So how do we buy a house?

In My Humble Opinion (IMHO)
1

Mr. avabeth and I have decided to undertake the grand expense of a house. It took a bit of convincing to even get him to look into the idea, but he’s starting to get excited about it. We had a long talk about it this weekend, and we’re going to start looking around for a house. We’re going to get some ideas of what we’d like for our starter home until our wedding in September, and after that, we’ll look into seriously finding a house and buying to move into in January. My credit is a bit rocky, although I’m trying to rebuild and pay off all of my debt. Mr. avabeth has near-perfect credit, so we’ll probably end up buying the house in his name only, and then adding me on later when my credit is better.

A few questions:

  1. If my credit is rocky and his is excellent, and we are married, can we buy a house in his name only? My brother and sister-in-law bought a house and put it in my brother’s name only, but this was prior to their marriage.

  2. Although my credit has a high debt-to-income ratio, I don’t have bad credit or charged-off debts or late payments - if we did look into buying with both of our names on the house, would they turn us down based on my credit, even if we can easily make the payments? (We’re looking to buy a house that’s well within our means - I’ve seen too many of my friends buy a house that they can’t afford, and then not even be able to buy furniture for it! We just need a house with enough room for us, the two kitties, and in a couple of years, the newest little addition to our family;). Since I’ve been in a Brooklyn apartment for four years prior to moving here, I am not concerned with finding a too small house - anything is bigger than my old apartment).

  3. What steps do we need to be taking now in order to buy in another nine months or so?

  4. What should we look for when we start looking at houses, in terms of the livability of the house?

Thanks for all of the advice! I’m actually very excited to find our own house. I think, financially, it’s a much sounder decision than paying rent.

Ava

2

My credit is completely hosed. As long as the house you are looking at is affordable with just his income you can buy it in just his name even though you are married. We bought our house with just my husband’s income and credit and it is in his name only. Our mortage broker recommended this.

Get a home inspection! Get a home inspection! Oh and did I say Get a home inspection?

Look around and don’t lock yourself into working with just one real estate agency. Go online - realtor.com is a lot of fun.

Start socking away money yesterday. Buying, moving, painting, furnishing are all expensive!

3

You should go to a bank or a mortgage lender before you even start looking. That way, you can get the credit stuff figured out and have a ballpark (or better than ballpark) idea of how much money you should spend. This is what we did, and it made the looking part much easier. We didn’t even go to see places we would have fallen in love with but couldn’t afford.

As far as #4 (livability of a house), that’s probably pretty personal to you. You should make a list of the must-haves (for us, this was 3 bedrooms, 2 full baths, fireplace, yard, hardwood floors). If you get a realtor to help you look for a home, you can give him/her the list and only look at stuff that applies. We eventually found a spec home (a home that a builder was putting up with the hopes of selling it, as opposed to a house that is being built with the buyer coming in before the building process). We got it under contract early enough in the building process that we were able to choose all the paint, carpeting, color of the hardwood, light fixtures, appliances, etc. This was so fun to do, plus we ended up with exactly what we wanted! For us, the time frame was: under contract early December, closing mid-January.

(we have since sold our house & moved into a rental apartment because we’re preparing to move to Australia in September…I really, really miss my little house :frowning: )

4

If your credit is just on the poor side and not really shot, you might be able to get away with just putting your husband as the primary borrower on the mortgage. This way you can still be included on the paperwork, just as the secondary borrower (this might be handy someday in case something happens to your husband). My husband had pretty bad credit (including some past cards that had gone into collections, though those were cleared up and paid by the time we applied), but he is still on the mortgage as the secondary borrower. IIRC, he had to write a letter to the lender explaining his credit history, and how it was better now, etc. and they were ok with it because I had a good history. The mortgage company will be able to let you know what your options are - they can run your history and come up with your scores, and let you know which way is best.

Get pre-approved for your mortgage before you start looking. It helps you know what you can afford (though you will probably be approved for more than you want to spend, so don’t make the mistake of letting the bank max you out on a mortgage) and also makes the process much easier when you do find that perfect house. You can make an offer then and there once you decide - many sellers won’t consider offers from people who aren’t pre-approved and the process can take awhile.

We found that having a good realtor was well worth it. I know some people find them a waste of money but for the first time home buyer I would really recommend a good realtor. Ours helped us through the whole process and was really looking out for our interests - not the seller’s.

It’s a good market right now so take your time looking at houses until you find one you really like, and have fun! I still enjoy looking at houses just for fun. Even if all you see at first are houses you don’t like, you get an idea after a while of what features are really nice and what doesn’t matter to you.

