First time homebuyer

[ArgentCy]

I think this thought is common with a lot of home buyers, but I'd only recommend going that route after you've done the math.

Looking at bankrate now, it has the 15 year note at about a .6% discount over a 30 year: on a per month basis, for a $200k loan that's an initial difference of about $95 in interest per month - IMO a high premium to pay for the option of paying more with a 30 year, opposed to just getting the 15.

That is just the difference in interest paid with each payment. Still a good sized difference. I'm actually considering a 30-year this time for a different reason. We are at very low interest rates and I'm unlikely to see these again in my lifetime. So I could hedge increasing rates by locking in for 30 years.

A 4% 30-year mortgage payment is $763 / month
A 3.5% 15-year mortgage payment is $1,143 / month

 

[BillBrasky4Cy]

Looks like most of the basics are covered but I'd add that if you are buying a house built in the 80's or 90's be very wary of anything that still has Masonite siding on it. Our first house had it and it failed quickly after we bought it, leaving us with an unexpected siding bill. Masonite is essentially siding your house in fancy cardboard. It had all kinds of class action lawsuits, but there is still a lot of stuff out there with it and even if maintained well, its now at the end of its useful life and will need replaced.

Also, don't get too freaked out by the HOA boogymen in here. There are all kinds of HOAs. Mine exists for a few common rules, but primarily to collect money to landscape and maintain the subdivision entrance signs. Some HOA can be really strict, but just make sure you research that going into it. An HOA really just ensures that there is some consistency throughout a development for various things. So if you like a little protection against someone painting their house Black & Gold with tigerhawk logos on it, then the HOA helps prevent that. On the flipside, if your opinion is that you should be able to do whatever you want with your property, then don't buy in an HOA, or even in corporate limits for that matter.

Masonite siding is a really good call out. Our first house had it and I had to replace several pieces on the north side of my house. When we were house hunting for our 2nd house masonite was an absolute deal breaker.

 

[cyclonesurveyor]

Not sure if IA works this way, but you can go to your county plat map website and see the owners for each lot. Then head to Facebook. Start with the woman on the title if there is one. Far more likely to have a social media profile.

This is a pro move here - besides finding out about neighbors, you might find out its a rental property which currently has decent tenants but maybe not next year.

Our last 3 houses we've been surrounded by old widows with one foot out the door. We typially are there right before the big neighborhood turnover happens, do some remodelling and watch your equity climb.

 

[CycloneSarah]

We are currently house-hunting and the biggest thing I've noticed that I struggle with but luckily my husband is good at is envisioning furniture placement, mostly in the living room. He has pointed out many living room layouts which would feel awkward or not work with our furniture and I wouldn't have thought about that on my own.

 

[isucy86]

My advice would be to remember realtors are sales people- both yours and the sellers. They don't get paid if you don't buy. And they get paid more if you pay more. Do your research on home sales prices in the area you plan on buying. Website like Zillow and Trulia allow you to do competitive analysis. The county assessor website also has good info on assessed value and historical home sale prices for the home you buy and your potential neighbor's homes.

There are a lot of costs to home ownership besides the mortgage. Property taxes, mortgage insurance, HOA- all expenses of home ownership.

Find out the age of the roof, siding, heating/cooling systems, appliances and other big ticket items. Both inside and outside. Sidewalks, decks, fences or cutting down dead/diseased trees are expensive. If they are close to the end of their useful life- take that into account in deciding on a purchase price.

Hire your own home inspector. Your realtor might have someone they work with- but ask around and find your own.

 

[IceCyIce]

There have been several mentions of the realtor. The selling realtor is for the home owner. I looked at a house couple weeks ago, New construction 395K asking price. The selling realtor had payment options printed out at 5% down, 10% down and 15% down. I asked her if people are actually putting down 5-10% on a 350-400K house, she said yes all the time. I couldn't believe it, my wife asked why I was interrogating the agent. My point was if she's telling others that putting 5-10% down on that kind of mortgage is a good idea and supports the thought process that it's a good idea. I can't trust her.

If you are not putting down a minimum of 20-25% to get away from PMI, you can't afford the house.

 

[cowgirl836]

I think this thought is common with a lot of home buyers, but I'd only recommend going that route after you've done the math.

Looking at bankrate now, it has the 15 year note at about a .6% discount over a 30 year: on a per month basis, for a $200k loan that's an initial difference of about $95 in interest per month - IMO a high premium to pay for the option of paying more with a 30 year, opposed to just getting the 15.

We built when interest rates on a 30 were about 3.6%. Think the per month difference was like $700 so it was a decent chunk of flexibility then. It's easy for us to look back now and see that we'd have been totally fine with the 15 year but I think it was the right choice for us at the time.

