Talk to me about buying a house.

[katespade]

Because it looks like H and I might be house hunting sooner rather than later.
What kind of stuff do you look for? What's important? What isn't important? Are we supposed to look at places that are listed as more than we can afford because we can make them an offer for less? If so, how much less is usually a fair offer? Older house that needs some work or newer house with a higher list price? 


I don't even know where to start.

[anyastroud]

IMO

don't try to find something higher/lowball the seller. (I have little experience with this personally, I'm just not ballsey enough. tried it once the seller was highly insulted) I would look for some modern amenities . IE; you don't want to have to replace an oil/electric heat system. I would find a floor plan that you love to avoid renovations, and or take in account for your financial situation if you want to do extensive renovations. I don't own now I would like to some day and I have looked around but $$$$ market and places have not all added up to the sweet spot for us yet.

[bk1]

Think about what kind of people you and your H are. Do you DIY? Do you have any repair experience? That could help you decide on old of a home you want. Older homes have the potential of needing more work.

How do you spend your time in your house? Do you hang out in your bedroom? Do you cook frequently? Is there anything specific you know you want? I picked out my house because the common areas are big, tons of storage, amount of land we wanted. In doing that we ended up with a 1.5 bath instead of 2 bath, and small master bedroom because we were willing to give on those.

As far as cost, I was conservative. We made sure to stay at something that was under what we could afford because I didn't want to stretch us too thin. This house was under my max to start with and we got it 6k under asking.

[HoneySpider]

Is this a forever home?

When we bought our house we knew it was a 3-5 year home for us since we didn't want to stay in the area. So, we set our budget conservatively and pretty much stayed within it while looking. It depends too on your market - is it typical for buyers to pay their own closing costs, or for sellers to cover? If you have to cover your own, don't forget to add that to your budget.

bk1 had a lot of good questions to ask yourself. For instance, we knew we were ok with cosmetic changes but didn't want to do major renovations. We wanted 3 bedrooms, 2 bathrooms, a "decent size" yard, not on a busy street, a somewhat updated kitchen (some we saw were beyond outdated....one had a blender built in to the counter, lol). We didn't care about schools because we knew we wouldn't have kids old enough to attend them. We wanted to be on the older side of town close to the bay where the houses were older and had character and the yards had mature trees and such vs being on the other side with new cookie cutter developments and tiny yards with no landscaping.

Once you start looking you'll start to figure out too what's important and what's not or get a feel for a certain type of house.

[amaranth]

First, do some market research in the area(s) you want to live. Figure out what houses are selling for compared to their original list price. Some areas you have to over bid to get a house, so you need to know that when you pick your price range.

Now it's been hours since I started typing this and I can't remember your other questions. Lol. I'll post again in a second.

[katespade]

HoneySpider - A blender built into the counter? lol.

We don't know if it will be a forever home, but we're fairly confident that we will want to be in it for the next 10+ years, at least. The two things we know we want is a decent sized yard and a garage. We know what county/town we want to live in, so that helps narrow things down.

bk1 - H has a bit of repair experience and FIL has a lot of repair experience, so I think that we would be able to handle minor repairs and renovations if we went for an older house. I hadn't thought about how we use the space that we have, though. That's a really interesting thought that we'll need to talk through.

amaranth - Would a realtor help with market research, or is it better to do it yourself?

anyastroud - H seems to think that when you buy a house it doesn't come with any appliances. That's a great point about the floor plan, too. I feel that in the house we're renting right now. The house looks great, but we don't really have any options for where we put our furniture. It is where it is and that's the only place it fits.

[estrellita]

Getting a realtor was an awesome idea. He really helped us figure out what we wanted and explained how everything works. We looked online at houses and he gave us some suggestions too. We were looking for something that didn't need a ton of work but was still in our price range. We decided on something that works for now but we can always work on it and make it our own.

I wouldn't look too far above your price range because if you want the seller to pay closing, you'll probably end up paying at least close to asking.

[awick14]

I would look within your price range, and if nothing works for you then go back over what you want and what is realistic in your price range. If you still can't find anything then looking a little over isn't the end of the world. Your realtor will help you with that.

