.

[phil5185]

We are focusing our search on the bland 3/2 with a basement we can finish. I'd actually prefer a house that has not had any major work done (electrical/roof excluded) because I don't really trust 'new kitchens' and those that construct them. Granite counter tops make me cringe

Good observation. When we buy rentals, I buy only "as-built" houses - no add-ons, no changes to the 'footprint', roofline, etc. A modified house (IMO) has two foundation settling rates - cracks/leaks at the siding joints, offsets at the roof joints, shifted floor joints, etc. Then there is the 'new section' plumbing, the 'new/old' electrical service, etc. All things that a landlord doesn't want.

I like 1 to 8 yr old houses - the first owner has planted the lawn and hung the drapes. The plumbing/electrical is new modern code. The water heater, AC, furnace, DW, disposal, are all near new and good for several yrs.

In the price range that you are looking, your mortgage will approx offset your $1285/m rent - ie, almost no change to your budget (incidentals - lawn mower, maintenance, paint).

Consider cash flow - eg, if you buy a $200k move-in-ready, near new house, your cash flow will be ~ -$1285/m. Conversely, if you buy a $150k house that needs $50k of work in the first few yrs, it is still $200k (usually more, rework has a way of going way over-budget). And the cash flow will be way north of the $1285/m because you will be using multiple shortterm, high interest loans rather than a single long term, low rate loan.

What's a Full Time FF?

[Deleted]

Phil,

I think that's Fire Fighter.

Words of wisdom about buying your first place? Like Phil says, unless you're really handy be careful about how much fix up work you think you can do when you're working full time. Although I have to laugh; FFs are notorious about 2nd jobs and many of them have side construction jobs...

I always view a property purchase through the eyes of how it would work as a potential rental. Have bought 6 now and they've all served time as a rental for some period of time.

Don't forget to do your homework on a home inspector! Make sure you talk to a few and review their reports before you contract with them. The best inspectors belong to ASHI, have both a check list and a narrative report as well as home maintenance recommendations/schedule. I like inspectors who have spent at least 10 years as a general contractor or a municipal building inspector.

And to echo a previous post; one the wisest pieces of advice I got from my mother in law was to live on one salary and bank the other. Because of that advice I haven't had to work full time since I was 42.

[Deleted]

The "exterminator" inspection is actually called a pest control inspection and is probably REQUIRED by your lender.

A good home inspector should point out if you have problems in either area. Don't cheap out on this inspection! They are good at finding code problems and can save you from making some big mistakes. If there are problems with something e.g. signs of significant settlement, they will suggest that you get additional inspections, such as a geotechnical engineer.

[suziq38]

Just take your time.
I hope it is a buyer's market.
List all of the things that you want, and try not to "settle" for less without a good reason.
Get ready to look at a lot of houses.

$14K is not much as a DP. Save, save, save.

Try to shoot for you payment being 25% of your income or less.

[whoisjohngalt]

I might be mis-reading your numbers, but I would be a bit nervous buying a house with that little cash reserve. That's just me, though.

As far as inspections - you can ask for whatever you want. We actually brought in a HVAC guy bc we wanted to know all we could about the furnace.

Lena

[Lindz85]

My advice... is wait and save A LOT of money up. Trust me.. you NEVER know what can go wrong! You just never know... $5k is not a lot of money at all. That can go very quickly. Since you don't have kids and don't even know if you want to have kids, you have plenty of time to save your money up. My advice, is to work on your budget, see where you can cut expenses and just stockpile your money, wait maybe another year or however long it takes to save up a lot. Put a NICE LARGE downpayment on your home, go with the cheapest home possible. Like someone said earlier, bigger is not better. Bigger means, more possible problems, more maintenance, higher utility costs, higher taxes, higher insurance premiums, etc...
I would rather have a cheap, mortgage payment and extra cash to put into savings, fix things on the home if an emergency comes up, or to do whatever, take trips, etc...

[Clifford]

You should try hard not to pay both your rent and a new mortgage. First payments are usually due the month after closing, not the month of, and you might consider not closing until the rental agreement is almost up. If you can close in early July, then you can probably avoid double paying altogether. A couple of months of rent when you already have the house is $3500 thrown away. That would almost double your proposed EF minimum.

[whoisjohngalt]

Sroo,

No way I would buy a house having only $5K in savings. I don't know where you are, but your certain bills might get much higher, not to mention all those "little" things that you will have to buy upon moving in. They add up incredibly fast. I am not even talking about any kind of repairs or furniture if your house is larger than the appt.

