First time home buying...

[evan9381]

what should i look into if i was interested in looking to purchase my first home in the next ~6 months. i know credit is getting harder to get, but my credit is getting close to the scores i think i'll need to be able to qualify for a decent rate. i think the 6 months or so its gonna be before im ready will give it time to go up a little bit more.

 

im hoping to have around $10-12k to put down, maybe more...just depends on a couple things between now and then. now i've heard of "first time buyer" this or that. i think i remember hearing about a tax credit for 1st time buyers as well.

 

the houses im looking at aren't anything extravagant or fancy, im just tired of renting and throwing money away. im looking at a couple places in the 100-110k range.

 

taxes for the area on the houses are around 2200-2500/year. i think i've heard if you're not putting 20% down, theres an insurance.

 

also i know theres something with mortgage insurance being tax deductible.

 

what else do i need to add in that im not aware of and haven't included in this? realtor fees? closing costs? other things? this is the kind of stuff im not sure of and am curious about.

[LJ]

Evan, I will bring your boresighter back this week and I can sit down with you and go over some things with you if you want.

[evan9381]

that would be sweet. let me know what night would be good. i think im gonna cut back on the overtime this week (put in 13 last week and 33 this week of overtime alone). i should be home by ~830 on tues/thurs if either of those will work

[LJ]

that would be sweet. let me know what night would be good. i think im gonna cut back on the overtime this week (put in 13 last week and 33 this week of overtime alone). i should be home by ~830 on tues/thurs if either of those will work

 

I could do 9 on Tuesday if that works. Fiancee (ex) left me last week, so I'm free whenever!!

[evan9381]

shit. sorry to hear. 9 on tuesday is good with me.

[Rustlestiltskin]

I could do 9 on Tuesday if that works. Fiancee (ex) left me last week, so I'm free whenever!!

 

 

sorry to here that bud, mine left me today

[copperhead]

With things the way they are, better have 20% to put down, if not more.

 

Realtor fees are paid by the seller.

 

Closing costs can go either way, just depends on how you work it out. If you are getting a steal of a deal it will probably be up to you to pay them, but you can throw this into the mortgage.

 

When you are ready to buy, GET A REALTOR!!! and realize there will be more expenses before you can buy the place, like required inspections, so have another $500 stashed away for that.

 

Also, make sure that all agreements involving money are put into writing, don't trust verbal agreements.

[nurkvinny]

The insurance is called PMI (Private Mortgage Insurance). It sucks and there is no need to ever pay it. If you can not come up with 20% down, you can get a small 2nd mortgage aka a line of credit to make up the difference.

 

Example - you have $10k for a down payment on a $100k house. Your mortgage would be $80k, and your line of credit loan would be $10k. The smaller loan would likely be 20 years at a higher rate, but the idea is to pay it off quickly, and you have just saved yourself a shit ton of PMI and your main mortgage started off lower.

 

These are all rough numbers because there will be 10 different fees and taxes added into the numbers.

[Akula]

I bought my first house on a 80/10/10 to avoid PMI, paid off the second mortgage in about 2 years.

 

If you have 10k for a down payment, don't go looking for a $200,000 house.

[AJ]

alot of banks are doing FSH loans, those are 2.125% down but next year they are going up to 3.5% down.

 

me and ashley are looking at a forclosed home and have been working out a price after the inspection turned up some things wrong with the house.

[zeitgeist57]

With things the way they are, better have 20% to put down, if not more.

 

+10000. And make sure your personal credit score is at LEAST 680, or you'll have a hard time getting approved...let alone the fact that your rate will be adjusted 1-2% higher.

 

Great time to buy a house...IF you socked away enough money for a serious downpayment, and your credit is great.

 

My wife is a real estate attorney and can handle closings...

[rl]

Buy a HUD home. The deals that are out there are amazing.

[copperhead]

One more thing - I'm not sure if they are still being offered or not but DONT GET A FUCKING ARM LOAN

 

Fixed rate is the way to go, as short of a time frame as you can deal with payment wise. If you have 20% equity in the home you don't have to pay PMI. That's why you need 20% down. In the current economy, I really doubt that you will even get a loan if you don't have 20% down, but the other ways out of PMI are to do an 80/20 like I did, an 80/10/10 like Akula did, or manage to get the house for way less than it appraised for. However, i don't think PMI will be an issue because I don't think you'll be able to buy a house without enough down payment. I know that if I were in the market for a house now instead of two years ago when I bought, I wouldn't be able to buy anything.

[LJ]

One more thing - I'm not sure if they are still being offered or not but DONT GET A FUCKING ARM LOAN

 

Fixed rate is the way to go, as short of a time frame as you can deal with payment wise. If you have 20% equity in the home you don't have to pay PMI. That's why you need 20% down. In the current economy, I really doubt that you will even get a loan if you don't have 20% down, but the other ways out of PMI are to do an 80/20 like I did, an 80/10/10 like Akula did, or manage to get the house for way less than it appraised for. However, i don't think PMI will be an issue because I don't think you'll be able to buy a house without enough down payment. I know that if I were in the market for a house now instead of two years ago when I bought, I wouldn't be able to buy anything.

