First Time Home Buyer Tips

posted 3 months ago in The Lounge
Post # 31
Member
86 posts
Worker bee
  • Wedding: June 2019 - Sandpoint, ID

NikkiBee18 :  Ha, yes! Those online calculators are crazy off!! I just looked at my actual house on zillow and it says the estimated mortgage for my house is $744/month. Laughable! My actual mortgage is $1,301/month. And this is for a house close to 200K. 

Post # 32
Member
7463 posts
Busy Beekeeper

sarathemermaid :  I always tell people to focus on a house that functions and is in a good location. Ugly can be fixed later when you have more money! Plus a fair amount of ugly can be fixed with a little paint in the meantime. 

Post # 34
Member
7463 posts
Busy Beekeeper

alshink :  wow that’s a really bad one! Although are you including the escrow for taxes/insurance in your $1300 amount? That’s sometimes the difference. Those calculators are really bad at estimates taxes and insurance. 

Post # 35
Member
86 posts
Worker bee
  • Wedding: June 2019 - Sandpoint, ID

LilliV :  Yes, it includes mortgage insurance and taxes worked into it. Also, where I’m at, rates are high. I think mine is at 5%. (I feel that’s high anyways)

Post # 36
Member
86 posts
Worker bee
  • Wedding: June 2019 - Sandpoint, ID

NikkiBee18 :  Right?! The only person who can really tell you how much you can afford is your lender. Mine was quite accurate.

Post # 37
Member
7463 posts
Busy Beekeeper

alshink :  but is your mortgage alone about $744? That’s where I think the calculators can throw someone off – it tells them just the mortgage and they assume it’s the entire PITI payment. 5% for mortgage insurance sounds crazy high though! That’s on top of your regular interest rate? Woof.

 

Post # 38
Member
1738 posts
Bumble bee

I’m about to close on a home and I’ve found that the smartasset.com affordability calculator was spot on to what our lender said. We ran different scenarios with our lender and that calculator was always spot on. I may have just gotten lucky though.

My situation is probably unique because I live in a super HCOL area so we had no choice but to get a jumbo loan. Jumbo loan requirements are much more strict than conventional. We had to show 12 months of reserves. Different loans had different requirements for this portion. All cash reserves meant lower interest rate. If we had 1/2 of the reserves in cash and 1/2 from our retirement accounts, it would’ve increased our interest rate. And they can calculate how much the retirement accounts are worth in different ways. Some only count 60% of the retirement account since there are penalties if you withdraw, others count 50%, some count 100%. This all changes the interest rate. Jumbo loans also factor taxes and insurance in everything so the amount you qualify for already includes those numbers. In my head, my “mortgage payment” equals principal, interest, taxes and insurance (PITI). 

If you put 20% or more down on a house, you can access the equity for improvements right away, BUT they still factor in your debt to income ratio. If you max out on your mortage, you won’t have a good debt to income for a line of credit even with a 20% down. 

For our market, we had to have way more than just a prequalification letter. Our lender put our loan in underwriting BEFORE we even made any offers. That way we could offer a 15 day close and be able to compete with all cash buyers. 

Closing costs are different depending on county. My brother bought in two counties over from us where houses are far cheaper, but his closing costs were far more expensive than ours. We used the same lender too. 

Post # 39
Member
708 posts
Busy bee
  • Wedding: June 2019

We recently bought our first home! A couple of things we’ve learned so far… Save as much as you can before buying a house/moving! Don’t totally rule out the option of buying new. We chose to build a house in a rural area and it was less expensive than buying an older/”used” home in the the “city” or more developed part of our area. Look online at websites like Zillow but keep in mind their pricing is wayyy off! Talk with your partner about what your top few things you want in a house are and make those your priorities. We really wanted a large house, safe neighborhood, good schools, a nice community, and an up-to-date home. In turn we sacrificed space (our home is almost 1,200 sqft.) and we will have a bit of a commute. Worth it to us! Just pick what’s most important to you. Also, some bees suggest you get pre-approved and work with a lender now. That may not really be necessary depending on your credit. We had great credit and were able to get a preapproval letter within days. Also, use a lending company and not a bank when you look into getting a loan. If your lender with a lending company doesn’t successfully do business they don’t make money. This leads to them being far more motivated to help you along. If you go to a bank then they aren’t necessary specialists in home loans and have a lot more going on and won’t necessarily be there to pick up your calls when you have random questions. Plus they tend to be a bit less motivated. Congratulations! Buying your first home is so exciting!

