Trying to buy a house soon, any advice?

I'm in the market to move out of an apertment and into my first home, yay! I'm doing my homework on the field and I know:
1) don't buy too much house (money-wise)
2) will go for 30 yr fixed, (with extra payments on the side)
3) home inspection for sure
4) good neighborhood (I'm kinda stuck with one Dallas neighborhood due to numerous factors)
5) house orientation (don't want afternoon sun in the livingroom)
6) I need an indoor area for my workshop
7) not too much yard - that's just more upkeep

Any other advise from people who gone through the process and regret missing something?

There are a few of us CPF'rs in the RE business and I recall a couple of similar threads in the past. I am a Mortgage Consultant in CA and will gladly help with any questions you may have about financing although I do not originate loans in TX.

PM or post here.

Skip the 30 yr fixed. You'll sell and move waaaaay before then. I'd look for a 5/1 arm or maybe a 7/1 arm.

If you actually live there 30 years, I'll buy you a beer.

1. Make sure you get a cost comparison with what's in the area. Don't overpay.

2. Check if the neighborhood has a strong organization, and check the CCR's. Some neighborhoods don't have strong organizations, and they suffer for it. Some have nazi organizations, and they suffer for it. Get the CCR's and check them. Some can get ridiculous. Find out if the neighborhood association is voluntary or mandatory. Check to see if they allow sheds in the back yard. These are invaluable places to store the grimy crap that you don't want in your garage, etc, but a lot of newer neighborhoods don't allow them. I moved from one where you couldn't have one to one where you could, and I'll try to never go back.

3. Absolutely do not fail to do a final walkthrough. I've seen houses that have passed inspection get damaged by the movers, and following up on the damage can be a PITA as the sellers will deny damage and the movers will deny it too. You can get it cleared up, but again, it's a PITA and best avoided.

4. Check veeeeeery carefully if there are any fence encroachments. You might not mind if the neighbor's fence is on your side, but the neighbor might have a huge problem with it, even if it's only a few inches. He might have run his course with the neighbors who are selling the house, but might be more than ready to revisit the issue with *you.* And if you're not willing to shell out $1,500 bucks to move the whole damn fence, well then, that makes you just as much of an A-hole as the last neighbor. Just ask me why I'm saying this.

5. Sloooowly integrate with the neighbors. In every move I've ever done, people are just absolutely giddy about dragging you into the neighborhood politics. It was never like this when I lived in apartments; neighborhoods bring it out more, maybe because of the increased permanence versus apartments, where people really generally don't go out of their way to know the neighbors. The gossips will be right there smiling, but ready to cart off every snippit of information that they can glean to anybody who will listen. The users will be assessing their ability to borrow tools off of you. The mashers will be assessing their ability to bed your wife. The hussies will be assessing their ability to bed you. The territorialists will be giving you that pink-rimmed-eye mad dog stare, wonding how you will fit into the 'hood pecking order, the materialists will be sizing up yer stuff, and will be more than willing to buy a new car if that's what it takes to upstage you... Yea, just move in, wave nicely, start painting, get the living room set, chat briefly and friendly with the neighbors at first, and then let the good ones closer while keeping the rest at a friendly but respectable distance.

6. Not sure about your demographics, but a small yard isn't necessarily better than a larger yard. IME, the actual mowing and trimming time isn't substantially greater for a larger yard; it's the setup that's a pain in the booty. Getting everything out, mixing the fuels, sharpening the blades, replacing the strings, the weeding, fertilizing, cleanup, etc. On a 42" deck mower, a few more passes will only take a few more minutes. I went from a yard that had a postage stamp-sized yard to a gynormous corner lot, and the actual mowing, while greater, isn't nearly as bad as I thought is would be. That said, if you live in an apartment, and do the math on a quality new mower, an edger, a trimmer, a blower (you can get the 'quick link' types of multi-attachment tools, which will trim down your engine costs, but will wipe out all of you ancillary power tools if you should experience engine problems), rakes, shovels, shears, fuel containers, mixing oils, etc, etc, etc, etc, you'll quickly see that it might be easier and somewhat cost effective to hire a lawn service, even if you plan to buy these things used or referbished. Also, a larger yard does indeed allow somewhat greater options when it comes to landscaping, outdoor activities, and cubic feet of space for children to play in.

