Yep, I’m a land baron. I’m a first-time home buyer with a signed buy-sell, and a closing date for the end of October. I’m totally excited and scared to death. After living in apartments (or dorms) since leaving home years ago, I’m really looking forward to having my own place, but I cannot believe how far into to debt I’m going to put myself in order to do it.
Any advice from other home buyers for a “newbie” to the world of property ownership? My only plan is to increase my alcohol consumption until this whole thing is over.
jodhi, congrats! We bought our first house (townhome) in March 1998.
My advice has to do with your mortgage broker/company/whatever. We had many problems with ours.
Call them when you have questions or think of something they might have forgotten. Don’t worry about insulting them or annoying them. This is a big-ass purchase. Probably the biggest-ass purchase you’ll ever make. It’s important… sometimes the people who do this stuff all day long forget that.
Keep copies of everything and take it all with you to closing! They will ask you for a million pieces of paperwork before then and it’s a real beeeyatch when that day shows up and they lost something.
Make sure the house is the way you want it to be before you sign the closing paperwork. Or at least have something in writing saying that it will be done by a certain date.
Most common question I ask: “What?”
Most common question I get: “Are you really hearing impaired?”
Pay extra each month on your mortgage payment. Take your monthly mortgage payment, divide it by 12 and add the result to your payment. Make sure you tell the bank that the extra payment should be applied to the principal of the loan, most payment coupons have a space for “Extra Principal.” Mortgage loans are set up so that the majority of the payment in the beginning of the loan is applied to interest, by making a extra payment directly to the principal amount you will pay off your loan earlier and save yourself a bucket full of interest charges.
This will be the most stressful month of your entire life. Just accept it. Do you have a mortgage yet?
Hire an attorney to represent YOU at the closing. The attorney who runs the closing does not represent you. You are making one of the largest commitments of your life when you sign a mortgage. Wouldn’t it be worth a couple hundred bucks to make sure you don’t get majorly screwed? It DOES happen.
Congratulations. I don’t know what your housing arrangements were previously, but buying a house is just the beginning of the buying. Got a lawn mower? Or a refrigerator? Power tools? Get ready.
I really didn’t mean to be so negative. Buying a house is a great thing. It’s absolutely worth the stress and expense it causes. Congrats and enjoy!
Thanks for all the kind comments; I’m really excited and am sharing with everyone (as you’ve gathered).
PHIL – Well, since you asked , the house is a bungalow, built in 1950, your basic two-bedroom one-bath, kitchen and front room layout. Fireplace in the front room, original '50s white enamel cupboards in the kitchen (in mint condition). AND it has a two bedroom apartment in the basement (with another kitchen and bath) that I hope to rent out to off-set at least part of the mortgage. Corner lot on a quiet street, two car garage, fenced backyard for the dog … I’m really happy with it.
GENERAL – good idea on the extra-to-principle; I intend to do it as soon as I can afford to, but it’s going to be bread and water for me for a while. I also intend to ask the bank to make my payments bi-monthly instead of monthly, which should total an extra mortgage payment each year.
FRANK – Excellent advice. I ALWAYS take a lawyer to business meetings.
Be careful with pre-payment. Some companies will penalize you for that. Like you said it saves you interest. That means they make less money. I work for a mortgage company, and they teach us all about this stuff. The best advice I can give you is to buy “The Complete Idiots guide to Buying and Selling a Home.” They give everyone here a copy when you go through training. It will give the ups and downs of every option there is, and it’s a lot cheaper than an attorney. Good luck!
ALERT!! ALERT!! Some banks charge a “processing fee” for the bi-monthly payments (the one I work for does). DO NOT pay the bank for that privilege! Do as GeneralRipper suggests. Even an extra $20-30 per month applied to principle will reduce your motgage substantially.
Oh, and say “so long!” to carefree weekends. Now you’ll always have housework or yardwork to do! And the movie The Money Pit - only a slight exageration.
