Do You Have More Questions About Buying A House?
I have organized all of my experiences as a first-time homebuyer to one central page. It’s huge, sometimes I can’t believe I wrote all that stuff. Hopefully it can be of some help so other folks. Although I have few things left, I seem to be close to wrapping things up.
Do you have any other questions about buying a home you’d like to see answered? Please leave a comment below. I’m sure I’ve missed some things. I continue to be amazed by how confusing and complicated the home-buying process can be. No wonder so many people simply make inflated offers and sign their mortgages without even reading them…
Find more in Real Estate | 4/30/08, 5:18am | Trackback
April 30th, 2008 at 6:00 am
Yes, I have a question! I will graduate from College in May, at which time, I hope to close on a house and get a hefty raise at work (and also transition to full-time work). My wife and I are wanting to look for a house. Is there any way to verify with a financial institution or broker what my salary will be for the pre-approval process? I don’t want my part-time, minimum-wage salary to be the deciding factor. Graduation is May 11 (and the bonuses that come with it). I need to get pre-approved before then.
Also, as a side note, I’ve found the credit unions nearby to have the best rates. My area has been (for the most part) unaffected by the housing market troubles, and rates are great locally!
April 30th, 2008 at 6:32 am
Jon - I would ask around for some mortgage broker recommendations, or simply sit down with a broker at a bank you respect and ask them directly what their underwriting requirements are. They should be pretty forthcoming. Local credit unions can also be a great place to start. I got my loan from a small local bank.
You may need to have your employer provide some sort of letter that says “Jon has the title XX and will be paid a salary of $XX,XXX per year starting June 1…”.
April 30th, 2008 at 6:33 am
Show the lender an offer letter and acceptance form from your employer. Mortgage companies typically like 2 years history and 3 years forward outlook. But with students and other situations they understand when there is not much history.
April 30th, 2008 at 7:24 am
Actually yeah, I was wondering what your take on buying repossessed homes would be (Maybe you can’t say because you never went down that path).
It just seems like there are a lot of people saying you can make easy money by buying homes at auctions and then flipping them or living in them for a while or whatever. Granted a lot of this I have seen or heard on commercials so I mostly ignore it but I was still wondering how the whole process works, how competitive it is, etc. Any thoughts?
April 30th, 2008 at 7:27 am
We are going to pick up a fixer-upper. Being that we are trying to get out of the cycle of overspending, we are basically cutting our monthly payment in half while moving to a house. I am hoping I can use the difference to pay off debt and buy supplies to work on the house. I am sure you can get a lot of repairs done with $200/month.
However, while getting advice I was told that this house would continue to depreciate in this market, even if I fixed it up.
Is this true? This house is almost as cheap as the land it’s on. I can’t imagine it’s price going down. Especially if it’s fixed up.
Right now it’s surrounded by well-maintained parks and everybody else in the neighborhood does a good job. It’s really the place I want to fix up that’s currently the neighborhood eye-sore.
Anyway, I know you can’t predict the housing market, but I figure, if I buy this 6 months from now, the market will have probably bottomed out (or at least will within 1-2 years).
I wouldn’t need to move for at least 5 years. By which point I would think it would gain back any losses. (I would rather stay permanently, but I figure in five years I might feel different).
Anyway, do you think my friends advice is correct, that even if I fix this up, I will be permanently stuck with no option to sell, since it will depreciate?
My realtor says I am making the best move, but she obviously wants to make money on the sale, so who knows if her advice is legit.
Thanks!
April 30th, 2008 at 8:05 am
I was wondering if you have the actual closing costs that you paid listed anywhere? I am starting to go through the process of looking for and eventually buying a house, and I am trying to get an example of actual closing costs.
April 30th, 2008 at 8:36 am
Jeff,
There really isn’t a way to tell what will happen in the future, prices may go down more and stay low for a while or they may start to go back up again, who knows.
With that being said, it sounds like you’re making a good decision to buy a fixer in a nice area for little money. I don’t know what the market is like in your area but fixing up the worse house in a good neighborhood is generally a good thing to do as long as you’re getting the property at a price well below market for fixed up homes in the area and you can afford to fix the place up.
April 30th, 2008 at 10:35 am
I have a question!
My wife and I are looking to buy a house; I am employed and have credit in low 700s. I also have some debt- 20 K between two credit cards and a 401 K loan( 3K). Should I repay 401 K loan to maximize what I take home? Also, our medical insurance is expensive and gets deducted from the payccheck. What’s left is around $2400, $3400 gross. Will insurance affect how much we can borrow? Should I try to prepay it so it’s not on the pay check? We will also have 20% downpayment.