7. Drive by the area at night. Dark? Well lit? Not bad to be near a streetlight.

8. Check on the 'puter to see if there are any pervs in your area. Don't want to move in right next door to a sex predator. Speaking of that, anecdotally, when I checked out this house I'm in right now, one thing that bothered me was that the guy who was selling it was very, very keen on locking all the doors. After we'd checked out the back yard, he made sure to lock the screen door and the sliding door, same thing front and side doors. Bothered me, and so I called a cop friend of mine asking for crime stats. Said my neighboorhood wasn't even on the radar. Only later found out that the guy had been arrested for standing in the garage and shaking his noodle at women when they passed by. Kind of freaky, and goaded me to burn off about a can of lysol on the internal door knobs. One can per knob. Guy was afraid of retribution and that's why he kept locking the doors.

9. Try to get a feel for background noise potential. Near an airport flyover? Near a train track? Near a race track? Near an amusement park? Near a school? Near a weapons test facility? By near, I mean within earshot. These things can get old.

I'm sure there is a lot more advice here, but I just wanted to get in my .02.

That's for the replies so far.

almost forgot #8 - background noise. Absolutely will not live near train tracks or an airport. I know from experience.

turbodog said:

Skip the 30 yr fixed. You'll sell and move waaaaay before then. I'd look for a 5/1 arm or maybe a 7/1 arm.

If you actually live there 30 years, I'll buy you a beer.

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Sometimes people move but keep the property and the loan while renting it out.

Regardless, the current yield spread between 30yr fixed products Intermediate ARMs (5yr & 7yr) is too close to really warrant chosing the Intermediate ARM over the fixed products unless you fully plan on keeping the loan for less than 5yrs.

Sleestak said:

5. Sloooowly integrate with the neighbors. In every move I've ever done, people are just absolutely giddy about dragging you into the neighborhood politics. It was never like this when I lived in apartments; neighborhoods bring it out more, maybe because of the increased permanence versus apartments, where people really generally don't go out of their way to know the neighbors. The gossips will be right there smiling, but ready to cart off every snippit of information that they can glean to anybody who will listen. The users will be assessing their ability to borrow tools off of you. The mashers will be assessing their ability to bed your wife. The hussies will be assessing their ability to bed you. The territorialists will be giving you that pink-rimmed-eye mad dog stare, wonding how you will fit into the 'hood pecking order, the materialists will be sizing up yer stuff, and will be more than willing to buy a new car if that's what it takes to upstage you...

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Jeez. This is not encouraging!

Go with a 15 year loan and spend no more than 25% of your income on mortgage payment including property taxes and insurance

If you both work, try to keep the mortgage sustainible with only one paycheck.

get recent police reports for the neighborhood.

Is the house near the local college sorority house , or is fraternity row a block or two away? :buddies: One might be OK, but the other...? Remember, no guarantees that either one can't be a total PITA!

Check out the neighborhood around the time the schools let out. What are the kids doing before Mom & Dad get home? :devil:

We walked away (ran away actually) from several potential houses when we heard, "It's supposed to be like that," or "It's fine. It's always been that way." :ironic:

One more thought -- now's a good time to play with that new ~375nm UV flashlight. :green:

Be sure to get the FULL monthly price you will be paying, INCLUDING all taxes and other charges.

The bank will loan you way more than you can comfortably afford. Be careful.

Despite what some people say, living in an apartment is not necessarily "throwing away" more money than having your own house. For most people, either way you are renting. You are either renting a living space, or you are renting money. And when you "own" a house (the bank actually probably owns it) you have all sorts of fun new expenses that will crop up. Whatever you think you will be paying, you should probably add a large margin for unforseen house expenses and repairs.

Best advice so far, in my opinion, is to go for a 15 year mortgage.

Good luck!

To me, 15 year mortgages only make sense if there is an interest premium.

Otherwise, having the lower payment flexibility of a 30 year mortgage if you lose a job, are off work for a while due to illness or injury, etc. makes sense.

Just make the payment in the amount of a 15 year mortgage, and your 30 year mortgage becomes a 15 year mortgage!!

Afternoon sun in the living room is better, at least to me, than afternoon sun in the backyard. We like to barbecue, sit outside and talk, etc. and when the back of our house faced west, it was impossible.

You can always put up heavy blackout drapes in the house, hard to do in the yard!!

Just my 2 cents, your mileage may vary!!

Bill

lowball the price. You'll never know what the current owners are willing to sell for if you offer them too much. I remember my real estate agent scoffing at my first offer telling me "they will never accept that!" and my reply was that of course not, nobody accepts a first offer. And they dont. Many people will just keep coming back splitting the difference with you, so if you bid only 1k off, they will come back at 500 off even if it's a great offer. DO NOT be afraid of pissing off the current owners by offering too little as a starting bid. This is a very common first home buyer mistake.

dont fall in love with any one house so much that you have to have it. If the negotiations dont work out you have to be ready to walk on the deal and move on. If you have a house that you let yourself get so attached to that you absolutely have to have it then you'll get taken on the price.

be there when the inspection is done and pay attention and ask a lot of questions. They generally find a lot of really minor stuff and miss all the important stuff.

