Buying a home?

[Slappie 9]

specialguest I didn't mean to hijack your thread. It's just a subject I'm toying with myself. I wish I had the income to afford 250k though. Because I'd be in a house NOW.

Good luck with your search.

"Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them."

[StreetScooby 5]

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Thanks for all the advice. I am stressing a bit since this is such a major thing. I will probably go to a month-to-month rental agreement with my apartment so I don't have to rush anything.

Another option I would seriously consider is scooping up a foreclosure. Not sure what's involved, but there could be a pearl in there for you.

We are all engines of karma

[specialguest 0]

No worries! We can both get advice.

[lawrocket 3]

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Another option I would seriously consider is scooping up a foreclosure. Not sure what's involved, but there could be a pearl in there for you.

These can be difficult, at times. There are plenty of people with a lot of sophistication who are involved with it that get these gems. They have the money and the financing to do it, so foreclosures can be rough for people who need to get financing.

Another thing some people do is look for people who are about to face foreclosure. You can find these people and make a deal for a private sell, where you come up with the money to pay off their old mortgage and give them and additional $20k or so. This saves their credit and gives them money for other expenses. It seems shady to me, but it's a growing thing with nothing legally wrong with it.

My wife is hotter than your wife.

[pincheck 0]

sorry people just curious is it more popular to rent or buy in the states ???

Billy-Sonic Haggis Flickr-Fun

[Remster 24]

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Thanks for all the advice. I am stressing a bit since this is such a major thing. I will probably go to a month-to-month rental agreement with my apartment so I don't have to rush anything.

Another option I would seriously consider is scooping up a foreclosure. Not sure what's involved, but there could be a pearl in there for you.

I wouldnt recommend that for a guy who is already nervous about a 1st time buy!

Remster

[safari1957 0]

Bought my first house in February... Love it. It was painless and we found exactly what we wanted in a short period of time. The reason? I have known my real estate agent for 25 years and completely trusted her. She also did not try to push us towards buying something out of our price range. I crunched the numbers and with the tax advantage we have a bigger place to live and spending a couple a hundred less than what we paid for in rent, not to mention the equity. Good luck!

A foolish consistancy is the hobgoblin of little minds -Ralph Waldo Emerson

[AggieDave 6]

Do you have a publication or a website that helps you track forclosure auctions and such in our part of TX?

--"When I die, may I be surrounded by scattered chrome and burning gasoline."

[Deuce 1]

PM sent.

I do both real estate and mortgage lending. It's a great time to buy because there is a lot of "inventory" of housing in most markets and interest rates are still really low. We bought our first house in 1989 and interest rates were above 10% and 100% financing was unheard of.

Now, a conventional mortgage (below $417,000) with 20% down on the property, three months reserve cash in the bank and at least two years working in the same profession, and a good credit score (720+) 30 year fixed mortgages are going for about 6.25%.

I got into lending because I saw so many people getting screwed by unethical lenders. Folks who offer "no cost" loans would be doing them at a loss, right? So how do they get paid?

Lenders offer brokers interest rate and rebate (looks a lot like "kick-back" but that would be unethical) options. With the above conditions I could get you a "par" loan where the lender offers me no rebate but the lowest interest rate. In that case, you would pay me 1% of the loan amount plus the fees from my processor and the lender's fee. Some loan people call that a "buy down" of the interest rate.

The best deal is to pay the loan costs "out of pocket" and have your Realtor negotiate a credit for closing costs into the purchase price of the home. That way you get the best interest rate and aren't out any cash. (That's why I like to do both )

As the interest rate goes up, the rebate gets bigger. At the interest rate that is easily a half point (percent) over "par" the rebate can be as much as 3% of the loan value. Hell yes I'll pay all the fees etc if you insist a crappy loan that really costs you three times what is available.

The kicker is that the "rebate" does not show up as a cost on the title documents at signing. It is documented as a transfer of funds between the lender and the loan broker. Because people are so freaked out by the huge sums in the transfer of California property, if it's not in the cost or credit columns they don't pay attention to it.

Anyhow, all, be careful who you do business with.

As to foreclosures, they are typically "as-is" and sight unseen. Lenders generally won't lend on them because you are in effect asking the bank to give you a half-million dollar credit card to go to an auction on the courthouse steps. If you overbid, the bank is in the hole because if you default, they can't get their money out of a crappy property that got bid up and suckered you in.

[dancingdolphin 0]

Great idea to buy.....instead of paying off somebody else's mortgage!

just bear in mind ( as I'm sure you wil anyway) that interest rates can increase dramatically.......
When we bought our first house monthly repayments tripled after 2 yrs.
Best of luck finding a wonderful home. x

If you're holding anyone else accountable for your happiness, you're wasting your time."

