Housing question

barnburner180 · Posted: Dec 12 2007 Post subject: Housing question

Ok everyone, this is a little off base but I wanted to post this to you home owners who are savvy about buying a house. Wifey and I are pretty sure we are going to buy our first house the first of next year sometime. We have never owned a home before and have no experience as to what to do or expect. What is the best way to start the ball rolling. I really have a big issue with trusting realtors. They just seem like slimy used car salesman to me..? I have heard of redfin.com and that seems like a really good place to start but unfortunately they are not in my area. Everyone who owns a home please chime in here with information.
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marvsbbq · BBQ All Star Joined: 15 May 2005 Posts: 6186

Ask a close friend or relative for a realtor that THEY trust. Also be sure to get one that is either BOTH a "sellers" realtor and a "Buyers" realtor or just a "buyers" realtor.

DO NOT use the SAME realtor that is working for the seller of the house you are looking at...their responsilbity is to the seller FIRST and therefore would NOT have your best interst first and formost.

Once you get a realtor that you feel comfortable with...STICK WITH THEM. Don't bouce from realtor to realtor.

That being said, IF (big IF) you don't feel your realtor is working hard for you after a few weeks (if it takes that long to find a house)..THEN you might look for a new one.

What my wife and I did was made a "list" of what we were looking for in a house. I think we had 16 things on our list.

After looking at each house, we would write down what we liked and dis-liked about the house and then compared it to our "list".

Our current house met 14 requiremets on our list out of 16...IF you can get 50% consider youself lucky...unless you have one built to your own specs.

Good luck on your new search and purchase.. Wink

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soonerjimmie · BBQ Fan Joined: 31 Mar 2007 Posts: 134 Location: Quincy IL

I agree with Marv. Never, ever settle for a house. It is one of the biggest things you will ever buy.
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mhoodnc · BBQ Fan Joined: 23 Aug 2007 Posts: 344 Location: Charlotte

Get a buyers agent(realtor) tell them what you can honestly afford and want.
the commission is the same regardless if one or 2 realtors are involved.
Be Careful with new housing in the starter range, many starter neighborhoods turn bad after a few forclosures.

bigdad · BBQ Fan Joined: 03 Apr 2006 Posts: 224 Location: W.pa

take pictures of the houses you vist. That way you can better compare them and not "forget" that house one had a small bath room or house three needs new paint ect......
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BBQMAN · Posted: Dec 12 2007 Post subject:

Get a home inspector (a good one, there are a LOT of hacks) to go thru a potential purchase with a fine tooth comb.

That won't prevent every problem, but will eliminate and/or discover some possible trouble areas. This also gives you some leverage when negotiating the final offer.

It is generally a buyers market across the country, and interest rates are due to drop again soon.

I would also buy something that fits your space and budget needs, and not spend every last penny you have on a huge mortgage. Stay within your means, it will pay off later if/when you want to upgrade and make some home improvemets.

Now is as good a time to buy as any in recent history.

Good luck with your purchase.
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SierraScott · Posted: Dec 12 2007 Post subject:

I agree to get a buyers agent.

Also a great help in easing your mind in getting your money's worth in your home, is to start out by looking at an equal amount of homes in a price range that is just above what you can afford, as you do in the range you know you have to buy in. Then you can compare quality of homes and neighborhoods vs. price. By the end of a month of doing that you and your wife will have a better assessment of what is over priced and what is going to meet your needs for the best money.

If you decide to go after a bank repo, you must be patient. It can take weeks to hear back from the bank(s), and months to close the deal. Don't be fooled into thinking that repo's mean rock bottom prices. You can get a house for less in some cases, much less, but almost never next to nothing. Insist in your contract that the bank hand you a clean title at closing. That means they are going to pay outstanding leans and late fees if there are any against the house.

CONVENTIONAL LOANS ONLY.... I can't stress that enough.

Last thing to keep in mind. It's best to buy the WORST house in the BEST neighborhood than it is to buy the BEST house in the WORST neighborhood. Very Happy

BangBangBBQ · BBQ Fan Joined: 20 Apr 2007 Posts: 277 Location: Ohio

I counldn't agree more with the people say to only go the conventional load route. I know some people who recenlty bought a house, they extended themselves to far and had to go with a variable loan. Now they are barely scrapping by trying to pay for a house they can't afford.

