Tales From the Crib: Buy This House

Monday, July 02, 2007

Buy This House

Well folks, we might actually do that thing that pretty much everyone else around us has already done -- we might buy our first home.

It's exciting and terrifying all at the same time. It's completely time consuming and emotionally exhausting and we are only at the very beginning stages of pre-appoval and house hunting. It's nerve-wracking trying to figure out the right choice in this shaky southern CA housing market. After being immersed in the depths fixed rates, variables, 5-1 arms, fees, taxes, comps, closing costs, insurance, rent equivalency, interest only (language only a mortgage broker could love), it's mind-boggling to think that people actually make it out happy and mentally sane on the other side. And like I said, we are only in the beginning stages! I know it will only get worse.

I know there are millions of people out there who have already gone through the crazy roller coaster ride that I am about to strap into. I believe 12 of the Tales Girls have gone through the process within the past 2 years. Not to mention all the other fellow bloggers who seem to have done this crazy thing recently too. I need you now. What are your best tips for a first home buyer?

Please let me learn from your mistakes and find hope in your success!

18 Comments:

When we went house hunting, I took notes and my husband took digital pictures.

You think you are going to remember everything, but it all blends together after a few houses.
posted by Julie M. Smith at 7/03/2007 07:17:00 AM
We are too going through that process right now. It's scary, exciting, overwhelming and a lot more. We have actually made an offer on a couple house, one has been accepted and now we are just waiting to see if everything else goes through. Words of advice, you'll get disappointed. Some houses on paper look great and when you see them it's a total let down for one reason or another. Just because it doesn't work out the first time don't give up. We've made 3 offers on houses. The first two didn't get accepted. We loved the first house and were a little disappointed but felt it wasn't right for us at the moment. About two weeks later the owners came back and said they were wiling to lower their cost and just sell it for what they owed and now we have made a second offer on the first house and are just waiting. Just remember anything is possible. It might happen so quickly you can't think or it might take longer than expected. Good Luck!
posted by Erin at 7/03/2007 07:17:00 AM
My best advice would be not to settle & find a good realtor. When my dh and I were looking we were getting so frustrated and wanted to find something quickly before our lease was up for renewal, so we settled on a place that wasn't everything we wanted. It felt terrible. We kept trying to persist and have positive thoughts about how great it would turn out to be. It just turned into 1 roadblock after another...this house wasn't meant for us. The deal actually wound up falling through when it was discovered that the sellers had a $20,000 second on the loan that they "forgot" about. We then changed realtors (make sure your realtor is working for you and really looking out for your best interests, one who won't let you settle) and we found the perfect home for us a couple of months later (we just wound up paying a fee to terminate our lease). Good luck and happy house hunting! :-)
posted by Anonymous at 7/03/2007 09:35:00 AM
My advice after buying our first home?

First, make landscaping a bargaining point. Lots of trees and bushes only means a big headache for you. You may think you love gardening, but the attraction fades once you are solely responsible. Be sure to make a lower offer if the landscaping isn't up to snuff. And let the sellers know why.

I don't know if Home Warranties are common in Cali, but if not ask for one. At least for the first year when the stress and cost of resplacing a blown AC system, (or water heater, or heating unit, etc) might kill you.

Check out your state's programs for first time home buyers. Even if you are not low income you may qualify for some money. The money is either zero interest, or lower interest than the market, and some loans don't have to be paid back until you move. It can really help with down payment assistance, upgrades to the home, etc. Check out www.hud.gov and find your state for specific programs.

And again, the one rule of homebuying....location, location, location! Buy what you can afford, in the best neighborhood you can afford!

Good luck! It's so worth it. And don't be fooled by other couples who buy their dream homes as their first home. It's not realistic for most people, and probably not wise financially for any of us. Don't get fooled into buying an entire house of new furniture either.

Ooh, one more note, it's a smart idea to buy what you can afford on one income, even if you and your partner/spouse, (if married), are both working. This protects you in case one loses his/her job, has a serious illness, or whatever. I know plenty of people who qualify on two incomes, then refinance later and make it work, but it's just something to consider. Of course in Cali how anyone buys at all is beyond me, it is so ridiculousy expensive!
posted by the Rew Crew at 7/03/2007 09:42:00 AM
I know this might not even be an option where you are, but as a first time home buyer, don't buy new. Unless you love fix-it-uppers, stay away from anything that's unfinished or "yardless". It just means more money you'll have to spend down the road; and be more expensive then you think.

I also agree with finding a fabulous realtor. We interviewed three and called some others before we finally picked the one we wanted. We knew she would be great because instead of telling us what we wanted, she just let us take the lead.

