I'm looking to buy my first house sometime this summer. Seeing as how I've never done this before, I've got a few questions I hope you guys can help me with: 1. What is the easiest way to figure out my price range? I've heard there is some calculation you can do that has to do with your mortgage payment being 1/4 of your monthly income or something to that effect. 2. What are interest rates like these days, how often do they change, and how much do they change? My buddy told me this weekend that they were around 6% at the moment, but that seems pretty low. What will they be like this summer? 3. Any good realtor websites out there? Since I'm single w/no children (that I'm aware of), I'd like to just find a nice 2 bedroom bungalow type house in or near The Heights. Oak Forest is another possibility. Coldwell Banker's site has been very helpful. Is there another realtor that sells a lot of houses in The Heights? I know I should call a realtor, but I'm so early in the process I'm not ready to do that just yet. Thanks in advance.
www.har.com I would try and get approved first....thats what I did. Good Luck! Its going to be tough getting something cheap in or near the Heights.
1. Extremely conservative estimate: you will pay, all bills included, roughly 1% of the purchase price per month for mortgage, taxes, insurance, maintainance, water, garbage, power, et cetera. I'm finding it's a good bit less than that, but it's a good place to start when you figure out what you can afford. 2. I wouldn't believe anyone who tells you what mortgage rates will do this summer! They will very likely *not* go down significantly, since they are already incredibly low.
Agreed, Greenspan already stated that dropping them again would do no good and since he is incharge of that I would tend to listen to him. Definatly get preapproved. It not only lets you know what you can afford, it gives you some leverage over others that are bidding on the same house as you if they are not.
First, housing price really depends on where you live, places like New England, Cali, NY are very expensive. So do some research on the area you want to buy, some websites give past sale prices. Check the recent sales of the houses that's samilar to the house you want to buy (size, condition, age). If you are a first time buyer, you might want to use a buyer's agent, the agent would have access to a lot more information such as the recent sales record. Also as you look at different houses, you will get some knowledge on what to look for in a house. Interest rate varies quite a bit, there are basicly two types of mortgages, 15/30 year fixed or ARM. The interest rates are somewhat tied to US Treasure yields (I won't go into the details) But in gerenal, the interest rate has been the lowest in many years. ARM rates are even much lower than the Fixd rates. And interest rate are most likely to rise in the coming monthes (2004). Do be careful on choosing an ARM mortgage though, as the interest rate will reset after the initial fix period. So there is a chance your payment will increase by a large amount when it resets. Check realtor.com, they have a huge database on house listings.
I second the Buyer's Agent. For your first house, you should really work through an agent. After that, if yuou feel you're smart enough to not make any stupid mistakes, feel free to go without. Furthermore, don't just go with the first agent you find... shop around. In some parts of the country, you can claim to be a buyer's agent without really being one. Make sure to ask specific questions about representation. There are probably Buyer's agent real estate firms in Houston. Call one up and talk to them... get the Texas specifics about what realtors have to tell you and the things they cannot. Always get an inspection done. Shop around for rates. I always feel more comfortable going with someone local, but know folks who go the internet route as well. Regardless, expect your loan to be sold to someone else at some point. Don't get caught up in a certain house. Be willing to walk away from any deal. As far as costs go, don't pay any attention to what you qualify for. Make out a budget and figure out how much you can afford given your lifestyle and other obligations. It should be way less than the top number the loan gives you... and don't forget insurance costs, prtoperty taxes, utilities, sewer, garbage, etc. even without kids, look at schools and other factors that may not be of concern to a single guy because those could be important when you go to sell. After you've figured out how much you can really afford, give your realtor a range and don't deviate... it's tempting to look at what you can get for 20K or 40K more, but best not to open yourself for temptation. Evaluate the house coldly... look at the work that needs to be done and try to factor the costs in money and time. Good Luck.
