Looking for a house!

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August28th Posts : 153 Registered: 1/28/09
Looking for a house!
Posted: Apr 24, 2010 12:12 AM

DH and I are really ready to get out of our apartment, we feel that by renting we're throwing our money away, especially for a cramped one bedroom with no privacy. We've been going over our finances and looking at our savings, CDs, and DH's military accounts etc. Our "big money" CD is maturing this August, and we've heard that rates are going up in September, so we're planning on seriously looking this summer and hopefully having a contract on a house in late July/early August, so the timing is perfect.

Right now we're bank shopping. Looking at local banks to (hopefully) give us a great rate! We're currently debt free and once our CD matures we'll be able to put down a nice down payment on a house. I'm so excited! I'm all over realtor.com looking at affordable houses in our area, it's so much fun. I've seen many houses that I like, but nothing that has everything I'm looking for. I guess I'm looking for the total package. I'm just praying that God will bring us the right house at the right time.

If anyone has any advise or words of wisdom regarding home buying, I'd be glad to hear it. DH and I are going to be first time homebuyers, so it's all new! Luckily, my mom was in real estate and my dad is in construction, so that helps too. But any outside help would be great! Either way, I'm really excited to start this process.


True love is like a ghost which many talk about but few have ever seen.

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HappyGirl13 Posts : 1,298 Registered: 4/21/08
Re: Looking for a house!
Posted: Apr 24, 2010 9:14 AM Go to message in response to: August28th

Congrats on starting the house-hunting process!

We just bought a condo 9 months ago. My advice is probably obvious, but I'll give it anyway:

Shop around for a realtor you feel happy with. And don't feel bad about it. If I had to do it over again, I would have picked a different realtor. Ours had the experience, but she wasn't as attentive as I would have liked and that made a difference when the transaction came down to the wire. There were small red flags at the beginning that would have indicated that might happen. DH & I felt like we had to stay on top of her at the end to make sure everything was getting done.

Shop around to a few lenders.

Make sure you really prioritize what you want as much as you can. I think we made the best decision we could have at the time, but if I had the opportunity to do it over, I would have made a safer street a higher priority. We just had a baby & the drivers on our street are NUTS. We don't plan on being here more than a couple of years, but I worry for mine and the baby's life every time I turn out of our driveway.

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Elbelle77 Posts : 222 Registered: 1/24/08
Re: Looking for a house!
Posted: Apr 24, 2010 9:18 AM Go to message in response to: August28th

Congratulations! I love looking at houses and watching all the house hunting shows on HGTV, so I was very excited when DH and I started looking for our first home. It turned out to be the most stressful and tense moment in our relationship.

My advice is to sit down with DH and make a Needs list and a Wants list. For example, we Needed to live on a quiet street, not a double yellow line street. We Wanted a fireplace.

It would have been helpful if we had done this before we started looking. We assumed that we both had the same priorities and vision for our house, but when we found out house that had the perfect basement for entertaining, but no formal dining room for family dinners, DH couldn't understand why I was so against the house.

Now, even though the checklist is a good idea to help you be on the same page. I had to explain to DH that it's also a feeling. You'll know your house when you walk in, just like you knew DH and knew your dress.

Also, in the beginning, make sure it's just you and DH that go. When you think you've found it, bring in mom and dad if you want to, but not before. My in-laws live close by and when DH would tell them that we're going to check out a house, they would show up! While I love them dearly, I felt I couldn't be totally honest about my opinion of the house because if it had something I really didn't like, that his family's house had, I didn't want to insult them.

In the end, DH and I found the perfect house for us (it has a basement that can be fixed up for entertaining for him and a little formal dining room for those family dinners we look forward to having). We love our house and have enjoyed fixing it up and making it our own :)

Good Luck, try to relax and enjoy it!