I would make a list, as best as you can, of everything you can think of and add it up and see where you are. You might be terribly shocked or pleasantly surprised. Either way, I would think it's better to find out now than after the ink dries on your settlement papers.

Good luck!!
Lena

[happyscooter]

Number 1 didn't call back for 2 days but your gut tells you to go with him? Did you type that right?

[happyscooter]

ok. gotcha.

[Waffle]

A lot of real estate agents in this area (probably most areas) work evenings and weekends. Because that's when most working people are available to look at houses. From what you wrote, number 2 seems like the better choice to me.

[GRG a/k/a goldenrulegirl]

We bought our first home 6 months ago.

We used BOTH a buyer's agent AND an attorney (for the closing). Both were worth their weight in gold. The buyer's agent was quick to point out her concerns about a property's condition and, conversely, to quell any concerns we had when they were really just cosmetic. As for the attorney, we closed when the new lending rules were coming into effect. For a while there, it seemed that we were suddenly going to lose our mortgage because the lender screwed up and wasn't pro-active. The attorney saved the day for us.

As for the house itself, do NOT box yourself into a specific closing date/time frame. We ACTIVELY looked at houses for 7 months before we found the one we bought. There was plenty of supply, but, given the current economic situation, looks can be VERY deceiving -- there are a lot of scary properties out there. People are letting maintenance lapse while they try to hang onto their homes. We finally closed 10 months after we began the process. Fortunately, our landlord allowed us to go month-to-month toward the end of our search.

As for inspections, ABSOLUTELY insist on a home inspection, a pest inspection, and a chimney inspection (and septic, if appropriate). We learned soooo much from each inspector. Fortunately, our house passed all 3, but there were some concerns raised that we needed to have resolved.

Finally, make this a business transaction. Leave your heart out of it. Seriously. You want the best bang for your buck and you want a house in GREAT condition in a decent neighborhood with amenities reasonably close by. Forget the color scheme, the style, the "cute" factor. Life happens, and you want to know that if you ever needed to, you could put the place back on the market in relatively short time and get out without losing your shirt (aside from uncontrollable economic factors). ALL that you REALLY want is a house with the following in relatively new, working, condition: roof, furnace, hot water heater, a/c (if appropriate), electrical system, plumbing, and working appliances. See if the seller will leave the lawn mower, snow blower, rakes, shovels, roof rake, etc. -- that stuff will devour your "moving in" fund. Oh, and do NOT underestimate what a PITA and how expensive renovations can be. You're young, you're both working. Do you REALLY want to take on some huge renovation projects and spend all of your evenings and weekends working on the house? Do you want to wait to invite people over until you're done? If you do, then great. But think really hard about your answers...

As for decorating, pay for it as you go and NOT with your $5-$8K savings balance. You WILL need that money for emergencies (one ice dam can spend it all for you, ask me how I know). As I tell people coming to my home for the first time (in a really laughing, upbeat way): same old crappy furniture but it looks so much nicer in our new home! Take time to get to know how you will REALLY use your rooms (i.e., if you have a family room and a living room, chances are you will rarely use the living room so put off decorating that room). Also, watch how the sunlight moves through your house. That will impact your decorating decisions: paint colors, lighting, furniture placement, etc.

Good luck. Enjoy the process. Give yourself plenty of time. Don't settle -- you don't HAVE to buy -- you have a decent place to live for now. And, honestly, it *is* true: when you find the right house you will know it instantly.

[cronewitch]

If you are saving more than 2,500 a month for a house and emergency fund why is it only 14K now? Where did the extra money go before 6 months ago? You may not be saving as much as you think and counting overtime to balance the budget means when there isn't overtime you need to dip into savings.

Will the car loans be over soon? How long before the cars need replaced? That is a huge car payment so if it will be done soon it will make your cost of living much lower, but if you buy another car soon you will be even tighter.

I think you can afford it if your expenses in the house are only about 500 more than renting but if much more you would need to cut back on pocket money or something.

[mrsgords]

It's probably already been said, but bears repeating if so: DON'T FALL IN LOVE. There is more than one right house for you and, if you don't remember that, you are bound to make a big mistake, such as buy a money pit or buy more house than you can afford or need or overpay for the house.

Also, buy way under what you can afford. Houses are expensive...there's always something you need to buy for it or want to buy for it or fix or replace...you get the idea.

