Buying A Home
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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.
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.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Buying a home---first steps??
Hi all. I am newly married and new to The Nest. Now that my wedding is over, my next obsession is buying a house. I've been watching all those house shows on HGTV, but mostly Property Virgins. My husband and I have a little bit of money set aside for a down payment but still need more. I've been looking at lots of properties online in our neighborhood, and we've even seen a few in person. But I am clueless as to what we really need to do next.
Can I have some advice please??
Re: Buying a home---first steps??
Go to the library or Amazon and pick up a copy of Home Buying for Dummies. Really. There are previous editions you can get for just a couple pennies.
You should evaluate your own finances seriously before even beginning to look or talking with a bank.
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1) get your finances in order. Pay off consumer debt. Establish an emergency fund of 6 months expenses. Save a downpayment - more the better.
Then save for closing costs, moving costs, start up costs, repair & renovation costs, misc. household items that you will need, but don't own as a renter, and save for decorating and more furniture.
Keep your housing costs to 25-28% of your TAKEHOME pay for
mortgage+PMI+taxes+HOA+insurance+utilities. Less if you have other debt. 30-35% for a HCOL area.
After that - make a list of must have as well as wants - and prioritize. Know what you are willing to give up as no house has it all.
LOCATION, LOCATION, LOCATION - decide where you want to live.
Got that all checked off - now get preapproved (and you already know what you can spend if you have done your financial homework)
Do not take the buying/negotiation process personally - this is a business transaction. You want the cheapest selling price, the seller wants the most money for his house.
ETA: Decide if you will use 2 incomes of one to finance your payments. Do you want to have children (add day care expenses), will you want to SAH?
Check your FICO scores - fix any negatives on your credit reports. You need scores over 720 to get the best rates.
Find a REALTOR you trust and who has you and your family's best interest in mind. A good agent will be able to help you with the following:
1. Recommend a qualified and ethical lender who will know what loans or special programs you may qualify for (ie FHA, VA, First Time Homebuyer Programs, community housing projects, etc). They also should be able to tell you IF you should pay off any debt (it's not always a good idea to pay all debt down to $0, may negatively affect your credit score, leave you strapped for cash, and often isn't necessary to purchase a home!). A good lender should walk you through the process of qualifying for and obtaining a loan.
2. Help you determine how much of your cash you want to put down. You don't want to put ALL your money into your downpayment. You need to allot for necessary repairs, maintenance, insurance, taxes, HOA fees (if applicable), etc.
3. Find a property in a community that meets your needs - do you care about quality of schools, proximity to work, quiet street, walkability score, shopping, etc. A good agent will know what questions to ask YOU, not leaving you the responsibility of being the one to guess what questions you should be asking.
It's helpful to start with finding a Realtor, but not all Realtors offer good service, have experience, and conduct business ethically. Check the Nest's articles on how to find a good realtor. Also, ask friends and family if they've worked with anyone they were happy with (preferably with the homebuying process).
Hope that helps!!
Additionally, be careful having your credit run by too many lenders or banks. If it's run by multiple lenders within a 45-day period it shouldn't ding your credit, as credit reporting companies acknowledge that you should be allowed to "shop" for a good loan and group those inquiries as a single event on your credit. However, if you're just browsing and not ready to buy yet, hold off on giving them your SSN and having them run your credit until you're ready.
That being said, most lenders won't be able to give you a good idea of what you qualify for without running your credit. Unfortunately it's a catch-22. My suggestion is to just be a little ready to dive into the idea of finding a home. If after running your credit it turns out that you can't qualify now, your lender should be able to give you a to-do list to help you qualify in the near future.
I just wanted to mention that it's not a great idea to go from bank to bank in the next year or two and have your credit run by numerous companies over a long period of time. That could hurt your credit.
Bank of America has a nice interactive tool on their website to help you figure out what price range house you can afford. According to that we could get a half million dollar house. We ended up getting something under $300k so we could be comfortable. Our loan officer even said that if we needed more money to do improvements (we don't) we could easily get approved for more. Always try to undershoot that amount so you're not house-poor.
Make sure you can get preapproved at a bank for a loan in the amount of the houses you're looking at before you get too far into the process.
Start looking online and getting an idea of what area you want to look in. Find a realtor and start looking at houses! We really wanted to stay where we were renting, but in order to get a house in our ideal price range (not what BOA thought we could afford) we'd have to settle for a house that needed a lot of work and had a little land. We ended up going about 15 minutes around the beltway and found a beautiful house in a nice area on a 2/3 acre lot for LESS than the houses where we were looking originally. Sometimes your dream home isn't where you thought it would be
Good luck!
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Paying off your consumer debt does NOT hurt your credit score - it will improve it! Closing credit cards may in some cases hurt your score if it is a long history card. Pay them off, but don't close them.
Do not let anyone else tell you what you can afford. Track your spending and KNOW what you can afford COMFORTABLY. You will be able to get a loan for more than is reasonable to spend and you will wind up house poor if you accept that amount