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OT: Advice for Buying a First House


FallofEmpyrean

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My girlfriend are I are starting to get serious about the idea of buying a house. We live in the -- unfortunately -- very hot real estate market of Phoenix.

 

The lease on our apartment is up in March, and we are wondering what to look out for when looking for a house.

 

What advice do you guys have on buying a first home? I appreciate it!

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Originally posted by FallofEmpyrean

My girlfriend are I are starting to get serious about the idea of buying a house. We live in the -- unfortunately -- very hot real estate market of Phoenix.


The lease on our apartment is up in March, and we are wondering what to look out for when looking for a house.


What advice do you guys have on buying a first home? I appreciate it!

 

 

it's a pain in the ass...lol....but that's not advice...

 

don't let a realtor pressure you...some will try to make you think that you need to get a mortgage from THEIR bank IMMEDIATELY NOW!!!

 

also, get your own inspector...don't use anyone they recommend....just my experience =)

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1. Figure out how much you can afford.

2. Call around to a couple mortgage brokers to get a feel for the prevailing interest rates and what types of loans you can afford. We hooked up with ours through our broker. Some of the national guys are more expensive.

3. Look around at a lot of houses and figure out which ones you like and what about them you like.

4. If your lease is up in March, I'd start looking now - real estate deals take ~1 month to turn around (in general) because of the massive amounts of paperwork.

5. GET AN INSPECTOR. You don't want any hidden suprises. The inspector works for you. You pay ~$500 to make sure there aren't any major issues - money well spent.

The whole process can be very agonizing, and the amounts of money that get thrown around are downright obscene, but its worth it in the end...

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Go to a reputable local bank. Walk in and talk to a mortgage specialist. Have them help you figure out your budget and then stay within that budget. Also budget according to only one income. It'd totally suck to be in over your head if one of you were to stop providing income (illness, break-ups, babies...)

Get a place with a room for gear. I'm looking at a place with a basement. :thu:

HOT real estate market in phoenix you say? :D I laughed a little when I read that.

Tim

:wave:

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I recommend this book

Geeze, there's so much to know. Basically, everyone will be out to get as much money from you as they can. You need to remain in the driver's seat at all times, or you'll get horribly screwed. Remember, the real estate agent works on comission. His or her obligation is to the contract and getting the deal, not in protecting you. If you really are new to this, get at attorney on your side to look over the contract.

Also, typically at closing time, they won't give you all the final costs until you walk in to sign papers. This is absolutely unacceptable, as they'll usually try to slip in some extra fees that you won't have the time or desire to challenge. Insiste on all papers several days prior and let your attorney look over them.

Shop for your mortage. There are hundreds of lenders and each deal is different. Don't just go with the first company you real estate agent suggests. Watch out for excessive loan origination fees. Above all, remember EVERYTHING is negotiable.

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Originally posted by FallofEmpyrean

I guess I need more advice in the months leading up to actually looking. What determines that you're "ready" to buy a house?



the fact that you're asking about it shows that you're probably ready..or near ready..

havin' a nice downpayment doesn't hurt the readiness factor either ;)

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The girlfriend and I just bought our first house right before Thanksgiving and, for the most part, it was a pretty painless process. Both the Realtor and our loan agent were friends of a friend and both of them really helped us out. In the end but got about $15,000 knocked off the price of the house and had enough money to do a lot of stuff we wanted to do around the house.

The only real advice that I can offer is REALLY look over the house. There was one house that we looked at that I was really into. It was a lot bigger than the other ones we looked at, nice yard, BIG basement. It's was really nice. I was about ready to put in a bid on it when we decided to go look at it again. That time around I noticed a lot of things I didn't see before. Things like cracks in the basement walls, the front porch was sinking into the ground, {censored} wiring throughout the house. Needless to say we never went back. Morale of the story, take a REALLY good look at the house.

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it is a pain in the ass...lol!!! but totally worth it.

hit some open houses to get a low pressure look at whats out there, even just to familiarize yourself with the idea of looking at a house. ask friends and colleagues about their experiences, and see if anyone has a realtor to reccommend. once you're serious, contact the realtor that comes with the highest personal reccomendations and secure them as a "buyers agent" that way they (theoretically) are working in your favor, not the sellers. without knowing your downpayment situation, i'd mention that you can buy a house with nothing down (and can often get money back at the signing--great for immediate improvements) using a first time buyers loan (my wife and i have a 0 down morgage, with a low fixed interest rate for the first 5 years, and then variable rate--with yearly and total caps--after that) but you will have to have some earnest money...usually 5-10% of the asking price. also, when you're serious, it can help to get pre-approved for a loan. it lets you make an offer right then and there. it will also let you know what you can afford. i'd be careful though, you'll most likely be approved for much more than you would realistically want to spend each month, so have an idea of what you're comfortable with at the beginning.
definitely get a good inspection, and walk through with them as they do the inspection if at all possible. you'll learn a lot about the house. when we did that i got a lot of tips and pointers that proved to be really valuable. along those lines, if you can get a home warranty do it!!!! it will cost you about $400-500 a year to keep it, but is worth it. we've already (been in the house for 2 years) used ours to repair our dryer and garagedoor...and when the furnace goes, that $400 will be cheap compared to the $5000 for a new one.
remember that paint/wallpaper/cosmetics can be changed. i look at pictures of our house before we repainted and tore out all the carpeting--basically brought it into the 21st century...lol--and can't believe its the same house. along those same lines, if you're looking at a place that needs some work, be realistic about how that fits into your budget (money and time wise)

