House buying 101?

[trillionaire]

I tried reading some old housing threads but didn''t quite see what I was looking for...

SO has decided that this is the year that he wants to buy a house. (probably December-ish) However, he is more like my dad, a bottom line type of guy than a details and minutiae type of guy. So I am hoping you PSers can give me some guidance of where to start in terms of research, books, online guides, seminars, etc. He is looking in the DC/VA area. And no, we are not buying together (I live in another state), but I do want him to go into the market well informed and prepared

 

[Skippy123]

I would get a good realtor that will find you the best house. The reason I say a good realtor is because some will work hard for you and others not so much as far as finding the latest listing, location location location, mesh w/your personality, etc. I would think about your storage needs, schools, stops close to the metro if you use it, etc. Also check with the mortgage company to see what you qualify for and what you actually think you could afford, they are not always the same. Good luck!!!

 

[pennquaker09]

And make sure the person is a full-time Realtor because they seem to usually work harder at finding you a home.

 

[MichelleCarmen]

Try and avoid homes selling as short-sales. My neighbor is a realtor she says they are very stressful transactions and I''ve read that it''s more difficult to get banks to approve those types of sales. ALSO, she said her company teaches classes on short-sales and that is the big new thing and often are pushed on sellers and buyers.

 

[movie zombie]

don''t totally rely on your realtor....no matter how good s/he is!!!!! they know how to sell a house and how to write a contract. they are not schooled in mortgages, etc.

you are right to do your homework...and i think also right to hold off until december!!!!!!!

how did you get educated re diamonds/stones? did you just read one website and take that as the word? or did you check many websites and go to many mall stores to see for yourself? its the same way for real estate: read as much as you can, especially for that particular area. what are the pitfalls? are their issues with basements and weather? is a particular type of roof going to present insurance problems? all the little details add up. i found that even good loan officers didn''t know some info regarding financing.....don''t take anyone''s word for anything unless you check it out yourself and trust the source.

is your SO planning on putting 20% down and avoiding PMI? is he going to use a mortgage broker? if so be armed with as much knowledge as possible because part of the mortgage crisis we''re experiencing is a direct result of mortgage brokers. mortgage brokers are sales people with a product. not all mortgage brokers carry the same product/loans. you can finance a house without using a mortgage broker and save $. yes, they''ll say they don''t charge for their services but its built into the loan or points. nothing is for free. i bought my first house without using a mortgage broker.

back to realtors: i agree you want a full time realtor. hopefully, the good ones will be able to stay working and the others will fall by the side. this happened back during the savings and loan crisis of the 80''s...also real estate related. also, go to open houses for about 6 months. don''t buy even if tempted. this will give you a sense of what the market is and a feel for areas and neighborhoods. don''t just visit during the day. do drive bys at night. go late at night and/or early morning and sit for awhile to get a feel for the neighborhood. it is quiet or noisy?

buying in december is also good because any weather issues with the house and/or outside enviroment should be evident: is there erosion due to rain runoff?

the more preliminary work YOU AND YOUR SO do, the more you''re making sure your $ works for you. no one is going to look after you and your $ better than you do. remember: their job is to part you from your $ and get their commission. spend your $ and time wisely and you won''t regret your purchase.

movie zombie

 

[steph72276]

Others here have made really good points. My husband and I have moved (for his job) 5 times in the 6 years we have been married, so I know a little about the process. Like Skippy said, get a good realtor...maybe if he has friends in the area that can give him a reference. Call the mortgage company to get pre-qualified, but generally it is wise to have a monthly payment of no more than 30% of your take home pay. Then research the area and try to find a good school district, even if kids are not in the near future, it is good for resale. When you do find a home, drive by at different times of the day to see traffic patterns, etc. If you are commuting to work, drive from that home to work in the morning to see how long it actually takes you. Make sure you have a home inspection done and a clause in your contract that says if you are not satisfied with the inspection, you can get your escrow money back. Check comps of houses that have sold around the area so you know you are getting a good price based on square footage. A website I use is ziprealty.com. Hope this helps!

 

[Hera]

I agree that he shouldn't spend more than 30% on your take home pay. There will repairs required during the year so you want to have extra money for that.

I agree to find a house with good schools for resale value. People will spend more money on a house with good schools. You can go to city-data.com and find your immediate area and you can post any questions on the forum there. check out Greatschools.com and going to the school district page will help for school info.

I also used ZipRealty.com and registered so you can see the MLS online and I found it better than the listings my agent sent me. I wouldn't use their realtors though because it's not full service and I was greatly disappointed.

As far as loans go, I would check with several places and have them provide you GFE's so you can see all of the fees etc. You will want to be preapproved (not just prequalified) so you can submit your offers with a preapproval letter. I used Creditboards.com and their mortgage forum for any questions I had.

For the types of properties out there:

Short sale: a house where the owner cannot afford the loan and is trying to sell it to save their credit (somewhat). Most do not go through and they can have a loooong wait (like 6 months).

Foreclosure: The homeowners can no longer afford their house and it's going to the auction. Some houses will be sold before this time and some will become REO's.