If you buy a house with old fixtures and equipment they will cost more to run and eventually need to be replaced. Putting in a new roof is mega bucks, so is putting in new HVAC. Look for a house that is either new enough that everything is still working but past the lemon burn out stage, or a house old enough that the AC and water heater and roof have all been replaced in the last 5 years or so.

DO NOT listen to anything your real estate agent tells you as far as "oh, every house in this market is selling within 4% of the asking price" or any such garbage. Unless you can just write a check for it you'd be a fool to buy a house in a market where no negotiation is taking place. I wouldn't make a starting offer for less than 30% off the asking price. but use your own best judgement.

When you ask for repairs, be specific. If you want a licensed electrician to fix the flying splices that the current owner hacked together in the attic then say that. If you just say "fix them" then they can go up and continue to hack it themselves. You want to say "have a licensed electrician" and you want a receipt for the work presented to you at closing. Same for HVAC or any other non-handyman type stuff.

DO NOT take anything on faith. You'll be using a lot of boiler plate contrate paperwork. If you have a question, or want something different, do not be afraid to just write it in. Your agent may tell you that you can't change the contract, thats bull. The other folks just have to agree to any changes that you make.

DO NOT be afraid of making extra work for your agent or your lawyer (you do have a lawyer right? you'll need a closing attorney at least) If you have questions or problems or issues that aren't being addressed get on the phone ASAP with these people.

it is my experience in the buying and selling of 3 houses of my own and sitting in on the deals to help out my sister in law and my sister for a few more that real estate agents like things to go smoothly even when things are not going smoothly. And that generally means asking you to accept things that are not to your advantage just to avoid extra paperwork. DO NOT let them put you off and tell you that they will never agree to that, or thats not how it's done, or that doesn't need to be in writing it's always done that way. Get it in writing.

At the very top of the contract add an expiration date. Something to the effect of "if this deal is not closed by (some date like 3 months hence) or something this contract is considered null and void" or something like that. We had one person who disappeared half way through the negotiation process for our house show up 3 months later and expect us to still sell to them. We were in the process of closing with another person at the time and were rather amused to see this other jerk just show back up. But there were no expiration dates on the contract and in talking to our lawyer (you do have a lawyer right?) we discovered that the common law rule in the state for such an unspecified deal was a lifetime of 6months! We convinced the jerk to sign a piece of paper saying he had waited too long and the contract was void. But he didn't really have to do that. (he did not have a lawyer, you do have a lawyer right?)

Dont let me turn you off to it, there is nothing better than owning your own place! But nothing worse than getting screwed in the process! DO NOT feel guilty if the current owners agree to a good price! My sister had that problem and didn't press them for needed repairs because she thought they had given her a good price and felt guilty! You can't do this, she's now looking at costly repairs that should have been done by the current owner prior to sale.
'
EDIT for more info : About the 15 year, 5 year balloon or whatever.You have to look into all those things and pick the best rate.

When we bought our first house my wife was still in school and we knew we were only going to be there 3 years. We got a significant rate improvement by doing a 5 year balloon payment mortgage. That just means that you get the money for 5 years, and at the end of 5 years the remaining principal comes due. we were long gone before it ran out. If we were still there we would have had to re-finance at whatever the current rates were at that time. When we bought the second house we also knew we were only going to be there for a couple of years, but the rates had converged and there was no advantage to doing it that way at all. Gotta do the math.

Watch for any owner's association fees (community pool, streets, etc.). In our area, those fees have been ever increasing--and there is usually not a thing you can do about it.

Also, checkout planning commission/building requirements. In older areas and politically "advanced" areas (larger cities), it can make add-ons and 2nd stories a multi-year pain in the butt. Unless you are a contractor, or enjoy the politics/building, get the house you want--don't plan on major additions in the near future. They usually cost about twice what you think they should.

Lastly, look at your payments and how much goes to paying interest. The first 5+ years of a 25 year loan are mostly just interest payments. Paying an extra payment or two (every year) in the first five years can dramatically shorten your loan. Making extra payments in the middle or end of the loan will not save you near as much money.

Look at the piping (don't want galvanized iron, old leaks--mold/rot around windows and/or old roof/basement leaks). Insulation (check their power bill--if you can).

House/roof/land orientation/neighborhood trees-buildings-shade for solar heat/hot water (energy costs are probably going to skyrocket--being able to reduce those will probably be helpful in the future).