Don’t underestimate the amount of cash you need on hand - you have to pay closing costs, inspection fees and other fees start adding up. Make sure you leave yourself some savings for after you move in - the law of homeownership says that something will break within the first 30 days!

5

I don’t know much about the legal and financial stuff, but we found a lot of good financial info on the Motley Fool website. I do know that the debt to income ratio is considered more in terms of you as a couple than you as an individual if you buy jointly. As long as your combined incomes are high enough in proportion to your combined debt, that shouldn’t be nearly the problem that charge-offs and such would be.

As far as the livability of the house, you might want to pull up a comfy chair and get a drink, 'cause there’s a whole lot of of stuff to consider. First off, before you ever call a realtor or look at the classifieds, sit down and think critically about how much space you need, and how much space you’d really prefer to have. We opted to go for three bedrooms, so we could each have our own room on top of our shared bedroom. We decided we just couldn’t live with computers in the bedroom, and didn’t really care for the idea of having them in the living room. Besides, it saved us a lot of fighting over what to do with things the other truly hates, like my unicorn lamp and his Elvis clock. We could have gotten by with two bedrooms, but we prefer three. Keep in mind that if you’re going to be in this house for the long term and planning to have kids, you’ll probably need more room in five years than you really forsee needing now.

Once you know how much space you want, and how you plan to use that space, think about whether or not you want to take your furniture with you. If so, plan what pieces you’d want to put in what rooms, measure them, and write those measurements down in a little notebook you take on all your hunting expeditions. Always have an ink pen on you, and always bring a tape measure with you. See if your furniture will fit into the rooms and through the doorways. Check out positioning of the heat vents, outlets, windows, and doors–all of these can spell a huge pain in your ass when arranging your furniture. Never assume there are phone jacks in the bedrooms, always check and make sure.

Look at your traffic patterns in the potential house. Is there an easy way to get the garbage out of the kitchen, or do you have to carry the bags across the new carpet to get it out? How many bathrooms, and where are they? If you have an attached bath, will it suit your needs or will you still be traipsing out to the other one? Where are the washer/dryer hookups? Where will you have the litterboxes? Is there enough room in the kitchen for you to store your utensils, dishes, and the groceries? How much counter space is there in the kitchen? What kind of shape are the major appliances in?

Think about what you want in the property as a whole. Is having a good-sized yard important to you? You’ll probably have to trade newness of house for size of yard and maturity of plantings; is that a trade you’re willing to make? If there are plantings in place, take a good look at how they’re laid out. How easy will they be to maneuver a lawnmower around? Are they likely to grow together and comlicate lawn care? Are the grass and other plants pretty healthy-looking, or are you looking at removing trees, replacing bushes, and reseeding the lawn in a year or so? Does it matter to you if the yard is fenced or not? Will it matter after you have kids or decide to get a dog? Does it matter if there’s a garage? Do you care if the driveway is blacktopped or not? If it’s gravel, how close it is to needing a new load put on it?

How is traffic in that part of town? How close are you to your jobs, to schools, to shopping of the types you normally do? Does the neighborhood as a whole appeal to you?

I’m sure everyone else has five million and twelve things you absolutely must look at, too, but that should cover most of the little stuff that we didn’t really think about when we bought our house.

6

Oh, and no matter how carefully you look the place over, you’ll always find something that you didn’t consider. Trust me, if you think about the furniture and the litterboxes and the trash cans, you’ll find that there’s not really a good place for the (^%^* laundry hamper.

7

First of all, my biases. I am a Realtor[sup]TM[/sup] and a licensed real estate agent in the state of Wisconsin. So if you want a house in Door County, WI, call me right away. :slight_smile:

The laws that govern agents vary considerably from state to state. My only experience is Wisconsin, so anything I say here should be verified as applying to your state.

As others have said, get pre-approved for a dollar loan amount. This may save you grief later; if you need to tweak your finances, you can do it before you get attached to that dream house and watch it slip away. And for some price ranges, agents don’t even want to talk to buyers unless they are pre-approved, to cut down on the lookie-loos that waste our time.

Plan to have a home inspection and make it a contingency in a contract. The average buyer does not have the knowledge to detect serious house flaws without help, and Realtors are not qualified to provide this knowledge, either, so don’t count on them.

If you have an unusual financial or other need, or the transaction gets complicated, consider retaining a lawyer to check a contract. Agents are not lawyers; we are really paralegals within a specialized field. We can modify contracts only within narrow limits. We cannot advise you on how to take title (trust, joint ownership, etc.) for example.

Consider executing a buyer-agency agreement before going any further. In Wisconsin, as many states, the seller normally pays the commission and even if you approached the agent yourself, the agent legally works for the seller. (We even have to get the buyer to sign a statement that they understand that fact so there are no surprises later.)

