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I wish I knew ____ before buying a home/taking on a mortgage

megumic

Brilliant_Rock
Joined
Mar 8, 2009
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1,647
We're thinking of getting pre-approved for a mortgage and have been looking at homes locally.

What do you wish you knew before you bought a house? What kinds of mortgage advice do you suggest? Any regrets? Best decisions yet? What to look out for? Tips, suggestions, ideas, thoughts, advice, of any kind are welcome. Your intelligent insights will be helpful as we (maybe) begin to navigate the housing market....



PS - I know I've been all over the boards talking about debt, finances, etc. in the past months, but there's a back-story on this for a later post.
 

iLander

Ideal_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

Be sure your mortgage is fee simple and doesn't have a penalty for early pay-off. You'd be surprised how many mortgages have this.

Don't get an adjustable. Just don't. In a few years, the inflation rate will blow your doors off.

Inspect the house yourself, along with the inspector. Some inspectors will give you fancy, multiple-page reports that they are downloading from the internet and filling in with pointless stuff (light switch in master bedroom is slightly crooked :rolleyes: ). We just sold a house and the home inspector said our porch light didn't work, and our stairway light didn't work. Thing is, the porch light was on a light sensor and doesn't come on until it's dark. The stairway light has two switches at each end of the stairs, and he flipped the one but not the other. So, look for yourself too, and use common sense.

Look through real estate sites a LOT. With Zillow, you can find a street and see how much houses up and down the block are selling for and what they've sold for in the past. Don't give them a ton of credence on value, though. They have my place listed twice with 2 DIFFERENT values, and the numbers are different by about 30%, which is a LOT. They seem to have trouble with their guesstimates. With realtor.com, you can punch in a condo building and see the prices for all the units. Some friends of ours didn't do this and bought a condo from the original developer and paid TOP dollar about a month ago. If they had checked, they would have found repossessed units in the same building for half the price they just paid. Find a good site that shows ALL the listings in your target area, and get familiar with them.

Buy in a good school district even if you don't have kids yet. You never know . . . ;))

Never buy a For Sale Buy Owner without a termite inspection. My uncle did this, and the place is riddled with termites. The termites are holding hands to keep the place together.

Don't pass on a great house because some prized piece of furniture won't fit in a certain spot. I've learned over the years how disposable furniture really is, and how my kids don't want ANY of the "heirlooms". :o

Enjoy the process! I have often toyed with the idea of becoming an agent, just because it's fun, so have fun!
 

Lanie

Brilliant_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

I wish I knew how much it all adds up. Insurance, flood insurance, taxes. Make sure you can afford it. Especially when your taxes go up every year. Maybe that's just my area (Houston) but it's a lot that adds up.

Also, I wish I would have taken little things into consideration. Like our parking situation. We're in a townhome complex that is gated, but the parking sucks. My friends have to park on the street and can't park in our driveway. Delivery trucks are a pain for that reason as well. Also, think about pantry space, closet space, cleaning (hardwood floors? tile?), counter space, etc. No house is perfect, but some things might make or break the decision for you.

Good luck!!!!
 

iLander

Ideal_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

YESSSS to Lanie!

Don't let them tell you only about your "mortgage payment", get the whole story; mortgage (principal and interest) taxes, insurance, homeowner's association fees (sometimes there is a master association and a community association!).
 

Sparkledrops

Brilliant_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

I especially agree with Lanie's first paragraph. It all DOES add up...and very quickly! Also, consider escrowing in the insurance, taxes, etc. so you don't have to come up with large lump sums of money periodically. It would also be a good idea to find out how energy efficient a house is before buying, and if the house is in a flood zone area.
 

Hera

Ideal_Rock
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Jul 12, 2007
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Re: I wish I knew ____ before buying a home/taking on a mort

How much everything adds up to include:
1. Mortgage and property tax
2. Homeowners insurance
3. Energy costs- call the energy company and ask for a rough estimate to the previous owners usage.
4. Call and see if there's been an insurance claim ever put on the house
5. Get an housing inspector NOT affiliated with your realtor
6. Sewage costs
7. Garbage pickup costs
8. Decide if you want a home warranty
9. Find out if there is a Homeowner association or Mellos Roos
10. Find out if there's a pet exclusion if there is a homeowners association

For the house:
1. Visit the house during the day and night for noise levels
2. Flight path?
3. Use Zip Realty.com but not their realtors to look at properties. It's extremely user friendly. Some like Redfin.com also.
4. Look at the school districts. It will be good for your resale to buy in a good school district.
 