Our realtor showed us our house which was 35k over our price range, but she thought that the house was priced way to high, it was on the market for over a year with no offers. We did low ball it and came away with the house for 30k under asking. Which was still 5k over our price range, but we set our price range in regards to not be house poor, we did not use the number the mortgage broker approved us for. ($100k more then we were comfortable with.)

Everyone else had some good suggestions.

Good luck.

[katespade]

awick14 - We're waiting to hear back from the broker on our final approval for pre-qualification and how much we're approved for. That's a good thought, though, about not assuming that what we're approved for is our price range. We don't want to bite off more than we can chew just because the broker says we can.

[awick14]

Jul 29, 2015 8:56:30 GMT -5 katespade said:

awick14 - We're waiting to hear back from the broker on our final approval for pre-qualification and how much we're approved for. That's a good thought, though, about not assuming that what we're approved for is our price range. We don't want to bite off more than we can chew just because the broker says we can.

When they give you a final number, ask them to break it down to approximate monthly costs if they will. This way you can know what the max amount will cost you a month. (Don't forget about property taxes, and utilities that you may not pay now.)

[katespade]

Jul 29, 2015 9:23:08 GMT -5 awick14 said:

Jul 29, 2015 8:56:30 GMT -5 katespade said:

awick14 - We're waiting to hear back from the broker on our final approval for pre-qualification and how much we're approved for. That's a good thought, though, about not assuming that what we're approved for is our price range. We don't want to bite off more than we can chew just because the broker says we can.

When they give you a final number, ask them to break it down to approximate monthly costs if they will. This way you can know what the max amount will cost you a month. (Don't forget about property taxes, and utilities that you may not pay now.)

If we pay all of our utilities in the house we rent now, is there anything other than property tax and home owners insurance (we have renters, so I'll have to research the price difference) that will be added to our monthly costs?

[HoneySpider]

You'll have PMI if your DP is less than 20%

I don't know how much you take care of in your rental home, but factor in something every month for repairs, decorations, etc. There's always something you either need or want to do!

[awick14]

Home owners insurance is more then renters, but ours wasn't too much more. We stayed with the same company so we got a loyalty discount. (Which I would also have gotten if we stayed with the company renting)

The only other thing that I can think of is life insurance if you don't already have it. (Or some type of mortgage insurance, I think life insurance is better though.)

And also being able to put money away each month for repairs that will come up. If you ask financial people is a certain % but I can't remember what.

[Deleted]

Sorry for the novel up there lol. One more thing is, as PP mentioned I recommend making a list of what you and your H want and need. What are some things that you aren't willing to negotiate on - for example, garage, at least 1.5 bath, things like that. How many bed/bath are you interested in? How many square feet, one floor or two, finished basement or unfinished? This will help your realtor find properties in your area to narrow down your search. I gave my realtor my criteria, and she put it all into her program and emailed me the results with the houses that met my parameters. Then I chose which ones I wanted to go look at.

[MrsMB]

What kind of stuff do you look for? DH and I sat down and wrote a top 10 list of must haves in a new home. We combined this for a list of say top 7 and gave this to the realtor. NOW....everyone on HGTV will tell you that as a first time home buyer, you may not get everything you are looking for. It's important to know what things you can or should be willing to budge on. I strongly recommend watching some of those shows. It really paints a picture of some things that first time home buyers get hung up on that they really shouldn't....

What's important? What isn't important? Again, that list will come in handy. KNOW how much you want to reno/not reno in a home. If you absolutely have to have something "move-in ready" that will affect pricing and location. If you are willing to put in a little elbow grease and/or money...that might open up the possibilities of more homes. PLEASE make sure you have someone good to talk to if you decide to get a fixer-upper. We bought a fixer-upper for our first home thinking we could do a lot of the work. My husband could and did a lot of the work. However, the one big item was something he overestimated he could do...and it was going to cost us $17k. So make sure you're knowledgeable about that before you buy.

Are we supposed to look at places that are listed as more than we can afford because we can make them an offer for less?