If you are uncomfortable with that arrangement (and you should be), execute a buyer-agency agreement with the agent of your choice. Some of the major points:[ul][]In a typical transaction, you will not be obligated to pay anything for commissions anyway[]The agent legally works for you[*]The agent will include in property searches private sale offers (FSBOs) and Internet listings, something a typical agent will not do otherwise. If you eventually buy one of these, you will pay the commission, but that is negotiable.[/ul]Hope this helps!

8

Wow, there’s a lot of stuff I didn’t think about. I’ll be printing these things out and going over them with mr. avabeth. We’re just now thinking about what we want and what we’ll need in a few years. We do want to move out West in a few years, so what’s applicable to our lives now may not be necessary in 5-6 years, but we’ll see. We also don’t want to get ourselves in deep so that we can’t afford to live our lives because we’re paying for a house we can’t afford.

My father-in-law is a realtor and I know he’ll help us get the best deal possible - so we probably need to sit down and figure out what we want in a house (all mr. avabeth has said so far is that we definitely need two bathrooms - my only definite so far is a room that will hold all of my books - and I need an entire room for that, we have about seven large bookshelves all over our apartment right now, and that’s not even holding all of my books).

Please keep the ideas coming - we’re excited to start looking, although very nervous about it!

Ava

9

If by “a few years” you mean fewer than 5, you may be better off renting. To recoup your closing costs in 5 years, your house will have to appreciate pretty rapidly. Some people believe that the current real estate boom is on its last legs because interest rates can’t be cut much more. It would suck if you bought a house, then couldn’t afford to sell it five years later because the market went down.

10

I would just repeat what others have said.
Mainly, and most importantly (IMO), get an inspection. It cost us about $300 ten years ago (in Maryland) and a good one really spells out all potential problems. You could fall in love with a house with built-in bookshelves for all your books, but then if you find out it has a leaky roof and a crack in the foundation and a leaking gas furnace - well, you’d know the gorgeous bookshelves just aren’t worth it.

You and Mr. Avabeth should sit down and make a list, literally, of what you want.
Two bathrooms, check.
Two bedrooms or three?
Formal dining room or eat-in kitchen?
Colonial or Rancher?
Which neighborhood? Snooty Hills or the trailer park?
Think about the schools if you’re going to still be there when the potential little Avabeths start school. Do you like the schools in that area?
And so on like that. Decide on what are must-haves and what is not as important.

And have fun looking.

11

In addition to all the other good advice:

Decide how much fixing up you want to do. If you like fixing up a house, you can get a cheaper one and do it yourself. If not, or if you are uncertain, get one in move-in condition. I know people who thought they were going to do fix-up, and never really got to it, and had to deal with unliveable rooms for years. If you plan to move in five years, I’d suspect you don’t want to do any fixing up.

Go back to any house you are interested in several times, and do it if possible during bad weather. When we lived in New Jersey, lots of houses had leaky basements. We went to the house we were looking at during a storm, and found the owner had lots of expensive electronics equipment on the floor. We figured the basement was going to stay dry, and we were right. Check for fit and finish of things like outlets and carpets. Look for signs of bad upkeep. Still get a home inspection, but this will let you filter out houses with problems.

Be on the look out for tricks, but this will probably be more likely a case for new construction. We toured a model house in a development a block from us. Since we were not interested in buying, we were probably more observent. Some of the stuff I noted was the lack of drapes on the bathroom window, making it look bigger, that they removed doors from the bedroom -ditto, and that they put in small beds to also make the rooms look bigger.

When you are negotiating, make sure the seller does not put in a contingency. If there is one, you might find yourself without a place to live because of a chain of problems. Even if you can rent month to month, you might be able to negotiate a favorable deal while waiting for the house to become available. Check with a lawyer. We did this right a few times, and were happy we did.

Don’t let your realtor drag you to houses that don’t meet your needs. Good ones won’t, but if you go to too many you might feel pressured to buy something.

I can’t help with credit issues, but I thought when you were married both spouses credit figured into things. This might depend on the state, though.

Good luck!

12

Musicat: I’m sure you would want someone to buy a house in Door County. My Mom bough a house for ~$70,000 in downtown Sister Bay in 1985. Sold for more than twice that in 1998 (would have sold for more, but my sister bought it)

Its no San Fransisco, but real estate in Door County is going up, up up (and the county is only so wide)

here endeth the hijack

Brian

13

Buyer’s Broker? Link: Here.

I loved the experience of buying a home after throwing the realtors I was previously dealing with overboard. They represent the seller’s interests and the one’s I had to deal with were more of a liability than an asset.