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BrighterThanSun... Posts : 853 Registered: 10/17/08
Re: Looking for a house!
Posted: Apr 24, 2010 10:04 AM Go to message in response to: August28th

I don't really have 'banking' advice because--well, I'm a little ignorant when it comes to that stuff. I'm sure some homeowners on here and maybe somebody like Aunt (the queen of financial wisdom) will be able to give some input.


All I can say--is to stop looking for that 'whole package' that you are looking for. Make a list of your priorities when you are buying a house. 1. Good neighbourhood 2. 3 Bedroom, 2 bath 3. Up-to-date kitchen appliances 4. Central Air 5. Lots of windows 6. Hardwood floors.

Then when you go around looking at houses rate them on how they meet your priority list. I think it's important to understand that while you are obviously buying the house 'as is' (well most purchases happen like that) the house will become what you make it to be. You can fix a crummy paint job with a coat of paint, you can rip out a carpet to reveal gorgeous hardwood floors, etc. Imagine yourself in the master bedroom with your bed and your dresser, etc. Because right there when you are buying it--it is a house, but you will make it a home.

Sometimes I think it's best to buy a 'fixer upper'--bad paint jobs, carpets, a semi-renovated basement, old appliances can bring down the cost of a house--and a house is a good investment--buy it at a low price and eventually sell it at a higher one.

I would just stop looking for the whole package because you can make it the whole package--and finding 'the perfect house' could take a while.

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cyndi33 Posts : 2,585 Registered: 1/3/07
Re: Looking for a house!
Posted: Apr 24, 2010 11:35 AM Go to message in response to: BrighterThanSun...

Take your printouts with you, and rate them when you are in the house. We came up with a scale, based on features most important to us. We looked at about 60 houses over a 3 day weekend, which is a LOT of looking. Our realtor scheduled them based on location so we could get it done.

But, you forget specifics so writing down our ratings there, and taking a couple of digital photos, helped.

Then, we ate dinner and made up the day's list. Some were really easy to eliminate because they just didn't add up to the ad or what we saw online once we got inside. But by the end we had about 5 that we really liked. We put those on our spreadsheet/chart my husband made and we made offers based on the top 3. Then, we ended up buying one that never made the list that we found 3 days after that weekend of looking. But the list and rating while we were there was a huge help, we would never have remembered details we really liked or things we didn't like so much if we didn't write them down at the time.

However, our top one countered our offer and we thought wanted to start a bidding war. We didn't want to pay over our set price. So, we upped our search range by 5,000 and looked one more time. We found 2 houses with all our features we hadn't seen yet. We are living in one of them, bought 2 years ago.

We also looked at the tax rates and water districts, here, if the builder had to pay a whole bunch to get water set up, then you pay an additional fee through property taxes for about 15 years. We bought in a subdivision that doesn't have the additional tax. Throughout our community, our town, the tax varies to a large degree, and we didn't want to live in the most popular subdivision just so we could say, we live in the meadows, when that meant paying twice (or almost) as much property taxes per year.

And, having a good realtor who you click with and who is your exclusive buyer agent is good advice. Ours worked super hard for us, and was super accomodating. We had about two weeks to decide for sure, or be stuck in another year's lease, and she went out of her way to make sure we could get our looking done. (the landlord we were renting a house from upped the rent by a LOT and we were pretty certain we did NOT want to pay him, as far as I know, the house is still vacant too)

Before you make offers, or really even look, get preapproved or preauthorized (I forget which one is better) but they will want to see that letter that you are authorized up to a certain amount, sometimes without that letter other seller realtors won't even show and certainly won't take an offer)

Brighter is right about the things you want to change aspect. Ours had white appliances (which we hated, so we put in stainless) and HORRIBLY clashing wallpaper/paint combos in a few rooms. We changed that almost immediately. One room left. But the big stuff, (size of bedrooms, size of bathrooms, type of basement, size/type of yard and views) that's the stuff we looked most closely at. A home inspection is something I would never skip either, by a professional. Your realtor can help with that. We wanted, separate bathroom for kids, walkout basement, no street or house backed right up to our back yard, large master closet, and enough bedrooms, and open floor plan with high ceiling in the living area for my christmas trees, low property taxes, quiet area. With enough looking, you can generally find a couple that meet your most important criteria.

have fun!!