If so, how much less is usually a fair offer? It depends. For example, if your budget is $250k, I wouldn't recommend looking at homes at $350k hoping to lowball them. We were looking at a budget of $200k. We had a FEW homes we saw that were in the $220 range. But they had been on the market for SEVERAL months and there was a possibility of talking them somewhat down. But we ended up buying a home within our budget anyway that was brand new....just further out from work.

Older house that needs some work or newer house with a higher list price? DH and I have done both options. Our first home was a major fixer upper. DH is very handy and did a great job with a lot of the work. Unfortunately, we had the situation stated above...and had really bitten off more than we could chew. Make sure you really research the resale values of the areas you are looking to buy in. If we had spent the $17k on that one particular fix, we would NOT have recovered the cost of the reno. I agree with what Honeyspider said in that you need to know how much money and elbow grease you are willing to put into a home before you buy one.... and if it's a first home, investment,  or forever home. I would say that we bought a brand new home last year and that has been a DREAM for a second home. We have gotten to spend money on making it even prettier and making it OURS with fun updates like molding and paint...verses having to repair things in our first home. BUT BUT BUT....this is a personal preference for everyone.

Lastly, PLEASE check out the crime rates of the areas you are looking to buy in. As a former victim of home invasion at our first home....I can't stress this enough. There are all kinds of resources on the internet where you can even map out criminal activity in the area you are looking in. One of my best friend's Mom was our realtor in the purchase of our new home. I know as a professional, she had certain things she could/couldn't tell us......but I will always wonder why she didn't even try to give us a hint that the neighborhood was so bad. Now, I will say that NO neighborhood is perfect. But we know now that area is crime ridden. They had home invasions all the time....major crimes all over and nearby. It was bad.

Also, ditto to @moonbeam on Zillow. You can even have it set up email notifications to send you homes you might be interested in. Loved Zillow.

[mac08]

I would look pretty extensively at online listings just to get an idea of what's available and to get used to what are reasonable/typical prices in your area.  But you should definitely contact a realtor as soon as you're ready to start looking seriously.  

You can show the realtor listings you've found online that you want to see in person, and he or she will also find houses that meet your criteria and suggest them for you.  My biggest advice is to keep an open mind and don't judge a house too seriously, good or bad, based on the pictures.  When we were looking, there were tons of houses that I looked at the pictures and thought it was great, then when I saw it in person I hated it.  The house we ended up buying, I saw the pictures and thought "meh", but loved it in person.  

Come up with a list of must-haves, and nice-to-haves.  You can refine this as you go on and get an idea of what is realistic for your budget.  You will find that you might be willing to compromise on certain things for an otherwise great house.   It's smart to consider location first and foremost, because that's the one thing you can't change.  Personally, even if a house was completely perfect but in a really bad school district, I would hesitate on buying it regardless of if you have or are planning on having kids, but because it will be harder to sell in the future.  Also look at proximity to work, stores, restaurants, and other points of interest, type of street- busy or quiet, and the overall feel of the neighborhood.

good luck!  I love house hunting, it's so exciting!

[katespade]

@moonbeam - We're trying to figure the loan out right now. We were going to do a USDA loan, but apparently we make too much, which is crazy because we don't. H just got a totally random bonus at the beginning of the year and it's messing with his expected income for the rest of the year. They overprojected his income by a pretty significant amount compared to what his W-2s show from the past few years.

Anyway, now I'm talking to the broker about our other options to see if we can even move forward with a loan right now.

[awick14]

katespade- I would recommend going to a broker instead of going to a bank. They are much more helpful in regards to getting a mortgage.

[katespade]

Jul 29, 2015 17:42:28 GMT -5 awick14 said:

katespade- I would recommend going to a broker instead of going to a bank. They are much more helpful in regards to getting a mortgage.

We are going through a broker. We got a recommendation from a friend who bought his house using a USDA loan and said he was really great to work with.

[amaranth]

PB keeps eating my long responses and I am so sick of typing it up for nothing. So, good luck to you and post pictures and stories as you start to look!