(Closed) First Time Home Buyer Advise!

posted 4 years ago in Home
Post # 16
Member
105 posts
Blushing bee
  • Wedding: February 2017

do you really need to buy a house right away, i remember when me and my wife was in an apartment we have a lot more money than when we moved to a house, if you guys have no kids yet i suggest to wait and get a fairly inexpensive apartment

Post # 18
Member
105 posts
Blushing bee
  • Wedding: February 2017

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MissDevourer9 :  its not just a mortgage, im not trying to scare you, but if you have a house your square footage is a lot bigger than apt and you will need to use electricity more to cool or heat up the place, plus yard stuff (if you have yard) watering the yard, extra bill from water company which most apt does not charge, etc.. you might get lucky on some foreclosure or short sales. theres is a website called zillow (i think) that shows you prices of houses, closing cost you can include it in your mortgage loan.  make sure you do a fixed rate, dont let them talk you into variable rate. good luck, like i said i didnt want to scare u but these are additional stuff that comes in owning a house

Post # 19
Member
867 posts
Busy bee
  • Wedding: October 2015

If they don’t want to be co-owners of the home, your parents can each give each of you and Fiance $14,000 annually. So, that’s a total of $56,000 (in four separate checks of 14,000 – one from your mom to you, one from your dad to you, one from your mom to Fiance, one from your dad to FI) that they could give you without tax liability in the first year. You could finance the rest, and they could give you the rest of the 100,000 ($44,000 remaining) the following year, divided up again into checks less than $14000. You could immediately send it to the mortgage company requesting that it be applied to the principal of the loan.

 

Edited to add that this website has useful info: http://money.usnews.com/money/personal-finance/articles/2015/11/03/options-for-parents-helping-adult-kids-buy-a-home

Post # 20
Member
13892 posts
Honey Beekeeper
  • Wedding: November 1999

There are rules about gifting money for houses, so I would recommend talking with a mortgage lender to make sure you know all the facts.  Sometimes it’s as little as the giver writing a letter, or it could be as complicated as the giver having to also provide financial documents (bank statements, W2s, etc). 

Honestly, reading your debt though scares me.  You need to tackle all of your bad choices in the past and get them squared away.  Old medical accounts and high credit card utilization coupled with a past bankruptcy is going to terrify any lender and they’ll run from you, particularly now that it’s getting a tad more difficult to secure financing in some places.  While student debt isn’t looked as as “bad debt,” it most certainly isn’t good to have, particularly when you have several other red flags for being a poor candidate for a loan. 

Post # 22
Member
867 posts
Busy bee
  • Wedding: October 2015

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MissDevourer9 :  Since you are interested in the idea, you could also see when the deadlines are for the “annual” gifts. It might be by calendar year, so theoretically your parents could gift you the first $44,000 in 2016, and then the remaining $56,000 in 2017 when they sell the house. This would require that they have the cash on hand, of course. The good thing about having the full 100,000 available to you before buy the house is that you only have to finance the remaining amount, so your monthly payments will be smaller for the life of the loan.

If you put 56,000 down, and then pay the following 44,000 the next year, the extra 44,000 will be applied toward your principal loan balance (and your loan will then be paid off much sooner), but your payments will remain the same unless you re-finance, which can be costly.

Post # 24
Member
1594 posts
Bumble bee
  • Wedding: May 2017

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MissDevourer9 :  One thing that is important since your parents are gifting you money for a down payment is that there’s a processs you have to go through to do so (at least in Illinois, it may vary by state). My parents gifted me a small amount of cash for my first home, and we had to go through a “gifting” process. It’s very simple and quick, and there was no charge with my bank.

Basically, they explained it to me that the IRS can come after you for not filing it the proper way. It can flag them if you suddenly have 100k in cash to pay for a home. I had a friend that did not know this, and she ended up having to pay taxes on all of the money that wasn’t accounted for (and you don’t want to end up paying taxes on 100k after you’ve already wrapped up that cash into a mortgage).

