Want to Purchase A Home? Tips for Couples or Singles

[jubilance1922]

Great thread SC....I'm also looking to buy my first home, and unfortunately I make too much to take advantage of any local govt programs.

I'm going to check out that NACA org.

A soror of mine also told me that Countrywide Loans has a program for first-time home buyers, either a lower interest rate or no closing costs.

[Infamous12]

Great thread SC, I'm looking to buy a condo by the end of the year.

I'm attending a first-time home/condo buyers course tomorrow night and will post any 'new knowledge' up here for all.

*If anyone has any pertinent questions they want to know, send them to my PM, I'll add them to my list to ask*

[SummerChild]

Thanks Infamous12! It's already after 7pm your time so I guess I won't send you a pm at this point. Thanks in advance for posting what you find out.
SC

Originally Posted by Infamous12

Great thread SC, I'm looking to buy a condo by the end of the year.

I'm attending a first-time home/condo buyers course tomorrow night and will post any 'new knowledge' up here for all.

*If anyone has any pertinent questions they want to know, send them to my PM, I'll add them to my list to ask*

[AKA2D '91]

Article by: by Eric Bramlett
New home communities are more popular than ever! With good reason - new home builders are using popular, open floor-plans, including appliances, sod, and blinds, and helping make it easier than ever to get into a new home with little or no money. New home transactions typically seem a lot easier, as well. If a buyer chose to, they could get through a new home transaction without contacting anyone except the on-site sales agent! However, this would open you up to HUGE losses. Take these simple steps to protect your self in a new home transaction, and to ensure that yours is a success.

1. Use an Agent Who Has New Home Sales Experience
Many people think that they can save money by not using, or don't need the services of an Agent when buying a new construction home. This couldn't be further from the truth! New homebuilders typically try to monopolize a transaction - they only give you their attractive incentive packages if you agree, in writing, to use their lender, their title company, and sometimes even their insurance company! An Agent will walk you through the transaction and will make sure that you're protected every step of the way. If you've agreed to use the builder's lender, your Agent will make sure that you get a fair interest rate & fair closing costs. Your Agent will know what the industry standards are, and will make sure that the builder doesn't try and stretch beyond these. And best of all, an Agent with a lot of new home transactions under their belt will have established relationships with your homebuilder. Because of this, the homebuilder will be on their "best behavior." The homebuilder doesn't want to run the risk of getting a bad reputation in the Agent community, who can potentially bring the builder lots of homebuyers in the future.

2. Don't Sign ANYTHING Until You've Worked Out Every Detail of the Sale
Buying a home can be very emotional - and it should be. You're not simply picking out a house; you're picking out where you'll spend the holidays next year, where your parents will come visit you, and where you might raise your children. However, the on-site sales agent will try and play on this emotion and get you to "write up the contract so that no one else can get your house." That's just fine, as long as you understand what you're signing, and everything is okay with you. Just remember - no matter what is said, everything will be done as it is outlined in the contract.

3. GET A HOME INSPECTION!!!
Most people who buy new construction homes don't bother to get a home inspection. Most new homes come with a one year? bumper to bumper? Warranty that includes everything and many homebuyers feel that they can find out if there are any construction flaws during those 12 months. The problem with this mindset is that many problems won't surface until well after the 12 months. Remember, your home was built by humans, and humans make mistakes. And, no matter how much experience and reputation a builder brings to the table, it's still next to impossible for that builder to double check every part of the job their subcontractors have completed. A licensed inspector will go through a very thorough checklist to make sure that everything has been accounted for. At the very least, get an inspection so that you can sleep soundly at night, knowing that an independent third party has given your new home their stamp of approval.

