Hopefully there are some homeowners on here to give a little bit of advice. My wife and I renewed our lease at our apartment for another 9 months in July. Both of us work and I will be graduating in Dec. I plan on starting the job search in the next month or two in hopes to have something lined up by the time I graduate. *crosses fingers*

SO!
How long did you search for a home before you were "serious" about committing? I have figured what I would be comfortable spending on our current incomes for a mortgage payment, but I would like to get some advice in that area. Obviously a home FS now will likely be gone by March or April but I feel like I should start looking NOW for some reason....? Did you go to multiple lenders or what? I am kind of confused by the whole thing in general. MY parents will be there during the process to make sure I dont make a poor decision but I am just trying to do some research in advance


Thanks for any advice you may have



edit: Oh! If you lived in an apartment before the house, did you notice a HUGE increase on utilities?

 

Look now to start getting ideas of what is out there and what you want. You may find the "dream home" early, but keep looking until you're ready to buy. It doesn't matter where you get the mortgage from, just get a 30-yr fixed at the lowest rate possible, and then the lowest closing costs you can manage. In general, just have an extra $5k in the bank for unexpected expenses, which you will have. Start watching HGtv.

Surprisingly, most homes that are not too old can cost less per sq/ft for utilities than an apartment since they have better insulation, windows, etc.

Also, we have a homeowners forum here at S2ki.

 

The hardest part isn't finding a home you'll like, it's understanding where that home should be located.

Spend your time deciding what areas of town make the most sense for your present & FUTURE lifestyles. You can't see far down the line but you can see for 10 years or so barring any unusual changes.

Don't buy until you are sure you have a job you'll keep and you are in an area you'll stay for multiple years. It cost you money to get into a home and then you have the hassle of needing to sell said home. You'll have the time to sell and another set of expenses to sell.

Renting sux, but homeownership is only great when you aren't worried about moving all the time.

 

I was going to say something very similar. Go ahead and start casually looking right now. Not so much to find THE HOUSE, but more to find THE NEIGHBORHOOD that you like, that suits your needs, that fits your budget.

I found that casually looking turned into buying pretty quickly. My wife and I lived in an apartment...started looking in mid march probably, closed escrow on our house in late June (2008). And I should mention, that was a short sale which takes longer to deal with than a regular house.

As for utilities. Ours actually didn't increase much. Electric jumped, like 15 bucks a month, had to start paying gas, water and trash...but to be honest all of that stuff combined isn't even 1000 bucks a month (I don't think...my wife pays the bills).

Obviously living in a different market, and with a different climate, etc... you may have a vastly different experience than I have had. But that's my best advice.

oh yeah...for mortgages, I went through my credit union. They offered competitive rates (might have been able to find marginally slightly lower), and they were very helpful and easy to deal with.





Looking over your post once more:

The short advice...start looking now, just to find the area. Once you've got your job and financial situation figured out...talk to a lender to see how much of a loan you'll qualify for/ be comfortable with. Then you can really start looking realistically.

And remember, there isn't likely to be a shortage of houses for sale anytime in the near future. So be picky.

 

One thing I will say for sure is rent for a while to make sure you're settled in that area. One thing I didn't understand when we bought our house is just how ridiculously expensive it is to move.

You have to pay all of your closing costs to move in, which are a few thousand dollars (for us I think it was 10 thousand?). Then to move out it's even worse, with having to pay 6% of the purchase price to a realtor, and usually lots of taxes and new closing costs (for example here you have to pay a 2% transfer tax). Not to mention that housing values could drop after you buy the house. So for a $300k house if you were there a year, and even if the value stays the same, you're out about $30-35 thousand dollars in addition to your mortgage payments for the year.

So make sure you're going to be in the house for a while so that you get some of that back in principal.

In terms of looking, you should look for a while before you're ready to buy just so you know what's out there, what's a good deal, etc. Just be careful not to buy until you're ready to buy.

 

One thought to consider. Closing costs have gone up 38% since the election. All the "changes" that have been made to protect you have not been well thought out, have cost you more and actually have reduced protections in many cases or at least reduced your options.

Here's a quote from the Wall Street Journal that tells you what's happened to the loan qualification process.

"Around 60% of all borrowers with a 30-year fixed-rate loan could lower their rate by one percentage point given current rates ... but only 38% could actually qualify for a refinanced loan because of the stricter loan standards."
Mahesh Swaminathan, Senior Mortgage Strategist, Credit Suisse, quoted in The Wall Street Journal, 08.13.10

That means 62% of the people no longer can get a loan. This applies to purchases as well are refinances. By comparing it to refis you have a known quantity of people who've actually been thru the approval process and so can tell just how more rigid the qualification process has become. And this disregards the Alt A and B loan market. These figures are just for people who have good credit, good job and money histories.

 

thank you for the responses guys. I did not know there was a home owners section.

I guess my other question would be do you really have to put down 20% of the cost? I could do 10-15% but 20 is a lot I have also read cases where sellers will sometimes pay all/some of the closing costs which would be great! Does this happen often? I am assuming it is all part of negotiating the price of the home. We have looked in a few select areas and are looking at schools...etc in that district or whatever. This would be our first home and we would more than likely be in it for a while.

 

You don't HAVE to put down 20%...but with most lenders (mine included) putting down 20% gets you a much better interest rate. If you can, I really would do it...even if it means waiting an extra year. Better interest rate on a smaller loan amount makes a huge difference.

It kind of ties into what the poster two above was talking about. When we refinanced about a year ago...our house had dropped in value a fair amount. So, in order to get the best interest rate, we would have had to buy up some of the principle...so that we weren't borrowing more than 80% of the houses value at the time of the refinance. Luckily we could do it and our payments went down drastically.

As for the closing costs. They are totally negotiable. I think it's fairly common for the seller to agree to pay them. And if you're just worried about the surprise element, you could offer slightly more with the agreement that they pay the costs...so basically you're just financing those costs at that point. The problem with doing it is, you never know exactly what they're going to be...so it could work for you or against you.

 

Most lenders require 20% or you need to buy PMI - mortgage insurance - which is an extra bit of money each month until you get to 20% equity. Some lenders like credit unions require as little a 5% and no PMI, so you have to shop around. Pentagon Federal is good for qualifying people for loans.

A motivated seller can pay some closing costs. Before you sign with any realtor, make sure they are decent. You need to consider a lot about a house when you buy, and a good home inspection is crucial.

Older house = older parts that will need to be replaced, and are not up to code, which could mean more money. New construction neighborhoods can mean being stuck for years at the price you paid because interested buyers can just build what they want next door. Imo its best to be the second owner of a home over new if you are in a neighborhood these days.

Many older homes have poor insulation, windows, hvac and cost an arm and a leg to condition. Homes from the 80s-90s have plastic plumbing and Masonite siding you need to keep an eye on, and late 90s-current homes aren't built as well as earlier homes and increasingly are on slabs instead of crawl spaces. Newer homes have more open spaces and windows, but sometimes too open, and overall smaller rooms. Basically each type has its own charm and drawbacks.

 

Once you have a few houses in mind that your willing to commit to. Make sure you drive through the neighborhood at different times to see how teh landscape changes during the week and especially on the weekend. You'll be amazed at teh difference it makes from noon to 8 pm. and even on the weekend. Last thing you want is to buy a nice home and find out once you sign that you have 15+ people living in the house across the street with cars parked all over the lawn the entire weekend and the smell of coronas and chorizo that wont go away.

Not that I have anythnig against Coronas and chorizo, I love that shit. But you get my drift.