Be prepared to go into shock and maybe even cry a little when you sign your lives away. :) It's an overwhelming feeling at the final signing, but if you did everything right up to that point, the scariness will wear off within
a day or so... :)
posted by Cheryl at 7/03/2007 10:32:00 AM
See if you can qualify for a
Mortgage Credit Certificate Program . I believe most our offered at the county or city level. Sometimes there are income restrictions, but if you can qualify for this you can take advantage of a federal income tax credit.

Also, be ready for heavy property taxes the first year. At least in California, these are twice as much the first year than they are normally. Be prepared for this.

Lastly, make sure you know the house is right for you. It's gonna get pretty crazy, so knowing that it's right, having that confirmation, will help you get through everything else. I knew right away that the condo I bought was for me. It just felt right. That confirmation helped me from panicking when things felt overwhelming.
posted by tamrobot at 7/03/2007 11:18:00 AM
Also, really research what kind of loan you are getting into. I know a lot of people who have gotten into interest-only or one of those adjustable loans and, although, their payments are lower, they have no equity and aren't really getting the tax benefits of owning a house and kind of regret it later.

I have a 30-year fixed at a low interest rate and I really like it and it works for me. Do some research of the pro's and con's of the different loans and make sure whatever loan you choose makes sense for your situation.
posted by tamrobot at 7/03/2007 11:32:00 AM
I loved (and still love) the layout and feel and neighborhood of the townhouse we just purchased....but I ignored all of the "cosmetic updates" that I would just change it later. It hasn't been very cheap and it is taking a lot of time I would rather spend doing other things....I'm afraid to do the math to see if it would have been wiser to just pay the extra money for a more "finished" house. You are pretty handy, Carrie, so it might not be such an issue, and I still think layout and neighborhood is more important, but I wish I would have at least done estimates on the projects before buying so I knew what I was getting myself into.
posted by Jen at 7/03/2007 02:06:00 PM
Julie -

Oh such a good idea. We have been noticing that we can't remember which house had what. Total blur. I just need to get my camera fixed (yes, everyone that knows me, again).

erin- thanks for your advice. I have been trying to not get too attached to anything we've seen because from what I have seen with other friends, the whole process is such a crazy ride.

mkc-we are sort of in the same position so this is a good reminder to make sure I am not to letting panic fuel my decisions. ANd I think we have a good realtor. He is a great listener and seems to love "playing the game" which we hate. FIngers crossed.

Tally girl - anytime we see a house with any kind of landscaping, my husband groans. The house that we rent right now comes with a paid gardener. I am thinking we might have to factor that cost into our bottom line. Thanks for the other advice too. I need to look into home warranties.

Cheryl and Jen, while I like to think of myself as a do-it-yourself kind of girl, the bottom line is, I have a hard time finishing things that I start. I know that about myself. And when it comes to dh - don't even mention DIY. We either need to find something that is updated or be okay with it as is until we save enough money to have someone else do the work.

Tamrobot- I need to look in to the programs more, but it seems like Lawyers might make too much money. And I too am scared of the interest only, no money down deals. Especially in this declining market. I don't want to end up upside down in our starter home. But I am not sure we can afford a 30 yr. without buying a hole in a bad neighborhood.

It's next to impossible to weigh all the variables and figure out what is best. I keep reminding myself that people do this. People buy houses.
posted by This is Carrie at 7/03/2007 02:30:00 PM
In addition to what everyone else has said, get the word out; tell friends and ward members and co-workers that you are in the market.

We just bought our second house, and because we bought it without realtors, we actually saved about 40K, no joke. The only reason was we told people we were looking, and someone called us before they even listed their house; they saved a ton, we saved a ton.

Definately avoid the 3/1 or 5/1 arm loans. Go conventional 30 year. You will get the best interest rate depending on not only your credit score, but on how much you can put down. In CA that is not an insignificant thing.

We learned with our first house that we are NOT fixer-uppers. Nor gardeners. Hence house number two? All done. Nothing to fix. Smaller yard than old house. Ready to live in. Happy as a clam.

Good luck. It's stressful, no two ways about it, but it's one of those things you're glad you did when it's all over.
posted by tracy m at 7/03/2007 02:52:00 PM
Your camera is troubled again? What????

I know that we talked about this the other day...

1)Try not to get emotionally invested in any one house (this is like, totally impossible for me...) - it's just a house...not a home...yet. Just a structure.

2) Take TONS of pictures - you won't remember everything you saw. Take pictures of the streets too.

