First Time House Buying - what should I know, what should I do?
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PostPosted: Thu Sep 13, 2018 11:43 am    Post subject: First Time House Buying - what should I know, what should I do?

What advice do you have for a first time house buyer? I am a noob, doing this on my own.

Give it to me.
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PostPosted: Thu Sep 13, 2018 12:20 pm    Post subject:

zillow mortgage finder is a good tool to find the best rates at the moment. 99% of the time it will not be some big box bank you heard of

always factor in HOA and special tax assessments on a house... for a rough example a 500K house with $150/month HOA + 2% total tax rate could cost the same monthly as a 650K house with no HOA and 1.1% tax rate

be prepared for various closing costs to add up even if the loan itself has zero closing fees. seen a few who thought they were ready to buy but in reality needed several most grand for downpayment and closing costs.

try to have your downpayment and closing cost money sitting in a bank account for 2 months to avoid being interrogated on the source of the funds.

if you are looking for a way to maximize savings you can go with a discount agent such as redfin who will give you a 1% or more credit. But do note these discount agents often will not do all the legwork that a full service agent will such as guided house tours and being on site during inspection and appraisal.
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PostPosted: Thu Sep 13, 2018 12:23 pm    Post subject:

My wife and I bought our first house in 2006. My wife said, "oh we'll flip this bad boy in like 2-3 years."

12 years later we're still here.
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PostPosted: Thu Sep 13, 2018 12:32 pm    Post subject:

In a sellers market your agent makes all the difference in the world. They have to fight for you, otherwise your offer will never be the one that gets the house.
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PostPosted: Thu Sep 13, 2018 1:04 pm    Post subject:

What do you mean "on your own"?

When it comes to finding your agent, find a reputable one through your trusted personal relationships as opposed to searching online, just to save you time and eliminate some of the weaknesses with an agent who might be desperate for leads.

Important: DO YOUR OWN INSPECTIONS. This includes hiring your own inspector to a run-through of the house, as well as doing your own personal inpsection. Don't use anyone brought in by your agent because that guy will do everything he can to help your agent and not you.

Bring a friend's eyes and ears to test all the cabinet doors, make sure the ovens don't set off the smoke alarms everytime you cook beef, check the water pressure and heating on all of the faucets. Have your buddy make noise in different parts of the house. See what it sounds like in the bedrooms when someone is doing laundry, watching TV, or washing dishes, etc. Checking on little things like this that wouldn't immediately occur to you will save you a ton of headaches in the future.

Don't buy on any islands in the Puget Sound, it's becoming crowded with riff raff.
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PostPosted: Thu Sep 13, 2018 1:36 pm    Post subject:

yinoma2001 wrote:
My wife and I bought our first house in 2006. My wife said, "oh we'll flip this bad boy in like 2-3 years."

12 years later we're still here.


Same here, only 2009. I hope that the OP isnít looking in Ventura, after the Thomas fire prices are sky high.
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PostPosted: Thu Sep 13, 2018 1:54 pm    Post subject:

venturalakersfan wrote:
yinoma2001 wrote:
My wife and I bought our first house in 2006. My wife said, "oh we'll flip this bad boy in like 2-3 years."

12 years later we're still here.


Same here, only 2009. I hope that the OP isnít looking in Ventura, after the Thomas fire prices are sky high.


As long as OP isn't looking in California they'll be fine.
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PostPosted: Thu Sep 13, 2018 2:02 pm    Post subject:

I'd wait two years. I think we are on the cusp of another housing bubble that's going to burst. I was about to buy an investment property but was advised against it and now am investing my money waiting until that burst actually happens.

Other than that, avoid an adjustable rate mortgage, put at least 20% down and don't get into mortgage insurance.
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PostPosted: Thu Sep 13, 2018 3:45 pm    Post subject:

Get the inspection done right by an inspector.
Do some research on neighborhood (school system if you'll have kids, talk to neighbors, drive there at night to see if people have loud parties during bedtime, check if someone illegally dumped nuclear waste nearby years ago)
Get a few quotes on the loan.