Dancing Fire

Super_Ideal_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

megumic|1308623738|2950745 said:
We're thinking of getting pre-approved for a mortgage and have been looking at homes locally.

What do you wish you knew before you bought a house? What kinds of mortgage advice do you suggest? Any regrets? Best decisions yet? What to look out for? Tips, suggestions, ideas, thoughts, advice, of any kind are welcome. Your intelligent insights will be helpful as we (maybe) begin to navigate the housing market....

PS - I know I've been all over the boards talking about debt, finances, etc. in the past months, but there's a back-story on this for a later post.

my daughter is doing the same as we speak. i gave her some advices ..

#1...location,location,location!! buy a smaller house in a better neighborhood instead of a bigger house in a bad neighborhood.

#2...20% d/p to avoid PMI and with rates near historic low go with a fixed mortgage.

#3...if you're looking at a older house be sure the roof is in good shape.a new roof can be very expensive.

#4...don't ask daddy for $$$.. :lol:
 

sparklyheart

Brilliant_Rock
Joined
May 4, 2009
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523
Re: I wish I knew ____ before buying a home/taking on a mort

I got an 80/20 loan and I'm not a fan these days! My mortgage broker said my monthly payments would be cheaper than if I had to pay PMI because I didn't have the full 20% down-I only had 10%. This is very true.. Except the 20% loan has a high interest rate so I've essentially paid nothing on it. I'm looking to sell my house in the next year (hoping!) and I haven't made much movement on the smaller loan. Maybe I misunderstand it all but I feel like if it were going towards my whole mortgage there would at least be a little more movement.
 

Haven

Super_Ideal_Rock
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13,166
Re: I wish I knew ____ before buying a home/taking on a mort

I wish I knew just how grateful I'd be that we purchased a home we could afford on the smaller of our two incomes alone.

Because . . .

I wish I knew our home would be a bottomless pit into which so much of our money would disappear.

It is so expensive to own a home. We've only been here three years and we've had one large necessary and unexpected expense every year in the 3K to 4K range ON TOP OF all of those other little expenses we have. (My favorite is the giant HOLE in our front yard for the outside plumbing line. Talk about throwing money DOWN THE HOLE! :cheeky: )

I love our home. There is nothing I don't love about it. But I'm not sure I would purchase a home if we had it to do all over again. We'd just rent a home. I am not a disillusioned home owner, I'm just being very honest. We put 70K down (20% of purchase price), and I'm just not sure it was worth it.

ETA:

As for mortgage advice, I would say to set your own limit as far as what you can afford each month. We bought in 2008 so it might be different today, but the banks were willing to lend us a mortgage that was more than DOUBLE what we were comfortable borrowing. INSANE.

When you find *the* home, take a walk outside and talk to the neighbors. I've learned so much about our neighborhood (about the schools, how much people's basements flood, complaints about our town, etc.) just by walking the dogs and saying "hello" to people. It's really interesting, and you can gain some good insight about your potential neighborhood.

We bought for location and don't regret it one bit. It was really tempting at times to buy a newer and larger home in a less desireable and less expensive area, but I'm so glad we didn't. LOCATION LOCATION LOCATION!

ETA2:

I'm sorry to be such a Debbie Downer by saying that I wouldn't buy again! I'm just being brutally honest.
 

Dancing Fire

Super_Ideal_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

Haven|1308628516|2950803 said:
I love our home. There is nothing I don't love about it. But I'm not sure I would purchase a home if we had it to do all over again. We'd just rent a home. I am not a disillusioned home owner, I'm just being very honest. We put 70K down (20% of purchase price), and I'm just not sure it was worth it.
i wonder about renting vs owning too,but after this crash IMO,time to buy a house.i told my daughter to start looking for a house.
 

Haven

Super_Ideal_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

Dancing Fire|1308629557|2950813 said:
Haven|1308628516|2950803 said:
I love our home. There is nothing I don't love about it. But I'm not sure I would purchase a home if we had it to do all over again. We'd just rent a home. I am not a disillusioned home owner, I'm just being very honest. We put 70K down (20% of purchase price), and I'm just not sure it was worth it.
i wonder about renting vs owning too,but after this crash IMO,time to buy a house.i told my daughter to start looking for a house.
I don't doubt that it could be a good investment to purchase a home right now if you purchase it as an investment.
What I'm saying is I don't think it was (or is) worth it to purchase a home as a HOME to live in for many years. I wish we had chosen to rent. Can't go back now, though, so we're enjoying our home every day.
 

tannet

Shiny_Rock
Joined
Jan 15, 2010
Messages
204
Re: I wish I knew ____ before buying a home/taking on a mort

Wow...there's a lot I wish I knew before buying a home! I can't list them all, but my major lessons learned are:
1. Relying on credit and FICO scores are not the only way to buy expensive things. I rely on cash for almost everything now.
2. The lending industry doesn't give a sh*t about you and your hardships you may encounter.
3. Never buy a home with a HOA. There are no laws protecting you!
4. Don't buy any home you are not willing to possibly live in for the rest of your life.