Proud Member of P.O.O.P., People Offended by Offended People

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amdjelly Posts : 48 Registered: 8/7/09
Re: Looking for a house!
Posted: Apr 24, 2010 5:07 PM Go to message in response to: cyndi33

Don't overlook foreclosures... sometimes you can get an amazing deal on these houses. Our house was a foreclosure, and was roughly $115K for a tri-level 4 bedroom 2 bath, with a 2 car garage. It needs some fixing up; theres a different color of really ugly carpet in every room. But we really got a lot of house for our money, and once we fix it up we can sell it for more than what we paid if we decide to move.

I also second PP who said to find a good realtor. A good realtor makes a huge difference, and we got lucky with ours. He was awesome.

Another PP said to make a list of priorities; this is a great idea.

Also, is the first time homebuyer tax credit still in effect? I have no idea when it was supposed to end, but if it is still out there it will help out a ton!

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August28th Posts : 153 Registered: 1/28/09
Re: Looking for a house!
Posted: Apr 24, 2010 6:26 PM Go to message in response to: amdjelly

Thanks everyone for for the tips and advice! A lot of you mentioned somethings I never considered. Like a PP said, I have assumed DH and I have the same things we're both looking for. After reading this, he and I have casually gone over what we both want and plan to write EVERYTHING down this weekend.

Wants and needs are good to write down too. We have a brand new car, and I would like to have at least a 1 car garage, but I'm unsure if that fits under "want" or "need". Of course a safe neighborhood is a need and affordability is too. Well, these are things we have to figure out!

I was told that the 1st time homebuyer credit is will be over before we're planning on putting a contract. I talked to an agent and she told me that in order to get the credit you have to have a contract on a house by the end of April and be closing in June. That's way too soon for us! That would've been great to have though.

Thanks again, and if there's anything else, I can use all the wisdom I can get! Thanks

True love is like a ghost which many talk about but few have ever seen.

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BrighterThanSun... Posts : 853 Registered: 10/17/08
Re: Looking for a house!
Posted: Apr 24, 2010 7:08 PM Go to message in response to: August28th

Good luck house hunting!

Online house 'window shopping' is one of my methods of procrastination...along with this site.


Keep us updated!

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auntofthebride Posts : 9,354 Registered: 4/2/06
Re: Looking for a house!
Posted: Apr 24, 2010 7:21 PM Go to message in response to: August28th

Dear Aug,

Everyone else has hit the high points, except one: Pre-approved vs Pre-Qualified.

Here are the essentials.

Pre-Approved:

You tell the lender what money you have, what money your earn, etc. Based on your verbal statements of your financial picture, and based on other "standard" features of the market, the lender tells you that you can afford a house priced at $xxx,xxx.

That's the point where you start looking in neighborhoods where the houses are $xxx,xxx or lower. No sense looking at more expensive houses.

Remember, also, that pre-approval means nothing except give you a guideline. The bank does not know if you fudged your income. You know if you fudged your income. The pre-approval is only for your own use.

Pre-Qualified:

You fill out a mortgage application with all your financial details, and the lender verifies each point. The lender calls your employer and verifies your income. The lender pulls your credit report. It's just like the regular mortgage loan application for a real house, except there's no real house.

After the lender has done all their due diligence, they give you a Pre-Qualified letter, in which they state that you are qualified for $yyy,yyy, at %z.zzz percent interest. They will also indicate an expiry date.

This is what you get when you are narrowing your search down to a few good possiblities. When you make your offer to the sellers, you include a copy of the pre-qualification letter. That lets the seller know that you are already qualified by the lender, and will make your offer more attractive than another offer without pre-qualification.

