I'm kinda curious what kind of experiences people have had when they bought their first home. Advice, important points, money and how it relates to the current situation; all of that. My wife and I are looking for our first home. We are in the Webster/Clear Lake/League City area and trying to stay under 120,000. We've been approved for well over that, but aren't trying to get in over our heads. Particularly since we don't have much of a down payment to speak of. We've been looking for about a month. At about 115k is where I find homes that seem 'reasonable' so far. We are looking at a fixed rate at 5.8%. I'm wondering if, considering the current 'market', there's some awesome option I'm overlooking. From what I understand, the foreclosure situation isn't as bad as it is in other states. What was buying your first home like for anyone else? Anything I should absolutely know?
I got a fixer-upper type in the webster/clear-lake area. Saved me a lot of money, but it took a lot of time and cash to get it back into shape. My advice? If you go the way I went, spend a lot of time pricing out all the things you want to do, and lower your bid as needed to compensate. I spent more than I intended fixing the house up (not that I regret it or anything).
Man, I envy y'all. $120,000 for a home, probably with a garage and lawn. In the DC area that may at best buy you a one bedroom non-high-rise condo way out in the suburbs. I'm having to put together a small fortune just in order to make a 20% down payment on a town house.
get a home inspection -- and follow through on what they find do not get caught up in "losing this deal" no matter what the realtor tries to feed you. keep a level head and don't be rushed into anything.
http://www.myfirsttexashome.com/ or http://www.tdhca.state.tx.us/homeownership/fthb/ Ridiculously good interest rates from the State of Texas. Right now you can get 5.25% (on a 30 year fixed rate, not a crappy 1 year ARM or some garbage) and it's funded by the state government. Only first time homebuyers in Texas qualify. Check it out! And stay on top of it because it has limited funding. But it looks like they just passed another bond recently so you can get pretty much any rate you want, including downpayment assistance. I used this when I bought my house last year, and no one else could touch the rates I got, and I have perfect credit. You have to find a lendor that participates, but they have a list on the site.
Avoid PMI, don't get an ARM, if you're building new even though the warranty company requires a private inspector I get better piece of mind when I bring in my own after the first inspector has done his thing.. Make sure you understand how much tax you will pay every year on the house where you live.. Little things are A LOT cheaper to have done after the house is built than to have the builder do it.. I.E. running CAT 5 though the house, wiring a house for surround sound ex.. Most importantly don't forget almost EVERYTHING is negotiable..
Everything is negotiable BEFORE you close, afterwards its yours. Don't get to emotionally attached to the situation, sometimes you have to walk away from a house that you thought you really wanted.
a legitimate one at that. when my g/f bought her first house, she didn't knwo any better. just trusted the inspector they gave her. a week into living there, she started smelling gas. turned out the gas pipes were rusted and leaking. luckily, her neighbor was a plumber. also, there is so much maintenance and upkeep with a house. it's a miracle people even make any profit when they sell when you consider how much money you have to put it in. oh yea, don't forget TAXES!
Always stay away from ARM's. Thats the majority of the foreclosures. Try not to exceed a mortgage payment of more than 25% of your takehome pay. Remember that if you have a home built, the first year your escrow/taxes may only be on the land. The next year your payment should go up to cover the taxes on the house as well. You may have to figure out how much extra to pay by yourself, as most mortgage companies will not properly figure the increase in escrow after the first year. At least Wells Fargo doesn't. I was lucky enough to notice this and re-estimated my payment by myself and sent in extra money each month for escrow to cover the increase. They actually tried to send me a refund check out of the escrow. The extra I sent them ended up being just short of the amount I needed to cover the taxes the second year. Can't imagine how much I would've owed if I hadn't noticed this.
Just closed on a new home last Friday. It was my first home-buying experience. Luckily, the wife and I spent almost four years getting ready for this, so we walked into the deal with eyes wide open. No ARMs, no FHA: 30 year fixed and a great rate. As someone else said, EVERYTHING is negotiable. It's a buyers market right now, but only if you're a good buyer. When you have the three magic words "we're pre-approved", ask for the moon. You may not get it, but you just might. We had them throw in new appliances, new blinds, garage door opener, new cabinets, sod, and a sprinkler system. Also, get the home inspected, even if it's a new home. Some folks will tell you that new homes have warranties, so an inspection is pointless. Don't you believe it. There are so many loopholes in warranties, it's best to spend $250 to know the item you're buying for $120,000 is in good shape. Be proactive. Don't just assume that because you haven't heard from your lender or the seller that everything is ok. Ask questions, no matter how foolish. Get closing documents BEFORE closing so you can review them. Find out exactly how much you will be paying (or get back in ernest money) at closing. Lastly, realize that the expense in buying a home doesn't end with the home itself. You'll need money for things like a lawnmower or deposits/transfer fees for utilities. Don't spend your last dime buying the house.
I live on the west coast -- which is one of the higher rent districts, and we bought in one of the buying frenzies. I shudder at some of the houses we 'almost' bought. Sometimes your best deal is the one you don't make! In the last go round, sellers were only accepting unconditional offers (no inspections/ no subject to financing) and getting substantially more then their already rediculous asking prices for 70 year old houses in various states of disrepair. The houses were literally auctioned off to the highers bidder on the list day. I don't know how people did it. Or why. The cost of capital, taxes, repairs far exceeded any amount of rent. That said....home ownership is great. Congrats to the new buyers. Seems that you all pay pretty high taxes and maintenance cost down there, but you get great value on the buy.