Ditto those who recommend buying less house than you think you need. We have 2600 SF, and it's way more space than we need. When we bought it, my husband's two teenage sons were living with us part-time. They don't live with us at all anymore, and we have much more room than we will ever need. Not that we don't love the space, we do, but it's really more than we need. But, alas, I've moved about 30 times in my life and am determined to stay in this house. I'm so sick of moving!

Buy or check out a copy of Homebuying for Dummies. It's a great book full of useful advice.

[Deleted]

I don't know either of your buyer's agents so you have to be the one to be happy. But #1 should have called you back before Monday. You are going to be generating him a fair amount of $$$ in a bad time for realtors. He gets half the commission.

I looked at the house that I live in now for the first time on Labor Day. I was sensitive to the fact that both the agent and seller probably had plans, but I would have been annoyed if the agent hadn't at least called me back that day.

I'd probably choose agent #3. He/she will be someone that a coworker or someone else has worked with recently in a similar situation.

[2kids10horses]

I'm a Realtor. May I suggest this approach...

I take it that you've gone out and seen a few houses. That's good. Now you know it takes a lot of time to drive around, and time to go see them.

Have your Realtor get you access to the MLS. She can usually do this thru her website. Then, you can search the houses, look at the pictures, and then give her a list of the ones you like.

Or, she should be able to set you up so that any new listings that meet certain criteria get emailed to you. If the listing info has the address, you can even drive by to see if you like the neighborhood before you ask your Realtor to take you in.

If neither of these are available, you can search on REALTOR.COM. Tell your agent which ones you like. (You can search using price points, number of bedrooms, baths, fireplaces, etc.)

Working this way with your agent will minimize the time both of you spend searching for houses. It might still take months, but if you can search the MLS, and only see the ones you like, your agent can do a better job doing other things: negotiating price, coordinating appraisals, inspections, disclosures, managing the closing attorney, and mortgage process.

You will get a better deal if you can find a foreclosure that suits you. Banks are "motivated sellers" and are dumping properties on the market. You can get good deals on "short sales", but they require patience. A short sale is where the homeowner owes more than the house is worth, and hopes the bank will agree to take less than a full payoff of the mortgage. They don't have to, but they often will. They don't WANT to, so they drag their feet. If you have the patience, you can get a nice house on a short sale, but it's more work for your agent, and the seller's agent. Buying a foreclosure is much easier. The problem with buying a foreclosure is the bank does not know anything about the house, so you are buying "AS-IS". This means you need to get it inspected. Your contract should be written so that it will allow you to back out if your inspection is not satisfactory. Most banks will agree to that, but they are going to want to see the inspection.

Good luck! Post here for questions. I personally buy 4 to 5 foreclosed homes a year to either rent or fix and resell.

[GRG a/k/a goldenrulegirl]

2kids10horses is absolutely right.

Get access to MLS. We spent hours pouring over high-quality pictures and videos of houses, room dimensions, and features listings. But it saved us 1000s of hours driving around and physically viewing properties. There are tabs for finding the address so you can google/mapquest it and even determine if the location is what you want or if there are nearby problems (noisy truck stops, factories, hazardous waste dumps, whatever...). You can also check "solds" within the past month to a year so you can begin to get a sense of the FMV of a property. MLS has made house-buying far more efficient and informative.

We also looked at Realtor.com and Redfin because not every seller opts to go with MLS or is a FSBO without a listing broker.

We opted not to go with a short sale because it is highly dependent upon the bank's mood, LOL. We did see some foreclosures -- some that we got scooped on because we didn't move fast enough (there are some great buys out there if you KNOW what you want, know the values in that area, and are READY to move!!) and some that we rejected because they had issues that would have driven us away if they were on the regular market.

Ultimately, using a buyer broker, we found a standard listing in great condition that we got a fair deal on and meets most of our needs and many of our wants.

[upstatemom]

Glad to read you are going with a buyers agent. When we were looking for our first house my cousin, who was in commercial real estate, gave us two pieces of advice. The first was to use a buyers agent and the second was to keep resale in mind when buying a house. Good advice, we moved 3 yrs after we bought the house and it sold the first day it was on the market ( 11 yrs ago)

It always amazes me on how little buyers agents are advertised and that so many potential buyers have never heard of one.

[azphx1972]

Congratulations! I just read the entire thread, and was curious about how the judgment situation got resolved. Also, I'll wait to see photos but I'm glad you like that wallpaper. ;D

[Deleted]

Congrats on the new home!

[TheOtherMe]

Congrats on being a home owner!