Once your offer is accepted, then since you are already pre-qualified most of the lender's due diligence is done. The lender needs only get an appraisal of that particular property, inspections, etc. They already know YOU (and your finances) are OK. They need to know if the HOUSE is OK.

Pre-Approval (the informal, easy process) is usually free or at a very low cost. You might want to check out pre-approval from a variety of lenders. Most will probably come within a few percent of each other. Be wary if one is an outlier. If four banks will pre-approve you for a $200k house, but one will pre-approve for $400k, then there's something wrong. Don't just jump on the $400k pre-approval, but instead go back and ask on what basis they pre-approved for that much.

You should be doing your own pre-approval as well, based on your own down payment, your own salaries and your own desired monthly payment.

Finally, remember that all else being equal, you should expect to pay more in monthly house payment that you would to rent a similar house. Why? Because rental prices are based on the market, which includes houses that were bought and sold years ago. Those owners have a lower monthly "nut", meaning lower monthly expenses and can thus charge less rent. Your new house payment is based on exactly the last house to be sold in the market: namely yours.

It is my experience that it takes about 5 years for the house payment to dip below the market rents for a similar house. The first 5 years are always the toughest, then please trust me, it will get easier.

Right now my monthly house payment is about $800-1000/month less than comparable rentals in my area.

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auntofthebride Posts : 9,354 Registered: 4/2/06
Re: Looking for a house!
Posted: Apr 24, 2010 7:32 PM Go to message in response to: August28th

Ladies,

I'll add this.

We have an investment that has been earmarked to pay off our house. That investment has been pretty anemic in the past couple of years, like the rest of the stock market. However, with the recent rise in the market, that investment has increased in value.

Comparing the loan balance for our house to the cash value of the investment, we are now, today, within $600 of parity. That means when we pay our house payment next month, $800 of that payment will go to principle and we will officially be beyond parity.

We could cash out the investment and totally pay off our house. Can you imagine? No house payments. No rent. The only, repeat, only expenses we will have are property tax, house insurance and maintenance. Taxes and insurance are less than $5000/year. About $400 per month.

We actually will probably not do that, as the investment is increasing in value more than the interest we are paying on the home loan. However, if the stock market loses steam, we will cash out the investment and pay off our house. If the market continues to go up, we will continue to make money on the investment, and our house will be paid off in another two years, at the natural end of the loan.

It's a great feeling.

That will be YOU in about thirty years!!!! Hang in there. Please trust me, if you watch your money and invest wisely, you'll be there, too. I want to see all of you owning houses free and clear in another thirty or forty years.

Correction: I want to see all of you owning house free and clear if home ownership is your goal.

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BrighterThanSun... Posts : 853 Registered: 10/17/08
Re: Looking for a house!
Posted: Apr 24, 2010 8:39 PM Go to message in response to: auntofthebride

Did I call Aunt the Queen of Finacial Wisdom...or did I call her the Queen of Financial Wisom?
Called it.

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VšnTillBruden Posts : 353 Registered: 1/16/10
Re: Looking for a house!
Posted: Apr 25, 2010 3:54 AM Go to message in response to: BrighterThanSun...

I think AOTB needs to start writing a blog of her own: "Ask AOTB", everything you ever wanted to know about etiquette, financial planning, and a great, big dose of common sense.

I'd read it.

Love me when I least deserve it, because that is when I need it the most. (Swedish proverb)

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auntofthebride Posts : 9,354 Registered: 4/2/06
Re: Looking for a house!
Posted: Apr 25, 2010 10:01 AM Go to message in response to: VšnTillBruden

Ladies,

When you've reached 56, you learn a thing or to. Mostly from your own mistakes.

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Agape14 Posts : 201 Registered: 12/31/08
Re: Looking for a house!
Posted: Apr 26, 2010 1:54 PM Go to message in response to: August28th

Great post and great answers by everyone! I only have a few things to add.