My bf and I were burned by the housing market crash and were stuck in a crappy mortgage (partially our fault for not doing more research before hand). Long story short...we bought a condo responsibly (within our means) even though we were pre-approved for $250K more. HOA undermined the members by passing an "emergency" (meaning no vote needed) assessment fee which doubled our HOA fees for 2 years. Housing market crashed and we lost 50% value. Lender refused to talk to us....until we stopped making payments. It put a lot of stress on our relationship and we ended up doing a short sale on the home. It took 18 months to sell and 3 offers (bank turned down the first 2). Now we are renting a beautiful single family home in a nicer neighborhood for less than half the cost of our condo mortgage alone and we have no mortgage strapping us down. We can pick up and move any time with 30 days notice. We also don't have to worry about paying for repairs...we just call the landlord and it gets taken care of with no extra cost to us. And the bonus is our rent includes water, garbage and a gardener! Our credit scores are shot, but we have CASH piling up in the bank! :$$): When you have cash, there's no need to take out a loan and pay interest. You earn it instead! (I just wish I could spend some of the money on diamonds :naughty: )
 

tannet

Shiny_Rock
Joined
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Messages
204
Re: I wish I knew ____ before buying a home/taking on a mort

Haven|1308631065|2950822 said:
Dancing Fire|1308629557|2950813 said:
Haven|1308628516|2950803 said:
I love our home. There is nothing I don't love about it. But I'm not sure I would purchase a home if we had it to do all over again. We'd just rent a home. I am not a disillusioned home owner, I'm just being very honest. We put 70K down (20% of purchase price), and I'm just not sure it was worth it.
i wonder about renting vs owning too,but after this crash IMO,time to buy a house.i told my daughter to start looking for a house.
I don't doubt that it could be a good investment to purchase a home right now if you purchase it as an investment.
What I'm saying is I don't think it was (or is) worth it to purchase a home as a HOME to live in for many years. I wish we had chosen to rent. Can't go back now, though, so we're enjoying our home every day.

Haven: I agree with you. I am in no rush to buy another home again. I'm just not sure it's really worth it either. I guess one could say I'm a little jaded....
 

Dancing Fire

Super_Ideal_Rock
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33,852
Re: I wish I knew ____ before buying a home/taking on a mort

Haven|1308631065|2950822 said:
Dancing Fire|1308629557|2950813 said:
Haven|1308628516|2950803 said:
I love our home. There is nothing I don't love about it. But I'm not sure I would purchase a home if we had it to do all over again. We'd just rent a home. I am not a disillusioned home owner, I'm just being very honest. We put 70K down (20% of purchase price), and I'm just not sure it was worth it.
i wonder about renting vs owning too,but after this crash IMO,time to buy a house.i told my daughter to start looking for a house.
I don't doubt that it could be a good investment to purchase a home right now if you purchase it as an investment.
What I'm saying is I don't think it was (or is) worth it to purchase a home as a HOME to live in for many years. I wish we had chosen to rent. Can't go back now, though, so we're enjoying our home every day.

i never see my home as an investment.i see it as a savings account. we purchased our house in 1987 for $147K put 20% d/p borrowed $117K,pay off the mortgage in 17 yrs,so did we really come out ahead??.. :read:

after paying the bank interest for 17 yrs. (maybe like $80K??)
after paying $2500 in property taxes per yr.(25 yrs X $2500=$62K)
after paying $25k for a new roof.
after paying $10K for landscaping in 1987.(not including the koi pond)
after paying $600 per yr for insurance.(25 yrs X $600 = $15K)
after paying for a new hot water tank,painting the house,new fences,etc,etc...and this 25 yr old home can use a new bath,kitchen and new flooring. the list can go on and on.. :rolleyes:
 