On the plus side, there’s appreciation. I bought my first house in 1988. Sold it this year for about 33% more than I paid. Now I have a bigger house, decent equity, and (hopefully) more appreciation.
I wouldn’t trade home ownership for any other housing option. Good luck and enjoy!
The overwhelming majority of people have more than the average (mean) number of legs. – E. Grebenik
Congratulations! Just remember that during this memorable month, having Omigod! I’ll be XXX,XXX in debt!!! constantly drumming through your mind is perfectly normal, as is suddenly not being able to breathe whenever you try to focus on upcoming details.
There have been many good suggestions, particularly making sure there is no mortgage prepayment penalty (hey, you never know when you’ll win the lottery).
My own suggestion is to spend an extra couple hundred dollars on a professional housing inspection BEFORE closing. Depending on the nature of the report, the present owner may make any needed repairs, or some re-negotiating may ensue. Remember, you’re in a bargaining position before you sign off on the deal - after that, you’re on your own. (Yes, there are exceptions, but I’m simplifying.)
And don’t panic when you discover something that needs to be fixed/replaced within a few days of moving in. I’ve never talked to a condo/homeowner that didn’t have to work through some kinks.
Oh, not to scare you, but with a house built in 1950, the electrical, plumbing and all the appliances are due to go belly-up about now, unless the past owners have been maintaining/renovating.
As everyone said to me, It’s not the initial expense, it’s the upkeep…
But yes, it’s worth it - if only for the wave of happiness that goes through me when I walk in the door.
I saved for years to get a deposit. I got all the professional help I needed, checked loads of possible houses with a knowledgable friend and finally went for it.
45 minutes before the lawyers exchanged contracts, my building society (do you have those in America? It’s a company that offers savers interest, and lends the savings as mortgages) pulled out of the deal. Their reason was not that the property was unsound, or that I couldn’t make the payments. No, the bstrds said the property had 5 floors and was outside London. This had NEVER been mentioned before, and is a stupid reason anyway.
My lawyer told me to stay calm and found another financial source in 30 minutes. Maybe I should do the lottery (or my lawyer should!)
Congratulations! You’ll love it, and it is the smartest thing you ever did.
And yes, drinking heavily during that first “Omigod, what have I DONE!?!” stage is normal.
Sounds like you have the financials and paperwork pretty well under control. Ditto on the insurance and making additional mortgage payments.
So as to not repeat excellent advice already given, I’d add START READING! Hey, I own an 1874 (no typo) Victorian I’m rehabbing. It’s been amazing how much I’ve been able to learn to do.
Hey, forget “tool intimidation”. Watch those DYI shows, and invest in some good basic maintenance guides. It’s amazing–and liberating–to know how easy it is to fix a lot of things! Even if you decide to hire things done, you’ll be one tough, savvy consumer.
Get to know who to ask about building requirements. It can save you hassle, and it gives you a real-life reality check and when you need a professional. (Hint: furnace and extensive wiring: hire a professional! Ditto plumbing They train for years to do it!)
Fear not, you’ll love it. It’s now your castle. I rented until my big ol’ Victorian. Talk about the bends…But I always walk through those doors and I’m HOME. Bliss.
All the best! If there’s anything I could help with, zing me an email.
Next, buy stock in Lowe’s, Home Depot, Builder’s Supply or some other home improvement company close to the new abode. You will visit often and spend lots of $$$$$. Not that our house was a fixer-upper when we bought it, we just kept painting here, wallpapering there, caulking, spackling, tile flooring, new plumbing fixtures - it goes on and on and on and . . .
And then there is the yard!!
It is a lot of work but fortunately I can use a hammer, a screwdriver and a paint brush. My wife and I are quite proud of what we have done. So will you. Good luck.
I’m a first-time home buyer with a signed buy-sell, and a closing date for the end of October. I’m totally excited and scared to death. After living in apartments (or dorms) since leaving home years ago, I’m really looking forward to having my own place, but I cannot believe how far into to debt I’m going to put myself in order to do it.