4. Don't Agree to Use Their Lender Production builders (builders who can develop whole communities on their own) are now large corporations, many of them traded publicly. The corporations have realized that there is much more money to be made than simply selling you your new home - they'll also try and sell you a loan. Builders will offer HUGE incentives to get you into your new home, sometimes up to 15% of the value of the home. However, they will typically put one BIG stipulation on those incentives - that you use their lender. There are many problems that will come up when you pigeon-hole yourself to one lender - higher rates and higher closing costs are the two biggest. The on-site sales associates will typically tell you that their hands are tied, you have to use their lender to get the incentives. I can tell you, from experience, that this is seldom the case. Remember, the builder's job - first and foremost - is to sell homes. If you refuse to sign on the dotted line unless this stipulation is removed, you will be successful - most of the time. There are rare occasions when a builder will lose sight of the fact that they build and sell homes - and will absolutely insist that you use their in-house lender. In these circumstances, walk away, no house is worth taking a bad loan and paying THOUSANDS more for that house in the long run.

5. Research the Builder Most builders are "good" builders. They take simple steps to protect their neighborhoods. Research your builder, or ask your Agent if your builder takes these simple steps to make sure that your neighborhood won't instantly go down in value:

a. Limit the # of investor purchases - this makes sure that the neighborhood doesn't turn into a "rental" neighborhood & allows the "pride of ownership" to shine through.

b. Continues to build equal or greater value homes in the same and surrounding neighborhoods. Builders who avoid doing this create a "vacuum" in home prices and instantly devalue new home purchases.

6. Choose Your Appraiser
You're going to pay for an appraisal one way or another! The lender will require that you have an appraisal in order to loan you the money for the home! Additionally, most appraisers charge about the same money for the service - so why not choose your appraiser? Ask around until you've been referred to a good appraiser and request that they perform the service. Ask for a copy of it and read it! Call your appraiser if you have any questions. This will give you an in-depth knowledge of the market area - and it's something you would pay for, regardless!

7. Research City Plans
New neighborhoods are typically on the outskirts of town - the land is readily available and less expensive, which means that you can buy a bigger house for the same amount of money. In these outskirt communities, it's very important to know what the city has in store in the way of roads, zoning, public transportation, parks, and schools. These factors will dictate whether your new neighborhood will become the next "big thing," or the next "cheap thing." If you've decided to use a reputable Agent, your job will be easy! Simply ask your Agent and he/she will be able to provide you with lots of information about city plans that have been approved, and city plans that are still being talked about.

There are many benefits to purchasing a new home - that's why they're so popular! Make sure and protect yourself in any new home transaction by using qualified professionals to protect your interests. This will ensure that you'll not only love your new home, but you'll feel comfortable knowing that you're a winner in the transaction, as well!

This came from MSN a week or so ago.

[SummerChild]

Thanks Soror. I'm going to have to really go through this. There is alot of good information here. I am thinking of purchasing new construction so this will be really helpful!
SC

Originally Posted by AKA2D '91

Article by: by Eric Bramlett
New home communities are more popular than ever! With good reason - new home builders are using popular, open floor-plans, including appliances, sod, and blinds, and helping make it easier than ever to get into a new home with little or no money. New home transactions typically seem a lot easier, as well. If a buyer chose to, they could get through a new home transaction without contacting anyone except the on-site sales agent! However, this would open you up to HUGE losses. Take these simple steps to protect your self in a new home transaction, and to ensure that yours is a success.

1. Use an Agent Who Has New Home Sales Experience
Many people think that they can save money by not using, or don't need the services of an Agent when buying a new construction home. This couldn't be further from the truth! New homebuilders typically try to monopolize a transaction - they only give you their attractive incentive packages if you agree, in writing, to use their lender, their title company, and sometimes even their insurance company! An Agent will walk you through the transaction and will make sure that you're protected every step of the way. If you've agreed to use the builder's lender, your Agent will make sure that you get a fair interest rate & fair closing costs. Your Agent will know what the industry standards are, and will make sure that the builder doesn't try and stretch beyond these. And best of all, an Agent with a lot of new home transactions under their belt will have established relationships with your homebuilder. Because of this, the homebuilder will be on their "best behavior." The homebuilder doesn't want to run the risk of getting a bad reputation in the Agent community, who can potentially bring the builder lots of homebuyers in the future.

