OK, I’m going to be starting the process of buying a house next month. Since this is the first time I’m doing so, what should I make sure I do and what should I make sure I don’t do?
I’m looking both for things like ‘always make sure there’s not a wombat clause in the mortgage agreement’ and general information like slightly strange financing I can get into (my first stop for a mortgage will be my credit union, but I plan to shop around). If anyone knows of any good books or websites on the topic, I would appreciate them to.
(I’m going to be looking for something near to Raleigh, NC if there’s any state or city specific stuff to know).
Kevin Allegood,
“At least one could get something through Trotsky’s skull.”
The one thing to keep foremost in mind: that friendly realtor driving you around, looking for houses, doesn’t work for you. Your interests and hers/his are not the same. (Yes, I know about buyer’s agents, but am too cynical to buy that story) their interests are served by having you close on a property with the highest possible price, regardless of it’s value. Even better if the listing agent happens to be in their office, and best if the listing agent and your realtor are one and the same. So be cynical. Also, if they show you a property and start talking about how you could improve it (a pool here, sliding glass doors there, or finishing the basement or attic) run away screaming. Now they’re selling stuff that isn’t even there! Read lots of books. This 'll likely be the biggest purchase you ever made, spend effort & time accordingly.
This is the most important advice I can give you: Read and understand everything. Get an explanation of what each piece of paper means, and then read it to make sure that’s exactly what it says. Then sign it. You will annoy the title company at closing, but it’s their job to make sure you understand everything.
Don’t buy the first house you see. Look for a while and get a sense of asking prices. If you have a friend who’s a realtor, have a look at the recent sales figures in the neighborhoods you’re interested in.
Mortgage rates are about as low as they’re going to get, so get an fixed-rate mortgage. However you have bad credit, in which case get a fixed-rate mortgage and be careful about your bills for a couple of years. You can always refinance if there’s a big drop for some weird reason.
Get a warranty, in writing, specifying which of the home appliances (especially the furnace and water heater) are in good operating condition. The inspector will not be able to make sure the furnace hasn’t already been red-tagged, and they’re concealing that. (Sadly true)
Get a mortgage lender you trust. Don’t use the guys who call you on the phone and offer you amazingly low rates. Find someone that’s been around a while and has a good reputation. Make friends with someone who works at a title company, and find out who they recommend.
Make absolutely certain you don’t have a pre-payment penalty in your mortgage. Sigh… That one bit me in the ass big time.
When you go to closing make sure you have some serious money ($1,000-2,000) in your checkbook. There’s always stuff that comes up at the end. If you have a good lender, then you shouldn’t have too many extra expenses, but it pays to be prepared.
Take a look at several houses before buying. You’ll start to notice features of houses that you hadn’t thought of before. Like locations and sizes of various rooms, ceiling heights, sizes of yards, etc. You’ll pretty quickly notice what features appeal to you.
Drive around and check out the neighborhood.
If you can afford it, pay 20% down. You’ll get a better interest rate and not have to pay PMI, (insurance for the banks). If you can keep the loan amount under the “jumbo” size (~$200k), you’ll also get a lower rate.
Get ready to be pissed off at all the money you have to spend on crap. They charge for everything, and it adds up.
Keep an eye on after the purchase costs. Property taxes will be different in different school districts. Electric utilities can be different, we’re in a rural electric coop that is almost half the rate of NYSEG just a mile down the road. Keep an eye out for various building restrictions. My aunt and uncle live in a part of Syracuse NY where fireplaces/woodstoves aren’t allowed. Wetlands and road frontage limits are a big thing also so if you’re thinking of expanding keep these things in mind. Before purchasing stop in on the neighborhood at various times of the day/night to get an idea of traffic and noise problems. Talk to your future neighbors about the area and schools.
Congratulations on your decision to become a homeowner! My two suggestions for you would to be that [1] you make sure you have a really good inspector check out whatever house you ultimately decide you want to buy. This person will not be looking at your dream home with the same rose-colored glasses you’re wearing and will be able to spot many deficiencies that can lower your purchase price (and possibly increase your maintenance costs). [2] ** billehunt ** is right about paying 20% down. This can result in a change between a 40-year mortgage and a 10-15 year mortgage, which can end up saving you an incredible amount of money over the years! PMI is something you don’t need…if you’re worried about your survivors not being able to afford the house payments if (God forbid) something should happen to you, make sure you carry enough life insurance.
A ship in the harbor is safe, but that isn’t what a ship is built for.
