Buying A Home
Dear Community,
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.
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.
First time home buyer?
My husband and I are interested in purchasing a home. We are not sure where to begin; do we get a loan or find a realtor first? Also not sure what type of loan we would qualify for. I'm a stay at home mom and so we only have one income. How long of employment is required? He has been working for a long time but in his field is never something long-term. He worked for a company for one year then got lay-off, he found something right away but only stay there for 5 months and now he's working in Canada making more money but is only a six month contract. He's a pipefitter and where we currently live they're in high demand so he is never unemployed for more than a week. I'm just not sure how that?s going to affect us.
Re: First time home buyer?
You should get pre-approved by a lender first (NOT prequalified, they're very different). That will give you an idea of what price range you can look at. They'll ask you questions about your husband's employment during the process and will let you know if there are issues. If he's been in his line of work full time, they'll probably want to see several years' worth of tax returns to verify your income.
A lot of realtors won't work with you until you get pre-approved. Once you are, go to a few open houses to meet agents and see who you like. Or get a referral from someone you know.
I think your first step would be to determine what you can afford. How much can you pay each month toward your home? This should include mortgage, insurance and taxes, as well as utilities (electric, gas, oil, water, trash, HOA, etc.), plus maintenance (painting, repairs, lawn, snow removal, etc.). Look at your budget and crunch some numbers.
Once you know how much you can afford, you should get pre-approved for a loan and find a realtor. You can do this at the same time.
Agreed w/ PP: crunch number to see what you want to/can afford. Don't use the number that banks are gonna give you. Then get pre-approved for a mortgage.
Then find an agent. However I'd suggest an exclusive buyer's agent, who doesn't do listing/selling house but only work with buyers. We had great experience with ours.
This is a good point. I think almost everyone I know has laughed at the size of a loan they're pre-approved for by the banks. When you crunch the numbers, if you really take out a loan so large you may not be able to feed your family! DH and I have a spreadsheet that takes into account everything - taxes, HOA fee, insurance, interest, and down payment size and then calculates the monthly cost.
Also - I am a very practical person. We are buying now because it makes sense - we have a 20% down payment, we feel secure in our jobs and are finally to the point where we know where we want to settle down. I see friends sometimes buy a house simply because they want to buy even though they're not in a great financial situation. This doesn't work out well for them - either b/c they become house poor, or they buy a crappy house in a bad school district. In these cases it would make more sense to rent and save money for awhile.
How can we do those calculations? My husband would feel comfortable with a mortgage of no more than $1500. Also what is included in the mortgage payment is insurance and taxes added on it? We are not sure how much he'll be approve for but when we check homes online the price range of what we like is between $160-200 thousand. With the low interest rate it shows payments can be from $870-1300, not sure how accurate that can be.
How can we find an exclusive buyer agent? Very few of our friends own home not sure where we can get referral from.
Sorry double post.
Do you have a monthly budget? Do you know how much you spend each month and how much you have left over for savings?
The first place to start would be to look at what you pay in rent now. If you don't have a lot left over each month, then you would want your housing costs to be NO MORE THAN your current rent. That means all those things I talked about (mortgage, insurance, taxes, and maintenance). If your utilities are included in your rent now, than you should also include them in your housing costs.
As for how to estimate these numbers:
Mortgage - the numbers from a mortgage calculator will usually assume a 20% down payment (do you have this?) and will usually not include taxes and insurance. Tax information is usually included in the listing, so take the yearly taxes, divide by 12, and add that to your monthly payment. As for insurance, you can call around to get quotes, but in general if you assume $50-75/month you will probably be close.
Maintenance - I think they say to assume you spend 2-3% of your house price in maintenance annually. So if you buy a house that costs $200k, assume you will spend $4-6k/year, or $300-500/month on maintenance. Now this might not be true every year, but there will be years with big expenses (new roof, new heating/cooling system, storm damage, etc) and others with minor standard upkeep (lawn maintenance, painting walls, etc.).
Utilities - Once you are really serious about a place, you can get this info from the current owners, but if you are looking for a baseline, ask on your local board about utility costs for people with similar sq ft houses.
You want to be very careful about buying more house than you can really afford and maintain. You want to be able to enjoying living in your house, and NOT stress over living/working FOR your house.
You can try to look for one from this website.
http://www.naeba.org
Talk to couple of them to see who you have good "vibes" with.
Thank you so much, we don't actually have a budget put know how much we spend in on a monthly basis. I think I'm going to start with doing a budget for the next month and see how we do. We definitely don't want to buy too much house. That's why my husband wants to keep it at $1500 because give or take that's how much we spend monthly on rent and utility renting our home.
I think tracking your spending for a month or 2 and creating a budget is a great idea. I'll just one more time that if your cash flow is good right now (ie you have money to save every month and you are not living paycheck to paycheck), and you are comfortable with $1500/month, that you include all the appropriate expenses in that $1500.
All too often people don't realize the true cost of owning a home vs. renting. In your own place, if something breaks, you are responsible for it, and it always happens at the worst time. You should also make sure that you will have enough money in savings after paying for a down payment, moving costs, and house start-up costs (new furniture, appliances, etc.) to cover any of those emergencies that might pop up (hot water tank breaks unexpectedly, tree falls on house, etc.).
Good luck!
This doesn't take into account down payment, interest rate, etc. I'd be very wary of using this formula alone.