Thank you!
April 30th, 2008 at 10:57 am
Jon and company,
Your blog continues to be a lifesaver for me. I am looking for advice regarding Jumbo Loans. Specifically, a loan with 100% financing for about 750,000. Its a rough time for jumbo loans as you all know and the rates for a 30 year fixed (my preference) are in the 7 to 8 range [painful]. The rates for ARM’s are only slightly better (6.75%). My question is whether anyone has experience with Jumbo loans and 100% financing [i.e. physician/professional loans]. Is it wiser to take a lower interest ARM and try to aggressively pay down the mortgage and then refinance the rest at the end of 7 years? What about an interest only ARM? To get a better rate on a Fixed loan, the other option would be to pay points [which are tax deductible]. I suspect a lot of number crunching lies ahead of me in the next few days…
April 30th, 2008 at 2:23 pm
Jonathan,
How bout writing if those warranty programs that realtors offer are a good choice or not. Companies shuch as american home shield, etc.
April 30th, 2008 at 3:58 pm
Hey Jonathan, great site and great insight. Thanks so much. I’m looking to buy right now. My first house was a condo (paid off now by the way) that I found on my own, and was shown by the listing agent. I ended up buying that house, and negotiated the commission down to 4 percent…which enabled the owner to sell the house to me for less. The listing agent got more, the owner got what they wanted for the house, and I paid less than the asking price. What are your thoughts on this as I am approaching doing the same for my next house.
April 30th, 2008 at 4:36 pm
Jonathon,
This collection of posts on the process of buying a home is a tremendous resource for anyone thinking about buying a home.
I am looking forward to your posts on “Making An Offer, Inspections, Escrow, and Closing.”
April 30th, 2008 at 7:09 pm
I know I’m going out on a limb here, as my situation is atypical for a 30-something house hunter - but I would like to get direction or resources that weigh the pros/cons of buying a house outright - I mean no mortgage, no muss, no fuss… no brokers, agents, haggling, nada. I refuse to pay interest on lesser purchases, so why should I pay interest on a home? It’s a buyer’s market in my city and I am debt-free - so tell me… why not?
May 1st, 2008 at 5:51 am
home warranties offered by seller & their agents are good. The only drawback is you can’t just call your H&A guy and there are deductibles.
It’s great to have it if it doens’t cost you anything. Write in a contract that they are to provide home warranty at their expense.
Also, I just paid a mortgage off with a 5.875% interest rate based on the principle of 1) my age 64 2) small $130,000 value 3) paid $15,000 in interest since 2002 which seems like alot 4) flat rents making cash flow marginal. In the end, I can’t afford to pay Countrywide that interest and my cash can’t earn much more than 4.4% in the bank.
Buy a house outright. Live there two years and take the tax free gain when you sell it. Buy FSBO and save that 6% commission. The seller has already built it into their price anyhow.
May 1st, 2008 at 6:16 am
Narcisss, I am on your page! If I could just pay outright for a home, I would do it. It’s the psychology of having debt that gets me.
My question, Jonathan, is whether you uncovered recommendations for mortgages with loan to value ratios much lower than the common 80% (20% downpayment)? We are borrowing $400k on a $1.4m house - and I think our interest rate, which is largely a reflection of the risk the lender undertakes on the loan, should be much lower than the standard 20% down scenario. I mean, it’s unlikely that a foreclosure would ever *not* fully compensate the lender (value of the house would have to decline to less than $400k!). I want a lower interest rate to reflect that risk! Anyway, any thoughts on this situation would be appreciated! Thanks - Jessica
May 3rd, 2008 at 3:51 am
I stumbled upon your blog and love it!!! I’m getting ready to purchase a house next week and have found your info invaluable. When will the info be posted in regards to making an offer, inspections, closing, etc.? My biggest concern is wanting to get a good deal on a house. I am a bargain hunter by nature and want to pay as minimal amount as possible.
Thanks!
Amy
May 6th, 2008 at 6:40 am
Just a follow up to the first question in this thread. The credit union did accept a letter from my employer, and they had the cheapest rate.
May 19th, 2008 at 11:14 am
Any chance you’ll be posting about what to expect once your offer has been accepted? (inspections, concessions, what happens in escrow, etc.) Our offer just got accepted and as a first time home buyer would love to see your insight!