We just sold our house in Raleigh (sorry I missed you!). I’d suggest having a new house built, if you’ve got the time. You can stay in an apartment in the meantime. They don’t cost any more, and you’ve got the option of controlling/inspecting things before and during construction. Watch out for that flexible plastic water pipe. Insist on copper or PVC. Also upgrade the siding and trim. Don’t accept that composite or pressboard stuff. Some vinyl siding is inferior also (blows off in the wind). Insist on all vinyl windows.
As for the financing, get the shortest term, fixed rate mortgage you can afford (15-20 year). This way you’ll be building some real equity in it, and not just paying interest.
The best part of town here is in the North, preferably just outside the new outer loop (presently under construction). There’s also Cary, in the West, but that’s snobsville.
Email me if you’ve got any other questions about Raleigh. (Toymkr47@aol.com)
If you find a house you are really, really interested in, go back and look at it a couple more times, at different times of the day, and maybe even at night. I recently bought a house and after moving in, discovered that the neighbors like to work on their muscle cars and motorcycles at night. I have no problem with muscle cars or motorcycles, except at 10:00 at night when they are revved (sp?) up for 3 minutes, turned off, wait 15 minutes, revved up, etc.
Get an attorney who specializes in real estate transactions. I have been a paralegal for 11 years and in the last firm I was with, we had a separate Real Estate Dept. I would not enter into a real estate transaction without an attorney reviewing ALL the documents and representing me at closing for those “last minute” documents.
GolfWidow’s point about going back at different times of day is important.
When looking for a house, the one I found I liked was on a busy street, which disturbed me. I went back at 8 and 11 PM and sat in my car to watch, and the traffic had completely disappeared - so my fears were allayed, and I bought the house.
My husband and I bought our first house just about exactly 1 year ago.
I agree with Billehunt. Look at as many houses as you can, even if they are not in your price range. This will help you to get an idea of what particulars are available and which are important to you. In our area, there are “open houses” every Sunday, so you can look at a lot of houses in a short time without inconveniencing anybody.
We found “Home Buying for Dummies” very helpful. It laid out a lot of stuff that we were unclear on.
Look UNDER your price range. You might get lucky. Just about everything under a certain price in our town was a shack, so we set that price as a minimum. Well, my husband saw a sign on a cute house that looked fine was 35K under that minimum. We looked at at it on a whim, thinking it would be awful, and it was really great! The price was low largely because it had a horrendous kitchen and ugly smelly carpet. We ripped out the carpet, got the floors re-finished, and did a to-the-bare-walls renovation in the kitchen, as well as some other work done. Total cost–less than 35K. Now we have a great house with a dream kitchen for less than our original minimum. But, as Isosleepy said, don’t let your realtor sell you features that aren’t even there yet.
While it’s true that the realtor may not put your interests first, and that you have to be wary, a good realtor can smooth the process immensely. Open houses (like I mentioned before) are often used by realtors as a way to solicit clients more than to sell houses. As you look around at the houses, look at the realtors, too. We found our realtor this way, and he was wonderful.
There is lots of other good advice in this thread about mortgage stuff and home inspections. I second all of that.
HEY, We just bought a house! I’m soooo excited! We close next month on the 28th.
FYI, we just bought near Raleigh too! I used a great real estate agent if you want his name.
He did all the work, we just had to look at houses and pick one. He’s arranging all the details, the inspection, the loan, and just about everything else for us so we can just work and go home as usual. Good man!
We bought a house in Garner, and are very pleased with the whole process.
My wife and I spent several weekends looking at open houses before even contacted a real estate agent. It really helped to have a feel for what neighborhoods go for, and what we really needed in a house. Think of it as “practice, practice, practice.” If the market is fast there, you’ll need to know quickly whether it is a good house. We got a house in the lurid SF bay area market four years ago because we were ready to buy, knew the area, knew the market, and got our offer accepted the first day on the market (really helps to have a good agent here).
Get pre-approved for a mortage (not just pre-qualified). If you are pre-approved, it helps if you get in a bidding situation. The seller knows ou are serious.
Get the house inspected. This means house inspector, termite inspector (I’m assuming in NC), roof inspector. I’m not sure about the roof inspector, but if the general inspector says anything about the roof, definitely get it done.
Get an agent you trust. Interview three, or get a good lead from someone who recently bought in your area. Don’t even think about not using an agent for your first house. Find out who the agent is really working for. I think this varies around the country. If the agent really works for the seller, play your cards close.