 

Ummm...

 

He will be able to get a loan with 10% down no problem. Small banks are tripping over themselves to loan money.

 

Evan, don't worry about getting a loan. I'll give you the names of a few bankers that you can talk to.

[Akula]

DONT GET A FUCKING ARM LOAN

 

 

+ gajillion

 

The only time you should EVER get an arm is if you have the pay off sitting in the bank.

[LJ]

+ gajillion

 

The only time you should EVER get an arm is if you have the pay off sitting in the bank.

 

Are you talking about Balloon ARM's?

 

There are 2 different types.

 

1 has a Balloon payment that you have to make when it resets. The other just plain resets.

[badasskylark]

It's nice to have a realtor looking for properties on your behalf. But if you have the time to look for homes on your own you will have more room to negotiate if you go straight to the listing agent. If you bring another realtor into the sale both realtors have to split the comission which generally means less negotiation on price. 20% down for sure, Fixed mortgage. Also it doesnt matter what you offer on a house the realtor has to present your offer to the seller.

[evan9381]

im not looking for a house thats $200,000. i just figure with what im paying in rent, i could probably buy something that will be a decent starter home for just a bit more. ive seen a couple places in westerville area, which is close to my work, for 99k-103k, for 3 bed, 1.5 bath, and around 1700sq/ft, and the best part, a garage!

 

as for my credit - when i was in the bank helping my brother get his car loan situation figured out last month, the lady at 5/3 said my credit was at a 680, hence why i want to try to get it bumped up a little more in the ~6 months or so. i know that usually ~720 is when you can start getting the prime rates. my brother had to get a new car due to his old one finally killing itself, and the dealership gave him a loan at 24% (315/mo for 72 months on an $11,000 car...with me cosigning, it went to 230/mo for 66 months). i know its affecting my DTI now, but at the same time, its another line of credit thats also going to show good history of payments.

 

im hoping to have around $10k by around may, which is when my lease is up. maybe more. i've got a little cash stashed away now, im im expecting that by the time all this may roll together, theres a good chance i'll be getting a chunk of change from an auto accident settlement (whole other story), which is why i said i may have a little more.

[mmrmnhrm]

+ gajillion

 

The only time you should EVER get an arm is if you have the pay off sitting in the bank.

Not completely true... In the 2004-2007 climate, when interest rates were insanely low, an ARM was a ticking time bomb. But flip it around and think about folks who would have gotten an ARM in 1982 (granted, they hadn't been invented yet). Interest rates then were nosebleed high, and so an ARM there would have made wonderful sense, because as interest rates decreased in the following years, the rate would reset lower, putting dollars in your pocket.

 

ARMs are not the enemy. Not being educated about how they work is.

[LJ]

Not completely true... In the 2004-2007 climate, when interest rates were insanely low, an ARM was a ticking time bomb. But flip it around and think about folks who would have gotten an ARM in 1982 (granted, they hadn't been invented yet). Interest rates then were nosebleed high, and so an ARM there would have made wonderful sense, because as interest rates decreased in the following years, the rate would reset lower, putting dollars in your pocket.

 

ARMs are not the enemy. Not being educated about how they work is.

Basically. I was going to explain to Evan in person, but there is a good chance they willl offer you an ARM as a first time buyer, especially if you have less than 3 years at your job and are young. But that isn't a bad thing. Get a 5 year ARM, pay on the mortgage for a year or 2 or 3 and lock yourself in. Especially if you don't have a balloon.

[smokin5s]

at the end of the day, there are a million different types of finance options.... just make sure to read over EVERYTHING and be comfortable with where your payments are at.

 

The one thing that bit me last time was I didn't notice the 3 year early pay off penalty.... so make sure to be cautious about that....

[evan9381]

so just to bump this thread...pulled my 3 credit reports today, found out my scores are a bit higher than i was led onto by 5/3, and to the point where i could probably get into prime rates, if not, damn close...i found a place in gahanna, closer to work than i am now, decent area (hell, its gahanna), for <95k. ive been trying to read as much as i can into all this home buying stuff. few things i want to ask about...

 

1) taxes on the property for a year are ~$1,650. this, as well as mortgage intrest is tax deductible, correct? how much can that affect what i end up owing the .gov or getting a refund from them. is it going to be something miniscule like a couple hundred bucks, or will it be a decent amount. fwiw, annual income is only about 40k/yr, maybe a bit more, single, no kids.

