First time home buyers.

[King sns]

I was beginning to think about buying a home. Any tips or tricks, or experiences that anyone can share? (I'm planning on taking a class as well.)

(Oh shoot, can mods edit the title? "First" is the word I was looking for.)







(edited typo by CzeCze)

 

[spirilis]

All I have to offer is-- Check into every company involved in the transaction. If your mortgage co. recommends a particular title company, look into them a little before just "going with their recommendation." I almost got burned this way (thankfully, the law was on my side, and this state has competent regulatory & enforcement offices...)

Obviously this caveat should extend to everyone involved, the homeowner's insurance company, the Title Insurance co, etc.

 

[King sns]

All I have to offer is-- Check into every company involved in the transaction. If your mortgage co. recommends a particular title company, look into them a little before just "going with their recommendation." I almost got burned this way (thankfully, the law was on my side, and this state has competent regulatory & enforcement offices...)

Obviously this caveat should extend to everyone involved, the homeowner's insurance company, the Title Insurance co, etc.

Interesting. How would I go about looking into them? Better business bureau? Word of mouth? Anyone particular who knows all the inside information about these companies?

 

[Anew Leaf]

I was beginning to think about buying a home. Any tips or tricks, or experiences that anyone can share? (I'm planning on taking a class as well.)

(Oh shoot, can mods edit the title? "First" is the word I was looking for.)

I just bought my first home a year and a half ago.

Some things I learned:

Figure out your price range and don't deviate from it no matter how beautiful a house is. (My realtor showed me a house that was worth about 150,000 more than my range (why?!!?) and IT WAS GORGEOUS OMG. It kind of made me a little emo when I saw the houses that were in my price range.)

Spend a lot of time with an online resource for real estate listings. I spent hours looking at houses... getting a feel for what I wanted and needed. For example, I knew that I wanted a den so that I could get my Pulitzer prize winning novel written.

Try to be as objective as you can about a house. There was one house I looked at that made me soo happy! It had a sun room! It had a big living room! It had bedrooms! ..... It also had 5 levels stacked on each other like a Jenga puzzle.... and Each floor was the size of a matchbox....

When you do find a house you love, try to spazz out in a quiet manner.

Do research and find out which closing fees you can perhaps negotiate a bit. I knew my realtor really well (neighbor of my parents) and so she waived a few thousand in fees that were basically being charged because someone photocopied a few pages for me, or because they signed my papers.

 

[spirilis]

Interesting. How would I go about looking into them? Better business bureau? Word of mouth? Anyone particular who knows all the inside information about these companies?

Hindsight being 20/20, the one thing that would have raised red flags for me is if I'd checked my state's Court Case Search website for both the company and the employee representatives at the company that I knew were involved with my paperwork. Mainly the latter; the lady who was purported to be the "title attorney" assigned to my closing had some criminal cases on public record. This is definitely one of those things you NEVER think of until AFTER it's all said and done, but it's a good way to sleuth. Also it might be worth calling them up and asking them a little basic info about their company; how long's it been in business, who founded it, etc. Then check up on that (and any names) to verify.

Otherwise, not really sure ... BBB for certain, any online searches, word of mouth is always good (ask your realtor to ask around), etc.

edit: Oh yeah, and in my particular case I didn't find her criminal record under the name I was given; but under her current name there was a divorce listed, with her married name, and under THAT name I found the criminal record. Just a detail to remember when doing your research.

 

[Patches]

My ENTJ bought his first house a little under a year ago and he says this: Don't get impatient. He was looking for houses for 8 months before he finally found the right one. He almost settled for one he wasn't quite happy with, just because he wanted to finally have a house. Don't settle. Wait for the right house.

(My realtor showed me a house that was worth about 150,000 more than my range (why?!!?) and IT WAS GORGEOUS OMG. It kind of made me a little emo when I saw the houses that were in my price range.)

Thats odd. A lot of realtors will do the opposite. They have 'show houses' that they dont actually sell that are overpriced and in dumpy condition, so that when they take you to another house in the same price range, and you see how much nicer it is, you are more inclined to like it.