Paint colors and carpets can be changed pretty easily, and over tme. Structural problems can cost big bucks to fix. Avoid “incurable defects,” like next to a busy road, or poor schools. Even if you don’t have kids, good schools make property values rise.
All Realtors [not ‘realtors’] are real estate
agents.
Real estate agents are the used car sellers of the real estate market, they can lie, cheat, exaggerate & not tell you things & get away with it because you have next to no recourse.
Realtors have very high ethics, have a local Realtor board that handles complaints promptly.
Just passing the one year mark as a home owner myself, we used my wife’s mother as a realtor. She did a good job, but overall, if I had to do it again, I’d recommend a complete stranger who comes highly recommended. You’ll find you have to play hardball with your realtor at times and really piss them off, which was hard for me to do when it was a close relative. They are there to push the property, and whether you actually like it seems secondary in the process.
I’d also second, third, and fourth the idea that you should be prepared for a few thousand dollars in hidden costs. That is, if in the process of getting pre-approved for a loan (DEFINITELY get this done) you find out you can get a loan up to, say $250,000, DON’T go looking for a $250,000 house. Your realtor may tell you otherwise because the larger the sales price, the larger their commission, but I figured in about $5,000 in bullshit charges when everything was said and done, and I guessed pretty close to what it actually ended up being.
Other posters suggested that a shorter loan is better because you build up equity faster. Personally, I wouldn’t sweat it because interest is deductible from your taxes, and I found that the interest rate you end up with is pretty much uncontrollable (that is, you will quickly find who has the lowest rate, and there will be several that all offer the same thing). You’ll love the multi-thousand dollar return on your taxes the year after you buy because all your ‘rent’ was suddenly a deduction.
Whoa, what a flashback I just had. We had the exact same experience using a good friend of my wife’s. Fortunately, we politely dumped him (as an agent) during the process and retained him as a friend.
This is a really important point here. Use an agent that you can get in a fight with or kick around if you have to, because it might come to that.
You might think this is kinda silly, since you are probably planning on living in this house for years and years, but I always look at houses with an eye toward selling them again.
So many things can come up to cause you to have to sell. Any change in circumstances.
Don’t buy a property that you might have a hard time selling. Location has always been the primary consideration when buying. It is far better to buy the worst house in a good neighborhood than the best house in a bad neighborhood.
I don’t know if you have a family or not, but it is usually easier to sell a house with at least 3 bedrooms.
The earlier suggestions to visit the neighborhood at various times of day was very good. Talk to the area residents if possible. Visit businesses in the area.
If you use a reputable lender, you should not have to worry much about the legalities. Yes, read everything you sign, but most of it is form work required by the government and is there to protect you. The advice of watching out for a pre-payment penalty is very good.
Most of the professionals you encounter are there to help you and smooth your way. They are not there to steal from you or trick you. The best thing you can do at every step of the way is something you have already been doing: ASK QUESTIONS!!
And when you do make an offer for a house, put everything in writing. That ceiling fan you liked so much? Those appliances they’re leaving? The drapes, rose bushes, etc.? Get it in writing if it’s important to you.
By the way, credit unions are a very good place for financing in my experience. Excellent interest rates and good customer service.
We are on our third house, and you seem to learn more with each one you buy. Everyone’s suggestions are right on the mark. I had a friend that even checked out ‘HUD’ homes, and she got a real deal on a house that had been foreclosed on, and the bank helped with the costs just to sell the house again.
Don’t be afraid to approach neighbors if you find a house you like. Most of them will be up front about their neighborhood, and you’ll get a feel for how friendly the place really is too.
Then sit down and think what kind of house you’d like. Do you mind having a number of stairs/ want a garage vs. a carport/ do you want a neighborhood with lots of kids, or not/ CHECK OUT THE SCHOOLS BEFORE YOU GET ATTACHED TO ANY HOUSE this was a HUGE mistake we made with our first house.
Go to your library and there are some great books that help with step by step instructions.
Ditto on the extra costs too. That was the second house BIG mistake.
I also took pictures of the houses, and I wrote notes all over them, because by the time you’ve seen more than ten houses in one day, they can sometimes blur together.
Good luck, it can be fun too, try to hold on to that, when you get overwhelmed with ‘stuff to remember’!
“Lilacs bloomed in April and fruit ripened on the vine. Heartbeats quickened and old appetites were renewed. In April a livelier iris gleamed upon the burnished dove. April was spring, and in the spring Milo Minderbinder’s fancy had lightly turned to thoughts of…tangerines.”
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