Post # 1
Well ladies I think I need to take a step back from wedding planning for a bit because….. we’re buying a house! We want to close before April 30 to get the first time homebuyer’s credit, but honestly I’m a little clueless about where to start. Do we go get preapprovals first? (and how?) Or do we get a realtor first? Any advice would be appreciated!
Post # 3
I got my preapproval first. It made things MUCH easier. It’s a pain in the arse to go through all that crap and I felt a lot more confident knowing we were approved and ready to go. This way you know the homes you are looking at are for sure in your budget and also you have a leg up on the competition if you are already preapproved and ready to go. If they get two of the same offers and one person still has to secure their financing, but you already have yours in order…which one do you think they’ll choose? I would get a referral for a mortgage broker/consultant – don’t just start applying online or any of those sites, they farm your information out to everyone and they all wind up pulling your credit which could knock your credit score down a few points and possibly cost you are cheaper interest rate. Read up about mortgages and points and all of that stuff. Depending on how long you plan on staying in the house, buying down the interest rate with points is not a bad thing.
Definately find a good realtor in the area…get referrals from friends/family, etc. and depending on your area, be prepared for a wild ride…those that CAN buy a house right now are taking advantage of the lower home prices and the credit as well and there are LOT of first time buyers out there. We bid OVER asking price on a few homes and still lost out on a few. It was very stressful…
Make sure you get preapproved and not prequalified…being prequalified is worthless. Preapproved is when they actually pull your credit and verify your income and assets, etc.
Post # 4
HA! I love this title! It sounds like a super kitchy, smart-aleck cultural studies book. I don’t know WHY, of course, but it does.
I got nothing about buying a house though other than to say good luck! That’s really exciting!
Post # 5
We found a good realtor first and then got pre-approval. I know a lot of other people do it the other way around though!
We bought a house last spring and this is my advice…be realistic. I gather that you are a first time homebuyer and that’s important. Research cities and neighborhoods that will be good for first time home buyers. That is, places that you will enjoy living in and that will have a good number of nice homes within your budget. Also, come up with a realistic list of musts. This is your first home so you probably will not be able to buy the 4,000 square foot home with gourmet kitchen, master suite, walk in closests, huge yard etc etc… Also, really think about what budget you are comfortable with and how that translate into your mortage ahead of time. We were pre-approved for a lot more then we were comfotable paying, so really crunch the numbers yourself.
I don’t want to sound scary, but I think everything I wrote above is important! FI and I made an effort to reasearch and find a city (inner ring suburb outside of Cleveland, Ohio) that had a lot of options for first time homebuyers. We found a house that we love!
A good example of someone who has not been realistic with home buying is one of my close co-workers who is also in her mid 20s. Her and her FI have been looking for a house since March 09. They keep looking in really high end suburbs that just don’t have houses for first time homebuyers. They also refuse to look at houses that don’t have a ton of land, or a full master suite with connecting bathroom. They are basically are now looking at major fixer uppers because they refuse to look in places that are not as fancy.
My city might not be super ritzy, but it is a tight knit, artsy, safe community that we love!
Good luck with the hunt!
Post # 6
A lot of times realtors will not take you out to look at houses until you are pre-approved. Mortgage companies in our area have lenders they work with exclusively, and you can get a pre-approval through them. Otherwise, you can go to the bank of your choice and get pre-approved. (That’s what we did). You’ll need a couple of years of financial information to bring to the mortgage office… like paystubs, tax info, etc. When you make an appointment to get preapproved, just ask them what all you will need. Good luck! This was an exciting (but yes, stressful) time in our lives when we bought our house!
Post # 7
I have to say get Pre-Approved FIRST. THEN find a Realtor. If you go to a realtor first; you will be at a higher risk of looking (& falling in Love With) places outside your budget. After you are pre-aproved & know what you can afford; THEN you have a good Idea of what to tell your realtor.
When we first started; we went to a bank with a mortgage consultant that we already knew and trusted. If you don’t know anyone in the banking industry I would just check around. Do you know how much of a downpayment you will have? If you do I would start by calling banks and telling them you are interested in seeing how much you can get preapproved for & they will set up a meeting. They’ll ask you all kinds of questions. We had to have 2 of our previous Pay stubs; Checking & Savings Balances; & Drivers License & Tax Info History. I’d probably check into 3 or so different ones to see what kind of interest rates they can offer u. Also; your interests rates will depend on the amount of $ you have to put down. The more down; the better rates!
As far as the Tax Credit. There isn’t anything you do before hand. (that I know of) We closed before December 1st; so we will just be claiming it this year on our income taxes.
Well hope this helps. As stated above; This is a VERY EXCITING TIME; But is VERY STRESSFUL!!!
Post # 8
I agree with everything posted above by jaylii9 (great input on the being realistic thing and scoping out the neighborhoods!!!)