1) Get a mortgage broker rather than scout the banks by yourself. A broker will shop around and get a range of options for you through the banks, and basically get the best rate going since banks "compete" to get clients through brokers, so rates are generally better than if you go in by yourself to speak to a bank agent. And you don't have to pay the broker (I think they get a finders fee from the bank), so you're not losing out in any way.

2) If you're buying resale, you don't necessarily need a real estate agent. In my province there's a house listing tool that's outside of the MLS system, where home owners can list their property on their own. And although you need a lawyer to complete the transaction (which you would anyway), since there are no agents involved, you often get a lower price since the owner isn't adding the agent fee to the house price. Most areas seem to have something like that, so check it out for where you are.

3) Look into getting a new build house instead of a resale house. When we were looking to buy a few years ago, I'd get so frustrated with the resale houses because I'd often find myself saying "I like this house except for a, b, c things that I'd want to change". So eventually we just decided to get a new build, which was cheaper than any of the resale homes in the same area, AND (the best part) I got to design the house exactly the way I wanted. Every last tile, cupboard, counter top etc etc is the colour, size, shape that I want. And we added some extras (e.g cutout between the kitchen and living room/dining room) that made our place unique. So, we got the perfect house with everything I wanted, in addition to what we needed. i highly recommend it =)


Good luck!

*******Added later******

I almost forgot my most important piece of advice!

4) DO NOT max out your pre-authorization amount to buy a house. If the bank will approve you up to $300K (for example), set a limit of say...$250K that you won't go past. You dont want to be stuck with a mortgage that is at the farthest end of your financial limit. Because things will come up. Life happens, and you don't want to have to rely on credit cards/lines of credit because all of your money is going to your mortgage. I can't stress this enough...I know people who are "house poor" because they didn't think about this, got a huge house that they could barely afford, and then later on realize that they have to eat bread and water and basically never leave the house because they have no money for anything else. And when they have any unexpected expense, they're sinking further and further into debt because of it. It's really a bad situation...


~~Life's tough, wear a cup~~


Edited by: Agape14 on Apr 26, 2010 1:55 PM

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JessicaLong Posts : 29 Registered: 8/31/09
Re: Looking for a house!
Posted: Apr 26, 2010 10:20 PM Go to message in response to: August28th

Some really good advice here! We're closing on our house on the 29th, so I'll share some personal wisdom gleened over the past few months. :)

Research the differences between conventional vs. fha mortgages before you shop around for rates. Both have their advantages/disadvantages. If your credit is compromised, a conventional loan with a low interest rate may be hard to come by, so FHA may be the better choice. But there are plenty of downsides to FHA as well... namely, all the government red-tape and mortgage insurance premiums. FHA is picky and meticulous, so give yourself PLENTY of time to close. Also, be careful in chosing a mortgage person- you are going to have to trust them through the process, and the initial scary paperwork known as the truth-in-lending statement. Mortgages are incredibly complicated... a seasoned lender can help explain things, but you need someone you trust and someone with a lot of experience- because at some point, you won't know what's going on.

Don't make any huge purchases in the next few months that may impact your credit. Especially the time between initial offer and closing.

It's going to cost more upfront than you think... in addition to any downpayment. Closing costs can be negotiated between buyer and seller, but can be in the range of $3,000-$5,0000. Buyer typically pays for the inspection- $500 and appraisal (especially FHA) $300. FHA and a few conventional loans also request that you pay the year's homeowner's insurance premium upfront before closing (~$600-2,000+). Don't forget application fees/earnest money deposit. Oh yes, and TAXES, yearly mortgage insurance premium, monthly mortgage insurance, homeowners insurance, homeowners association fees, and all the other little junk you dont think about- lawnmowers, movers, home maintenance, etc. I wanted to cry after we paid $3,000+ more than we orginally budgeted for, and still needed a watering hose. hah! It's a good thing we had a nest egg and didn't use it all for the downpayment, or we would would be looking for pennies in the sofa.

So yeah, that's my biggest advice- save save save, and aim much lower than your maximum qualified amount.
Best of luck! :)




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