 

[Santosha]

Tips:

Think hard about what you really want or need in a house, practically. If you don't really love doing yard work, don't do what we did and buy a house on a half acre, with 20 rose bushes and 18 trees =D Go newer. You don't want to deal with re-roofing, old heating and air conditioning, appliances going out, etc. Buy close to an area that your going to work or that your friends and family live. It sucks having to commute far to see the people you love, and gas prices are insane. Don't go too big.. we bought a 2500 sq foot house.. I work from home.. i use about 800 sq feet, honestly. Now is a fantastic time to buy with houses being priced much lower than 5 yrs ago, interest rates really low, but expect and demand that your realtor work their ass off for you. I ended up doing more work than our realtor because I wanted to find such a great deal. Get online and research "junk fees" on a hud 1 statement before you sign it. It may not happen too much anymore, but a few years back some banks were known for predatory lending and sliding in a bunch of bull-shit fees that you shouldnt be paying. Really really take into account not only your mortgage payment + home owners + extra first time buyers home owners + property tax (and increase) but also utilites for heating and cooling a home, maintenance expense, etc. Suddenly that 1200k a month payment jumps to 1550, easily. Make sure they escrow your property tax.

We got a fantastic deal on a good sized house, with quite a bit of property and a built in pool. If I could go back and do it all again, I would have gone smaller, less money, closer to where I need to be, less yard work, and no pool. No pool just so I might go 2 days in the summer with out some bratty kids ringing my doorbell and begging to swim =/

 

[spirilis]

Another thing to add, my Home Inspector sends me spam emails once in a while with tips (ok I shouldn't call it spam, and I can opt out of it at any time, but I like calling those automated emails "spam"...) and one of them did catch my attention.

Subject: Pillar To Post: How to Budget for Home Maintenance

It's important for Realtors to remind home buyers that all homes-old or new-need
ongoing maintenance.
First, buyers should understand the 1% rule. This rule postulates that normal maintenance
on a home is about 1% of the value of the home per year. For example, a $250,000
home would require $2,500 per year to maintain. This would be enough to replace
the roof covering...and then, a few years later, to replace a failed hot water
tank...and then a few years more until a new central air system is required.
Then there is the 3% rule. Some experts say that home buyers should plan on spending
3% of the value of the home in the first year of ownership. This is because new
homeowners will most likely have to buy drapes, blinds, a washer and dryer, a stove,
maybe even a new roof covering. Also, new homeowners often customize the environment
to their taste, so they need to budget for repairs, replacements and maintenance.
In addition, most home components have fairly predictable life cycles. For example,
the typical life cycle of a high-efficiency furnace is 15 to 20 years. What this
means is that most high-efficiency furnaces last between 15 and 20 years.
One way to know the extent of the maintenance needed and the costs to repair and/or
replace items is to have a home inspection conducted. Home inspectors are required
to let the buyer know if a component is significantly deficient or if it is near
the end of its life cycle (service life), and a reputable home inspection company
may offer up-to-date repair-cost guides to help clients with their planning.
Home inspectors work with Realtors and buyers to help them understand the issues
that are found in the home, regardless of age, offering the right perspective and
objective information. Home buyers need to understand that it's normal for items
in a home to wear out. This should be regarded as normal "wear and tear" and not
necessarily a defect.
A good home inspection determines the current condition of the house, offering a
report of all the systems and components in need of maintenance, service, repair
or replacement.
For example, consider a home inspection that uncovers that the heating system is
old and requires replacement. A home buyer may see this as a huge problem. However,
this problem may be the only item in the home that requires attention. If a buyer
were to look at this situation in perspective, this home could be well above average-a
home merely requiring a new furnace.
A good home inspection provides objective information to help the buyer make an
informed decision. Knowing what items need to be budgeted for repair or replacement
will help home buyers plan or negotiate better and not be stuck with unexpected
costs of hundreds, or even thousands of dollars in the long run. Also, fixing these
items will make a marked improvement on the performance of a home and minimize issues
that could affect its future integrity...and value.

(obviously a sales pitch mixed in there, but the 1% rule was something I'd never heard of. Good to know about the "hidden costs" of home ownership.)

 

[King sns]

Another thing to add, my Home Inspector sends me spam emails once in a while with tips (ok I shouldn't call it spam, and I can opt out of it at any time, but I like calling those automated emails "spam"...) and one of them did catch my attention.