I would still do it the other way around with the realtor/mortgage approval though. It doesn’t do you much good to have a great realtor and be standing inside a house you love and not be 100% certain you can actually buy it. And, what if something comes up and for whatever reason you don’t get approved for what you expected, or something is on your credit that you didn’t know about (but you can avoid this by pulling your reports and knowing what’s on them all first) or if you have a super jerk underwriter that takes forever and your go over the fianance contingency date in the contract, etc. There is just so much that can happen.
I actually had my real estate license a few years ago and HATED it. But, i can tell you that from a realtor’s perspective it also did make us feel like the buyer was more serious having their financing in order first. Realtors don’t make a dime unless you buy the house, so they spend all that time with you upfront, carting you around, gas, sometimes lunch, a days worth of work…sometimes many, many times…for not one single penny unless you actually purchase the home and you do it with them. So, in that regard I do suggest you find someone you like and are comfortable with, so that you are not wasting their time and yours, but that also you are 100% ready to take the plunge before you go out looking.
Search your local MLS scour it….KNOW YOUR MARKET…save homes on your list and watch how long they are on the market…if the nicer ones in your price range are disappearing in less than 30 days…you have some competition in your area…pick up everyone of those little homes for sale books on your way out of the grocery store.
Research property taxes (big one!) and schools. Even if you don’t plan on having children in this home…when you go to sell it, the buyer might…so check into local school systems and make sure they are okay.
Post # 9
I don’t know about some of those things, but I will say that try to get that 1-year insurance package thing that we got. The person who is selling you the home pays for it and it basically covers anything int he house breaking the first year you buy it. So if the AC thing breaks or the fridge doesn’t work, etv….the insurance covers it. Last thing you want is to move into a home and then be like, “oh, XYZ broke and it costs $3,500”. In the first 3 months, my garbage disposal went out and so did my garage opener. It cost me $50 each time for a deductible to get it all fixed. It would have cost so much more!
Post # 10
It’s called a home warranty. You can buy it yourself, too if the seller isn’t willing to offer it. I’ve heard mixed reviews, been a lifesaver for some and a big hassle that doesn’t cover much for others. Look into the plan beforehand.
Ejs…do you remember what company yours is/was through? Sounds like one of hte good ones.
Post # 11
I would talk to lenders first to get a ball park of how much you will get approved for. PLEASE don’t borrow the max that they allow! When we got our house we were making less than 90K/year together and they told us we can afford a 500K house, that’s completly absurd!! Lenders will sell you the biggest loan possible, they dont care if you default on it.
We started talking to about 5 different lenders and then narrowed it down to the top 2, then we kept in touch with them until we found the house we wanted. Talk to more than one lender and don’t be afraid to let them know that they have competition. Hubby was talking to one of ours one day and the guy told him what the interest rate would be if we locked it in that day. Hubby told him that we had just gotten a better interest rate from a different lender and the guy responded with “Oh, I just got an e-mail, I can offer you this now” Yea, ok!
Don’t get an ARM! Interest rates are so low right now that they can really only go up in 3-5 years when your ARM would adjust.
Make sure you get a home inspection!!
Post # 12
I’m with Ejs… I think home warranties are a great idea. Our garbage disposal also broke…. new one installed for $50! thermostat broke… they installed a new digital one for $50. Definitely recommend, if just for peace of mind.
Post # 13
@blueshoes2….I’d like to buy one now. hehe. We have had a really nice digital thermostat in the box since we moved in…but it’s so damn confusing neither of us wants to attempt it so that we screw up something with the heating system. So there it sits in the box…
Do you know what company yours is with?
Post # 14
AH YES. The home inspection…likely the best few hundred bucks you’ll spend. And, the best few hundred you’ve ever thrown away if the house turns out to have a major problem, like one of the ones we made an offer on did!!
Post # 15
Thanks for all of the advice everyone! To answer some questions… we have been looking into houses/areas for about a year now and I think we have a good idea of what we want and where. We have three suburbs picked out that have really good schools, lower taxes, and aren’t the “ritzy” areas of town that we could only afford if we got a condo.
As far as prices/down payment etc. I have about 10K that I can put towards a house + the 8K tax credit. I figure we’ll put about 15K down and save 3K for closing costs/moving expenses. The houses we will probably be looking at are around 180-220K. Hopefully towards the lower end of that. We can make the monthly payments if we get a loan @5% or less for anything up to 250K but I don’t want us to be too strapped in case one of us should lose our job or ya know… life happens. 🙂
Sounds like there is a general consensus that we need to get preapproved first so I guess that is what we will do! It is going to be a busy year girls!
Post # 16
Oh and about inspection etc., I am very lucky that my dad is in the construction business and he will be doing our initial inspections for us. If he gives the go-ahead then I’ll hire a professional who can do the nitty-gritty stuff… but it is nice to know that I won’t waste money inspecting a house that has defects that are obvious (to people who know about such things).