2. Don't Sign ANYTHING Until You've Worked Out Every Detail of the Sale
Buying a home can be very emotional - and it should be. You're not simply picking out a house; you're picking out where you'll spend the holidays next year, where your parents will come visit you, and where you might raise your children. However, the on-site sales agent will try and play on this emotion and get you to "write up the contract so that no one else can get your house." That's just fine, as long as you understand what you're signing, and everything is okay with you. Just remember - no matter what is said, everything will be done as it is outlined in the contract.

3. GET A HOME INSPECTION!!!
Most people who buy new construction homes don't bother to get a home inspection. Most new homes come with a one year? bumper to bumper? Warranty that includes everything and many homebuyers feel that they can find out if there are any construction flaws during those 12 months. The problem with this mindset is that many problems won't surface until well after the 12 months. Remember, your home was built by humans, and humans make mistakes. And, no matter how much experience and reputation a builder brings to the table, it's still next to impossible for that builder to double check every part of the job their subcontractors have completed. A licensed inspector will go through a very thorough checklist to make sure that everything has been accounted for. At the very least, get an inspection so that you can sleep soundly at night, knowing that an independent third party has given your new home their stamp of approval.

4. Don't Agree to Use Their Lender Production builders (builders who can develop whole communities on their own) are now large corporations, many of them traded publicly. The corporations have realized that there is much more money to be made than simply selling you your new home - they'll also try and sell you a loan. Builders will offer HUGE incentives to get you into your new home, sometimes up to 15% of the value of the home. However, they will typically put one BIG stipulation on those incentives - that you use their lender. There are many problems that will come up when you pigeon-hole yourself to one lender - higher rates and higher closing costs are the two biggest. The on-site sales associates will typically tell you that their hands are tied, you have to use their lender to get the incentives. I can tell you, from experience, that this is seldom the case. Remember, the builder's job - first and foremost - is to sell homes. If you refuse to sign on the dotted line unless this stipulation is removed, you will be successful - most of the time. There are rare occasions when a builder will lose sight of the fact that they build and sell homes - and will absolutely insist that you use their in-house lender. In these circumstances, walk away, no house is worth taking a bad loan and paying THOUSANDS more for that house in the long run.

5. Research the Builder Most builders are "good" builders. They take simple steps to protect their neighborhoods. Research your builder, or ask your Agent if your builder takes these simple steps to make sure that your neighborhood won't instantly go down in value:

a. Limit the # of investor purchases - this makes sure that the neighborhood doesn't turn into a "rental" neighborhood & allows the "pride of ownership" to shine through.

b. Continues to build equal or greater value homes in the same and surrounding neighborhoods. Builders who avoid doing this create a "vacuum" in home prices and instantly devalue new home purchases.

6. Choose Your Appraiser
You're going to pay for an appraisal one way or another! The lender will require that you have an appraisal in order to loan you the money for the home! Additionally, most appraisers charge about the same money for the service - so why not choose your appraiser? Ask around until you've been referred to a good appraiser and request that they perform the service. Ask for a copy of it and read it! Call your appraiser if you have any questions. This will give you an in-depth knowledge of the market area - and it's something you would pay for, regardless!

7. Research City Plans
New neighborhoods are typically on the outskirts of town - the land is readily available and less expensive, which means that you can buy a bigger house for the same amount of money. In these outskirt communities, it's very important to know what the city has in store in the way of roads, zoning, public transportation, parks, and schools. These factors will dictate whether your new neighborhood will become the next "big thing," or the next "cheap thing." If you've decided to use a reputable Agent, your job will be easy! Simply ask your Agent and he/she will be able to provide you with lots of information about city plans that have been approved, and city plans that are still being talked about.

There are many benefits to purchasing a new home - that's why they're so popular! Make sure and protect yourself in any new home transaction by using qualified professionals to protect your interests. This will ensure that you'll not only love your new home, but you'll feel comfortable knowing that you're a winner in the transaction, as well!

This came from MSN a week or so ago.

