Home buying thread

Pasteton

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I remember this thread was on foh, don't see it on here - thought it would be good to get people's thoughts/advice/experiences on this.

1) Financing - given today's mortgage rates, best to do as little down payment as is feasible? stick to 30 yr fixed? ARM? if/when

2) picking the right home
- nearby schools quality? do they have room or waiting list?
- size of lot?
-disclosures? can't chop down a redwood on the lawn, have to compost your waste, cant build a 2nd story, etc etc. What to look out for?
- location - finding a good neighborhood. things to avoid (home next to retail or multi-unit complex?), things to look for (private backyards, surrounded by wealthier homes, etc)

3) resale value - primarily affected by #2.

4) atypical scenarios - have a home with a shared tenant? separate unit on your lot? etc
 
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Regarding #1. I think it's still prudent, if you have the finances, to put 20% down in order to avoid private mortgage insurance. Wife and I just bought a house and we are stuck paying an extra $150 a month to cover the bank in case we default.
 

Cutlery

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People get too hung up on PMI, in my opinion. It's gonna fall off eventually, you don't have to pay it for the life of the loan, just until you get 21% equity in or some shit. You need to weigh the costs of PMI versus where you're at in your finances and the housing market. If interest rates end up going up or the housing market booms while you're busy saving up 20%, you could be out way more than $150 a month for a few years. With the market where it's at now, or where it was 6 months ago (probably the low point), you can probably say that you should have been busy over the last few years stockpiling your 20%. But if you're just getting started now and need to get into the market before prices start going up too much (and they already are here, 14% over December a year ago), then just eat the PMI and work on paying into your mortgage early to get it off quicker.


Now, to OP.

No reason to do an ARM with interest rates where they are. 30 year fixed, as good as you can get. My parents had like a fucking 19% mortgage when they bought. That's insane, but they also only financed like 75k too. Get a good rate now and you'll never need to refi.

#2 is all personal preference. That's nothing anyone can help you with, unless you're asking for opinions on specific situations. I dunno anything about any of those disclosures, those aren't typical as far as I know, so I dunno what you're going for there. #3 - just realize that the more "Custom" and "Creative" your house is, the less value it's going to have to most buyers. There's always going to be people who like quirky, but they aren't always ready to buy your home, and you need to appeal to the masses.
 

Asshat Brando

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Any home appraisers floating around on here? I could use an opinion.
In regards to what? Most appraisers I've ever met are idiots, they're only trying to justify what you are paying not what it could or should have sold for unless they come in low. Not to mention the new regulations mean banks can't do shit to them if they are being dicks and coming in $500 low or some other retarded shit. They are being squeezed though by the appraisal management companies that the banks have to use, a typical appraisal fee of $400 results in the appraiser getting maybe $150 of that with the AMC getting the rest. So it's basically a volume based business at this point where if they spend more than 2 or 3 hours on your appraisal they are losing money.

As far as PMI, the benefit of owning vs. renting from a financial standpoint is the write-offs for interest and taxes. PMI in theory is only deductible up to $150,000 in income. When you get past that point the PMI might as well as be a credit card payment as you get fuck all from it. If you have no other option then it is what it is and just do it but if possible you should try your best to avoid it. As I mentioned in some other thread try to get lender paid MI as it's the cheapest but also the hardest to qualify for.
 

Convo

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Basically wondering how much an unfinished room will hurt my appraisal. I need my house to come in a certain number for a refinance. The house next to me just sold for 200k. I need
Mine to appraise for 180k. Other comps are 175k+ in the area and they are not updated like my house. So not sure how it would work.
 

Asshat Brando

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An appraiser can adjust for items that are updated and attached to the house such as flooring and appliances. If the unfinished room is considering a health and safety issue then your problem won't be value but that your house is not financeable as is. This would apply if there is currently no flooring or exposed wiring/AC ducts etc.
 

Convo

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I ripped the basement ceiling down.. So you can see the wiring, ducts and pipes... I am redoing the room but its going slow. That's why I'm worried.
 

Asshat Brando

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Unfinished basements are fine again as long as there is nothing that would be a safety issue and the purchaser is not using FHA, the appraiser will do a cost to cure downward if all the other sales have finished basements. If not then it won't have any effect on the value.
 

Zivany_sl

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For Number 1 it really depends on what you want to do with the home. ARMs are usually for investors who see the equity in the home rising and being a source of income; they don't want to own. 30y fixed is the traditional way to go but rates on 15 and 20y are so low they can be feasible. If you want to own the house go with the fixed rate. It will give you a standard monthly payment and interest rates are only going to get higher. I would put 20% down if you could. Paying PMI sucks. Banks usually don't take it off automatically until 78% loan-to-value. There are lots of good mortgage products out there if you can't do the 20%. FHA, USDA, VA (for veterans), check with your MLO to see what they can do for you.
 

Angry_Ninja_sl

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Just bought a house and agree with Zivany. I'm not sure your credit status but if you have great credit when you look at the interest rate v. inflation it's close to free money. PMI sucks and it will not drop off on it's own anymore once you hit 20% equity in your house you can do a refi and got out from under it.