[DrewEckhardt 0]

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Anyone know how much insurance and taxes run on something around $250,000 - $300,000?

In Westchester county, New York, you'd expect to pay between $800 - $1000 per month in property taxes.

In Boulder, CO you'd spend $125 a month for property taxes on a town house the City appraised at $266K and actually sold for that.

Shopping the $400K range here in King County Washington you'd pay $50-$300 a month on properties different cities appraised at $300K.

Different states, counties, and cities vary radically in the vallue they assign to properties, what percentage of that is taxable, and the percentage of taxable value (mill levy) you actually pay.

You need to research this.

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Oh, BTW, property taxes always go up.

And since total tax collections in Colorado are not legally allowed to increase beyond the rate of inflation * population growth without voter approval they wouldn't increase much.

[DrewEckhardt 0]

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sorry people just curious is it more popular to rent or buy in the states ???

About 70% of us own homes.

How much of a good idea it is depends on the local ratio between rent and purchase price + taxes - some places you can rent for half of what you'd buy a property for, others buying is less expensive. Local appreciation factors into it - some places are seeing property values drop 20% a year, others are going up at double digit rates. Your personal tax situation also effects it : in America we get to choose between having a standard deduction (about $4500 for single people and twice that for married couples) subtracted from our taxable income or an itemized list of deductions including state/local taxes (income and property) and mortgage interest. Once your other taxes exceed that standard deduction, you might be able to have the same money left in your pocket after spending 50% more each month on a property you own than one you rent (that means a 33% combined federal + state marginal income tax rate with the same mortgage deduction allowed on state taxes).

[DrewEckhardt 0]

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I am looking at buying a condo in the near future. I am getting sick of throwing money away in rent when for a couple hundred bucks more a month I can buy. Any tips for a first-time home buyer?

1) Get a pre-approval. As a seller I'm not going to risk paying for another month's worth of interest, property taxes, HOA fees, and utilities on a deal that's more likely to fall through.

2) Get an inspection from an inspector with references. Without references you might get a worthless inspector. With a good inspector you'll find out about anything that may be a health issue (Radon), expensive to fix (Radon mitigation is $800), and perhaps a bunch of stupid things that justify asking for credits which a seller may give you instead of loosing a few weeks or a month by putting their property back on the market.

3) Don't spend too much and be house poor. As an extreme example you don't want to buy the house and be unable to afford window coverings or more than mac & cheese for dinner. Lending guidelines will probably allow you to spend a lot more on housing than you'd like to - 28% of gross income with housing + other debt spending not over 36% of your income. The last time I checked I was only taking home 60% of my salary after taxes + 401K contributions.

4) Note that _everything_ is negotiable. You can ask for a closing date that minimizes the amount of time you're paying for two properties or gives you more time to move in (you want a few weeks). While Realtors will write in a month out as the standard closing date the title insurance company, banks, etc. will work towards whatever you list (we took posession of our new place two weeks after making the offer). You can ask for any furnishings you'd like. You can request credits for new paint or whatever and be more likely to get them than if you made a lower offer. People get psychologically hung up on the selling price. An offer of $245K might be unacceptable, while $250K plus a $5K credit for paint is.

[NWFlyer 2]

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1) Get a pre-approval. As a seller I'm not going to risk paying for another month's worth of interest, property taxes, HOA fees, and utilities on a deal that's more likely to fall through.

This is probably a good place to point out the difference between pre-qualifying and pre-approval. Pre-qualifying doesn't mean jack. You tell a lender a few things about your income, etc., and they say "Yep, you'd probably qualify for X amount." Pre-approval means you go through the entire process (filling out tons of forms, credit checks, account balance checks, etc.) and have an actual loan pre-approved. That's the one that's going to be meaningful to a seller.

Minor terminology difference that could have a big impact on your ability to buy quickly.

[Remster 24]

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1) Get a pre-approval. As a seller I'm not going to risk paying for another month's worth of interest, property taxes, HOA fees, and utilities on a deal that's more likely to fall through.

This is probably a good place to point out the difference between pre-qualifying and pre-approval. Pre-qualifying doesn't mean jack. You tell a lender a few things about your income, etc., and they say "Yep, you'd probably qualify for X amount." Pre-qualificationapproval means you go through the entire process (filling out tons of forms, credit checks, account balance checks, etc.) and have an actual loan pre-approved. That's the one that's going to be meaningful to a seller.