Also, some homeowners will offer a home warranty witht he sale of their home. These are really nice for first time buyers, or people who can't afford to have major problems after their purchase (who among us can!). The warranties are set up differently, but they usually cover things like appliances, hot water heater, furnace, AC....etc for a period of time. Usually a year. It's a nice option if you can get it, and gives you some additional peace of mind regarding your purchase.
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OKBBQEA · Posted: Dec 12 2007 Post subject:

The most important thing is... Be damn sure your wife hasn't meant other men (Yes I said men) on the internet and is going to leave you five days after you move into your new dream home like mine did.

Not that her leaving was a bad thing... Just the timing of it all.

Oh and like some others have said... Don't settle and hire a reputable home inspector.

Oh and one other thing... Make sure all the permits on the house are closed.... Somehow the home we had purchased had been occupied by two different owners but had never passed it's Occupancy Inspection... Fortunately I have a very nosy mother who checks stuff like that and she caught it. Otherwise the City could have come along someday and noticed the open permits and forced us out of the house.

Of course the wife asking for a divorce 5 days after we moved in forced me out of the house anyway.... LOL
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adolpho · Posted: Dec 12 2007 Post subject:

Fuzzbucket · Posted: Dec 13 2007 Post subject:

Having recently purchased our first home, I couldn't agree more with everyone's advice, get a conventional loan, buy only what you can afford, and get a good home inspection. Those things can help avoid headaches down the road. One thing to consider is that buy paying one-extra principal plus interest payment a year on a 30 year mortagage, you can reduce your payoff date down by a significant number of years. And while you can't avoid every problem, if you're "house poor" when it comes time for other things- car repairs, household expenses, vacation or even a new smoker - you might find your budget maxxed out.

swinebuck · Posted: Dec 13 2007 Post subject:

I am a mortgage loan officer here in Memphis. I will try and help with the other half of the home purchase the financing. Most people do not understand the mortgage end and are lead like lambs to the slaughter. Most people are only interested in getting the keys to the house not how little it will cost after they are in the house. They will depend on the bank, realtor, mortgage loan officer, or someone else to get them their loan. After I got in this business I found out how much I overpaid on my own home. You need to be educated on how mortgages work and which one is best for you. All of the people I mentioned work on commission. The more you pay the more money they make. You can save yourself thousands of dollars in closing cost and hundreds on your monthly payment if you are educated. If you have good credit everything is negotiable. If you have good credit, 680 tri merge credit score or higher, you are going to qualify for the best rates on a conventional mortgage. How low it is will be up to you and your negotiating skills. The biggest misconceptions on the part of homeowners is the interest rates are set in stone and this is the rate for which you qualify. They are not. The best rate is called the Parr rate. This is what you ask for. The bank will then try to sell you a loan at a rate higher than Parr. For example: The Parr rate for an FHA loan today is 5.875% for a 97% 30 year mortgage. If the bank sells you a loan for 6.125% the bank makes 1.3% of the loan amount for the bank in commission from the mortgage company. If they sell it to you at 6.5% they make 2.5% in commission. If you are buying a $100,000 house they just made $2500 in profit and you pay a higher monthly payment than you need to. This commission is call yield spread. Be sure and ask if there is any on your loan. Tell them you will be checking the Good Faith Estimate and the closing cost to verify none is present. The bank does have to make some money somewhere. The usual fee is 1%. This can also be a flat dollar amount especially if you are buying a high priced house. 1% of $400,000 is $4,000 somebody will do it for $2,000. You can pay this as part of your closing cost or in yield spread but do not pay both. Before you start shopping for the house you need to get prequalified for your mortgage. You do not want to find a house you want only to find out later you can't quilify for that high a loan amount. You shop for a mortgage the same as shopping for a car compare. They all want to make as much money from you as possible. Do not just look at the monthly payment. Call the bank you do business with and interview them not the other way around. The things you need to ask are:
1. Will you pull my tri merge credit report for free?
2. I wish to have a complete copy of the report. When can I get it?
3. What are your lender fees and closing cost (these vary widely). Some banks close loans themselves saving you the cost of a closing attorney. After you have a copy of your credit report you shop other banks using the information from the report. Do not let other lenders pull your credit. Start working on your credit NOW to get the score up as high as possible. Pay your credit cards down to 33% of the available balance and pay everything on time. There are allot of things that will set your interest rate your credit score is only the first. Are you going to make a down payment? A 100% loan carries a much higher interest rate than a 97% loan. The three best loans are: Fannie Mae (also called conventional), FHA (lowest rates but carries 1.5% mortgage insurance which can be added to your loan), and VA. My preference is FHA which only requires a 2.25% down payment and allows the seller to pay your closing cost up to 6% of the purchase price. Fannie Mae only allows 3%. I am sorry this is so long but there is allot of information and these are just the basics. You can always PM me with specifics and I will do my best to save you as much money as possible. I hope this helps.
Thanks
Mike
Swinebuck
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BBQMAN · Posted: Dec 13 2007 Post subject:

