First time home buyer, any tips?

[AlexGT]

I have decided after several years living in apartments not to pay rent anymore, and I will start looking for a home in the next several weeks, any tips about mortages and financing that I should know? Financing for dummies maybe? LOL! :laughing: I just want to avoid the pitfalls and sleazeball financial companies/brokers that are out there. Any recomendations?

A friend refered me to a local "Acorn" office for a first time buyer semminar, anyone heard of this Acorn people? (http://acornhousing.org/index.php) Anyone have other non profit organizations I should consider looking into before I start the home buying process?

Thanks!
AlexGT

 

[smokinbasser]

national real estate agents like REMAX are a great place to start a home search and now is a good time as a 1st timer mortgage rates are very good now plus you get an additional rebate as a 1st timer

 

[NA8]

Take an Introduction to Real Estate class at your local community college.

 

[StarHalo]

Fixed rate only, avoid adjustable rate mortgages.

 

[smokinbasser]

oh yeah fixed rate only forgot to mention that important point ty starhalo

 

[DonShock]

I haven't really hear much about ACORN's home buyer seminars, but I do know they have gotten in trouble in other areas. Several of their employees, in multiple states and different years, have been convicted of voter registration fraud of one type or another. There have also lately been some in-house power struggles between the people running the organization. Several of their associated organizations are being investigated at both the state and federal levels.

Personally, I don't know as I would trust ACORN for legal advice when buying a home.

When I bought my home I didn't use a lawyer or real estate agent. I just made sure to read everything I signed. And always be ready to walk away from the table if anyone tries to pressure you to do something you don't understand. When I had a mistake made during construction and the builder didn't want to accept my compromise offer on a fix, I just said "Fine, the contract says copper pipes. Rip the plastic pipes out and install copper." Suddenly, my compromise looked a lot cheaper than following the contract. Just make sure you understand what you are agreeing to so you don't get caught on the wrong side it's requirements. And always get everything in writing, cause that's what holds up in court. NEVER trust what somebody says if they aren't willing to put it in writing.

 

[Marduke]

Fixed rate only, avoid adjustable rate mortgages.

+1

Also, I recommend getting a home inspection, no matter if it's a new or used home. Ask your Realtor for a recommendation. They should have a list of recommended inspectors who are good for buying homes.

 

[clg0159]

Definately get a fixed rate, and then double pay the mortgage if possible! Also be aware that some fixed rate mortgages may carry a penalty for refinancing within the first few years.

 

[matrixshaman]

+1

Also, I recommend getting a home inspection, no matter if it's a new or used home. Ask your Realtor for a recommendation. They should have a list of recommended inspectors who are good for buying homes.

I've heard that many 'home inspectors' are just rubber stampers for the RE agents so beware paying much for them. You might be better off to find a building contractor or someone in the construction trade (maybe a friend? ) to help you check it out if you don't know what to look for.
When you find a home your are considering - talk to the neighbors after the RE has left. They can tell you a lot sometimes if you find the right person. Of course be prepared to 'sell yourself' somewhat or the neighbor might decide he doesn't want a neighbor like you and will tell you about bad things that don't exist (I had this happen one time in an area where an old guy couldn't stand any new growth in the area so he made up some BS about incredibly high water bills). You might also want to consider hiring a RE lawyer to look over any contracts (usually a couple hundred dollars IIRC) as that can save some serious headaches later.

 

[shakeylegs]

Alex,
If you will be in the home for several years definitely look at a fixed rate. Today's rates are historically low (remember the 70's and 80's - 17% loans). Also, remember the old adage, Location Location Location. Nothing worse than waking up to a neighborhood of rental homes with junker cars lining the street and your next door neighbor's "driveway engine removal service".
Buying a home in an established neighborhood saves you the very large expense of landscaping a newly constructed home. And, in an established neighborhood you have a chance to see who your neighbors will be. No small matter when you are investing yourself in a permanent living situation. Might be a good idea to speak with the immediate neighbors to get a feel for them and to learn anything about the home you wish to buy. My neighbor's home here has a virtual river running beneath it. And I know that the last two purchasers were not informed of that.
Best of luck!

 

[BVH]

I know this is difficult to do but...don't let your emotional side convince you to pay too much for something. Do your homework with the neighborhood comps.

 

[AlexGT]

Thanks for the tips!, keep em coming! I intend it to be my home for at least 10 or more years or until I get tired of it or need something bigger, Definetly I will be looking for a fixed rate.

BTW, thanks smokingbasser for the REMAX site! it's great to find out prices and location, I might pay them a visit when I decide on the place (Towards Katy Tx) I think I am leaning towards an established community where I can see who the neighboors are.

