Life's most daunting experiences, otherwise entitled "Jadis decides to buy a house"

Miscellaneous and Personal Stuff I Must Share
1

So, my company is moving my office to another town and the additional drive is going to double my commute. It’s only going to be another 12 miles or so, but I started thinking that I’m paying way too much local wage tax (3.4%…ack!!) and that it might be a good idea to move closer to work and find a town with a 1% wage tax in the bargain.

I started apartment hunting, and it got old very quickly. As I walked through each place, I kept thinking “well, this could be cute if I fixed up x and y…” and “this place is almost livable if only I were able to do y and z”. Duh. If I’m going to put the effort into fixing up a place, it might as well be mine.

I’ve been in touch with a mortgage broker who has pre-qualified me. I called a real estate agent today. The quest has begun. In a matter of weeks or months, Jadis just might own a home. Imagine that.

My fellow Dopers…reassure me!! Tell me that this is a good idea!! Give me advice…I feel like I am so out of my depth here. What tips would you give to a first time home-buyer that you wished you’d known before you took the plunge?

[sub]quaking…**

2

ohboyohboyohboyohboyohboyohboyohboyohboyohboyohboy

Advice time!

Here goes, from someone who bought his first house 10 years ago and is now in the process of buying another one:

  1. BE SURE YOU WANT TO STAY THERE. Ask yourself if you can see yourself staying 10-15 years there. If you flinch, question your decision. Selling a house when you need to move is a hassle.

If you lose your job, can you find another one without having to move? (I don’t know where you’re located). If you like the area and you can, then by all means, buy.

  1. DON’T RELY ON THE INSPECTOR. Some inspectors are good, some are not. Check out the house yourself. Pay attention to the roof (when will those shingles need to be replaced), look at the gutters (how fast will they fill up and who’s gonna clean them out). Go up in the attic and look for wood that looks darker than its neighbors, that may indicate water leaks. If there’s a bathroom on the second floor, look close at the ceiling underneath. If it “looks” clear, get a flashlight and look closer. Kilz can cover water stains on the ceiling, but leaves a slightly darker patch and maybe some small ribbing if the ceiling is composed of sheet rock. Don’t ask how I know.

  2. VISIT THE HOUSE DURING MORNING AND AFTERNOON RUSH HOUR AND ON SATURDAY NIGHT. Some neighborhoods can change dramatically at night. Weekends give you an idea of what parties are going on.

  3. LOOK AT THE NEIGHBORS’ CARS. That will tell you what class you’re moving into. Also, check on how well they’re keeping up their properties. Can you tell how many of the houses are being rented in the neighborhood? That has a big effect on which way it’s going (renters tend – only tend, mind you – not to take care of their houses and lawns).

  4. HOW VALUABLE IS THE HOUSE? Is the house the highest priced in the neighborhood or the lowest? If you’re buying a fixer-upper (either a cleaning-woman’s special or a handyman’s special), the value of your house will rise faster over the years, giving you a higher payout if and when you sell. If you move into the most expensive house in the neighborhood, you won’t get as high a return for whatever improvements you put in.

  5. GETTING A MORTGAGE IS A MATTER OF PAPERWORK, NOT A CHARACTER JUDGMENT. Generally, everyone is on your side. The bank wants to lend you money, so long as your credit is good. They may even want to lend you more money than you probably can realistically afford. Your realtor wants to sell you a house. The mortgage process is not meant to trip you up, although it can, but if you think of it as a way of feeding the bureaucracy with the right type of paper, it will keep your blood pressure down.

For example, we’re buying a house using money from a relative. It’s a gift. The mortgage company doesn’t see it that way. Under their rules, at least 5% of the down payment must be “our money.” Hmmmm, this could be a problem, I think.

“Well, I have a 401(k) I could borrow from,” I said.

Bingo! The magic words. The deal can proceed. Now, the bank doesn’t care if I borrow the money or not. What’s more important is that I can satisfy their requirement. They’re not going to demand proof that I borrowed the money. If I show up at closing with a check for the right amount, they’ll accept it.

  1. GO THROUGH THE WALK-THROUGH JUST BEFORE CLOSING. Traditionally, on the day of closing, you are allowed to walk through the property with your agent. Do so. This will give you a chance to see that the home-seller left behind what they promised to leave behind when you signed the contract (some don’t, trusting that it will be more trouble for you to back out of the contract than bitch about the missing swing set).

This could be a tough moment. It’s your last chance to see that they’ve vacated the premises. If they did not, dig your heels in and do not sign the contract. Technically, they’re in violation. If you let them stay after closing, then technically they’re renting the place from you, and tenant-landlord rules may apply. The real estate columns are full of letters from home buyers who give the sellers a little more time to move out, only to find themselves having to start an eviction process to get them to leave.

  1. SEE A LOT OF PROPERTIES. Especially if you’re not sure exactly what you want. This will give you a chance to learn about the different neighborhoods, see a lot of different design styles, and learn what you react positively to, and what sends a shudder through you. There’s nothing like seeing it in person to help you decide that, maybe you don’t want to take care of an old house after all.