Dancing Fire

Super_Ideal_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

tannet|1308637039|2950862 said:
My bf and I were burned by the housing market crash and were stuck in a crappy mortgage (partially our fault for not doing more research before hand). Long story short...we bought a condo responsibly (within our means) even though we were pre-approved for $250K more. HOA undermined the members by passing an "emergency" (meaning no vote needed) assessment fee which doubled our HOA fees for 2 years. Housing market crashed and we lost 50% value. Lender refused to talk to us....until we stopped making payments. It put a lot of stress on our relationship and we ended up doing a short sale on the home. It took 18 months to sell and 3 offers (bank turned down the first 2). Now we are renting a beautiful single family home in a nicer neighborhood for less than half the cost of our condo mortgage alone and we have no mortgage strapping us down. We can pick up and move any time with 30 days notice. We also don't have to worry about paying for repairs...we just call the landlord and it gets taken care of with no extra cost to us. And the bonus is our rent includes water, garbage and a gardener! Our credit scores are shot, but we have CASH piling up in the bank! :$$): When you have cash, there's no need to take out a loan and pay interest. You earn it instead! (I just wish I could spend some of the money on diamonds :naughty: )

yeah,but how much CASH did you lose?
 

JewelFreak

Ideal_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

Be sure you really understand every provision of the types of mortgages you look at before you choose one. Imho the old-fashioned fixed, especially at current interest rates, is the most secure. Stay away from balloon, etc., mortgages (if they're even offered anymore, don't know). Variables look good now, but interest is gonna be a runaway train before long.

Rule of thumb on home maintenance costs is about 3% of purchase price per year, not counting surprises like a new roof, dead a/c & all that. Factor in inflation on maintenance costs -- it is going to skyrocket too.

Check out the HOA if there is one: get a copy of CCRs & read it thoroughly. Good idea to ask a resident, if you can, how the HOA has performed. Google it -- if there's been any legal action, it will show up. Some HOAs are good, some way restrictive, some chaotic.

DO YOUR OWN RESEARCH, don't take the realtor's word for it, no matter how nice he or she is!
 

stephbolt

Brilliant_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

Haven|1308628516|2950803 said:
I wish I knew our home would be a bottomless pit into which so much of our money would disappear.

It is so expensive to own a home. We've only been here three years and we've had one large necessary and unexpected expense every year in the 3K to 4K range ON TOP OF all of those other little expenses we have. (My favorite is the giant HOLE in our front yard for the outside plumbing line. Talk about throwing money DOWN THE HOLE! :cheeky: )

Ditto Haven - what surprised me about home ownership was how quickly all those little expenses add up! Just the first weekend we owned our home we made SIX trips to Home Depot. We haven't had to tackle any major problems, but even the little maintenence expenses add up very quickly.

Related to this, see if you can get the sellers to pay for a home warranty for a year. We pushed for this and are so glad we did. We had our hot water heater stop working after only a few months - but under the warranty were able to get it fixed for only a $60 deductible vs. who knows how much. Our dryer also died and we got a payout toward a new one.
 

soocool

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Re: I wish I knew ____ before buying a home/taking on a mort

First of all, consult a real estate attorney. It will be the best money you will ever spend when you buy a home. The attorney will review your contract and basically protect you. The attorney will know the best home inspectors who actually do their job and let you know of any problems which can affect the price of the home, etc. So you can basically have the homeowner do the repairs or deduct the money from the sale price of the house (Imo, the better thing to do since it lowers the price of the home) and you do the repairs and make sure they are done right.

For an existing home, you want to know hold old your heating/cooling system is, how often has it been serviced (asks to see records) is the warranty transferrable, has the roof ever been replaced and if it has, was the old roof removed first, what kind of plumbing, septic how old is the system, how often is it pumped, (always have the septic system inspected prior to buying). If it has a well, how deep is it. Also, if the house has a septic and or well, check o make sure there are no plans to connect the neighborhood to public water or sewer. (same thing with new construction). Do a termite inspection and radon check.


Also, take some classes at the community college about handling your own home repairs. It will save you tons of money in the long run. My DH can do electric and plumbing, we paint ourselves, can do framing and drywall ourselves and have even installed hardwood floors and tile.
 

NewEnglandLady

Ideal_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

The majority of my advice has already been said. Location, additional costs, a large downpayment, thinking about future needs (e.g. kids) even if you don't have them yet. Doing all of the proper inspections. The only things I would add are:

1. REALLY think about the kind of "projects" you would want to to any potential house. This is the thing: no house is perfect. There will be things you want to change. But be realistic about what you can and can't do. When we bought our house I would say things like "We'll just put some hardwoods down in the bedroom soon". It's been a year and we still haven't done it. Obviously some things are an easy fix (paint), but if you're not handy, those projects might be put off for a long time!