Thanks!
AlexGT

 

[jtr1962]

1) If possible, try to find homes being sold by the owner. Sometimes you'll get a better deal as real estate agent's fees aren't involved.

2) Have the home(s) you might want to buy throughly checked out. That goes double for stuff like water problems in the basement. Generally sellers won't tell you about stuff like that.

3) Make sure the electrical service has been updated if the home was built pre-1970, and especially pre-1950. The electrical wiring in really old houses is usually crap if it's original.

4) If public transit is important to you, make sure to check out the available service and schedules before you commit to buying a house. Also ask locals how reliable it is. If you depend on or plan to depend on public transit to get to work, nothing is worse than being surprised at poor service after you move.

5) If you're handy and have the time, a "fixer-upper" can often save you a lot of money. On the other hand, if you don't enjoy that kind of work, best to find a home which is in good shape.

6) Same line of thought as #5 regarding the landscaping. If gardening is your thing, then a house with little growing might actually be viewed as an artist sees a blank canvas. But if you hate gardening, then best get a home with established landscaping.

7) Check to see if there are any local home owner's association rules or local ordinances regarding how you must keep your property. Some places have very restrictive rules regarding home colors, landscaping, etc. You obviously don't want to move somewhere and discover afterwards that you're not allowed to do certain things you wanted to do.

8) Just my opinion, but a brick or masonry house is much more desireable for a host of reasons. Less maintenance, stronger, IMO looks better, etc.

9) Ask potential neighbors about the local electrical service. Is it frequently interrupted due to lines being blown down or other reasons? If so, you might want to pass. Buried lines are obviously most desireable for asthetic and relability concerns but many places in the country still don't have them.

10) Check out the local shopping. If having stuff within walking distance is important to you, then make sure that's the case.

11) Central cooling is a good feature, especially if you're moving somewhere warm (I see Texas as your current location).

That's all I can think of for now. I've never owned a home, but went through all this helping my brother look for his. And having lived in my parent's home for the past 31 years, I know all the ins and outs of home ownership, including plenty of experience repairing what was wrong here in the first place.

 

[Hooked on Fenix]

First of all, don't take advice from ACORN. They are being investigated in many states for voter fraud and contributed to and possibly started the housing crisis. I don't think they can be trusted. With the cost of housing lower than it's been in a long time, now may be the time to buy. However, there is a bill that was passed by the House and is being looked at by the Senate that may change things. They are trying to require all new buildings to be built to the highest energy efficient standards possible. They also want to force current homeowners to make improvements on their existing homes. Without these forced improvements, you won't be able to sell your home until the improvements are done. If you don't make the improvements in a certain timeframe, your home can be considered condemned and you won't be allowed to live in it. For buying a home, this will skyrocket home prices if the bill becomes law if those parts aren't stripped from the bill. This is all part of the cap and trade bill.

If you buy a home on a terraced hill, make sure you buy one on the cut side of the slope. There are two sides, the cut side and the fill side. The cut side is the side of the hill that the dirt was cut out from. The fill side is where that dirt gets piled up and leveled out to make the terrace wider. Water runoff naturally will try to flow down the original slope of the hill since the dirt on the fill side won't be as dense as the cut side. This leads to water running under the house on the fill side which eventually causes mudslides, damaged foundations as the house slowly slides, and sometimes sinkholes. There were problems like this not too long ago in La Jolla in San Diego County, California.

If you buy a house near a lake, river, or stream, make sure that the house sits well above the 100 year flood plain. That is the standard in the U.S.. Houses can be built down to the 100 year flood plain. This is the level water can rise to in record flooding about every 100 years. The problem is that new construction actually changes where the 100 year flood plain is and that isn't taken into account when new buildings are placed. If you have many houses built close together, the water is going to get to a higher level than if it was an open field simply because the houses displace some of the water. The houses also tend to make it so there is less soil for the water to absorb into before flooding. Paved roads have the same effect. This is one of the reasons why more houses than ever get flooded during hurricanes, it's not global warming.

Make sure you read up on the building codes in your area. Older homes sometimes are required to be updated to current building code standards when remodels are done. In Southern California, it's very hard to get a permit to build a new house or to build another house on your property. People actually build an attached expansion of the house bigger than the house and then sometimes build around the existing house before demolishing the old house. New construction building permits can be hard to get, but "remodeling" is a lot easier to get away with. If building a new house requires you to drill a large, deep hole and lower an engineer into it, get a different house or property. It also helps to know the current value of the house from an appraisal. Find out how much you will have to pay in property taxes as high property taxes will make it harder to pay off a mortgage in the long run.