  2. DON’T PANIC. There are plenty of good houses out there. If you lose one, another just as good will pop up. And don’t fall in love with the house until you’ve bought it. That makes it easier to negotiate and easier to walk away from a bad deal.

  3. WATCH YOUR FEES. Fees are not locked in stone, and some lenders will pad them (especially if you see things like “delivery charge” or “copying charge”).

It wouldn’t be a bad idea to look for books like “Home Buying For Dummies” as well. There’s plenty of good advice in 'em.

Good luck in your search. Keep looking, buck up, and you’ll find yourself in a home you’ll love.

3

Wow…thanks for the advice. I did think of some of that stuff, other stuff I didn’t have a clue. I’ve lived in this area all my life, so I’m reasonably certain I’m familiar with the neighborhoods that I can afford, but I’ll be sure to watch for the cars/time of day sort of stuff, just to be sure.

One of my problems is that I do know pretty much what I want…finding it in my price range is going to be the problem!! :smiley: The real estate agent I spoke to today said that he has tons of listings in the towns I specified, and in my price range. It’s all going to be in the details. For instance, I want hardwood floors…and since most of the homes I’ll be looking at will be older, I think that this is something I’ll likely be able to get. I’m also into big porches. Nothing like sitting outside with a book on a summer night. :slight_smile:

I had no idea that people actually tried to stay in the house after it had been sold…I’ve never heard of it happening, but I can just imagine the nightmare. I have a few friends who own rental properties and they’ve told me horror stories of how difficult it is to get someone evicted. I can’t even imagine how frustrating that would be if it’s your own home you’re waiting to get into. Sheesh. Some people.

Thanks again. :slight_smile:

4

Go to the house in the morning, during rush hour. Sit on the porch, and listen. Do the same thing at other times of day, and late, late at night. Be sure you can stand any traffic or other sounds. For a long time. (Our place had freeway and airplane noise. Not a lot, but enough.)

Watch the traffic patterns. Look for odd stuff in the neighborhood. Ask the city planning office if the street is going to be widened. Find out what the easement is, and think about what that would do to the yard. Does it disappear? Yikes! (They widened the street, and the traffic increased. A lot.)

What’s the three most charming things about the place? What happens if those things change? Can you replace them? (Pie cooler rotted, fireplace mortar died, built-in bookshelves were OK.)

Look for gang tags in the neighborhood, in the alleys, on corners, and walls. Assume a spread of 1-2 blocks per year in major metropolitan areas, less in small ones. (Took them 6 years to cross the freeway.)

If you have kids, or want to later, check out the schools. Get involved in the PTA, and get on every advisory board. Get bad teachers re-assigned (or better yet, fired), and be sure the school reflects your beliefs and mores. (My youngest’s first grade teacher was incompetent, and everyone knew it. We managed to get my son re-assigned, but she kept her job.)

As far as money goes, be sure you can pay off the mortgage early, then do so. If your payment is $700, pay $850. You will pay off your mortgage way early. (Our mortgage wouldn’t allow excess payments less than 20%)

Most importantly,
NEVER TAKE OUT A SECOND MORTGAGE! (We lost the house, and our credit. So has every normal person I know who took out a second.)

Otherwise, cool. Enjoy it.

5

Bumping this up in case any of the weekday folks have additional advice. :smiley:

6

We want to buy a house so bad :frowning: Unfortunately our credit is utter crap so it won’t be happening anytime soon.

7

OpalCat, have you talked to anyone about it, or are you just afraid to even pursue it? Believe me, I can relate…passing the credit was my biggest fear. I wouldn’t say that my credit was “utter crap”, but I have made some mistakes (like letting the credit card they handed to me when I was in college get out of control…the bank canceled it and it took me about 5 years to pay it off after the account was closed). Even though credit mistakes stay on your report for 7 years, their impact fades after a while, and you might be surprised at what you can get if you have things under control now. I’ve been doing a lot of reading on this subject (gee, I wonder why?? :D) and the bottom line is that when it comes to mortgages, lenders want to find a way to give you the money. If you’ve got money in the bank and a fairly clean recent history, it’s possible that you’re being harder on yourself than a bank would be.

Just a thought. :slight_smile:

8

Missus Coder and I have bought 4 houses and sold 3 so far. I am not an expert, but maybe I can give you some tips.

  1. Find a realtor you like and trust. We’ve used 3 different ones so far. The last one has handled 1 or both sides of the deals (selling the old one, buying the new one) for the last 3 houses. She’s a real go-getter. I would not want to work for her, as I believe she’d settle for nothing less than 120% all the time, but I was damn glad to have her working for me! Ask friends/coworkers for recommendations, and interview at least 3 before you decide on one.