[SummerChild]

Great. I'm glad that it's a useful thread. Yes, it is a drag to not be able to take part in the government programs. Shoot, what makes them think that we have all of this money to make a downpayment, etc. I will look into countrywide. I just found a problem with my credit report that I pulled (I haven't seen it since 6/06) so now I have to try to take care of that. Meanwhile, I'm trying to start trying to pre-qual so this is going to hold up the process b/c the problem makes my score lower than usual.

I wonder if there is a way to just use income for the loan qual. Is that a stated loan? Have to look that up.

What do you guys think of 80/20 setups? I'm scared of interest-only loans so that's not an option. Thinking about the 7/1 ARMs too.

Anyone have any experience with any of these?

SC

Originally Posted by jubilance1922

Great thread SC....I'm also looking to buy my first home, and unfortunately I make too much to take advantage of any local govt programs.

I'm going to check out that NACA org.

A soror of mine also told me that Countrywide Loans has a program for first-time home buyers, either a lower interest rate or no closing costs.

[kddani]

Originally Posted by SummerChild

What do you guys think of 80/20 setups? I'm scared of interest-only loans so that's not an option. Thinking about the 7/1 ARMs too.

Anyone have any experience with any of these?

SC

I'm in the process of buying my first house (a townhouse). So here's a bunch of random thoughts:

I am doing an 80/20 loan with seller paying almost all of the closing costs (always keep in mind closing costs- they add up!). I have a good salary, but most of my money has gone towards paying down my higher interest rate student loans. Keep in mind that the 20% of the 80/20 loan is going to be at a higher interest rate. I am going to probably do 6.25% fixed rate on my 80 % and 7.99% fixed on my 20%. I could've gotten a 5.75% 5/1 ARM on the 80%, but in weighing my options it didn't look best for me in the long run and would've required me to pay a point at closing. (My goal is to try to keep closing costs down). But I have an excellent credit score, so your mileage may vary

EDUCATE yourself! Homebuying for Dummies is pretty good and explains all the mortgage options in detail.

First advice is get your credit in line, you mentioned you had caught something.

Get recommendations from friends, family and colleagues regarding mortgage brokers. A broker looks at all kinds of different options for you and shouldn't have a specific loyalty to any one bank. Mine is awesome. I am very happy with my rates compared to another friend who is doing an 80/20 as well through another broker.

You're going to be nickled and dimed on stuff, so make sure you have some cash accessable. You will also likely need to put in carpeting, and you're going to want to paint, decorate, etc. You're also going to want/need furniture. It can be a money pit. But don't go hog wild, take your time.

Make sure your realtor knows what you're looking for, what you like and don't like. Look at several places your first time out. Be willing to walk away from a property. Don't be blinded by the good things- be excessively nitpicky.
Take someone along who knows a lot about home repair (I took my dad) or even just another person to be an extra pair of eyes.

The negotiating process is annoying. Be willing to walk away from any property. There's always another property out there for you, particularly since the market has been turning into a buyer's market, at least in my area.

Since this is your first place, keep in mind resale potential. Buy in a good school district and neighborhood. If you can afford it, buy a bit more than you need. For instance, I'm buying a 3 bedroom 2.5 bath place. I could've gone in a 2 bedroom 1.5 bath but the resale will be better in my area on the 3 bedroom. As will having 2.5 baths as opposed to 1.5.

When it comes time for the home inspection, ask your realtor to recommend someone who is VERY detailed. You want someone who is very detail oriented and will explain everything to you. Do NOT miss your home inspection, some people don't go, but you should. You can learn and ask questions. Mine took 3 1/2 hours and the place isn't that big.

I just had my home inspection this weekend, and that's when it really hit me that this is going to be my home. You think the negotiating is over after you come to the sales agreement. Nope. There's more that goes on after the home inspection. That's what I'm dealing with now- it needs a new furnace and some electrical work.

As you're getting your act together with your finances and credit, spend a lot of time on realtor.com and other homesites and see what things are going for.