I’ve always used credit monitoring to check my credit score to see what I need to do to improve it. I’ve used Credit Karma in the past, which is good for giving you pointers on what you need to do to improve your score (But don’t rely on them for you actual score – they report your score lower than it actually is so you continue to use it)

Is it possible that your parents could help you pay off some of your debt and give you less toward the house? Even though you will have a big down payment, you still want to have the best interest rate possible, which is heavily influenced by your credit score and income. My credit score was right at 739 (1 point away from “excellent” rating), and the difference in a rate for a 739 score and a 740 score was a quarter of a percent – which ends up being quite a bit in the course of 30 years. I ended up completely paying off a card with a $200ish balance, which made my score go up 4 or 5 points, and it helped me out with the better interest rate. 

Shop around at different banks. Talk to a credit union now rather than down the road, and see what they will do for established members. The credit union I talked to was the best bet for me, but I could have gotten an even better rate with them if I’d been a member for 6+ months. This will help me out when Fiance and I refinance after our wedding. Smaller banks had the better rates as opposed to chain banks when I was shopping around – but I’m not sure if that’s the case everywhere. 

Also, this will be down the road once you actually find a house to buy.. but don’t skip a walkthrough under any circumstance! You have the right to walk through your home one last time the day of or the day before closing – do it, no matter what. I chose not to, because I’d been in the house 3 days before to do measurements. Went to the house after closing, and the basement was flooded. Since I didn’t do a walkthrough, it was all my responsibility. Lesson learned!

As far as closing costs – it all depends on the title company you go through, the bank you go through, and the way property taxes are done in your state. My down payment was $15k, but because of the time of year I was buying the house, the seller had to pay me for property taxes, which came out of my down payment. This ended up covering all of my closing costs, and then some. I think the closing costs were around $1200 before any of that, though. The first bank I went to to get pre-approved for a mortgage was going to charge me almost 3k in closing costs (PNC bank, they had the highest rates of anyone that I checked). 

I know this is a lot of info and kinda all over the place, but just figured I’d share the things that I didn’t know before buying my home.

Post # 26
Member
1594 posts
Bumble bee
  • Wedding: May 2017

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MissDevourer9 :  you’re very welcome! I would check with the credit union before opening an account – they can probably tell you the perks that they give their members. They were very helpful for me, and I’ve been happy banking with a credit union so far. I actually got a $2000 rebate on my last car I bought because Groomsmen gives discounts for credit union members!

As far as credit karma – since they are a free service, they make their money off of “clicks” within their app or website, so they want to keep you using their services..so obviously if your score seems lower, you’re more likely to check it out to see what more you can do to help it. The last time my credit was ran, it was about 35 points higher than what credit karma reported it to be. It’s been at least 15 points lower any time I’ve had an official credit report ran. But they do give helpful tips, so I continue to use it. 

Post # 27
Member
133 posts
Blushing bee

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futuremrss17 :  Its so funny you say that because our mortgage is with PNC and they had by far the lowest rates when we were looking. They also waived all our closing costs – it only ended up being like $200. 

Post # 28
Member
1594 posts
Bumble bee
  • Wedding: May 2017

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MrsF1234 :  That’s awesome, I wish my closing costs had been that low! I’m guessing it depends on the area and probably the mortgage loan officer you’re dealing with. Ours was so rude and very unprofessional! I told her that their rate was almost a whole percent higher than any other bank we looked at, and she tried arguing that it was because my credit wasn’t good enough, when I know my score was 740 or higher at that point. Also, when she sent me the initial paperwork in the mail, she had my first name completely wrong (wasn’t even close)..and I even had an account with them at the time! When I told her I was going elsewhere because it was the best financial decision for me, she sent me a rude e-mail thanking me for wasting her time. I responded and told her that I gave them the option of matching the interest rate and they wouldn’t budge. She also had my name wrong again in that e-mail. She was a mess..lol

Post # 30
Member
133 posts
Blushing bee

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futuremrss17 :  That is crazy! We actually do all our banking at Chase and the mortgage lender there referred us to PNC because he couldn’t beat their rates, lol! Funny how experiences can be so different. 

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