3) Try to visit the ward in the area you would be buying - this is important. Talk to ward members about the street you're thinking about - people in the ward are a great resource

4) Drive around the area at odd times - night, early morning - get a feel for who is around

Wouldn't it be great if you could just buy my house? :)
posted by Sara at 7/03/2007 04:09:00 PM
Only one more thing to add to the great list so far:

Dh and I have bought three different houses, and each time, we ended up HATING our mortgage broker, for different reasons each time. Get lots of referrals, and don't just go with someone who makes promises that sound too good to be true. They usually are.
posted by Anonymous at 7/03/2007 07:15:00 PM
On the flip side of that, our mortgage broker is AWESOME and we love love love him- have used him twice, and would recommend him to anyone. Honest, straightforward, courteous, troubleshooting, helpful, attentive, all good things... And we found him in a magazine!

Just so you know there are good brokers out there!
posted by tracy m at 7/03/2007 09:03:00 PM
Man, you girs are making remember all the DIY projects I started a year ago and still haven't finished; the bathroom tile, the dining room table, the dry-river bed in the back yard, the gutters, etc. Dang that HGTV! Though I love it and am addicted to it, it totally gives you false hope that these projects can be done in a day.
posted by the Rew Crew at 7/04/2007 05:59:00 PM
As far as mortgages go, you could check out bankrate dot com, don't want to plug them, but them seem to have an easy comparison that works locally.

Don't rule out IO mortgages if you have a small down payment. They have 30 year fixed rate mortgages, but you pay interest only for the 1st 10 years, then the principal you would pay back is added to the final 20 years.
This isn't for everyone, but might be a suggestion. Say you have 10% down on a house. Rates are pretty comparable, and it lets you take th e principal you would have paid on the 1st mortgage, and add it to a second mortgage. Thus you avoid PMI, pay off the second higher interest mortgage much quicker (say 5 years), and ultimately be better.

Also IO mortgages get all the tax advantages of a fully amortized 30 year fixed. In fact dollar for dollar they are better (you don't deduct principal). Now in a market where values may decline, you might be careful so you don't get stuck upside down (but in this case you may want to rent anyway).

Definately DO NOT do a negative amortization loan, or a "choice" mortgage, where you can pay LESS each month than the full Interest payment (unless you are a salesman or similar and your income is extremely volatile, but even then...)

Don't buy more than you can afford, and remember that most % ofincome guides or online calculators do not include tithing as an expense.

I would definately suggest driving at all hours.

Also knock on doors and talk to the neighbors. This lets you see what they are like, and see what they have to say about the previous owner and house (Say, did you hear about the flood....)

Carry a tape measure - to measure rooms and think of how your furniture will work.

Its not a booming market, and the power is in the hands of the buyer, so don't settle.
posted by JS at 7/05/2007 08:28:00 AM
We closed three weeks ago. It was the second house we made an offer on, and we are glad they didn't accept the first. We wound up with a nicer house in a nicer neighborhood, for not that much more.

I second the idea about taking pictures. Even though we knew we wanted the one we bought, it was hard to remember details. I wish we had taken a tape measure, too. I also second the idea about landscaping. We have a very large yard, but it is basically square and mostly lawn, so we (I) just have to worry about mowing. But with a self-propelled mower, it is no big deal.

Good luck.
posted by Anonymous at 7/06/2007 03:03:00 PM
Good tips.

-If you don't like your realtor, get a new one. Don't sign any sort of "agreement" that you will only use them. It makes the process a pain.

-We did a 7 year ARM (Adjustable rate mortgage). Basically out rate is set for the first 7 years, then can change. We did this for several reasons:
1. We don't plan to make this home our final stopping place.
2. The interest rate was better at the time than the 30.
3. If for some reason our plans did change, that would give us plenty of time to figure that out and refinance.

-We bought new and the landscaping is a pain. A big one.

-Find out if the house you are looking at is in a flood plain. Loads of people here (El Paso) got flooded last year and didn't have flood insurance.

-If you don't have a down payment (we didn't) look for a mortgage company that will give you 100% of the loan at a slight higher interest rate (like .75%) Otherwise, they do an 80/20 (basically two mortgages) and charge you a PMI (a mortgage charge). At least with the extra .75% we can tax deduct it...the PMI fee - no such luck.

-Get approved for your mortgage and stick with that price. Helps keep you from falling in love with a house you can't afford.

Good luck!!
posted by Anonymous at 7/07/2007 01:26:00 PM
Thanks everyone for your great tips. I feel like I am learning so much everyday going through this experience. I think there should be some mandatory class in college where you can learn this stuff!

Anyway, we made our first offer and lost our first house. I am so bummed. I was already sending Princess off the the prom in that house. So much for not getting emotionally attached. Now, none of the other houses that I thought I liked before look good at all. It's so depressing. I guess the roller coaster has begun
posted by This is Carrie at 7/09/2007 07:34:00 AM

Monday, July 02, 2007

Buy This House

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