2. Don't use all of your savings for the downpayment. I know that sounds impossible when you're facing of a six-figure downpayment (we were in this category--the joys of a high-cost-of-living area!). But you NEVER know what kind of emergency can pop up. During the process of buying our house, we were met with a very expensive emergency and if we hadn't had extra money set aside, I'm not sure what would have happened.

3. Don't be afraid to continue renting if you're still paying off school debt! :wink2: I don't know why renting has a bad reputation--it's perfect for those trying to save. No taxes, no unexpected house expenses. It's MUCH less stressful!

Good luck! Sounds like you've been doing lots of planning/prioritizing!
 

megumic

Brilliant_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

This is all really great advice, keep it coming!
 

Puppmom

Ideal_Rock
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Re: I wish I knew ____ before buying a home/taking on a mort

- ditto to everyone that things add up so don't just look at your loan payment. I just did the math and my loan payment is 77% of my total mortgage payment.
- everything and I mean EVERYTHING costs at least $500! Need the fence restained? $500! Need a new driveway? $4,000! Need to replace a few roof shingles? $500! Need to replace two itty bitty squares of pavement? You guessed it - $500!
- once you get in don't buy ANYTHING on credit. we saved for everything - from furniture to our fence to paint to our tv. a mortgage is enough debt so don't get roped into those "no interest for a year" furniture and electronics *deals*.

We can afford our mortgage comfortably on both incomes but would be in a bad way if either of us lost our jobs. I wish there was something in our area that we could have afforded on one income.
 

kama_s

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Re: I wish I knew ____ before buying a home/taking on a mort

We just bought our home a few months ago after renting for years. A few things that were important to us:

- Make sure the house you buy has been well-maintained. Little things go a long way - if the previous owners had ownership pride, you will save a LOT in maintainence costs down the road. Little things like roof, insulation, furnace etc.
- Keep aside at least 10K a year for unexpected (minor and major) house expenses.
- Rule of thumb with mortgage amount: Your mortage should not be higher than THREE times your joint annual salary. So, if you each make 100K a year for a joint annual income of 200K, then your total mortgage should not be higher than 600K.
 

IdLikeToBuyAVal

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Re: I wish I knew ____ before buying a home/taking on a mort

I am an accountant which basically means I am a CRAZY budgeter with our money. This helped SO MUCH when we were looking at buying our first house. I'm going to write you a book, bear with me :)

I use financial software (I like MSN Money but you could also use Mint.com, Quicken, Quickbooks etc.) so I know exactly what we are spending all the time. I download a file from our bank each day and check off the transactions. I use the software to get actual annual costs for each bill we pay and major purchases so I can get an average cost per month. It helps! Knowing exactly what you spend gives you a better picture of what you can afford, and can help you determine if you can cut down or cut items out of your budget.

After all that, here are my tips :)

Use bankrate.com. They have calculators, they have current mortgage rates of your local banks, it's a great resource. While you are waiting to lock in your rate on the loan, check Bankrate EVERY DAY. We saw interest rates change by 1/2% over the course of a day.

Do NOT rely on the estimates provided by any realtor's website. Sure, they may tell you that your house payment probably shouldn't exceed 35% of your gross pay, but look at that number. Who wants to or can afford to spend that chunk on a house payment every month. Figure all of your costs on your NET pay, most of us don't get those taxes back. Before the housing bubble, the max amount you would be approved for was 2.5x your gross income. During the housing bubble, we heard people were being approved for 6x their income. My husband and I bought at the end of 2008. We wanted a preapproval for $25K above the range we were looking in. We were told that we would've been approved for $150K more than the range we were looking in. Stick with what you know you can afford, not what the bank/realtor is telling you they think you can afford.

Talk with a good financial advisor, have them go over your credit history, outstanding debt etc. If you have a lot of outstanding debt, think about paying some of it down before you get the house. If you have very little debt, think about the debt you might acquire in the next few years. Will you or your SO need a new car within 5 years? How much might that payment be? Could you afford it with your house payment and expenses?

BEFORE you have your credit reports pulled for your preapproval, make sure any credit cards you have are paid off or have the lowest possible balances you can get. Your FICO score is going to look at how much credit you have available and how much you are using. If you have a card with a $1000 balance and you have $500 on it, it factors more negatively on your FICO score than a card that has a $5000 balance and has $500 on it. Don't close any credit cards or accounts right before you have your credits report pulled. Believe it or not, this HURTS your FICO score. Even if the cards have zero balances, they add toward the overall length of your credit history. Pull your free annual credit reports BEFORE you have your bank pull them. There are three agencies, pull all three reports. Make sure your information is correct, make sure all the items reported are actually accounts you have or have had.