(obviously a sales pitch mixed in there, but the 1% rule was something I'd never heard of. Good to know about the "hidden costs" of home ownership.)

Yea, this is really good information. It's good to know what to expect with the extra expenses.

 

[rav3n]

Another thing to add, my Home Inspector sends me spam emails once in a while with tips (ok I shouldn't call it spam, and I can opt out of it at any time, but I like calling those automated emails "spam"...) and one of them did catch my attention.

(obviously a sales pitch mixed in there, but the 1% rule was something I'd never heard of. Good to know about the "hidden costs" of home ownership.)

The 1% is low for first time home owners since they typically buy in the lower range which include fixer-uppers or less well maintained homes. They also lean towards major renovations, wanting to adapt the place to their preferences since they're very home proud.

Home inspection is worth every nickel, prior to buying. They can find unremoved oil tanks set into yards, all kinds of funky issues with homes. Buyer had better beware.

 

[King sns]

The 1% is low for first time home owners since they typically buy in the lower range which include fixer-uppers or less well maintained homes. They also lean towards major renovations, wanting to adapt the place to their preferences since they're very home proud.

Home inspection is worth every nickel, prior to buying. They can find unremoved oil tanks set into yards, all kinds of funky issues with homes. Buyer had better beware.

I actually thought of that.. I figured buying a lower priced home might mean the house is smaller, with less things to fix, but also may mean that is has more to fix in relation to the price since the lower price home may be a fixer upper. The article did mention that a first time buyer may spend 3 percent in the first year, though. How much is an average home inspection, would you think?

(Edit: Oh, never mind. Looked it up, answered my own question )

 

[FDG]

Don't do it unless you can buy cash. Home prices in the future are...uncertain, to be optimistic. The likelihood of being underwater is high. Unemployment might still be high, thus any type of mortgage might not be easily payable.

 

[rav3n]

I actually thought of that.. I figured buying a lower priced home might mean the house is smaller, with less things to fix, but also may mean that is has more to fix in relation to the price since the lower price home may be a fixer upper. The article did mention that a first time buyer may spend 3 percent in the first year, though. How much is an average home inspection, would you think?

(Edit: Oh, never mind. Looked it up, answered my own question )

Do you really want a single family detached house for your first home, considering the cost of utilities like gas or electricity?

That's one thing to be very careful of. If you live somewhere where the winters are cold and your house isn't well insulated or windows aren't energy efficient, this will be a major output. At least with condos or townhomes, you're sharing either walls, floors, ceilings or all, which lends itself to lower energy bills.

 

[King sns]

Do you really want a single family detached house for your first home, considering the cost of utilities like gas or electricity?

That's one thing to be very careful of. If you live somewhere where the winters are cold and your house isn't well insulated or windows aren't energy efficient, this will be a major output. At least with condos or townhomes, you're sharing either walls, floors, ceilings or all, which lends itself to lower energy bills.

I don't know. A condo is not out of the mix either, for all of the reasons that you mentioned. I would really rather have a detached home, but I think it may be smarter to wait a while on that one. If I wait, I'm stuck here. And I'm kind of antsy in the pants to get out, so, a condo may not be a bad option either.

(By "stuck here" I mean, I have a roommate who I get along with, the only "upward" and "better" move for me will require me to live alone. Which will require me to pay a rent that is similar to that of a mortgage with utilities. The smartest move right now seems for me to stay here and save money until I've figured out an optimal home buying situation, rather than throw a bunch of money away on rent just to live alone, and never be able to save enough to buy a house.)

 

[Anew Leaf]

I don't know. A condo is not out of the mix either, for all of the reasons that you mentioned.

I have a townhouse and I love it. I am not very handy with repairs or the lawn mower (I am kinda a klutz).

I have an end unit which gives me tons of natural lighting, while still sharing one big wall with my neighbor.

I also have a yard!

 

[King sns]

I have a townhouse and I love it. I am not very handy with repairs or the lawn mower (I am kinda a klutz).

I have an end unit which gives me tons of natural lighting, while still sharing one big wall with my neighbor.

I also have a yard!