 

[cyfan92]

http://web.assess.co.polk.ia.us/cgi-bin/web/tt/form.cgi?tt=simplegeneralform

https://beacon.schneidercorp.com/Application.aspx?AppID=909&LayerID=17429&PageTypeID=2&PageID=7823

Polk and Dallas County Assessor sites.

Also, don't live near sex offenders for obvious reasons

https://www.iowasexoffender.gov/map/

 

[CycloneDaddy]

There have been several mentions of the realtor. The selling realtor is for the home owner. I looked at a house couple weeks ago, New construction 395K asking price. The selling realtor had payment options printed out at 5% down, 10% down and 15% down. I asked her if people are actually putting down 5-10% on a 350-400K house, she said yes all the time. I couldn't believe it, my wife asked why I was interrogating the agent. My point was if she's telling others that putting 5-10% down on that kind of mortgage is a good idea and supports the thought process that it's a good idea. I can't trust her.

If you are not putting down a minimum of 20-25% to get away from PMI, you can't afford the house.

Dang I only put 5% down when we bought 7 years ago. If my monthly payment is less then 1 of my paychecks and my wife makes more then me does that mean I cant afford my house?

 

[cyfan92]

Shop your mortgage all over the place. I found Veridian Credit Union to have to lowest rate and lowest fees last summer.

If your credit score is over 725, you shouldn't need to pay anything higher than the best rate they offer.

Your mortgage will be sold 99 times out of 100 to Freddie Mac or Fannie Mae.

 

[mywayorcyway]

There have been several mentions of the realtor. The selling realtor is for the home owner. I looked at a house couple weeks ago, New construction 395K asking price. The selling realtor had payment options printed out at 5% down, 10% down and 15% down. I asked her if people are actually putting down 5-10% on a 350-400K house, she said yes all the time. I couldn't believe it, my wife asked why I was interrogating the agent. My point was if she's telling others that putting 5-10% down on that kind of mortgage is a good idea and supports the thought process that it's a good idea. I can't trust her.

If you are not putting down a minimum of 20-25% to get away from PMI, you can't afford the house.

When we sold our last house, the sales price was $395k. The buyers were only putting down 2.9%. I wasn't told this until after the inspection, at which point they used their get out of jail free card by demanding unreasonable "repairs" that they knew we wouldn't do. I suspect the buyers were excited by the house, made an offer they couldn't really afford, then after a week of thinking realized they had gotten in over their heads.

I told them to pound sand and that I would give them $0 and zero concessions. Their current house had already sold and they were past the inspection. I hope they enjoyed living with their parents for awhile.

 

[ArgentCy]

There have been several mentions of the realtor. The selling realtor is for the home owner. I looked at a house couple weeks ago, New construction 395K asking price. The selling realtor had payment options printed out at 5% down, 10% down and 15% down. I asked her if people are actually putting down 5-10% on a 350-400K house, she said yes all the time. I couldn't believe it, my wife asked why I was interrogating the agent. My point was if she's telling others that putting 5-10% down on that kind of mortgage is a good idea and supports the thought process that it's a good idea. I can't trust her.

If you are not putting down a minimum of 20-25% to get away from PMI, you can't afford the house.

You should see the number of people around here who can't put down 5-10%. This is on homes that have an Average sales price of $90,000. If's not good. Then the really desperate and dumb go out and pay a PREMIUM to buy a house on contract. Really, really dumb.

 

[SimpsonClone]

Dang I only put 5% down when we bought 7 years ago. If my monthly payment is less then 1 of my paychecks and my wife makes more then me does that mean I cant afford my house?

No, they made an inaccurate statement.

 

[cyfan92]

Should most people put down as much as possible (20% or more).. YES. Can you put down less, yes

Situations are different

 

[IceCyIce]

Should most people put down as much as possible (20% or more).. YES. Can you put down less, yes

Situations are different

Definitely agree with this.

 

[SimpsonClone]

Should most people put down as much as possible (20% or more).. YES. Can you put down less, yes

Situations are different

Yeah my recommendation would be to find a house that eligible for USDA first time home buyer loan product. They don't have PMI, but have a similar mortgage insurance program that is equal to 1% fee upfront of loan amount. ($190,000 loan = $1,900) and a .35% annual fee. ($190,000 x .0035 = $665 or about $55/month which is cheaper than PMI on a conventional loan).

 

[VeloClone]

We looked at an embarrassing number of houses and only had two of them that we made an offer on. The first one sold to another buyer and we got the second. We didn't have the situation where we just knew as others have said.

I have a buddy whose wife is a realtor (not ours) and he said if you need to look at more than 3 houses you don't know what you are looking for. While I don't think you should have to look at the ridiculous number of houses we did, I think that expecting someone to always buy after looking at 3 or fewer houses is realtor wishful thinking.