If your county has an online property assessment website, check out a sampling of houses in your neighborhood to see what they're assessed at for tax purposes, what they've sold at, etc.

If you have any questions, feel free to PM me. I know this was a rather random post.

[SummerChild]

Hi Kddani, thanks for the thoughts. I think that I read the Homebuying for Dummies and I think there's a similar book for condos and townhouses that I read. Any additional info always helps, however. Wow, is your second ging to 7.99%? I didn't realize that the rates on the seconds could be that high nowadays. I am looking into the 80/20 b/c I think that I'd rather have a highly leveraged investment and just keep my cash to invest in something else. Plus, in Cali if you're not selling a home and getting $$, who has 20%? Most of the houses and condos and townhomes are at least 360 for the older condos/townhomes and 450-500 for the new - and that's just a one bedroom. Excuse me if I don't have 60-100,000 on hand for a 20% down payment.

I wasn't too happy with my broker when I was preparing to buy a place in Chicago. He basically just brought back nothing that was as good as the loan that I found just by looking in the newspapers and calling a ton of companies. My realtor recommended a lender. Being the anal person that I am, I know that I'll do my own research too.

Originally Posted by kddani

I'm in the process of buying my first house (a townhouse). So here's a bunch of random thoughts:

I am doing an 80/20 loan with seller paying almost all of the closing costs (always keep in mind closing costs- they add up!). I have a good salary, but most of my money has gone towards paying down my higher interest rate student loans. Keep in mind that the 20% of the 80/20 loan is going to be at a higher interest rate. I am going to probably do 6.25% fixed rate on my 80 % and 7.99% fixed on my 20%. I could've gotten a 5.75% 5/1 ARM on the 80%, but in weighing my options it didn't look best for me in the long run and would've required me to pay a point at closing. (My goal is to try to keep closing costs down). But I have an excellent credit score, so your mileage may vary

EDUCATE yourself! Homebuying for Dummies is pretty good and explains all the mortgage options in detail.

First advice is get your credit in line, you mentioned you had caught something.

Get recommendations from friends, family and colleagues regarding mortgage brokers. A broker looks at all kinds of different options for you and shouldn't have a specific loyalty to any one bank. Mine is awesome. I am very happy with my rates compared to another friend who is doing an 80/20 as well through another broker.

You're going to be nickled and dimed on stuff, so make sure you have some cash accessable. You will also likely need to put in carpeting, and you're going to want to paint, decorate, etc. You're also going to want/need furniture. It can be a money pit. But don't go hog wild, take your time.

Make sure your realtor knows what you're looking for, what you like and don't like. Look at several places your first time out. Be willing to walk away from a property. Don't be blinded by the good things- be excessively nitpicky.
Take someone along who knows a lot about home repair (I took my dad) or even just another person to be an extra pair of eyes.

The negotiating process is annoying. Be willing to walk away from any property. There's always another property out there for you, particularly since the market has been turning into a buyer's market, at least in my area.

Since this is your first place, keep in mind resale potential. Buy in a good school district and neighborhood. If you can afford it, buy a bit more than you need. For instance, I'm buying a 3 bedroom 2.5 bath place. I could've gone in a 2 bedroom 1.5 bath but the resale will be better in my area on the 3 bedroom. As will having 2.5 baths as opposed to 1.5.

When it comes time for the home inspection, ask your realtor to recommend someone who is VERY detailed. You want someone who is very detail oriented and will explain everything to you. Do NOT miss your home inspection, some people don't go, but you should. You can learn and ask questions. Mine took 3 1/2 hours and the place isn't that big.

I just had my home inspection this weekend, and that's when it really hit me that this is going to be my home. You think the negotiating is over after you come to the sales agreement. Nope. There's more that goes on after the home inspection. That's what I'm dealing with now- it needs a new furnace and some electrical work.

As you're getting your act together with your finances and credit, spend a lot of time on realtor.com and other homesites and see what things are going for.

If your county has an online property assessment website, check out a sampling of houses in your neighborhood to see what they're assessed at for tax purposes, what they've sold at, etc.