those are just a few thoughts off the top of my head to get you started. we actually bought the "buying a house for dummies" book when we did it, and it was a fantastic resource, it covers a lot about the process and has good tips, so its a bit less daunting.


oh, and make sure it has a jam room!!!!!!

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i just closed on my house 12-23 in surprise. :)

mysticaxe had some good advice. start with figuring out what you can afford, then sit down with your girlfriend and decide what features are important to you guys...

are you looking new or used? how big of a home do you need/want? how important is location?

it also doesn't hurt to get a realtor... they make money from the seller so it doesn't cost you anything. it's really their job to find what best suites your needs.

good luck!

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Originally posted by MitchSchaft

Whatever you do don't put your girlfriend on the mortgage! Are you guys living together now and for how long? You'll have to refinance or sell to get her off of it when/if ya'll split up.

 

 

That's probably the best advice in this thread so far. Seriously.

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Get a buyer's agent and that will help. They can ask you questions about what you are looking for and take you to see the houses. They can also help you line up a mortgage agent, although as others have mentioned, you can get that squared away on your end before you get the buyer's agent.

Depending on where you are at in your career, I would buy on the high end of what you can afford. Your income will go up much faster than your real estate taxes.

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My best advice would be to not get in over your head...figure out exactly what you need and just get that.

3 years ago I bought a 4-bedroom house on my own....for the last 3 years, I've been fighting credit card debt and it's been a stretch anytime anything has gone wrong or needed fixed...and believe me, houses need fixed as I'm sure every home owner here will attest.

Sure, I have a bedroom full of guitars and an office with some nice recording gear....but did I ever need that much space? Hell no. Honestly, I should have spent about 25% less than what I did and just gotten a 2-bedroom...one room for sleep, one room for gear.

I'm still in that house, pinching pennies here and there just to stay afloat....and I haven't bought any new gear since I moved into the house. That wouldn't matter to most folks, but I'm sure it does in this forum. I can't really save any money because my dollars are spread so thin every month.

Also....more than likely, your HUD statement will have fees that you weren't aware of. I got hit with an $800 surprise at my first closing. I was obviously pissed, but the charges were legitimate (something to do with taxes). I wish I could have that day over again...I should have told my agent and the sellers that I didn't have the money and that if the deal was going to happen that they were coming up with the money.

So keep that in mind...the real estate agents are making money as are the sellers....if I were you and you got hit with some kind of unforeseen fees, I'd try to make them pay it.

My ex-fiancee and I talked a real estate agent into contributing $1000 of her commission money to get her house sold...so these people are flexible.

Good luck man, it's a big step. I'd also advise you to figure out how serious you are with this girl before you buy a house together. Trust me on this one, if you guys break up, it WILL get very, very ugly....

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Originally posted by Ralph Stephens



do you mean financially ready or mentally ready???

 

 

Financially. Only I can really determine if I'm mentally ready, I suppose.

 

I've been with my girlfriend for 8 years, so we're about as serious as it gets. It's a convenience thing that we haven't yet gotten hitched.

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Get a GOOD agent. Someone that listens to you and understands what you're looking for in a house and that knows what they're doing and can offer you guidance. I had an awsome agent when I bought my house and she made it so much easier even though I'm pretty darn picky. She really listened and only showed me houses she thought I would be interested in. It took a few look-see's for her to really get an idea but before long she knew a house wasn't right for me before I even said anything to her :thu:

Get a pre-approved mortgage. Be carefull about "no closing cost" loans, sometimes times they will actually have inflated closing costs that are just "hidden" by folding them into the loan amount instead of having you pay them up front. Talking to a lender or mortgage broker will help you understand if you are ready financially. They will tell you how much you can be approved for (so you know how much house you can afford) and what the payments will be. This is based on you income, debt, credit rating etc.


And you don't have months leading up to actually looking. If you plan to move in March, you're already behind. Start looking NOW. And when a market is hot like Phoenix, buy as soon as you can because it's just going to get more difficult, but don't rush any decisions, just don't dawdle.

