October 2011 Weddings
quirky75
member
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House buying advice
H and I have decided we are staying here a while and we are talking about buying a house. Problem is we have no idea where to start.
The big thing to figure out first is money. For those with homes, how did you figure out how much of a home you can afford? I've been looking at mortgage calculators online but I'm sure there's more to it. I've been looking online at different tools and calculators if there are any you recommend.
I assume we should go talk to some sort of financial advisor but I'm not sure where to find someone - a bank? Does a realtor help you with deciding what you can afford?
Tell me anything and everything you can think of about the beginning of house buying - the stuff before you even look at houses 
Re: House buying advice
We mostly looked at what we would have as a down payment, then figured out from there what our monthly payment could be and got our number that way. Also, call your bank and pre-qualify for a mortgage, they'll be able to tell you how much you would even qualify for, which will help narrow down your budget.
Then start going to the towns you might be interested in and get a feel for them (research schools if you think you'll be staying there a while, see what the downtown area is, etc). That way you'll know what towns you want to concentrate on. Visit open houses to see what's even available and for what money. Then find a realtor you like and trust (get recommendations from friends or coworkers) and go find that house!
Ditto all of this. When I bought my first house, I got recs for both a mortgage broker and a realtor from my boss at the time. All of this was before the big housing meltdown (that broker went out of business). If your credit is good, you may pre-qualify for a home that is actually way out of your price range, so be careful of what they tell you. Before you get pre-qualified, first know what you want to pay a month (don't forget to include insurance and taxes), and what you can afford for a down-payment. Depending on what you can put down, there are great programs out there like FHA loans -- these loans are awesome, but are very picky on inspection. Don't get discouraged! Be patient and picky! The market is doing really well right now but a lot of the good places are going quickly, which means sellers are getting what they're listing at. How exciting for you!
Curls said it well. Definitely talk to the bank before you get started to figure out what you can afford - knowing what you want your monthly payment to be and what you can afford as a downpayment going in will help.
I think most loans require a 20% downpayment (but I would look that up because I'm not positive about that). I know if you qualify for an FHA loan (particularly as a first-time home buyer), you can get approved for a loan with just 3-5% downpayment, which might make things more affordable from that end. FHA loans do require mortgage insurance (basically to help protect them since you aren't putting as much downpayment down), but you can write that off on your taxes which is definitely nice.
If you have any questions about getting an FHA loan, I can try to help. I did that ~4 years ago, but I just refinanced recently so some of it is still fresh!
I agree with all this, especially the bolded! We pre-qualified for about 400k more than we actually wanted to spend (or could afford with our down payment) because of our credit. When we got a printed letter with our pre-approval we had them knock down the price to what we wanted to spend so the sellers didn't think we had all this extra money.
And places are really going fast, so make sure you do your research before actually starting your real home search. You'll probably need to go see houses the day they go on the market and basically show up with a check to give with an offer if you like it. So there's not a lot of time to decide if you like a house or not. And if you LOVE it then you may even want to offer close to your best & highest at the first offer. We low-balled a place and instead of getting a counter offer we were just turned down of the bat.
Cool, thanks guys
I just talked to H and we're going to go to the bank probably our next free weekend to talk loans and money. We have 10% down payment ready so we may look into the FHA loan.
I'm getting excited. I didn't think H would be ready to go to the bank about it, but he is!
Everyone else had good advice. I would definitely ask co workers or friends in the area for recommendations on realtors and mortgage brokers. I hated our realtor and wished we would have picked someone else.
I also went and got the book Home Buying for Dummies. It gave me a little more perspective on things. It did have a lot of good info about the whole process.
I work in the mortgage business.. and it's definitely a lot tougher now to get a mortgage than in the past. Go to either your bank or to a mortgage company (but be sure to check them out first.. there are many banks/mortgage companies with issues). Have them pre-approve you. Make sure it's a true pre-approval (not a pre-qual), meaning they will pull your credit, check your tax returns, bank accounts, etc.
A pre-qual just tells you what you should be able to afford. A pre-approval goes a step further to make sure all your information has been verified for the mortgage.
The last thing you want to happen is get a prequal for a certain amount.. start looking.. write an offer.. then it turns out you actually can't purchase because you haven't been at your job long enough, don't have enough assets, etc.
For example: DH's friend was hoping to buy a house this year. He was told by a bank he could afford x amount & that his credit was good. So they started looking. Then he actually went to get pre-approved. Turns out he can't buy a house for another year because of they way his commission based job / taxes were. They were pretty bummed.
Good luck! It's an exciting and overwhelming process at the same time.
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I have a conventional mortgage with only 5% down, so you don't need to have the 20%. It all just depends on how much other debt you have and what your credit score is. We have very little debt and none of it is "bad" debt (like credit card debt) and our credit scores are both 750+.
My advice would be to make a list of everything you want to have and then narrow it down to a "must have" list and a "would be nice" list and go from there. It really helped us a lot to know what things we weren't willing to compromise on from the beginning.
For figuring out the price, H came up with this idea somehow that the most you can afford is 2.5 times what you make in a year, so we looked at houses that were in that price range. Later we met with a mortgage company when we got our pre-approval and they ran some numbers with a couple different prices to give us an idea of what our payment would be.