If you have any questions, feel free to PM me. I know this was a rather random post.

[Conskeeted7]

Originally Posted by SummerChild

I wonder if there is a way to just use income for the loan qual. Is that a stated loan? Have to look that up.

What do you guys think of 80/20 setups? I'm scared of interest-only loans so that's not an option. Thinking about the 7/1 ARMs too.

Anyone have any experience with any of these?

SC

A stated loan does not require information from your credit report or verification of income to approve you for the loan. Because of the high risk lenders take when not checking these areas, the interest rate is typically much higher. However, these are good options for people with liquid cash but trouble getting conventional loans because of their credit or self employment.

80/20 loans typically allow you to get a larger amount by breaking the loan amount into two separate ones. This also avoids PMI because you are not borrowing 100% on one loan.

Interest only is an option if you are certain that you are either moving before fairly soon or that the house will increase in value pretty steadily and rapidly by the time you plan to sell. Otherwise, you will be in a situation where you have not paid anything on the principle amount when you sell. Therefore, it may be difficult to come out on top when you list and deal with lower offers in a buyers market like we have right now. However, it has been successful for people who are able to get a property well under appraisal and market value. They can then sell and not have to worry about the unreduced principle amount.

I hope I've helped. I'm in the process of buying my 2nd home and selling my 1st. So, I'm right in the midst of all this right now.

[SummerChild]

I know this is a long shot and I am inquiring at other sources too - does anyone know of a good agent in the LA metro area? Please pm me. Mine appears to be moving a little too slow for me.

I need someone who will be responsive, aggressive and not lazy (willing to run comps, suggest developments not considered), etc. I would also prefer someone who does this work full-time and is experienced.

Please PM me if you know of anyone.
SC

[SummerChild]

What have you received in response to asking your realtor to run comps? Maybe I need some perspective....

I asked my realtor to run comps on the downtown area and she sent me a listing of 14 properties that sold downtown. They are the MLS listings with square footage, price, etc. It seems to me that she should go through this with me and tell me SOMETHING. I mean, what does this have to do with what is a good deal in price? per square foot?

Shouldn't there be something more than just sending me a listing of properties that sold over time?

I just feel like she hasn't really added much value...and she hasn't told me a thing about what new developments we should be looking at given these comps.

THEN, to top it off, she told me that she would be previewing properties but all she did was ask me if I have seen this document that lists all the upcoming condo developments. I'm like, um, ok, do you RECOMMEND any of these in particular. It's over 30 pages.

I'm about to fire this agent b/c she just seems LAZY. What have you gotten in response to asking for comps and recommendations on developments to pursue??

SC

[Conskeeted7]

Does your realtor have a solid idea of what you are looking for in a home? When we requested comps they were almost identical to the dream description we'd given her. So, the sq. footage, room size, and features were very similar in the houses that she sent me comps on. The realtor also did some research to find out about the listing prices vs. selling prices of those homes and the average asking price in the neighborhood overall. That's the reasoning for pulling comps. You want to get an idea of what that house is going for on the market. So, by sending you a list of 30 pages of random properties, she's not being helpful. She's being very lazy and not effectively using her time or yours. I would be on the hunt for another realtor if I were you.

[SummerChild]

Yes Soror, she should know what I'm looking for as I sent her my criteria over a week ago and I have been repeatedly speaking with her about it. I have moved on to another realtor.
Thanks for the feedback,
SC

Originally Posted by Conskeeted7

Does your realtor have a solid idea of what you are looking for in a home? When we requested comps they were almost identical to the dream description we'd given her. So, the sq. footage, room size, and features were very similar in the houses that she sent me comps on. The realtor also did some research to find out about the listing prices vs. selling prices of those homes and the average asking price in the neighborhood overall. That's the reasoning for pulling comps. You want to get an idea of what that house is going for on the market. So, by sending you a list of 30 pages of random properties, she's not being helpful. She's being very lazy and not effectively using her time or yours. I would be on the hunt for another realtor if I were you.