Look for the things you need for the property. Is it close to your work? Paying a lot for gas commuting will make the house more expensive to pay off. Are there any water restrictions or energy shortages in the area? You could be fined by simply using the amount of water you need. Water shortages and energy shortages are followed by people leaving the area, job losses, and home prices dropping. Can you have pets in the area? Is there any sort of home owners association that will give you rules you need to follow or charge a fee? Are there any annoying or dangerous neighbors? Are the schools in the area decent for your kids? Keep all this in mind when looking for a new home, and good luck.

 

[DonShock]

....9) Ask potential neighbors about the local electrical service. Is it frequently interrupted due to lines being blown down or other reasons? ......

Of course a serious flashaholic might want a house with frequent outages so they'll have more chances to play with the collection.

 

[mendhammarsh]

There are three important things to keep in mind when buying a home.

1. Location
2. Location
3. Location

There are many good books available on buying a home.
Make sure there is detailed checklist regarding the structure, neighborbood,financing etc.

Good Luck.

 

[BB]

This is my recommendation whether you buy a house or rent...

Savings!

At least six months--preferably one year of savings that you can live on (including making house payments)...

Use your credit cards like checks--you only use them when you can pay them off 100% at the end of the billing cycle.

Regarding the home--don't use it like an ATM. Once you have 6-12 months of savings, pay off the loan (per terms--don't get bit by pre-payment penalties).

Paying extra payments in the first 5-10 years is much better than pre-paying off a loan in the last 5-10 years (early on, your payments are nearly 100% interest--so any "little" extra money you pay over and above the principle payments will knock months of your payments. Near the end of the loan, most of the payments are principle anyway--and you are not saving much in interest payments.

Try and get a 20-25 year loan--30+ year loans don't reduce your payments much--but cause you to pay much more interest (morgage calculator).

A $150,000 loan, 30 year, 6% is $899.33 per month
A $150,000 loan, 25 year, 6% is $966.45 per month
A $150,000 loan, 20 year, 6% is $1,074.65 per month

In the first year of a 30 year loan, the principle payments are ~$155 per month (~80% of the payment is interest)... For each $150 at the begining of the loan, you knock ~1 payment of $899 off at the end of the loan.

The last couple years of the 30 year loan, you are paying less than $100 in interest per month... So paying more than the $899 per month, does not save signicant interest for you.

-Bill

 

[Wattnot]

It's a buyers market most everywhere and a great time to be buying. You especially have the upper hand since you don't have a house to sell.

Don't be afraid to make a low offer. Have the realtor get you comps INCLUDING FORCLOSURES in the area where you are looking.

I Agree with the others on the fixed rate suggestions - definitely.

Do you have 20% down? That will not only save you a bunch on that BS PMI insurance they make you buy, but these days the banks are so skittish, you might not get the loan otherwise.

I like Wells-Fargo mortgage. They don't sell the loans (though that's not really a big concern) and their rates are very competitive.

And DON'T SETTLE. Moving sucks! Do it right the first time.

 

[smokinbasser]

If even considering buying from the owner have investigations made in to the taxes on the house ( as in paid for the current year and not behind 3 or 4 years and about to be taken by the taxing agency for non payment) then make sure the mortagage is paid up to date and again not 5 or 6 months behind and one step from foreclosure. It's amazing how frequently those little facts seem to slip the sellers mind when they have a live one on the line. I picked up a 9 month old home that had been just repossesed because the "owner" somehow neglected to keep his house payments up to the bank. I had specified to the real estate agency I wanted a less than 2 year old home on one floor with excellent security for my bass boat. They got the notice on this place while the RA and I were looking at another similar place and they called the RA and we rushed over to check it out and it was zactly what I was looking for and was even a handicapped friendly designed home internally. I have been living in it since 2002 and got a fixed rate 15 year loan(yeah I am on the good side of payments made to payments owed) AND I am eligible for a reverse mortage if I so desired. While in dallas tx undergoing triple bypass surgery and the recovery process I got called today letting me know someone put a rock through a front window along with other juvenile vandalisim. MY lawncare man called both me and the county sheriff to advise of this crap and I called my insurance co and some good friends who drove 300 miles to evaluate and secure my home from further damage. Be sure who you can trust in your new neighborhood and who to not trust at all. I had an ex con meth head dealer/ manufacturer move next door and wish I had a claymore to plant facing his place. The moral of this??? You can go for location, location, location but poop can and does happen.

 

[nitesky]

Great thread! I am in a similar situation to that of Alex. Great advice folks, especially about making sure you still have some savings after the down payment.

Location and investment opportunites are all important, but I also know it means buying a home, not just a house, so I keep that in mind.