Buying A Home
melhunny46
member
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Newly married, looking into buying a home, no clue what I am doing!
I recently got married on 10/19/14 and we live in a small 2 bedroom apartment complex. Our lease ends in March and we are looking to move out of state and buy a home. What is the first step I should do? Do I got to the bank and see what we would be approved for? Would this hurt my credit if I see how much we are approved for? We have been slowly paying off our debt. I know there are first time home buyers programs that allow you to put down a smaller down payment. We have about $5,000 saved up so far. I need some help!! Any tips? Thanks!
Re: Newly married, looking into buying a home, no clue what I am doing!
Second - save a good 6 months worth of expenses in an emergency fund
Third - make sure you are funding retirement
Fourth - Read Home Buying for Dummies and Mortgages for Dummies - tons of great information in then.
Fifth - If you currently do not have a budget - track ALL of your spending - every dollar - that will help you know exactly where your money is going - which will help with the next step
Sixth - DO NOT GO BY THE AMOUNT A LENDER WILL GIVE YOU _ OR WHAT THEY SAY YOU CAN AFFORD -- IT WILL BE WAY TOOOOO HIGH - and you can easily wind up house poor. YOU NEED TO KNOW WHAT YOU CAN AFFORD!!!
How?
Allow 25-27% (or 30-35% in a HCOL area) of your TAKEHOME pay for housing ----that includes"
mortgage+insurnance+taxes+PMI+utilities+HOA ===then add annual maintenance & repair (usually about 1% of the cost of your home) to your budget.
Do NOT overspend for a house.
In addition to a down payment - save for closing costs (don't count on the seller paying these), moving costs, utility start up deposits, repair/renovations as well as decorating/appliances and additional furniture, allow also for needed tools(ladders, drill etc) along with outdoor maintenance items (lawnmower, rakes, snow removal, hoses and garden tools ) as well as yard fun - lawn chairs, table, grill etc.
OK - that is a ton of money that you need to save.
I would rent when you get to your new are - a cheap apartment and save, save, save. Meanwhile you will learn more about the area, which areas you might want to live in, where the good schools are, commute or close to work? etc.
Want to find out if your housing amount will work? Pretend Take that amount - pay your rent & utilities and then save the remaining amount. If it does not cramp your lifestyle or make it impossible to save for future vehicles, vacations and other goals --- you will know how to adjust accordingly. There are reverse calculators online (bankrate.com and others) where you can plug in your morgage monthly cost and it will tell you how much of a mortgage that would be. Remember the taxes, and other items are in addition to that amount.
Also consider if you will be using one income or two incomes to finance this home. Will you be having children in the future - will you stay at home? Work and pay for child care ___ those need to be considered in your budget when looking at finances.
OK - after all of that you need to look at your NEEDS and your WANTS
Needs you do not compromise on -- well, because they are needs.
Wants - those you will not get them all - so know your priorities as some just won't make the cut.
All set now? Get a good realtor and get prequalified with a lender (you do not have to use this lender to buy - but many sellers want to know that you can afford their house in order to consider your offer.) Do NOT buy a house emotionally - look at y our list of needs - EVERY time you view a house.
Have a good home inspection - other inspections if needed.
Owning a home is sooo much more than just the mortgage payment --- take your time, work thru the steps carefully .
Rent first - get financially prepared - read both books and then go for it when you are ready.
Good luck.
Most banks will "lock in" your rate for a certain period of time (normally 6 months), so if you close on a house quickly, those hard inquiries will never affect your home purchase.
When we bought our house, we shopped around for a loan, and the lender that we went with did not lock in our rate for us. Our first contract fell through, and they made us begin the whole loan application process over again. When they checked our credit the second time, all of the hard inquires showed up, and affected our score and our rate. Most banks aren't this difficult to work with - our realtor swore never to work with our lender again!
Read some of the advice given to other posters. $5,000 isn't a lot to use for a down payment (even a small one), closing costs, and the cost of moving to another state. I'm assuming that this $5,000 is on top of your emergency savings - which you shouldn't be using to buy a house.
Honestly, if you're moving to another state, I would say wait for the home purchase. Rent for a year. It will give you a chance to find out what neighborhood you want to live in, and it will give you a chance to both find decent jobs in the new area (if you need two incomes to qualify for the mortgage). Use that period of waiting to save up, and pay off as much debt as possible. Owning a home is expensive. Not just the home, but the insurance, maintenance and repair cost, yard care costs, extra utilities, etc. For such a large purchase, it's best to wait until you know you're ready.
What ever you rent - keep your housing costs low so that you can save more.
Utilities tend to be higher in a house than an apartment.