 

2) the first time home buyer $7,500 tax "credit" (which ive seen is actually an interest free loan), if i close in time for that, do i get that $7,500 "credit" back on next years refund, then when i start paying back in 2 years, does it automatically calculate from what my refund would be (ie, if i was supposed to get back $2000, it will recognize i got that credit and turn my refund to $1500), or do i actually have to make those payments out of my pocket at a certain time?

 

3) if im the buyer, do i pay a realtor, or is that only for the seller? my mom is friends with a realtor, who i plan to talk to when i get some free time.

 

4) if anyone has an idea, (and i know this will vary), if its a smaller home (950 sq/ft w/ basement), gas and electric, how much might i expect for utilites? im only used to seeing an electric bill for my current apartment, as there is no gas, no water bill, no bills for garbage/trash pickup, etc.

 

5) approx. closing costs on a home of this amount?

 

what else am i looking over?

 

TIA

[LJ]

 

1) taxes on the property for a year are ~$1,650. this, as well as mortgage intrest is tax deductible, correct? how much can that affect what i end up owing the .gov or getting a refund from them. is it going to be something miniscule like a couple hundred bucks, or will it be a decent amount. fwiw, annual income is only about 40k/yr, maybe a bit more, single, no kids.

It would adjust your AGI down. So if you have 40k taxable income and you have 6k in mortgage interest and property taxes, you would owe tax on 34k, not 40k. Also, it only works if the amount is more than the automatic standard deduction

 

2) the first time home buyer $7,500 tax "credit" (which ive seen is actually an interest free loan), if i close in time for that, do i get that $7,500 "credit" back on next years refund, then when i start paying back in 2 years, does it automatically calculate from what my refund would be (ie, if i was supposed to get back $2000, it will recognize i got that credit and turn my refund to $1500), or do i actually have to make those payments out of my pocket at a certain time?

Never dealt with it, will let someone else answer

 

3) if im the buyer, do i pay a realtor, or is that only for the seller? my mom is friends with a realtor, who i plan to talk to when i get some free time.

Seller basically pays your realtor. In reality, the commission is split between the selling agent and buying agent. You pay nothing.

 

4) if anyone has an idea, (and i know this will vary), if its a smaller home (950 sq/ft w/ basement), gas and electric, how much might i expect for utilites? im only used to seeing an electric bill for my current apartment, as there is no gas, no water bill, no bills for garbage/trash pickup, etc.

Well my place is 1500 sq ft, keep furnace on 74 and ac on 70, gas,water, sewer, electric is about $275/month

 

5) approx. closing costs on a home of this amount?

Closing costs don't really change that much on the amount of the home. Expect 2-5k. 1 year of homeowners insurance has to be paid up front, but you get a credit for taxes. Try to negotiate seller paid closing costs. Helps out a lot.

[AJ]

 

1) taxes on the property for a year are ~$1,650. this, as well as mortgage intrest is tax deductible, correct? how much can that affect what i end up owing the .gov or getting a refund from them. is it going to be something miniscule like a couple hundred bucks, or will it be a decent amount. fwiw, annual income is only about 40k/yr, maybe a bit more, single, no kids.

 

taxes are inc. in your payment, you can opt. out of that but it would be really stupid to do so.

 

2) the first time home buyer $7,500 tax "credit" (which ive seen is actually an interest free loan), if i close in time for that, do i get that $7,500 "credit" back on next years refund, then when i start paying back in 2 years, does it automatically calculate from what my refund would be (ie, if i was supposed to get back $2000, it will recognize i got that credit and turn my refund to $1500), or do i actually have to make those payments out of my pocket at a certain time?

 

from what i understand since we just bought a house you get $500/year for 15 years

 

3) if im the buyer, do i pay a realtor, or is that only for the seller? my mom is friends with a realtor, who i plan to talk to when i get some free time.

 

seller pays

 

5) approx. closing costs on a home of this amount?

you can get the seller to pay that as well. you will need a bank check for the 3.5% down though if you do a FSA loan. we had to take $6130.00 to closing since the house was $210,000

 

what else am i looking over?

 

get a home inspection. we got them to knock off 8k because of a few things wrong with the house that are easy cheep fixes i can do myself. you can also ask the seller to fix things on the house or take money off the price of the house if your in contract and things come up on the inspection. if they don't then that is your way out of contract if need be.

 

 

..

[RX-7 Addict]

evan,

 

glad you are aware of the $7500 0% loan from uncle sam.

 

I believe it increases your tax liability / lowers your refund meaning that there will not be a direct payment made to the government, but rather your refund will be lower or your taxes will be higher each paycheck (same difference) . Not 100% sure on this, but pretty sure.. I'm going to file my taxes soon (first time home owner as of Aug ) and I can fill you in when I fill out the paperwork to get the 7500

 

I made money at close with my FHA loan. Buyer paid $3000 towards closing costs, points, blah blah and raised the price $3000 on the house. Also, they cut me a check under the table for $2500 for repairs etc. This is illegal so dont tell your loan officer and definantly dont bring it up at the closing table