When my husband and I decided on a range we wanted to spend, we calculated what our house payment should be and started making that payment - to our savings account. We took our estimated house payment (minus our then rent payment) and put all of that additional cash into our account for our down payment. We managed to save at least $1000 a month on just out of college incomes. After we'd been doing this for the 8 months or so before we bought our house, we were totally comfortable that we'd be able to make the payment, and we had extra cash for the closing which we ended up needing anyway.

Reseach mortgage options. Everything has changed SO much just in the last two years. You absolutely should get a fixed rate. You also need to research PMI if you won't have 20% to put down. My husband and I have an 80/15 mortgage meaning we put 5% down, have a mortgage for the 80% bulk, and have a second mortgage for the remaining 15%. We don't have to pay PMI with this loan, however I doubt banks can offer those mortgages anymore.

Home inspections: Ours was $300, our home inspector called in a termite inspector he knew and the two of them scoured our house. We went with both of them and looked at everything. When there was a problem, we called a local repair person to see how much it would cost. Ask that those items be fixed before you buy or have that amount budgeted for repairs once you move in.

Lastly, we spent $30K in our first year in the house on things for the house we would never have bought if we were still renting. We needed a lawn mower, we needed furniture, we had to get a new dishwasher, you're going to want to decorating items, etc. etc. etc. It's expensive. But, we love our house and it's worth it to us.

Best of luck!
 

tannet

Shiny_Rock
Joined
Jan 15, 2010
Messages
204
Re: I wish I knew ____ before buying a home/taking on a mort

Dancing Fire|1308641346|2950871 said:
tannet|1308637039|2950862 said:
My bf and I were burned by the housing market crash and were stuck in a crappy mortgage (partially our fault for not doing more research before hand). Long story short...we bought a condo responsibly (within our means) even though we were pre-approved for $250K more. HOA undermined the members by passing an "emergency" (meaning no vote needed) assessment fee which doubled our HOA fees for 2 years. Housing market crashed and we lost 50% value. Lender refused to talk to us....until we stopped making payments. It put a lot of stress on our relationship and we ended up doing a short sale on the home. It took 18 months to sell and 3 offers (bank turned down the first 2). Now we are renting a beautiful single family home in a nicer neighborhood for less than half the cost of our condo mortgage alone and we have no mortgage strapping us down. We can pick up and move any time with 30 days notice. We also don't have to worry about paying for repairs...we just call the landlord and it gets taken care of with no extra cost to us. And the bonus is our rent includes water, garbage and a gardener! Our credit scores are shot, but we have CASH piling up in the bank! :$$): When you have cash, there's no need to take out a loan and pay interest. You earn it instead! (I just wish I could spend some of the money on diamonds :naughty: )

yeah,but how much CASH did you lose?

Hi DF--As I mentioned, we didn't do enough research beforehand so we ended up with a crappy loan (interest only, adjustable after 3 years...exactly what everyone here is telling the OP to avoid). We trusted a friend who would find us a great loan. We should have just walked into our credit union since we had great FICO scores, above 700, and a healthy joint income. When we did the calculations for how much our monthly payments would be with a 10% down vs. no down, it was very little so we decided to hold onto the cash. Considering the final result, I'm glad that's what we did. So the only cash we lost was the mortgage/HOA/insurance/tax payments we made for 4 years. It's horrible to have gone through all that for nothing, but I look at it as a learning opportunity. I will not be making the same mistakes again in the future. We are both young (still in our early 30's) so we're glad to start over now instead of finding ourselves in a hole in our 50's.
 

cookies

Brilliant_Rock
Joined
Jun 5, 2010
Messages
706
Re: I wish I knew ____ before buying a home/taking on a mort

Try to keep the loan within $417K. Otherwise it will be a jumbo loan, for which you have to pay a higher mortgage rate.

About the inspection -- make sure you do an asbestos test if the house was built before 1978. It was banned in 1978 for use in building homes. Also, if oil was ever used for heating or whatever purpose, make sure there is no underground oil tank left, and there is no soil contamination. You could pay big bucks later for soil remediation. It would be super expensive if the underground water is also contaminated.
 

TooPatient

Super_Ideal_Rock
Premium
Joined
Sep 1, 2009
Messages
10,295
Re: I wish I knew ____ before buying a home/taking on a mort

So much great advice!

