Buying a House for the Puns

5% is a good rate...my gf locked in at 5% and we bought down to 4.875%. I would say now is a great time to buy with interest rates as low as they are.
Some may say that the housing market is still going down, but I saw on CNN that theres only a 0.1% decrease through 2009.

I suggest reading through http://www.housebuyingtips.com/, very informative.

 

1. We received an interest rate of 5%. Is that considered good?

Interest rates depend heavily on your credit scores. I'm guessing the 5% is for a 30 year mortgage. If so, that is historically excellent, however, I think you may be able to get it lower if you shop around. There are some banks offering closer to 4.5% for those with great credit.

2. Let's say you visit several houses and you finally find the one you love. What would be your next steps after picking the house you want?

You would sign a contract with an offer and submit it to the listing agent. This can be done on your own, through the seller's agent, or through your own agent. If it accepted and they sign the contract, you get an inspection and close the deal if everything works out. If this is your first time buying a home I would recommend getting a good realtor who really knows the area you are looking in. They can often use their experience to steer you away from undesireable houses or neighborhoods. They will also have a good idea on what to offer and will be your representative in the negotiation.

3. I've been talking to a Realtor about homes. Now from what I understand, buyers do not necessarily have to pay the Realtor but the seller can add the costs of the Realtor into the house. Is that about right? If not, how does that work?

The seller pays the realtor fees, however, in some cases, if you do not have your own you can get them to discount the home a little more. This is especially true on new home sales where the salesmen that represent builders usually get a set commision and he rest is very negotiable. However, on resales, I don't think the savings is worth going into the deal without a realtor unless you are very knowledgeable about the process, especially since it appears you are a first time buyer.

4. The Realtor is able to show us anybody's listing even if the house is being sold by another Realtor or agency. Does this increase costs? I'm not sure how that work either, I mean just because somebody owns a Ford dealership doesn't mean they can go to some other dealer's lot and sell their vehicles, right? How can they do that with houses?

Your buyer's agent can take you to any listed house. There is this thing called the MLS that all the agents list their houses on, basically its all the homes on www.har.com. They have agreements that a licensed realtor can show other listed houses. So if the house is listed by a remax agent, your prudential agent can take you to that house and show it to you. The listing agent is rarely if ever the person that actually sells the house.


5. Are Realtors as shady as car salesmen or is this a completely different business?

With every business there are realtors that are good and others that are bad. You should ask friends and relatives for referrals with someone they trust. Remember, even your agent, that is supposed to represent you wants you to purchase a home: that's how they get paid. You want a realtor that wants a long term relationship and so wants you to love the house you purchase so you'll use them again. Depending on what area you are in, I may be able to recommend someone if you PM through the board: but I mainly recommend asking around and researching for a quality realtor. (one way is to drive around the area of town you are looking in and see who is listing most of the homes, this will indicate that they are a good realtor with a lot of customer as well as the fact that they know the area.)

6. Is it common for the buyer to pay closing costs or the seller? Our loan officer told us it is common to ask the seller to do so and they usually do. For some reason, I just don't buy that.

There are closing costs for both sides, with the buyer historically covering most of the costs, however, if the buyer is motivated to sell it is certainly a point you can negotiate. In this real estate market, for the most part, its a buyers market and you can ask for things like this. When the market is good, you will usually not get the seller to cover, when the market is bad, the seller will often cover a lot of the costs.

7. Is there anything else we should be on the lookout for while shopping around? As many of you know, this is probably the largest purchase we'll ever make and it is going to be our home so it is kind of nerve racking even thinking about all the things you want to be just right before you commit to such a purchase. I know many of you have been and/or are going through the process so that is why I am asking for your advice.

Don't get emotionally attached to a house. Its just a piece of property. You live there. You can always sell it and move, however, if you get attached you will often make irrational decisions about the property.

You can often research before you purchase on websites like www.har.com to see comps in areas you are looking of finding houses you want to look at.

Even if you don't have kids: school district is important.

Also: if you like a house: carpet, drapes, paint, appliances, etc. can always be replaced or negotiated to replace. Don't pass up on a great house because one of the bedrooms is purple.

Finally: don't make your home purchase decision based on something like a piece of furniture you own. "I can't buy that house, our breakfast hutch would never fit!" Well, don't make a several hundred thousand dollar decision based on the fact that you have an $800 breakfast hutch or whatever.

Also: Don't forget if you buy this year, you are probably going to get as good of a price on a house as you can get due to the market, your interest rate may be as low as they will ever go, and you get free money in the form of a tax credit from the government.