Post # 40
Member
2235 posts
Buzzing bee
  • Wedding: June 2015

 All good advice, just wanted to add that EVERYTHING costs more than you think!

We closed on our first house in December, and have probably spent 25K or so on getting things to where they want them (and this was a move-in ready, albeit older, house) – and we’re still not done. Granted, we live in the Boston area, so it’s a very high cost of living, but as a first time homeowner I was blown away by some of the quotes and ultimately, the prices, we ended up paying for work. We got everything in the house painted (prior owners LOVED bright colors), including kitchen cabinets, trim, doors, ceilings, etc. That alone set us back like 12K. We replaced carpet in the master bedroom and finished attic and that was like 3.5K. We had to have some of the electrical system updated, and that was another 8-9K. We’re having ductless AC installed on the first floor next week, and that’s another 3.5K (after getting quotes of up to 7-8K). Landscaping is $1000, after my dad and husband did a substantial amount of it themselves (and we have a very small yard). It’s so hard to get a ballpark of what these things cost online, so I’ve come to just expect everything will be way more expensive than I think it’ll be.

I also want to emphasize the importance of the school district (assuming you’re plannning on having kids)! This was one of the reasons we chose our town, and I’m SO glad we did – we found out I was pregnant about a week having our offer accepted. Our thoughts are that if the market crashes (it’s INSANE here right now, and this was my husband’s biggest fear in the process), we can sit tight in our current house for as long as we need to while the market recovers and not have to worry about moving to get our kids into a good school system.

Good luck! Our homebuying process was insanely stressful and complex (because our lender SUCKS – can’t wait to refinance), but it doesn’t have to be that way!

Post # 41
Member
7463 posts
Busy Beekeeper

brideandblue :  Look online at websites like Zillow but keep in mind their pricing is wayyy off! 

Tacking on to this point – depending on your area it can be way off in both directions! Better to look at the recently sold listings to get a better idea of prices. I know my “zestimate” is about $60k less than the appraisal we had done last year and at least $100k less than any other similar house in our neighborhood has sold for in the last few years. Pre-approvals are really for the sellers – in a very hot market a seller isn’t going to consider an offer without a pre-approval because they have 6 others that have it and have offered more than asking price. If it’s a slow market it probably isn’t as important though. 

Post # 42
Member
9342 posts
Buzzing Beekeeper
  • Wedding: August 2012

brideandblue :  In a lot of markets people don’t have days or even hours to wait on a pre-approval letter though. We looked at our house before it was even officially listed and made an offer in an hour, and we STILL had someone offer on top of us after that.

Post # 43
Member
143 posts
Blushing bee
  • Wedding: May 2019

Don’t settle for something you don’t love. Don’t spend your whole budget. We bought our house for $50,000 cheaper than we were approved for. Take into account property taxes and insurance. If something needs fixed, it’s good to have money available. If you are upgrading in size- it’s amazing how much you will need to purchase! Furniture, washer/dryer, bathroom stuff. Make a list of things that are your must haves. We gave the list to our realtor and so we didn’t waste time looking at properties that were absolute no’s. 

Dont look at homes that are over your budget. We got our closing costs paid by the seller. Saved us tons! Get a good home inspection! It’s worth the $. 

Post # 44
Member
481 posts
Helper bee

NikkiBee18 :  

Figure out if you are “project people” or “turn key people”. I HATE home renovation projects…but my husband LOVES them and so does my mom (she renovated homes for money before she retired as a side business). 

If it were up to me, I would buy closer to the top end of my budget in order to get a home that already has granite countertops, good lighting, updated bathrooms, and et cetera. However, I compromised with my husband and we agreed on a house well below our budget, but that need cosmetic updating (like an easy kitchen reno and changing the color of the house). 

 

Post # 45
Member
708 posts
Busy bee
  • Wedding: June 2019

Westwood :  Totally depends on the market you’re in! If I remember correctly she’s not looking to move for another year or so. In the market where I live it’s a very hot sellers market but we were able to get our preapproval letter to our builder a couple days after they “held” the lot for us and they were totally okay with it. It’s different for everyone(:

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