Where to Start?

erinxelizabeth

Hello!
So hubby and I just got married last month, but we've been talking about buying a house for years now. We've always kind of put of any kind of planning until after the wedding so we didn't stress ourselves with money too much. Now, however, we're over the hump and are looking seriously at finding our home.
So my biggest question, where on Earth do I start? We've already got a savings account that we've been adding to for a down payment but are there some serious steps we should be looking into during our savings process? Are there some books or articles that might be useful?

Thanks!

SmrBrd2012

H and I are in the early stages of home buying too. Home Buying for Dummies is a good read. I would also start thinking about what you can afford and what kinds of qualities you would want in a house, what would be deal breakers, etc. There are also some websites out there about the quality of schools and crime rates in different neighborhoods.  Neighborhoodscout.com and city-data.com are good ones.

G2SoccerTaz

I second PP. Also think about a real estate agent. They can help you out tremendously. Start asking friends and family that have recently used one. That is how we found ours and he was awesome. Just because you see a house on line does not mean that it for sale. So having a realtor to let you know helps.

I would also recommend see what type of loan you want. Each mortgage loan has a bit of a difference for requirements. Talk to a loan officer. They can help you out. Also, see what you are preapproved for. Sometimes they preapprove you for a whole lot more than what you can afford in your monthly budget.

A very important aspect is to sit down with your H and make up a budget. See what you can afford as your maximum monthly payment. Don't forget that also included in your monthly payment is homeowners and property taxes.

LoveKiss

Start with your budget. How much can you afford for your monthly housing payment? That amount should be low enough to allow you to save 10% of your income for retirement, several hundred more for home maintenance and repairs, eat more than ramen noodles every night, and go on a vacation every once in a while. If you are thinking of having kids in the future, your budget may also need to account for childcare costs/diaper & formula budget/ college savings/ etc. once you know your monthly housing amount, subtract $200-300 for mortgage insurance (if you have less than a 20% down payment), $300-600 for property taxes (you can get a more accurate amount by investigating the typical annual property tax bill in your desired neighbiorhood), $75-200 for home owners insurance (more if you are in a disaster-prone area like Florida), and $100-$500 for HOA fees (if you want an HOA neighborhood, rates vary by the amenities offered, could be more than $500). After you subtract all of those things, you will be left with the amount that you actually have available to pay the principal and interest of your mortgage loan. Take that amount and use an online calculator to see how much home that amount actually buys you. Then go online and look at homes for sale in your price range. Do you like what you are seeing? Are there homes that you actually want to pay money for? If so, then you are ready to move on to contacting a REA and some lenders. If not, you need to save more money for a bigger down payment, find ways to free up more money in your monthly budget for a housing payment (e.g. eliminate your cable/satellite tv plan), and/or increase your monthly income. if you can get to a 20% down payment you can eliminate mortgage insurance, freeing up hundreds every month to go towards principal and interest instead. Also, factor in that utilities may cost you more each month if you are moving to a bigger place or an older (i.e. less energy efficient) place. Make sure that you give yourself some breathing room in your budget for any unpleasant utility changes.

Talk to friends and family for realtor advice and lender advice. Talk to more than one realtor and more than one lender. They will be working for you, so interview them like you would interview an employee. What will they do for you? Why should you choose to work with them? Make them work for your business.

Regardless of what your budget analysis tells you (you're ready/not ready), you can always start casually visiting open houses just to learn what you do/do not like in a home. The more informed and confident you are in your preferences, the more streamlined your real shopping experience will be. I will admit that I wasted a lot of my realtor's time looking at ranchers that I would never buy in a million years. I wanted to convince myself that I could maybe like one because Mr. LK really loves ranchers. But the truth of the matter is that I just don't like them for me. Never have, probably never will. It would have been helpful if I could have made peace with that fact before we started really looking, and I think that visiting open houses ahead of time may have expedited that process.

Good luck!

Sisugal

Two good books to read:

Home Buying for Dummies

Mortgages for Dummies

FIRST is to get all finances in order - pay off consumer debt,

save for:

downpayment

closing costs

inspection

moving costs

utility start up deposits

repairs/renovations

decorating/furniture/appliances

Misc household items (garbage cans, lawn mower, hoses, ladders, etc - all those things you do not need in an apartment)

AND have a 6-8 month's expenses in an emergency fund when all this is done.

BEFORE you go to a lender for preapproval - you will want to have determined how much you want to spend each month on housing costs .  Do not go with the amount that the lender will give you or you will wind up house poor! Just because they will give you a large mortgage does not mean you should do it. 

Keep your housing costs to no more than 25-28% of your TAKEHOME pay 30-35% in a HCOL area.  Determine if you are using one or two incomes for that figure -- consider your future plans for children .  That % amount includes mortgage+PMI+insurance+taxes+utilities+HOA. .

 

As for the house -

Make a list of NEEDS and a separate list of WANTS.  You will want a house that has all of your needs taken care of  - and them some of the wants.  Rarely will you get it all,

Avoid buying emotionally - stick to your list and your financial situation.

MissMaeisbeforeJune

I agree with the PPs about getting books/articles but the first thing I actually did was met with a loan officer at my bank, went through the prequalification, and figured out what my budget would be (i.e. what I could afford). That way when I "played around" looked at houses online (prior to getting a real estate agent) I wasn't looking at a bunch of stuff I could never afford. Now I have met with a couple real estate agents, and chosen one to help me find and see houses in my area.

short+sassy

Make sure your credit report/score are in good shape. If applicable, make sure it is accurate and clean up any negative incorrect information.

Hmmm...why is it the ONLY "mistakes" on credit reports are negative ones? Rhetorical question, but had to throw it out there, lol.