Greenspan doesn't impact mortgage rates too much--at least he certainly can't lower them. He impacts short term interest rates, but mortgage rates follow the 10-year Tbill more than anything. Where mortgage rates will go? Who knows. Bankrate.com is a good source to learn about them and find what the "experts" think. Of course experts often don't agree which shows how unpredictable these things are. realtor.com as MM said is a good site as well. DS's hunch? Well, I don't think the economy is heating up so fast that Greenspan will raise interest rates quickly or real soon (which indirectly could raise them buy setting off panicky behavior in stocks or bond). So I would guess they will still be 6.5 or less by the summer. They could even drop below 6 again if the stock market majorly stumbles again. Thus my guess is they will be between 5.85 to 6.5 for the next 6 months so long anything wild is not going on in the economy (neither unsustainable growth nor a free falling market or bailing out international investors) which I think is a solid bet. Unless you are fairly sure you will be moving in less than 5 years and assuming your credit qualifies you for the current rates, at these 30 rates I would not consider an ARM. I do think it is probably a good idea to try to get into a home market as a new buyer in the next 6 months if possible. Complete hunch on my part. Be sure to save what you can for a down payment (20% is best, but 10% gets you some better programs than 5%, 5% more than 1%, etc.). Even more important is making sure you don't have revolving debt (credit cards) and that you get your credit as clean as possible. I think a buyers agent is a very good idea in general, and even more important for somone new to the process. Try to find one that will work for you (ask around) rather than just hook you for for sellers they have or sellers in their company. Get a couple names from friends or family, and interview them. If you will be expected to sign a 3 or 6th month contract with the one you choose. As long as you feel good about them, this is reasonable--as none of their costs will be paid by you, only if a deal is done do they get commision from the seller. As for monthy payment, I would base much of it on what you pay in rent. Most people can deduct the interest and taxes so consider you may pay a little more in monthly payments are maintain your lifestyle. But then again you have maintainence fee's. Also, are you going to have a roomate. I think the best way to to examine you take home pay and see how much you are willing to pay in house payments while also keeping some monely funds (100?, 200?) for maintaince.
This has got to be wrong... I've had several people tell me to expect the same amount of your house payment for house upkeep. Say you pay a $2000 note a month, should I really expect to pay that much for maintance and upkeep a month? I’m a potential first time buyer too!
The other questions seem to have been fielded pretty well. Just wanted to say that if you want a realtor to help you look, the person I had used specialized in and really knew the Heights. It was too bad I wasn't looking in the Heights. Email me if you want her name.
Also, make a plan to figure out how long you think you will be in a home. If it is a starter home and you can't envision yourself living there for more than 5 years or so, go with an A.R.M. (adjustable rate mortgage). If you get a 5 year ARM you can get 1-2 percentage points knocked off your interest rate. I plan on moving out of my house in 3-4 years, so I went with a 5 year ARM at 4.125%. The risk is that if you live in that house for longer than the locked in period on your ARM, your rates start floating with the market...which is risky. Also, don't underestimate how much property taxes will be, especially in Harris County. Your MUD (if you have one), school district, and County taxes will be on this. Figure about 2500 a year for every 100,000 in house appraised value....and they tend to raise your appraisal every year...so they only go up.
A lot of good stuff here, thanks guys. I'll be printing this thread at work tomorrow. So what exactly is the difference between a realtor and a buyers agent? Also, what goes into the pre-approval process? My credit has been perfect for the last 2 years, but it was pretty bad before that. Would having a co-signer help? JV, thanks. I'll email you tomorrow from work.
A realstate agent can be a seller's agent or a buyer's agent. Usually they split the commision 50/50. Supposely a buyer's agent should look out for your interest, i.e. pointing out which house you should NOT buy. Not all buyer's agents are the same. So if the agent has only good things to say about every house you see, then you should consider finding a new agent. Pre-approval means after the mortage comapny checks your credit, your pay history, you will get a letter from them stating you will receive a certain amout of loan should you apply. (usually there is a time limit). Assuming you have good credit, most mortage company will be happy to loan you a lot of money. Be careful on the amonut of debt you take on, don't over extend yourself just because the mortgage company will give you the money.
Ima, if you are interested in buying around Houston, you might want to email codell...I believe his wife sells houses. Im surprised he hasnt chimed in already.
I would really like to second this point. ima_drummer, if you start looking at houses, an agent *showing* a house will only be too happy to "work with you" and "represent you," but it's bad business to let the same person represent buyer and seller. Also, along deepblue's post, feel free to "fire" a buyer's agent at some point if you feel they're not working for you. Or that's my take anyway.