You are Da" MAN, Mike!
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marvsbbq · BBQ All Star Joined: 15 May 2005 Posts: 6186

Yea Mike, that is AWESOME information for those that might be in need.. I am going to copy and paste this and email it to my son who is looking to re-fi a ARM soon...His 3 year arm just went to a fixed rate of 12%!!!

I know huh???? Rates haven't been THAT high since the mid 80's
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BangBangBBQ · BBQ Fan Joined: 20 Apr 2007 Posts: 277 Location: Ohio

WOW

I have bought 3 houses, and my wife and I are thinking about starting to look for our dream home.....our final resting place. I thought I knew a little about home loans.

I have just been educated!

Great Information! I love the smoke ring....never know what your gonna get here! Swinebuck.....how does PMI figure into those types of loans? I have always been able to avoid it, but i know others that have not. That may be an issue for barnburner also.
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SierraScott · Posted: Dec 13 2007 Post subject:

GREAT STUFF MIKE!

I put 60% down on my house to lower my payment. I also made sure my credit was great for years. Payed it all off and was ahead in my previous mortgage 2 months. My credit rating was 822. Point is.... do everything you can to give yourself leverage with banks or lenders. Show them you take your money matters very serious. It makes getting that loan easier and lifts some of the stress of it off your shoulders.

necron 99 · Posted: Dec 13 2007 Post subject:

I can't add to all the good stuff everyone here has posted, just reinforce it. I was nervous about my first home purchase and hired a friend who had branched into real estate as my exclusive buyers' agent for the first house, and the knowledge gained was a great investment. We have always taken conventional loans. We're in house number 4 now. We'll tend to 'settle' on a home more so than folks whose jobs / careers aren't as likely to have them moving again in 2 to 10 years each time - we don't figure we'll custom build until we retire. The thing about building a house customized (and optimized) for you is it isn't likely to be optimized for anyone else, if you later need to sell it and move on.

Good luck!
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barnburner180 · Posted: Dec 13 2007 Post subject:

barnburner180 · Posted: Dec 13 2007 Post subject:

I want to send out a special thanks to Mike @ Swinebucks for his post. That was a lot of information and I am going to have to read over that several times to try and understand it better. I know I have a lot to learn yet. Mike, I will probably PM you for some help, thanks again!!
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swinebuck · Posted: Dec 14 2007 Post subject:

Bang Bang: You had a question about PMI (Private Mortgage Insurance). PMI is placed on any loans above 80% loan to value. A long time ago people placed 20% down and financed 80% on all mortgages. As houses got more expensive people could not place 20% down. The PMI insures the lender the difference between 80% and 100% loans. This is why people who put 20% or more down do not have to pay PMI. To get around PMI companies were splitting the loan into two parts an 80% loan and a second 20% loan at a much higher rate. These types of loans have disappeared because of the credit crunch you are seeing on the news. No companies will loan the 20% second mortgage any longer. FHA carries the lowest PMI and the lower interest rate usually offsets the PMI. Please remember when you pay the mortgage down to 80% you can have the PMI removed and not pay it any longer.
I hope this helps.
Thanks
Mike
Swinebuck
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