Enjoy the process
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PostPosted: Thu Sep 13, 2018 4:28 pm    Post subject:

Make sure your realtor fully inspects the property. Demand all damaged parts are repaired. Search for lowest APR. Use a repeatable realtor. Believe it or not their are some used car salesman in the business.
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PostPosted: Thu Sep 13, 2018 4:56 pm    Post subject:

LakerSanity wrote:
I'd wait two years. I think we are on the cusp of another housing bubble that's going to burst. I was about to buy an investment property but was advised against it and now am investing my money waiting until that burst actually happens.

Other than that, avoid an adjustable rate mortgage, put at least 20% down and don't get into mortgage insurance.


My wife and I are looking to purchase our first house in the 626 area but houses are really expensive right now. Our budget is around 500-550k but it doesnt look good. We aren't in a hurry and we plan to purchase one in the next 2-3 years and hopefully houses will be more affordable by then.
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PostPosted: Thu Sep 13, 2018 7:42 pm    Post subject:

Buy from a parent if you can, to get the Prop 13 advantage...
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PostPosted: Thu Sep 13, 2018 8:47 pm    Post subject:

ksmgf wrote:
LakerSanity wrote:
I'd wait two years. I think we are on the cusp of another housing bubble that's going to burst. I was about to buy an investment property but was advised against it and now am investing my money waiting until that burst actually happens.

Other than that, avoid an adjustable rate mortgage, put at least 20% down and don't get into mortgage insurance.


My wife and I are looking to purchase our first house in the 626 area but houses are really expensive right now. Our budget is around 500-550k but it doesnt look good. We aren't in a hurry and we plan to purchase one in the next 2-3 years and hopefully houses will be more affordable by then.


Same. We have a duplex in the 626 and my parents live in the main front house and I'm in the back. It's a great set-up, but prices over the past few months have jumped tremendously. I am hoping they drop in the next year or 2, because I will also be looking around then. (Gonna put a pin on this thread)

I have an app on my phone (Redfin) that has homes/condos/townhomes listed all over the country. U can filter through to find exactly what you're looking for. I had my setting saved for a 3 bedroom/ 2 bath in the 626 area for UNDER 375k. Beginnning of the year there were AT LEAST 2 dozen in the immediate area. If I do that same search now... there is MAYBE 1 or 2.
Everything is so damn expensive out here...
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PostPosted: Thu Sep 13, 2018 9:35 pm    Post subject:

With all the student loan debt you have, I don't know how you can afford.

Just save your money and wait for the Housing Crash and vulture one.
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PostPosted: Fri Sep 14, 2018 2:01 am    Post subject:

Make sure who your agent is working for, you or the buyer.
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PostPosted: Fri Sep 14, 2018 5:26 am    Post subject:

- Make sure you have 20% of the purchase price set aside for your down payment to avoid paying PMI. PMI will cost you several hundred dollars per month and you won't be able to get out of it, ever, without a refinance and 20% minimum equity

- Lower your DTI (debt-to-income) ratio to as much as possible, preferably zero, meaning no debt. This will help ensure you pre-qualify for the largest possible loans at the best rates

- Only if you absolutely need to (for instance, to get to 20% down payment), consider you can take $10,000 out of your 401K with no penalty if you are a first time homebuyer. You will still have to pay taxes on it, but no penalty. I would advise against it from a financial perspective but it's an option you should be aware of.

- For most people, I would recommend buying a home that is move-in ready. Sometimes, it is tempting to buy an older, fixer upper style home but the costs to update are significant ($50K+ depending on size of home) and you'll probably never get to everything.

- In general, if you can afford it, I would recommend buying an SFR (single family residence), and if possible, in a neighborhood without an HOA. This will allow you to make modifications to your home without having to get approval from the association. Added bonus: you won't pay HOA dues which can run $400/month or more and are not deductible

- After you buy your home, work with your tax guy and adjust your withholdings. You'll get to deduct your mortgage interest, so if you need/want it, that can be put right back into your paycheck each month so you can avoid giving Uncle Sam an interest free loan

- Buy a home that leaves you with enough available income to do the things you enjoy. I know a lot of people who bought a much bigger home they can "grow into" and, many have had to take second part-time jobs to afford the mortgage payment. To me, what's the point of that? You're going to have to sacrifice, whether it is nice cars, vacations, etc, but, make sure it isn't to the point where you have to sacrifice on your happiness.
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PostPosted: Fri Sep 14, 2018 8:01 am    Post subject:

Huey Lewis & The News wrote:
What do you mean "on your own"?