I think one of the keys things to remember is a house is a lifestyle choice and is truly a labor of love. If your not willing to commit to taking care of it skrimping in other areas for new counter tops etc.... You might be better off renting.
 

McCheese

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I'll preface this post by saying it's going to make me sound really stupid, but I tend to trust information from the people here so I figure this is a good place to ask. Google has been somewhat helpful to at least understand various terms (for example, PMI as discussed earlier in this thread) but I'm still fairly confused.

Basically, my biggest goal for 2013 is to finally buy a small house. I'm finally in a place in my life, job, and credit that it's actually feasible for me to think about buying. There are tons of little 2br/1bath/full basement single family homes in my area for sale for 120 - 130k, which are the perfect size and price for me as a late 20s single guy. The area is nice enough at the moment, and the entire downtown/center of the city is being revitalized as well with new movie theaters, restaurants, shopping replacing the rundown mall (which they are currently destroying). So it seems like a good time to buy.

The problem is that I have absolutely no idea where to begin. All I've ever done is rent apartments, so I've never dealt with a real estate agent, and I've never dealt with any bank beyond setting up a checking/savings account 15+ years ago.

Should I talk to a real estate agent first? Should I try to get preapproved for a loan first and, if so, where should I try to do this? Should I go through a website like LendingTree.com or just go into my bank and tell them I'm interested in buying a house? Some people say that 20% down payment is ideal, and others have said that you should put as little down as the bank will allow. Is there a general rule of a minimum you have to put down, or does it vary by bank?

I don't plan on beginning the home buying process in earnest until Fall 2013 at the earliest, but I'd like to start to get a clearer picture of exactly what I'm going to have to do so I won't run into any surprises later on.
 

Cutlery

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Get pre-approved first. Then you can take the knowledge of how much you can get a loan for, and what the payment on that loan would be and make the correct decision for your property. Note that your pre-approval only lasts for a certain amount of time (6 months? Something like that).

After that, you CAN deal with a realtor, but the best bet is to probably just spend a night a week going thru the MLSonline or something to get a feel for what's out there. That way when you bring in the realtor, you hand them a stack of papers and say "I wanna see these, set them up."
 

Asshat Brando

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Depending on the lender most pre-approvals only last 60 or 90 days, Fannie Mae guidelines are documents are good for 90 days so that's most common. Keep in mind most banks aren't giving you a true pre-approval as that only comes from an underwriter and most aren't staffed with enough underwriters to do them. In most cases it's just a loan officer giving you a piece of paper he drew up himself which is only as good as he or she is competent.
 

Falstaff

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Depending on the lender most pre-approvals only last 60 or 90 days, Fannie Mae guidelines are documents are good for 90 days so that's most common. Keep in mind most banks aren't giving you a true pre-approval as that only comes from an underwriter and most aren't staffed with enough underwriters to do them. In most cases it's just a loan officer giving you a piece of paper he drew up himself which is only as good as he or she is competent.
This is my understanding of how it works as well. They have some program where they put in your income, assets, debts, etc. and it spits out a number. Then you get some letter from them. Then you will fill out a bunch of other shit and sign even more shit and they send it off to the underwriter.
 

Draegan_sl

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How much money do you have saved up? Assuming decent credit you probably need:

10% down payment, so 12k. But you'll have to pay PMI. Shop around for a bank that offers the best PMI packages. I found one that allowed me to bake 4k into my loan and lose PMI forever. Else, 20% downpayment if you don't want to do PMI.

Then you need closing costs. That will vary but it's like 3%? of the total cost of the house plus some other fees. Toss on an extra 2k for other stuff.

Then there is the money you need for savings and a ton of shit you'll have to buy and fix for your new home. Depends on the condition of the home.

Then there is Home Owners insurance (cheap).

Then you have to figure in property tax escrow accounts.

Once you're financially ready, go to a real estate agent and they'll walk you through everything. Once you are close to buying a home and getting an inspection, come back to this thread.
 

McCheese

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Thanks for the information. That's exactly what I was looking for: a short, simple explaination of the steps involved.
 

OneofOne

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Our first step was to go see a mortgage broker. He can take your info and run the numbers and give you very realistic numbers that have PMI, escrow for property taxes, etc included in a monthly payment at various rates and loan amounts etc. You are under no obligation to use his/her services, and it's going to give you pretty solid info, while allowing you to ask all the questions you want.

We had very simple breakdowns for every $10k increment in our price range of monthly mortgage payment, amount needed down, estimated closing costs, etc. Initially it was a really good reality check that allowed us to hone in on our final price range.

You can google shit till the cows come home (and you should), but having that person to ask questions of is gold. Just ask around for reqs.

Like Cut said, you've no need for a real estate agent until you are actually ready to start looking at homes.
 

Cutlery

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Yeah, like OneOfOne said, my mortgage broker was fucking awesome. His estimate on my mortgage was within $10 of my actual payment, and there's no way he could have figured out what my homeowners insurance was without seeing the house, but he did.