 

[cyfan92]

We looked at an embarrassing number of houses and only had two of them that we made an offer on. The first one sold to another buyer and we got the second. We didn't have the situation where we just knew as others have said.

I have a buddy whose wife is a realtor (not ours) and he said if you need to look at more than 3 houses you don't know what you are looking for. While I don't think you should have to look at the ridiculous number of houses we did, I think that expecting someone to always buy after looking at 3 or fewer houses is realtor wishful thinking.

Of course a realtor wants you to buy a $300K house after only looking at 2. She just made $9,000 (3%) for working 2 hours..

It disgusting what some realtors make versus what they worked for that sale. Before I get killed by realtors. I do realize there are also instances where you work for multiple weeks to end up getting nothing

 

[CYdTracked]

Didn't read through the 7 other pages of posts but these are my main points of advice:

1. Just because the bank pre-approves you for a certain loan amount doesn't mean you can afford to buy a house at the highest $ level of that approval. Figure out what you think you can reasonably afford on your budget and lifestyle and set a price ceiling you are comfortable with. Don't let the bankers and realtors tell you what your price range is, they want you to spend as much as possible so they make the most money off your purchase as well.

2. Goes with #1 but owning a house also comes with higher utility bills and repair/maintenance costs. This isn't like renting where you can call the landlord and they will pay for any repairs and be the ones that call and schedule the maintenance and let the repairman in to do the work. All that is now your responsibility and costs so factor that into your budget and always have a "rainy day fund" on hand for unexpected repairs.

3. Have someone who has gone through the home purchasing process go with you to look at homes. This is a BIG help to have someone that has bought and owns a home look through homes with you as they probably will be looking at or find things about homes that you may not catch right away. I know that this aspect is very under-rated part of buying a home the first time because I can bet you the next home you buy you will be going over things much more thoroughly than you do your 1st purchase once you know what a pain it is to deal with things like the HVAC system, condition of the roof and windows, signs that the basement has had water in it, etc. that could all cost you a lot of money to repair or replace.

4. Don't settle - it's easy to get caught up in the excitement of looking for your 1st home purchase but don't settle paying more for a home just because you fall in love with it and the owners won't agree to a more reasonable fair market price if they have it over-priced. Same thing if you aren't finding a home that you completely like too, don't just buy one because you are ready to buy now and will settle for less than what you expected it to be. There are homes that come on the market weekly if you live in a decent sized metro area so just keep looking until you find the right one for the right price.

Best of luck, it can be a frustrating and stressful process sometimes but especially with your 1st home you have the luxury of not having to sell your current home as part of your buying process which really puts a damper on timing some times. When I sold my first home it took nearly 4 months for us to get an offer and we were at the point we watched a few houses we liked sell because we weren't going to make an offer until we accepted one on ours. It got to the point that looking at houses was like setting ourselves up for disappointment because if we found one we liked we may never get to offer on it before ours sold but we had to be ready to offer on one when the time came. Fortunately 1 home we had on our list was still on the market when we finally got that offer and they were in a pinch because they were closing on a new home in 3 weeks so we had some leverage in price negotiations. In hindsight it worked out well because this house was probably #2 or 3 on our list the entire time and after living in it we appreciate a lot of the things we didn't notice at first compared to the house we had #1 that we missed out on - the biggest being we enjoy the larger lot size and neighborhood than the smaller lot and the prairie land that bordered the back of the lot that we later found out that neighborhood deals with insect issues because that area doesn't drain well and basically can be a swamp at times.

 

[CYdTracked]

Of course a realtor wants you to buy a $300K house after only looking at 2. She just made $9,000 (3%) for working 2 hours..

It disgusting what some realtors make versus what they worked for that sale. Before I get killed by realtors. I do realize there are also instances where you work for multiple weeks to end up getting nothing

My wife sometimes would say something like "our realtor has to be annoyed he is taking us around to all these houses the past couple months in the evenings when he probably would rather be doing something else at home." I pointed out that it's his job and he probably does it all the time with other clients too. Between the home we are selling and the one we are buying he's going to make nearly $12,000 on us in commissions. He has to be willing to accommodate his clients on their schedule as much as he can else someone else who is willing will get that business instead.

My uncle used to own a realty company and now teaches continued education for realtors and have gotten all kinds of advice from him when I bought and sold homes. Basically if you have a realtor who says no to you a lot you didn't hire the right agent. They should be willing to meet your demands to a reasonable point and if they won't work with you or try to get you to buy more than you a re comfortable with or expecting to get an unreasonable price for the home you are selling then you should reconsider who you are working with. They are commission driven so of course they want you to buy and sell for the most possible but some of these agents will mislead you and you'll wind up getting into too much house you can't afford or have a house that sits on the market forever because they over-sold you on what it's worth in order to get your business.