OT/ Buying a house-YIKES

[CathydsRNA]

I am finally thinking about buying a house and YIKES...I don't know how anyone does it with all of the upfront payments (deposits, points, taxes) and hidden costs. I am currently an apartment dweller and figured it was about time to stop throwing my money away but am completely naive about this housebuying stuff and am starting to get scared. I am one of those types who has been solely focused on my work etc and am completely stupid about other things. Any advice regarding how to shop for mortgages, what to look for or any tips on keeping costs down (especially upfront costs and hidden payments or even to know what hidden payments I can expect) would be greatly appreciated. Thanks soooo much.

 

[Connie1]

The more you have saved for the down payment, the cheaper (percentage points wise) the loan. If they lend you less than eighty percent of the full price, you get a preferred rate, and if 70%, even better.

If they all charge a lot for new buyers, then at least in a couple of years (or months, in California!) you can refinance at a much better rate, because your value will have grown.

I think Ditech dot com has one flat (low!) fee for a mortgage loan. I don't know if they're national or not.

Hidden costs: besides the obvious, that is, your monthly mortgage payments, yearly property taxes (a big shock unless you plan for them, I use the escrow option with the mortgagor) and yearly homeowners insurance (ditto escrow), there are transfer taxes. That's a fee you pay when you buy a house. I think it's one percent, or a percent of the total selling price.

Escrow fees also include delivery services and fees for making copies. Anything out of the ordinary during the escrow could cost a lot. Find out if you can do these things yourself as much as possible.

Some people (sellers) will make a deal with you to personally finance a portion of the home price. That amount gets left out of the bank loan, and possibly the actual reported sales price, and may lower your transfer tax and property tax. In Calif., property tax is very high so people are always conscious of ways to at least slow down its growth.

Hope this helps.
-Connie

 

[navywifey]

The only things I can add are:

Shop for your mortgage first. Get preapproved before you start seruiously shopping for a house. Most sellers want pre-approved buyers only.

There are lots of options for first time home buyers. I'd consult with more than one mortgage person. Even if you don't have 20% to put down - which is hard to come by depending on what area you live in -- (Like Boston where a small house sells for $250K - how many people have $50K downpayment??) there are programs called 80/20 and 80/15/5 where you avoid paying PMI.

Look closely at the fees that mortgage companies charge. There are many useless fees that they charge because that is how they earn money.

I heard Home Buying for Dummies is a good book to get you started.

My only other advice is, should you not be able to buy right away for whatever reason, continue to save as much money as you can.

Good luck.

 

[veekcee]

Cathy:

Buying a home can be very overwhelming. Fees and what not varies from state to state. We live in California and it is rediculous what you have to pay for! Do a lot of research, talk with current homeowners in your area. Someone may be willing to show you thier closing papers. Get a real estate agent referred by someone you trust. Most realtors have a preferred mortgage company that they work well with and recommend. Be as informed as you possibly can. It helps to question everything. It is so easy to be taken to the cleaners if you don't know what is customary.

We have bought and sold several homes around the country. California by far is the most complicated of all home buying/selling transactions I have ever encountered. Being a homeowner has many rewards and benefits.

Good luck to you! Now is a good time to buy. There are, as others have mentioned, a lot of programs available.

 

[melfitz]

Hi there!

Believe it or not, there are low-to-no down payment AND no points mortgage programs. They are not usually advertised so it would be worthwhile to ask a lender about such programs. When we bought our 1st home, we put, I think 3% down, maybe less, 0 points with a 30-yr fixed interest rate. We moved to a different state last year and got a 0 down/0 points 5 yr ARM. I can't remember our interest rates, but they were both well under 7%. We've found that going to a local bank, instead of a national/online lender, may have the best mortgage programs available. Definitely shop around and ask a lot of questions.

I agree with getting prapproved before purchasing a home. When we made an offer for our current home, we were in a "bidding war" with another family. Since we had already sold our 1st home and had gotten preapproval for a mortgage for our 2nd home, we won the house. Having a preapproved mortgage makes home buying so much easier.

We will most likely be moving in 2 years and have to go through the whole buying-selling thing again. I dread it!


-Melanie

 

[CathydsRNA]

Thanks everyone,
I had my first meeting with my realtor yesterday afternoon and thanks to your replies I was able discuss your advice tips etc.. I will also be phoning a motgage officer up to get preapproved and now know what sort of programs to ask about. Thanks so much everyone. I couldn't have been prepared yestersay without you.

 

[Gayle]

Hi Cathy,

Buying your first home is both exciting and terrifying. There are a lot of pieces to the whole process, but it's really worth it.

The Fannie Mae Foundation has several publications for the first-time homebuyer that are free for download at the URL below:

http://www.homebuyingguide.com/

I agree with some of the other posters in that you should definitely get pre-approved for a mortgage amount with a reputable lender first. Having a good grasp of your price range will help a lot in the process.

One other thing I'd suggest - once your serious about a specific property, I'd recommend hiring a home inspector to check it out - someone who's independent of the realtor and is working for you. They can look for any major potential problems that might not be immediately evident. This piece of mind alone would be money well spent.

Good luck and keep us posted!