When it comes to finding your agent, find a reputable one through your trusted personal relationships as opposed to searching online, just to save you time and eliminate some of the weaknesses with an agent who might be desperate for leads.

Important: DO YOUR OWN INSPECTIONS. This includes hiring your own inspector to a run-through of the house, as well as doing your own personal inpsection. Don't use anyone brought in by your agent because that guy will do everything he can to help your agent and not you.

Bring a friend's eyes and ears to test all the cabinet doors, make sure the ovens don't set off the smoke alarms everytime you cook beef, check the water pressure and heating on all of the faucets. Have your buddy make noise in different parts of the house. See what it sounds like in the bedrooms when someone is doing laundry, watching TV, or washing dishes, etc. Checking on little things like this that wouldn't immediately occur to you will save you a ton of headaches in the future.

Don't buy on any islands in the Puget Sound, it's becoming crowded with riff raff.
really? i remember visiting there years ago for the first time and I loved those little islands.
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PostPosted: Fri Sep 14, 2018 9:28 am    Post subject:

ringfinger wrote:
- Make sure you have 20% of the purchase price set aside for your down payment to avoid paying PMI. PMI will cost you several hundred dollars per month and you won't be able to get out of it, ever, without a refinance and 20% minimum equity

- Lower your DTI (debt-to-income) ratio to as much as possible, preferably zero, meaning no debt. This will help ensure you pre-qualify for the largest possible loans at the best rates

- Only if you absolutely need to (for instance, to get to 20% down payment), consider you can take $10,000 out of your 401K with no penalty if you are a first time homebuyer. You will still have to pay taxes on it, but no penalty. I would advise against it from a financial perspective but it's an option you should be aware of.

- For most people, I would recommend buying a home that is move-in ready. Sometimes, it is tempting to buy an older, fixer upper style home but the costs to update are significant ($50K+ depending on size of home) and you'll probably never get to everything.

- In general, if you can afford it, I would recommend buying an SFR (single family residence), and if possible, in a neighborhood without an HOA. This will allow you to make modifications to your home without having to get approval from the association. Added bonus: you won't pay HOA dues which can run $400/month or more and are not deductible

- After you buy your home, work with your tax guy and adjust your withholdings. You'll get to deduct your mortgage interest, so if you need/want it, that can be put right back into your paycheck each month so you can avoid giving Uncle Sam an interest free loan

- Buy a home that leaves you with enough available income to do the things you enjoy. I know a lot of people who bought a much bigger home they can "grow into" and, many have had to take second part-time jobs to afford the mortgage payment. To me, what's the point of that? You're going to have to sacrifice, whether it is nice cars, vacations, etc, but, make sure it isn't to the point where you have to sacrifice on your happiness.


That's some good advice, but I think it really depends on the person and maybe even their situation. Buying a house that needs updating (but not necessarily major modifications) can be a huge money saver. If buying a home from someone who flips houses, it may be a nice move-in ready home, but it also means paying a premium on their time and money to upgrade that house. So that $500k house that they put $50-$60k of upgrades in is suddenly like $700k+ on the market. On top of that, property taxes and mortgage interest will be on the higher purchase price.

It's great for a first time buyer to buy a fixer-upper because they don't have any property they need to sell, so no sale contingencies to deal with, and therefore have a "luxury" of time. This means they can continue renting while the house is remodeled (if they are financially able to continue renting after closing). The downside is having to "do the dirty work" and put in time dealing with contractors, but the buyers can get far more bang for their buck on their home - both short and long term - by going that route. On top of that, they can pick and choose what they want done to the home. By not living there while the remodel is being done, there's no inconvenience on daily life and it also gives the contractors complete freedom to work in the house.
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PostPosted: Fri Sep 14, 2018 10:21 am    Post subject:

Get your prequalification letter ready so that when you do see a house you like, it's ready to be put in with your offer.

If it's a seller's market and there are multiple offers, always go over asking if you really want the house.