Look at lots of locations -- we went to the other side of the lake (adds 10 min to get to work) and got a bigger, nicer house in a better neighborhood ---- for $100,000+ LESS than we would have on the other side. (plus lower taxes, utilities, etc)

NEVER buy a home with a mortgage that you can "make work"

FIXED RATE!

Don't write off a "fixer upper" at a low price BUT be very careful to have a good estimate from a good contractor so you know what to expect before you put an offer in.

Go EVERYWHERE with the inspector and listen to what he says -- not everything will end up in his report.

If the water or electricity is off when you look at the house, DO NOT buy it without insisting it be turned on to check for leaks and other issues. (especially if the seller is a plumber by profession :rolleyes: )

No matter how carefully you look and inspect, there WILL be surprises. Those surprises WILL be expensive. (the new "high end" wood laminate flooring was either installed poorly (over water damaged areas?) or was damaged while the house was vacant as the sellers had kept the heat off and it got too cold; the kitchen sink plumbing was fitted incorrectly so leaked)

The "new" appliances may look shiny and make you think they are a great deal included with the house but don't be fooled -- they could easily be the "builder" models that really aren't built for quality. Make sure you are able to replace at least one or two in the first couple of years if something happens.


After signing, CHANGE THE LOCKS!! --- ALL of them IMMEDIATELY! Seriously.... as soon as the signing is done, drive straight to your new house and take every.last.lock to the local hardware store to be re-keyed. Or have a locksmith meet you AS SOON AS signing is done and have him do it. Just because the paperwork you signed SAYS that they are turning over all keys to you doesn't actually mean that they are (houseguest who forgot to return the spare, grown-up kids...) ---- I got a phone call from our realtor the day AFTER signing... the selling agent went back to get into the garage for her lawnmower but "her keys won't work" :-o :angryfire: :rolleyes:



Our mortgage is high enough that if anything happened, my income alone couldn't pay it (forget the rest of the monthly bills, every penney I make in a month would barely cover HALF of the mortgage!). There wasn't really an option. We can manage it so long as we are both working (and there aren't TOO many unexpected emergency expenses) but there is a lot of stress as we consider "what if..."
I know that it isn't an option for everyone (certainly wasn't for us), but if you can stick to a mortgage low enough that you could manage on only one income DO IT!

We avoided ANY sort of HOA because we didn't want any more out of our control - increasing expenses than required. Taxes will go up. Insurance will probably go up. Not much you can do about those. HOA's can raise their dues/fees wether you like it or not. They can do some "improvement" and expect you to pay for it. --- one of my bosses mentioned the other day that his HOA upped their dues by $700 per MONTH for the next several years to pay for some "improvement" they did. There is nothing to stop them from doing another "improvement" and increasing it again!
 

megumic

Brilliant_Rock
Joined
Mar 8, 2009
Messages
1,647
Re: I wish I knew ____ before buying a home/taking on a mort

kama_s|1308667457|2950994 said:
We just bought our home a few months ago after renting for years. A few things that were important to us:

- Make sure the house you buy has been well-maintained. Little things go a long way - if the previous owners had ownership pride, you will save a LOT in maintainence costs down the road. Little things like roof, insulation, furnace etc.
- Keep aside at least 10K a year for unexpected (minor and major) house expenses.
- Rule of thumb with mortgage amount: Your mortage should not be higher than THREE times your joint annual salary. So, if you each make 100K a year for a joint annual income of 200K, then your total mortgage should not be higher than 600K.


Kama, I'm curious about the bolded. Why do you say 3 x salary? Would you include bonus (if it's substantial) in that calculation?
 

NewEnglandLady

Ideal_Rock
Joined
Jul 27, 2007
Messages
6,299
Re: I wish I knew ____ before buying a home/taking on a mort

tannet|1308637675|2950867 said:
Haven|1308631065|2950822 said:
Dancing Fire|1308629557|2950813 said:
Haven|1308628516|2950803 said:
I love our home. There is nothing I don't love about it. But I'm not sure I would purchase a home if we had it to do all over again. We'd just rent a home. I am not a disillusioned home owner, I'm just being very honest. We put 70K down (20% of purchase price), and I'm just not sure it was worth it.
i wonder about renting vs owning too,but after this crash IMO,time to buy a house.i told my daughter to start looking for a house.
I don't doubt that it could be a good investment to purchase a home right now if you purchase it as an investment.
What I'm saying is I don't think it was (or is) worth it to purchase a home as a HOME to live in for many years. I wish we had chosen to rent. Can't go back now, though, so we're enjoying our home every day.

