Hi!! I just bought a house about 2 weeks ago! I was sooo confused and I asked about a thousand questions (on WB and elsewhere) so if you have any questions feel free to PM me. Here is my opinion on home-buying in general:
– You do not need to have 20%. If you do… that is FANTASTIC and a better deal because you might get a better rate and you won’t have to pay private mortgage insurance (just for example, I will be paying $83 per month on a $190,000 mortgage until I hit 22% equity). So it is definitely awesome if you have the 20%…. but really unless you have family money or want to wait until your 30s who has 20%?? I make a great salary but now is the time to buy and I was not willing to wait another 5+ years to buy and miss out on all the great deals. We bought with 4% down (about) and I feel like it is absolutely worth the extra cost because of the deal we got on the house. (We got a house for about $70/sq foot when the avg price in the area is 100-110/sq foot).
– If you don’t have 20% FHA is probably the way to go. FHA loan is not just for low income people (that is what I thought, but there are no income limits that I am aware of). You’ll get a lower rate, lower PMI, and you only have to have 3.5% down. You WILL have to pay an administration fee for using the program which really sucks (ours was about 3300 on a 200K house), but they roll it into the price of the mortgage so you don’t have to have that money out of pocket
– Get a real estate agent you TRUST.
– If you close before June 30 you get an $8,000 tax credit from the federal government (which means that next year on your taxes, you will literally get a check for $8,000 in addition to whatever refund you would have gotten)
– Consider new builds… you can still get the tax credit, plus homeowners insurance is lower and the prices are actually lower than already built houses in a lot of areas (like mine).
– Even if you get a new build– your real estate agent should be able to help you!
– Plan to pay more than you expect. There will usually be an application fee (new builds) or earnest money deposit (already built houses) when you put in an offer. These will be applied to the down payment if you buy. There will also be closing costs unless you can negotiate the builder or seller to pay them. There will also be “prepaids” (which no one told us about!) which is stuff like homeowners association fees, homeowners insurance fees, FHA fees, taxes, etc.
– Get a REPUTABLE inspector. An inspector’s fees are totally worth it because they make sure that you are getting what you paid for. A discount inspector who misses $10K worth of issues with the house is not a bargain.
– Accept that the time between contract and closing is going to suck. But it will be so worth it when you get into your house.
Thats all I can think of for now!