REO's: This is after the house forecloses and now the bank owns it (otherwise known as bank owned). I bought one of these properties recently and they are the easiest to close besides buying it directly from an owner.
the pros are that the bank wants to sell it and there are some good deals out there. The cons are that they are not all good deals so you'll want to do your homework. They also don't come with any warranties.

In all cases (especially REO's) you should have a good inspector look at the property and not one your agent recommends. The agent is there to sell a house and there can be conflicts of interest so it's important you find one you can trust (or semi trust). Also, check the property and make sure there weren't any insurance claims on the house. This is a minor detail and it's to insure you won't have skyrocketed premiums.

 

[babysteps]

Such good advice so far - def. get a good, recommended, full-time; objective home inspection (some items are deal breakers, others you can ask for a credit on the sale price - personally don''t think it''s a good idea to ask the current homeowner for repairs, many will want to do it as cheaply as possible - better to get estimates and do it yourself); look for good school districts. For our first house, I remember being hugely irritated with the realtor (we dumped him immediately) as he completely disregarded our input on what we wanted to spend mortgage-wise and used their ''formula'' to tell us we could afford a much more expensive house.

Other thoughts - determine "must haves" with regard to number of bathrooms and bedrooms - you can always renovate an old kitchen or ugly bathroom, but it is very hard to add a bathroom where one does not exist due to plumbing. Same thought - location of kitchen/baths etc. - make sure you like where they are located in the house - difficult/expensive to start trying to move gas/plumbing lines. Also think ahead to what you want your future family to look like - some homes are great for a couple but not for a family with young children (I have had a couple of friends move out of charming antique homes for this reason) - if you think you''ll need a playroom down the line, think about where it would be. Also think about storage needs.

I have known a couple of people who have paid a consulting fee to have an architect or contractor tour a house with them if they are close to making an offer, just to make sure that contemplated renovations are feasible physically and financially.

Homes with new kitchens or new bathrooms are great - as long as they are a style that you love. Otherwise, you''ll end up paying up for renovations that you don''t like and long term they''ll end up costing too much since you''ll want to rip it out and redo it to your taste. Good luck!! and have fun. Now is a wonderful time to buy.

 

[Mara]

i can chime in here since we just went through this painful process..it was not our first time but the landscape now is so different than 5 years ago.

get a full time realtor but also someone who has been in the biz for a long time AND ideally someone who is really familiar with the areas that you are looking to buy in. i can do a lot of the basic legwork that fledgling realtors can with the internet, BUT someone who has lived or was raised in the areas you are looking and sells in those areas is going to know far more about little details than you ever will. our realtor was so good, i could just email him going 'what about this one, why is it lower' and he's write back and go 'oh you don't want to live on that street. did you drive down and see the cars on cinder blocks? and the elementary there is not the best...go 2 blocks west and you get this better school instead'. or that he knew in an area where 1-2 streets were gems but the rest were not that great. he'd been in the biz so long but he also worked and partnered with younger people so that he wasn't 'stuck' in old ways, it was a great way to combo.

now that is info i could find out on my own sure but would have taken me a lot longer on my own. make them work for you and take advantage of their strengths. i also am a huge internet person so i was always doing research on my own online. here in N CA we have a site called redfin.com and they do some other states. you can type a zip in and some loose parameters and it shows you a map with details on houses, you can click, see things like 'days on market', if it's a short sale, when it was last sold, how much they paid in prop taxes last year etc. movoto.com and trulia.com are two other sites like redfin but redfin had more info that i liked in a layout i preferred.

for any property on the market you are considering, ask for the inspection report. if there is not one, you need to determine if you want to pay the $400 or so for one. but if there IS one already, it's great, you can see what the potential pitfalls will be. we turned down a place that seemed nice based on the fact that it needed a fair amount of small work that added up AND they had a rodent problem.

secondly, get your finances in order, or start. if you have not saved enough, keep at it and buckle down. also talk to one or two of your local bank mortgage branches and ask them questions... like how long is it taking to close a loan, how do they deal with short sales and/or foreclosure properties. how much do you have to have down to work with them and what are your loan options. also sometimes they will tell you where they think the market is going...and if a rate decrease is coming. they do know that stuff, loosely...not exactly when but if you listen well they will hint. you don't have to use a bank directly for your mortgage, when the time comes, shop around for the best rate, package, closing costs. some banks though, by working directly with them, you dont have to pay a mortgage broker fee which might save you $6-8k.

lastly, you will hear a lot of 'advice' from people who are like oh no you need to have 20% down or don't do this...or that. you will have to filter through and take what is useful to you. there are loans with less than 20%, you'll need to pay PMI but maybe it's worth it to not wait as long and get into something sooner. also, short sales and foreclosures and bank owned ARE more of a pain, but there are some really good deals if you are willing to be patient and wait and are in a good position.

sorry this is so long, but the more educated you will be, the smarter a purchase you will make. best of luck and start working on your patience, you will need it.

 

[Steel]

I would start listing what you both want from your home/neighbourhood. What you expect from your home in the next X years. Are you looking for a home for now or to grow into? Will you take on DIY? Look at as many houses as you can from now until then so you will be a veteran by the time you actually want to put money down at the end of the year. A fringe benefit of that is - you might view the house of your dreams now and if it is still on the market by December, you can bargain.