  2. Have a real estate attorney look over the paperwork before you sign. Unless you’ve been through this process a lot, the amount of detail in the process is mindboggling. Interest rates, points, insurance, payoffs, pro-rating the payment if you don’t buy at the end of the month, what stays, what goes, escrow accounts, warranties, addendums, neighborhood associations, all add to this. It’ll cost you a few hundred dollars, but you’ll hopefully avoid thousands of dollars of hassle. To find one, ask friends/coworkers for recommendations, or call the local bar association for a recommendation, or maybe find someone new who’s just starting his/her own practice after a few years in someone else’s firm.

  3. See the house several times, at different times of day. Keep a notebook with you, and take lots of notes. If you have favorite furniture you’re bringing along, measure to be sure it’ll fit on that wall. Heck, will it even fit through the door? Are there enough closets? Is the basement dry, or does it smell musty? Is there enough room in the kitchen? How old are the appliances? Furnace? Air conditioning? Dish washer, fridge, oven, fireplace, garbage disposal? Ask for the utility bills for the last year. Does the house have a municipal water supply, or a well? How about a sewer vs. septic field?

  4. Hire a home inspector, and meet him at the house. Follow him around, ask him to explain what he is looking for, what’s he is finding. Be wary if he offers to fix something, as his job is just inspecting, not drumming up business. Expect a written report covering all the major areas of the house, describing it, giving his assessment of the area, and reccommendations if it is damaged or defective. Again, ask friends/coworkers for names or recommendations of people they’ve used.

  5. Your realtor should prepare a competitive market analysis for you, showing this house, and similar ones in the area that have sold recently. The idea is to see if yours is selling for about the same price relative to the others, or is too high, or too low. If it’s either, you should find out why - condition, the neighborhood, features it has that the others lack (or vice versa).

  6. Try to visualize where you’ll be in 2, 5, 20 years. It’s difficult, I know, but will this house serve your needs later on? Is marriage or kids in the offing? Is there room to build a garage later on? Can a spare bedroom be turned into an office, or used as a guest room, if that’s what you want?

  7. Be practical and hardheaded about what you can afford and what you need. Don’t fall in love with anything that can’t love you back - it’s just a house. I saw someone do this with a gorgeous old victorian moneypit. It needed buckets full of work, and the heat bill in the winter was a killer. It dragged them to a heartbeat away from bankrupcy before they finally sold it.

Best of luck, Jadis - it’s a scary proposition for the first timer. But I’ve been much happier owning than renting. With a bit of luck and some planning and forethought, so can you!

9

I always think of more I should have said after I press the button. Sigh…

You should be able to figure the approximate amount of your payment, and how it breaks down (interest, principal, taxes, insurance, etc). If interest and/or property taxes you would pay are deductable where you live, you can factor that in to your income tax return, and see how this affects your budget.

Around here, being prequalified is just some quick informal math done on the back of an envelope. Ask about getting pre-approved. This means that your income, situation, etc. have been formally reviewed, and the lendor is committed to lending you $XX thousand dollars (or lira, pounds, marks, euros, or big round stones). The difference is, when you come down to making an offer for a house, you can mention that you are pre-approved. If there’s a similar offer from someone else, but they are not pre-approved, the process will take longer before the deal is closed, because they have to jump through these hoops yet. Your offer will be more attractive to the seller. It also saves you time.

10

This is advice if you are buying a newly constructed house - check to see if the builder was ever sued for shoddy workmanship. I just bought a condo where the builder, well let’s just say he maximized his profits. We had the decision of whether to sue him to make him fix the mistakes or pay for the repairs ourselves. This guy was good - it would cost more to sue him than for us to pay for eveything to get fixed. (I certainly learned my lesson!)

11

Oh, good thing I stumbled across this thread. The missus and I are looking at buying a house soon, and this advice is definitely handy.

One question for anyone who knows – due to a screwup in the dotcom economy, I recently god laid off from work. :frowning: Not too big of a deal; I’m sure I can get a new job within a few weeks. But does anyone know if this will have any effect on my ability to get a mortgage loan? My credit is excellent, but I’m curious if my temporary unemployment will cause banks to balk at signing me up…

12

RalfCoder, thanks for all of your input. My mortgage broker offered to go through the pre-approval process if I wanted, but I thought that I’d at least take a look and see if the sort of house that I’m looking for is available before I jump through those hoops. Once I see my prospects from the real estate agent, I might give pre-approval some more serious thought. :slight_smile:

The types of houses that I’m likely to be able to afford in this area are definitely going to be on the older side…probably 30-40 years. I know that an inspection is an absolute must, and my father is experienced in home building and engineering, so I’m sure to get plenty of input from his side as well.

Thankfully, I don’t plan on having a family, so I’m not too concerned about outgrowing the house. I’m not looking for anything terribly complex…I’d love something relatively small (1200 square feet or so), an easily maintainable yard, quiet neighborhood (easy to find in this area…we’re not known for our rowdiness). I don’t care about the quality of the school district, I just want my taxes to be low (both property and wage). I have a pretty clear idea of what I want…the project is finding it. :smiley:

Thanks to everyone who pitched in advice…I’ll keep everyone posted!!