Make sure to hire a home inspector during the inspection period so you won't have any surprises later down after the purchase. Read the seller's disclosure statements thoroughly so you know what you're getting into esp if it's an older home/condo.
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PostPosted: Fri Sep 14, 2018 11:04 am    Post subject:

I just bought a house. We had an offer in 4 times before actually landing the home we live in. I'm glad the other 3 didn't work out although it was discouraging at the time. One thing we did with this one to set ourselves apart was to write a personal letter to the seller explaining who we were, why we really wanted their house, and why we were extremely qualified buyers. I was told that this put our offer over the top. It turns out, the house had just fallen out of escrow and the sellers were getting discouraged as well. It was a perfect match.

Make sure you get a home warranty. The house we bought is relatively new and renovated but we have still come across issues and it has been helpful.

When getting a loan, get Loan Estimates from several people once a title company has been established (so that you can compare fees/rates). Don't necessarily go with a "friend of a friend" because that doesn't always mean you are getting a good deal; the same goes for the realtor's "preferred lender". If you don't have 20% down, there are lender paid mortgage insurance options. Also, there are mortgage programs that only sometimes have income limits that would be better than FHA such as Home Ready and Home Possible. Ask your lender about them. They have lower mortgage insurance and caps on fees. In the market we are in, don't necessarily go with a shorter term to save on interest payments. The 15 and 30 year rates right now are so similar, it might be better to go with a 30 and make extra payments on it to lower the interest you pay. That way, if an emergency arises, you have wiggle room.

Get a home inspection. It is worth the money and a tool to negotiate down the purchase price or money towards closing costs. Make sure you have a realtor who knows how to use that tool.

Make sure you understand all of the costs associated with whatever property you settle on for example: Utility rates, property taxes, whether you are in a flood zone or not (could result in higher homeowner's insurance costs), pool or yard costs, age of the home and maintenance needed, etc.
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PostPosted: Fri Sep 14, 2018 11:11 am    Post subject:

GoldenChild wrote:
Get your prequalification letter ready so that when you do see a house you like, it's ready to be put in with your offer.


Not to step on any toes and along those same lines, some lenders will actually get your file underwritten and conditionally approved BEFORE you make offers. You will have to do an application, and send them all of your income documentation. That will set you apart from the other offers with a prequalification letter (which is usually just a loan officer say that everything "looks good".) It makes you more of a "sure thing" to a seller knowing that you do actually qualify based on credit scores and income.
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PostPosted: Fri Sep 14, 2018 11:18 am    Post subject:

LakerSanity wrote:
I'd wait two years. I think we are on the cusp of another housing bubble that's going to burst. I was about to buy an investment property but was advised against it and now am investing my money waiting until that burst actually happens.

Other than that, avoid an adjustable rate mortgage, put at least 20% down and don't get into mortgage insurance.

I think a market correction is coming but not an all out crash.
People looking for another 2008 crash will likely be waiting for a very long time. The market conditions are not the same without all those subprime mortgages that people were loading up on without any means to keep up with the payments.
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PostPosted: Fri Sep 14, 2018 11:35 am    Post subject:

Man, LA is my hometown forever. But it seems crazy what's going on with the real estate (and general cost of living) out there.

What's the average price of a home in LA County these days? What are the average property taxes (which are ridiculous here in NJ)?
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PostPosted: Fri Sep 14, 2018 12:20 pm    Post subject:

Huey Lewis & The News wrote:

Quote:
Important: DO YOUR OWN INSPECTIONS. This includes hiring your own inspector to a run-through of the house, as well as doing your own personal inpsection. Don't use anyone brought in by your agent because that guy will do everything he can to help your agent and not you.


On a scale of 1 to 10 that ranks 10. 10 being most important. Ask for a home warranty. If the seller is legit he/she will pay for it.
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PostPosted: Fri Sep 14, 2018 1:15 pm    Post subject:

yinoma2001 wrote:
My wife and I bought our first house in 2006. My wife said, "oh we'll flip this bad boy in like 2-3 years."

12 years later we're still here.



I'm in the same boat I bought in 2006 and have been locked in ever since. I would not buy a home right now. Wait for the adjustment in market and then poach one.
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