Haha. I don't know how to mow a lawn either. I couldn't figure out a broken furnace to save my life. I would always have to pay someone.
(Or I can just find an icky husband and let him and all his icky cooties into my life to help me.)

 

[rav3n]

I don't know. A condo is not out of the mix either, for all of the reasons that you mentioned.

Just to add to that, houses have yards that need to be maintained. Unless you can afford for it to be taken care of, you're going to have to do all the yard work yourself. This would be on top of regular home maintenance on the inside or any fixer upper renovations.

Condos have monthly maintenance fees which should be reviewed, in combination with the size of their contingency fund as well as at least a year of strata council meeting minutes. This way, you don't get swacked up the head with an astronomical special levy. One indicator of "known" special levies is the disporportionate number of suites for sale within the complex.

 

[King sns]

Just to add to that, houses have yards that need to be maintained. Unless you can afford for it to be taken care of, you're going to have to do all the yard work yourself. This would be on top of regular home maintenance on the inside or any fixer upper renovations.

Condos have monthly maintenance fees which should be reviewed, in combination with the size of their contingency fund as well as at least a year of strata council meeting minutes. This way, you don't get swacked up the head with an astronomical special levy. One indicator of "known" special levies is the disporportionate number of suites for sale within the complex.

Well, the bolded is obvious. However, regarding the condos, I always wonder if the fees are worth it (instead of maintenance on a house.) Whether or not the fees are comparable. Probably. I also would kind of like any property purchase to be an investment on my part. Do condos tend to go up or down in value?

 

[rav3n]

Well, the bolded is obvious. However, regarding the condos, I always wonder if the fees are worth it (instead of maintenance on a house.) Whether or not the fees are comparable. Probably. I also would kind of like any property purchase to be an investment on my part. Do condos tend to go up or down in value?

From personal experience, house ownership is more work and costly to maintain on a monthly basis. But you gain in space and privacy.

Depends on the real estate climate in your area.

 

[CzeCze]

Depending on what kind of area you look in, you might want to consider a condo, particularly in a new building. The buying and maintenance process is much easier than buying a stand alone house. Also, the process is not nearly as overwhelming as it may seem, maybe because I bought a condo, but after getting approved for a loan, the rest was a breeze compared to what I had expected.

I agree that you should have patience and a timeline (though if you are not pressed to move in anywhere, that is best) and shop around for your mortgage, your agent, and your property. When it comes to your realtor, you have to trust them. When it comes to your mortgage loan, un/fortunately your agent may be a dick, but as long as the rate is low and it's from a legit lender Brokers have the most access to different loans and more likely to get you the best deal. I found a wonderful lending agent who I personally liked but he couldn't offer the same rate as this other guy who was always getting "sick" and not returning my emails on time. It was purely about numbers.

Become an expert, or as much of an expert as you can, in the areas you want to live. That just means go to a lot of open houses, speak with realtors, and homeowners if you can and look online. As an EP it won't be a challenge for you to chat people up and glean info from them.

When it comes to mortgage, get pre-approved and have that letter with you when you shop around. It will help immensely once you find a house you want to buy and realtors will take you more seriously.

I personally really enjoy real estate and even studied to become a realtor, so I had seen a lot of properties over the years helping friends househunt and also on rental hunts for myself, and then I went into high gear when I was ready to buy. So I had a very good idea of a fair price ranges for properties and when I stumbled upon a great deal, I took it.

After you've done all your preparation and you find "the one", jump on it immediately. Express interest and have your realtor draft an offer right away (after figuring out a good price) or put down the deposit to 'hold it' if it's a condo. The market in most places is still down so there is wiggle room. If they can't come down on price, you can ask for improvements/repairs to be done or money towards closing costs or even some of the furniture or window treatments to stay if you like them.

Find a realtor you trust who is experienced but don't sign a contract with them binding you to paying them even if you find a find a place on your own. Overestimate how much you will spend in total, cash, for closing, move-in, and first month's expenses, but get exact figures for your estimates. Like Spirilis said, find a good title company. Legally, you are not bound to a property's "preferred lender list" or title company.

And good luck! Exciting times! You will figure out your real "Must haves" and "dealbreakers" as you shop around and when you find "the one" for your first home, you will know!