Minor terminology difference that could have a big impact on your ability to buy quickly.

Fixed it for you... I think we need a Vocabulary Police now...

Remster

[NWFlyer 2]

DAMN!!! Caught by the Smelly French Canadian, too.

Fixed my original post. Good catch.

[Slappie 9]

Well shit Deuce! You need to come sell and lend in Houston. I'm scared shitless now.

"Find out just what any people will quietly submit to and you have found out the exact measure of injustice and wrong which will be imposed upon them."

[AggieDave 6]

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As to foreclosures, they are typically "as-is" and sight unseen. Lenders generally won't lend on them because you are in effect asking the bank to give you a half-million dollar credit card to go to an auction on the courthouse steps. If you overbid, the bank is in the hole because if you default, they can't get their money out of a crappy property that got bid up and suckered you in.

I had thought about that, but haven't researched it enough to know all the details yet.

Right now its just a dream, its going to be a couple of years to get to the point where we can buy a house. So I'm just watching, see what property goes for in my area, typically and playing the game of guessing where would be a good place to buy in our area for costs, quality and to have a better chance of a long term good area.

--"When I die, may I be surrounded by scattered chrome and burning gasoline."

[specialguest 0]

Thanks everyone for all the info.

Deuce - I will be giving you a call.

[JerryBaumchen 1,060]

Consider a book called:

100 Questions Every First-time Home Buyer Should Ask

by Ilyce R. Glink

check with amazon.com

Jerry

[Deuce 1]

Um. There's really no such thing as true "Pre-approval" until the property has been appraised. So, if the market was really slow you could have a property appraised and then bring the appraisal to a loan broker who would bring your application package and the appraisal to a lender who would then "approve" you for the loan amount.

Then you could take that to a seller and negotiate a deal.

Pre-"approval" letters are generally written by loan brokerages. When I do mine, I will include the credit score of my buyer and a thumbnail sketch of their financial position. With so much 100% financing around, a big selling point is someone with the werewithal to put together a 20% down payment.

Another good way to negotiate a deal is by putting up a significant deposit. Only do this if you are really serious, but putting up $10,000 instead of $1000 of "earnest money" (meaning the seller gets to keep it if you flake). One of the worst things that can happen to a seller is to have their property off the market for a month and then the buyer can't get financing or flakes.

Anyhow, that's why there are contingencies in the contract. The buyer is making the offer on the presumption, to be verified by inspectors, that the property is pest free and needs no significant repairs. If damage is found, we renegotiate. Again, the best loans are the biggest pains in the butt for all concerned, and "A-paper" lenders will not finance properties that don't have any discovered damage repaired prior to the close of escrow.

For anybody not from around here, this is what about $550,000. gets you in the Oakland Hills. ( I really like this house)

[wingnut 0]

wow, that house with a half acre here where i live would preobly go for 120k......a 5k house here in central ohio is a freaking mansion!!!!!!!!!!!

______________________________________
"i have no reader's digest version"

[Deuce 1]

Yeah, that's why I posted them. I know how people from other parts of the country and elsewhere can't believe what RE costs out here.

And that listing is pretty much a STARTER home.

The good news is the amount of equity you can generate, but first time homebuyers out here eat a lot of mac and cheese.

[skycat 0]

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Thanks for all the advice. I am stressing a bit since this is such a major thing. I will probably go to a month-to-month rental agreement with my apartment so I don't have to rush anything.

Another option I would seriously consider is scooping up a foreclosure. Not sure what's involved, but there could be a pearl in there for you.

Denver right now has the highest forclosure rate in the country, 1 in 300 homes. So when I was looking at houses I looked at A LOT of foreclosure homes and well the deals really weren't that good, the banks want the the homes are worth, and there definately were no good deals on that front especially since the homes are sold as is and in general were trashed, if the inspection comes back bad you are out of luck and your only options is to terminate the contract.

I ended up being able to get a better deal with an idividual seller, the seller paid my closing costs as well has put some money in an escrow account for some repairs that were needed.

I also agree with the stay within your monthly budget and do whatever it takes to get a 30-year fixed loan. I like knowing that if I loose my job or Derek does, we won't loose the house.

Fly it like you stole it!

[DrewEckhardt 0]

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For anybody not from around here, this is what about $550,000. gets you in the Oakland Hills. ( I really like this house)

Real estate isn't cheap on the Seattle east side either.

In February some one paid $540K for the house across the street. 1 bedroom. 1 bathroom. 680 square feet. Built in 1945.

I bet it'll get scraped off and 3 new homes in the 700s-900s built in its place.

We bought a condo.