Interest rates might go down some more so watch for that. If you plan to live there more than 7 years then it's usually worth it to spend some money now to buy down your interest rate a few more .25%. Don't do escrow if you have the will power not to spend the money.
If you can, choose the house in the neighborhood with stronger convenents and restrictions and one where you can plainly see that they are being enforced. (provided of course you are not the guy who wants a driveway full of cars on blocks or wants to paint his front door purple) That's especially true in that price range. Like when you get married you not only marry your wife, you marry her family; when you buy a house, you not only buy the house but you buy your neighbors. And it's not like an apartment where if you hate your neighbors you can just move. If you can afford it, take a 15 year loan. The rates can be better and you start knocking down equity a lot quicker. If you don't escrow your taxes make sure you keep a low risk investment nestegg that you can pay your taxes from.
VERY good advice. 15yr notes are much better and usually only cost a couple-hundred more a month, but save you thousands in the long run. Especially if you have the 10% or more to put down on the loan.
Purple front doors may be the wave of the future. I noticed that in my neighborhood, at least half of the front doors are red. Can't always tell how well the neighborhood covenents are being enforced just by looking. I'm going on three years living in my neighborhood, and we've yet to even receive the neighborhood rules and regulations that supposedly govern the neighborhood. Wouldn't know who to complain to if there was somebody abusing the neighborhood, but there's been no reason to complain anyway. Who knows how the HOA, assuming it even really exists, would respond if there was cause to complain. Sometimes the people who junk up the neighborhood don't live there yet (and given that the first 33 years of my life were spent in neighborhoods without any kind of restrictions beyond the very basic city rules and I've never had to deal with the "eyesore" property, I'm not sure the "cars on blocks" family is necessarily all that prevalent, waiting to spring up in any neighborhood without strong rules against it). On a different note, I've never tried to buy a foreclosed home, but I'm starting to wonder if the process isn't incredibly burdensome. The house next to me has been vacant for over a year. The family who lived there defaulted on their mortgage, and the house has been sitting empty ever since. When the bank put it up for resale, they set a price about $10,000 below the $108,000 the family who defaulted owed on it when they defaulted (I learned the amount the family owed by asking him as he was moving out). Since then, the bank has lowered the price another $10,000 officially while also openly hinting that they'd take an amount that's another $15,000 or so below that. No takers so far. There's another house in the neighborhood next to mine that was foreclosed on. The bank is officially asking for roughly half of what other houses in the neighborhood have been selling for (on a per sf basis, anyway). It's been on the market for several months. No takers so far. While the house next to me has been for sale, there have been at least ten other houses in my neighborhood (all new construction) sell for prices far higher than any of the asking prices for the house next door. Don't understand it at all.
I remember the first time, he just started walking around with that cain and making fun of how stupid his assistants were. It was also kind of shocking because I knew of Hugh Laurie's work before House and to hear his voice sound so drastically different was jarring.
Take your sweet time. Like with marriage, you want to wait until you are dead certain you've got THE one. Even if it's frustrating, be quick to walk away. If you settle on a home, you'll hate yourself for it in no time. Definitely keep a pool in savings for your first 18 months - no matter what you do, you have to be ready for unexpected hits that slipped through the inspection cracks. Plumbing and AC are two MAJOR things that you need to know about -history, age, everything. Some things you can push off, some things will be immediate hits. I'm doing a 15 yr with 30% down, and trying hard to pay off additional principle as much as possible. We're not in the house that we'd want to raise kids in, and I'd like to treat this house as if it will become the 30+% down on the "real" house that we can live in as a full family. Evan
I'm a financial expert and I am here today pounding the table advising people NOT to pay down principal on their house. Now is the time to be investing in the stock market, at these depressed levels, not paying down principal to avoid a 6% interest rate (especially when that interest is tax deductible). Heck, if you can't beat 6% in the market today, then you are receiving bad advice. You have a choice with where to invest your money. Paying down principal is one choice. Selecting high quality investments is another choice. I'm interest only on my house and put the bare minimum as a down payment. When the government backs up your credit, you get cheap money. Use it!
Great info, folks. Keep it coming. We're trying to take our time, and focus on some things we consider 'more important' than others. Doing some maintenance won't be a big deal, but I don't want to have like foundation repair and a new roof to put on in the next five years or something. In addition, the wife wants neighborhood and school districts to be big considerations. We are staying away from looking at new homes because I wasn't sure I could get anything well-built in that price range. We definitely consider what we buy to be our 'first house/starter home'. Anyone have any experience with a 'seller's contribution'? I've been hearing about but not sure I understand it. It almost sounds like the seller is willing to pay some of the closing costs, but that doesn't sound right. hahaha If you don't mind me asking, how much did you buy for? Are you in Houston?
<a href="http://picasaweb.google.com/treymcglaun/NewHouse06/photo#5052892442757414914"><img src="http://lh6.google.com/treymcglaun/Rh9658LPwAI/AAAAAAAAHD0/jss2ll-KiaU/s400/New%20House%202007-04%20030.jpg" /></a> We bought this house last May and it's so awesome to have your own house. I agree that there are a ton of expenses that you have once you move in. I can't really add much to the advice that hads already been given. Good luck!