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+1000000


Originally posted by epiegols

Get a buyer's agent and that will help. They can ask you questions about what you are looking for and take you to see the houses. They can also help you line up a mortgage agent, although as others have mentioned, you can get that squared away on your end before you get the buyer's agent.


Depending on where you are at in your career, I would buy on the high end of what you can afford. Your income will go up much faster than your real estate taxes.

 

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Originally posted by BerkleeBill

I feel for the base noter. I'm also shopping for my first house, but want acreage so I can keep/ride my horses there. Man, is finding one that's not a meeeellion dollars is proving quite tricky.
:(
:(



Mass is a pain.... We just sold a condo in Somerville (to our substantial benefit) and bought a house on a 5000 sqft lot. Land prices are OBSCENE!! You'd be lucky to get a saw horse in that lot.

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Originally posted by FallofEmpyrean



Financially. Only I can really determine if I'm mentally ready, I suppose.


I've been with my girlfriend for 8 years, so we're about as serious as it gets. It's a convenience thing that we haven't yet gotten hitched.

 

 

start with a realtor or mortgage broker. first thing they'll do is find out what you qualify for. but keep in mind most times banks with approve you for more than you want. you should also decide up front how much you fell comfortable paying.

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Get an agent that really knows the area in which you want to live, that's the biggest lesson we learned in our two buying scenarios, otherwise you may just end up in the area that they DO know about but you don't like so much.

Look for Whole Foods or other high end food markets in the area, a very good sign.

Know the property taxes in your area, they can be very high, especially at today's prices. Consider the costs of homeowner's insurance as well as utilities you may not have had to pay so far (water, garbage).

Visit the area at night! You may catch undesirable activity or noisy neighbors.

Don't plan on making a profit, it's a place to live and profit is a nice plus but not guaranteed over any 5 year period.

Pray that the tax changes Bush's panel want to approve don't pass: mortgage interest deduction limited to 15% vs. current (income bracket) and an upper limit on allowable mortgage deductions. Not likely to happen, but whoo boy it'd be tough for us if they did.

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Originally posted by FallofEmpyrean

My girlfriend are I are starting to get serious about the idea of buying a house. We live in the -- unfortunately -- very hot real estate market of Phoenix.


The lease on our apartment is up in March, and we are wondering what to look out for when looking for a house.


What advice do you guys have on buying a first home? I appreciate it!

 

 

Find your own Mortgage firm - banks are "OK" at best- but you'll typically find a better deal elsewhere.

 

Find out what government programs you qualify for. Apply independantly (I wish we had, since our interest rate would have been lower, and our closing costs would have been covered (or something like that))

 

Anyhow, do what you can to get the lowest rate, without "points" and choose a term you can work with.

 

Don't let the $ approval the Mortgage Co. says you can afford go to your head - shoot for HALF that (unless you are applying independantly then aim for 75% that amount)

 

You can use your 401K or Mutual Fund to help with closing costs and not pay a penalty for early withdrawl (up to 10K lifetime, I think)

 

Get some ballpark estimates of what your payments would be like for a given dollar amount. Figure that into your budget, plus about 5%/month for unexpected expenses. If you don't use it - great! If you have to, it's there. Make sure the property taxes are part of that estimate. If you're still generating money into your account at a reasonable rate, then you're good to go. If not, then you need to consider going lower or sacrificing something.

 

Save as much money as you can between now and when you apply for pre-approval. It'll help.

 

Don't take out any loans or make any large purchases from the time you get pre-approved until you sign all the papers for the house. They WILL question you on it.

 

Have the home inspected, and not by your brother in law (etc)

 

Attend the inspection, ask questions!

 

Make and offer on the house, but unless you REALLY want it and you think it will be bought up by someone else, low ball them. Find out what the owner paid for it and figure in some appreciation (there is a report your realtor can pull for you that shows the last few homes that sold over the past couple years), and make your best guess. Worst thing that could happen is they balk at it, and refuse any further offers.

 

Realtors can not decline bids on behalf of the owner - so they have to at least present it....

 

Have a Realtor working for YOU - and don't buy a house that is for sale for the same company THEY work for. You'll get screwed since the more they can milk out of you, the bigger the commission, etc. If you have a Realtor working for you, they split the commission, and, you can get advice from them. They are still screwing you for more money, but, at the same time, you don't have one person holding all the cards.

 

Get pre-approved before you "bother" a realtor with showing you houses. It gives them incentive to know you're serious, and not just wasting their time. Kinda like being at a music store with cash in hand, and wanting to try out their $3500 guitars...

 

Get insurance quotes on the house when you're considering the house - it will effect your house payment...

 

That's all I can think of at the moment...

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