Post # 1
I’m not sure this is the right place to ask this, but I’m not sure where to ask.
My new husband and I have been talking increasingly about buying our own home at some point in the middle-future. We are nowhere near ready at this point in time, with very little in savings. However, we really have no understanding of how home loans work, what additional fees are involved, what equity even is, etc, etc, etc. We have so many questions about all these issues, and we aren’t sure where to start or who to be asking.
Can anyone suggest who we should be asking these questions of, or where to go for this type of advice? We are at a loss!
Post # 2
Contact local real estate offices to see of they have a first time homebuyer class/info. We did that and learned so much! Plus there are grants that offer down payment assistance, which is always worth looking into. Make sure you find a realtor you are comfortable with!
Post # 3
You can google most of those things..
Post # 4
My county provided a first time homebuyers class that was incredibly helpful for Darling Husband and I when we started thinking about buying. It explained types of mortgages, how to get mortgages, where your options are, realtors, what happens when an offer goes in, inspections, appraisals…you name it, we discussed it.
Post # 5
I went to a home buying 101 seminar with my husband this past weekend and it was super informative and interactive. I agree with PP – connecting with some local realators is a good place to start. In my area you can sign up for their mailing lists online, or follow them on social media to receive alerts about upcoming events.
Post # 6
missyjz : Yep. We just did a lot of research.
OP, I would not get a realtor if you’re not ready to start looking. No need to waste their time this far out.
Some things to research:
- Types of Loans (Conventional vs. FHA – I was under the impression that Conventional Loans all required a 10% down payment and they do not)
- Neighborhoods/Housing Market/HOA costs – Where do you want to live? What do homes cost in those neighborhoods? Are those prices feasible for you? If you have kids or want kids, look at the school districts.
- Closing Costs – most of the “fees” are bundled and paid at closing. This can be a lot of money (ours were ~15k, but we are in a HCOL city). Sometimes you can get the seller to cover closing costs, but it has to be part of your offer.
- Loan Amortization (you pay a lot more interest than principal when you first start paying your mortgage and that was a shock to me, even though I knew to expect it). Your equity is the amount of the house that you actually own, i.e. the amount you’ve paid toward the pricipal (+ any increase in house value). So if you buy a 500k house and your down payment is 50k, at the time you close, you own 50k of the house and take out a 450k mortgage (if you put less than 20% there is PMI, which you can roll into your mortgage or pay up front when you pay your closing costs, but that’s for another post). From there, each month a certain percent goes to principal and the rest goes to interest. Your equity would go up by however much you’re paying toward principal each month. If you ultimately sell your house for > 500k, the amount over 500 would be part of your equity too.
- Your monthly budget – figure out what you want to spend on your mortgage each month. Make sure you’re considering utilities (Electric, Gas, Water, Wastewater, Trash, etc.) and how they will increase from what you’re used to if you’re moving into a larger property or are not used to paying them separately. Factor in the HOA (if you have one) and property taxes. In my experience the “projected monthly payment” numbers on Zillow, Trulia, etc. were not accurate (sometimes off by 1k) so be wary of that.
- Just because the banks offer you a loan in a certain amount DOES NOT mean you should get a mortgage at that amount. The bank offered us over 50k more than we spent on our house and it would have been very challenging to pay a mortgage had we bought at that price point.
Post # 7
- Wedding: December 2017 - Courthouse
There are a lot of really good videos on YouTube that explain everything. It’s a lot to learn!
Post # 8
moonstonepagan : I did a first time homebuyer course because it was required for my state-run loan program and I’ll be honest – it was kind of garbage. Maybe there are better ones out there but mine had straight up inaccurate information in it and when I pointed it out to the loan officer she said “yea I know – you’re one of the few people to pick up on it!”. Horrifying.
Google is your friend and in the meantime focus first on creating a budget and increasing your savings. Don’t put the cart before the horse – you need to get your finances in order first.
Post # 9
Expect to pay a lot more than you originally planned for. lol
Post # 10
missyjz : That’s not a helpful response. Google can be hell to sort through, even for someone with superior google-fu powers. Many questions can be hard to google, and sometimes you need interaction to fully understand an answer. A forum is for talking, so talk. 😉
Post # 11
I would advise you to speak with a mortgage broker! We skipped the realtor and went directly to a broker who answered all of our questions (totally new homebuyers, will be closing next week). He was really great about breaking down all the hidden fees and the general financial side of homebuying which was the biggest hurdle for us.