Check the land itself. Look who owns the mineral/water rights. Do you have a well/septic tank? Flooding/flood zone? Any toxic waste history (old factories, gas stations, mines, etc. on property or nearby). Avoid being at the top of, or on, a steep slope/grade. Watch for slides/settling/poor grading/etc. Are you at the top of a slope/hill? Look down at what is at the bottom. You are responsible for you hill sliding down--even if the neighbor dug into your slope or if poor city storm/sewer drains caused your land to move. I have a friend (who is a soils engineer) whose home was built on the remains of a secret government project that involved lots of poorly performed grading (and near a dam/lake too). All of that added together cost him over the equity in his home to fix and left him with a life-time risk of being sued (again) if the land ever moves again (deep-pockets law suites allow any former owner of a property to be sued for damages).

Older homes are great—but building codes have improved much over the last many decades. Especially around insulation, earth quake, flood plains, and storm damage. Are you in a tornado area, etc. Have an idea of where you would get the money and when you would plan to repair/update any weaknesses in your home.

Getting a house inspection is OK--but you have read it closely, use your common sense, and be willing to walk away if it does not look good.

-Bill

C4LED said:

Jeez. This is not encouraging!

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Don't get me wrong. THere are also very wonderful people all around you when you move into a new place; it's just that there are plenty of pratfalls as well. You just want to be circumspect so that you can tell who are the good ones and who are the bad ones before you really involve yourself with them.

Do it right, and you'll love your stay.

Move every two years to take advantage of the capital gains tax exclusion benefit.

greenlight said:

Move every two years to take advantage of the capital gains tax exclusion benefit.

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Amen brother.

We:

1. bought
2. built a house and moved
3. are getting ready to break ground again in a month or so

In a decent market you can make some SERIOUS cash in very little time, especially if you build. And I happen to benefit from a market that usually sells at 98-100% asking price WITHIN A 1-4 WEEK TIMEFRAME. I have seen 25% of my neighbor's houses sell within 1 day at full asking price.

With all the katrina refugees, housing here that was tight it getting _really_ tight.

But the down side is, crap is expensive around here. But it's all relative.

Among the best advice my wife and I received: "Never fall in love with a house."
Don't feel you "have" to have one particular house - some people can be sold on one little detail of a house ("It's got a center island with a butcher block! I've always wanted that!"). That can make you overlook problems (every house has some problems), dismiss needed improvements/upgrades, and can blind you to some real potential dealbreakers.

Find who you want to handle your mortgage, and get pre-approved before you go shopping for houses. Being ready to go, with no delays for paperwork or potential credit snags on your end makes you a much more attractive buyer if it comes down to you, ready to pull the trigger at your offer price, and another buyer who has yet to be approved.

I'll second the advice to check out the potential new neighborhood at night/off hours - if your future neighbors have garage bands or are the local party central, you might like to know that first.

Also, check around the neighborhood - it's easy to focus on the little cul-de-sac you're looking at, but just because there's a treeline between your development and the outside world, or you're looking at a quaint little country road, doesn't mean it doesn't back up onto something you wouldn't want to be neighbors with - large factories, a neighborhood you don't want to live near, etc.

Oh - take notes on each house - you'll be surprised how quickly one house becomes indistinguishable from another after you've looked at three or four. "Wait, was that the one with the walk-in closet, or did it have the nicer kitchen?"
Someone suggested to us that we come up with nicknames or descriptive names for the houses we visit (the electric blue house, the professor's house, the Swedish house, the fixer-upper). Try to enjoy the process - you'll probably look at a lot of houses you feel ambivalent about, or hate, or kind of like, before you find a couple you can be enthusiastic about. Also, this can be a stressful process - try to keep your sense of humor about it. And if you're looking with a spouse, it can be really frustrating when you disagree on a house's desirability.

Good luck - there are a lot of hassles involved, but it really is a satisfying feeling to come "home."
Dave

bwaites said:

To me, 15 year mortgages only make sense if there is an interest premium.

Otherwise, having the lower payment flexibility of a 30 year mortgage if you lose a job, are off work for a while due to illness or injury, etc. makes sense.

Just make the payment in the amount of a 15 year mortgage, and your 30 year mortgage becomes a 15 year mortgage!!

. . .

Bill

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Great point, Bill. Yes. That's a good idea. My main point was only that paying extra on your 20 or 30 year mortgage early on will pay HUGE dividends in interest savings later on. In other words, paying off your debt is often a good investment idea. Obviously, it depends on the interest rates, and rates are very low right now. But that can't last.

I haven't done this but know people who have: video tape the inside of the house(s) you are seriously interested in. You can say it is to help remember the features, but it also protects you if the seller downgrades the light fixtures or draperies after you sign to buy it.

Greg