Buying A Home
disneyfan89
member
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Well this is terrifying
Hello - new to the boards and the whole real estate world. I am 26 in a relationship for about 7 years but not married. Recently about 2 months ago started looking to move out. We started out thinking about renting, was somehow convinced on buying and here we are two months later with a substantial offer in on a house. Assuming this goes through, and my realtor seems to think it will be accepted, most people would be popping champagne! I'm over here ready to have a breakdown. It's just hitting me like oh my god we are actually doing this. There goes all my savings. I just in general don't know how to be sure. I cant even get a straight answer on what the monthly payment will be because of mortgage insurance and homeowners insurance and then added onto this the closing costs no one can tell me will be. How can you tell if you have enough with no straight answers? Our downpayment is 10% (i have no idea who can afford 20% in our area we are one of the most expensive in the country) so we have the added expense of mortgage insurance. Added onto this homeowners insurance (which i have no idea how to even begin with that) I'm just hyperventilating a bit.
We both have decent paying jobs with about 56k saved between us but there will be no outside help. Everything from toilet paper to furniture to anything and everything is all on us. So some general questions: What is the average homeowner insurance rate? How do you "shop" around? Going online seems unreliable how do i know who is reputable without reviews? Is buying a home worth the money? I read horror stories of the never ending money pit but on the flip side am told buying a home is far better than renting.
Finally - if you could give advice that you wish you had or knew what would it be?
Re: Well this is terrifying
Ok, first thing.......breathe!
As for getting a handle on the expenses, your mortgage company should be giving you a good faith estimate of how much the mortgage will be in terms of principal and interest payments. There should also be a section in there about the mortgage insurance.
The listing itself will normally include something about how much the annual taxes are, you can take that and divide by 12 to figure out roughly how much they'll take out for that part of the escrow payment.
As for insurance, I assume you have renters insurance? Call the same company and ask them for a quote on the place you're buying. This will at least give you a starting point. Then call around and get various quotes. I personally prefer to stick to mainline companies (ie. places with offices). I personally have State Farm, but there are others out there. Ask your friends who they use for homeowners/renters policies. That should give you some options.
As for the "money pit". The "pit" comes from the fact that you're now responsible for everything including maintenance. You can't just walk up to the office or call the landlord and tell them the sink is leaking, the A/C pooped out, etc. If it calms your fears, you can get a home warranty for a price that will cover most major items (there's still a deductible), although I personally prefer to just cover things out of savings. However, with some good fortune and wise choices, you should walk away from the house when you sell it better than you were when you bought it.
Hope this helps.
All that aside, you're not getting good guidance from your realtor. He should absolutely be available to you on the weekends, and should have helped you determine whether you were in a flood zone.
Hey @disneyfan89, it sounds like you might just have cold feet. It is one of the biggest purchases you will make in life and buying property is daunting! Especially when it is your first go-round.
Like @MommyLiberty5013, I personally would not buy property with someone I was not married to. But, I'm sure you and your b/f have considered that and made a different choice. If you haven't already, I might look into getting your legal ducks in a row for bad possibilities...that hopefully won't happen...but could. Like what happens with the house if the two of you break up. Or if one of you passes away.
Sorry to pack on more stress for you! But here are some answers to your questions. It's a little early in the process for this, but you will be given a good faith estimate from your lender, which will include your estimated monthly payment and closing costs. As for the mortgage payment, you can get a pretty close estimate of what it will be, once you have your insurance costs figured out. There are mortgage calculators out there where you can input your loan amount, down payment, interest rate, loan term and voila...it will give you the loan portion of your mortgage payment.
Typically, your mortgage payment will consist of loan payment + insurance escrow + property tax escrow + PMI (private mortgage insurance). The insurance and property tax escrows are derived by taking each of those costs and dividing them by 12.
The best way to find out your insurance costs...whether for dwelling and/or flood...is to contact a few local insurance agents. They will each be able to give you a few quotes from different companies. Just make sure you are comparing apples to oranges...like same levels of coverage, same deductible, etc. There is no way any of us can tell you how much your insurance will be because it will vary greatly based on your area and replacement cost of your home.
As for flood insurance, that will be the same cost for all the agents because it is sold by the same folks...the NFIP (National Flood Insurance P?). I don't want to get your hopes up because it may not be similar for you, but I wouldn't think insurance for an AE zone would not be very high. I'm in AC...which is worse...and my yearly insurance is $400. It went up $80 from last year. And yes, all flood insurances will keep going up over at least the next 5 years, but what doesn't? It shouldn't be large jumps...that is why they are spanning the jumps out over 5 years. But, that is just my guess. The insurance agent you choose should be able to give you a bit more insight on that.
Is your house raised at all? If so, you can also have it surveyed after the purchase. In my area, a survey runs about $300, but if your house ends up being elevated higher than the flood plain it is sitting in, it will lower your flood insurance costs. For example, my house is raised a few feet off the ground. When I had a survey done, my insurance dropped from $1200/year to $320/year (at the time).
Last, but not least, you asked if you can still get out of your contract. You can always get out of the contract as long as it is before closing. No one can legally force you to buy a house you no longer want to buy. I'm assuming you mean "and get my earnest money back". Very possibly. It really depends on the contract you signed. Does it have an inspection clause? Most do. At least in my area. If so, you can use that to back out of the contract as long as you are still in your inspection period. I don't think you even have to give a reason, but every house is going to have something wrong with it. You decided the roof is too old. You think the HVAC unit is on its last legs. I'd even think another valid reason would be, "We were told it was not in a flood zone, but now are bank is requiring flood insurance and we can no longer afford the financing"...assuming there is a financing contingency in the contract (there usually is).