Haven: I agree with you. I am in no rush to buy another home again. I'm just not sure it's really worth it either. I guess one could say I'm a little jaded....

I do completely understand the rent vs. buy argument--I've always said that rent is a great option for some. D has an uncle who's rented a small 1-bedroom apartment for the past 20 years for this very reason. It makes sense for him because he never planned to get married or have kids (thus no need to rent an expensive SFH).

The ONE reason why I'm really glad that we bought is because my goal was always to pay the house off ASAP. Granted, we'll still be paying taxes, insurance and maintenance/upkeep, but that is still significantly less per year than rent for a SFH in the same neighborhood.

Buying a house large enough for our future family, in a great school district and realistically paying it off within 10 years made a lot more financial sense than renting a 3+ bedroom SFH in a great school district for at least the next 20 years.
 

MustangGal

Ideal_Rock
Joined
Jun 18, 2004
Messages
2,029
Re: I wish I knew ____ before buying a home/taking on a mort

Buy a house you'll be happy with for longer than you think you'd live there. We bought thinking we'd upgrade in 3 years. It's now been 7.5 and I don't see us moving any time soon.

Check the local schools. I didn't do this, but got lucky and we're in a good school district. We were 24 when we bought the house, and schools were the last thing on our minds!

Try for a 15 year mortgage. We just refinanced to one, and wish we'd done it 7.5 years ago when we first bought! But it is nice to know our house will be paid off before our son graduates high school.

If you can, try to find a new-ish home. Ours was 2 years old when we bought it, so we haven't had any major repairs or issues, all the money we've thrown at the house has been towards upgrades/improvements. I know something is bound to go out on us soon, but at least we've gone this long without having to worry about it.

And lastly, even though you may be working on one side of town, try to buy a home that is a bit centrally located. DH and I have each worked 3 different jobs since buying the house, and never had more than a 30 minute commute in a huge city. We've had friends have to sell their homes because they got jobs on the complete other side of town and it was too far to drive.
 

Dancing Fire

Super_Ideal_Rock
Premium
Joined
Apr 3, 2004
Messages
33,852
Re: I wish I knew ____ before buying a home/taking on a mort

tannet|1308672855|2951065 said:
Dancing Fire|1308641346|2950871 said:
tannet|1308637039|2950862 said:
My bf and I were burned by the housing market crash and were stuck in a crappy mortgage (partially our fault for not doing more research before hand). Long story short...we bought a condo responsibly (within our means) even though we were pre-approved for $250K more. HOA undermined the members by passing an "emergency" (meaning no vote needed) assessment fee which doubled our HOA fees for 2 years. Housing market crashed and we lost 50% value. Lender refused to talk to us....until we stopped making payments. It put a lot of stress on our relationship and we ended up doing a short sale on the home. It took 18 months to sell and 3 offers (bank turned down the first 2). Now we are renting a beautiful single family home in a nicer neighborhood for less than half the cost of our condo mortgage alone and we have no mortgage strapping us down. We can pick up and move any time with 30 days notice. We also don't have to worry about paying for repairs...we just call the landlord and it gets taken care of with no extra cost to us. And the bonus is our rent includes water, garbage and a gardener! Our credit scores are shot, but we have CASH piling up in the bank! :$$): When you have cash, there's no need to take out a loan and pay interest. You earn it instead! (I just wish I could spend some of the money on diamonds :naughty: )

yeah,but how much CASH did you lose?

Hi DF--As I mentioned, we didn't do enough research beforehand so we ended up with a crappy loan (interest only, adjustable after 3 years...exactly what everyone here is telling the OP to avoid). We trusted a friend who would find us a great loan. We should have just walked into our credit union since we had great FICO scores, above 700, and a healthy joint income. When we did the calculations for how much our monthly payments would be with a 10% down vs. no down, it was very little so we decided to hold onto the cash. Considering the final result, I'm glad that's what we did. So the only cash we lost was the mortgage/HOA/insurance/tax payments we made for 4 years. It's horrible to have gone through all that for nothing, but I look at it as a learning opportunity. I will not be making the same mistakes again in the future. We are both young (still in our early 30's) so we're glad to start over now instead of finding ourselves in a hole in our 50's.
i have pay off my mortgage, but as a tax payer i'm now paying part of your defaulted loan,so keep in mind that somebody had to pick up your tab... :rolleyes:
 
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