Buying a house

[Zymologist]

This is an option that I'm starting to consider. This is very preliminary. Anyone have any good guides on the subject? Any general tips, do this, don't do that, that sort of thing?

[Cow Poke]

Make sure you buy what you can afford.

MANY people got into their home with special financing or special options, only to discover they couldn't keep up the mortgage and expenses.

Note EXPENSES besides mortgage --- insurance, taxes, utilities, down payments / deposits on utilities.

Also, PMI - Private Mortgage Insurance. I think most states require you to have additional PMI if you owe more than 80% of the value of your home. It can be another $40/$80 a month, easy. If you pay 20% down, you will likely NOT have to pay PMI.

Also, consider if you want to "escrow" your insurance and taxes - include them in the mortgage payment. I don't like to do that - I like my mortgage to be separate, because I don't trust the finance company to keep up with the other stuff, and I don't pay my taxes until they're due - rather then having the taxes and insurance come out all year long.

There are move-in expenses that a lot of people fail to consider - landscaping, carpet, drapes, changes or modifications - repairs of stuff not found in the inspection.

Oh, yeah... be SURE to pay for an inspection - it will give a "third party" view of problems with the home, and you can assess whether these are worth it or not.

AND- if you're a "fixit" kind of guy, don't be afraid of a fixer-uppper. Obviously, if you're not, then don't consider a fixer-upper.

Those are my first quick thoughts.

[robrecht]

My advice. Get a 15-year mortgage and pay double payments so it is paid off much sooner. If you can afford to do that, you know you can afford the house. Better to live in a smaller house without debt than a bigger house that you can't afford. You will probably end up somewhere in between those two extremes.

[Jedidiah]

Make sure you buy what you can afford.

All good points. As far as affording a house, you can always trade up as you can afford more or want to move to a new area.

[Jedidiah]

My advice. Get a 15-year mortgage and pay double payments so it is paid off much sooner. If you can afford to do that, you know you can afford the house. Better to live in a smaller house without debt than a bigger house that you can't afford. You will probably end up somewhere in between those two extremes.

If you can do it. I am retired, and on a fixed income, carrying the remains of my house mortgage. Skip that if you can.

[Cow Poke]

My advice. Get a 15-year mortgage and pay double payments so it is paid off much sooner. If you can afford to do that, you know you can afford the house. Better to live in a smaller house without debt than a bigger house that you can't afford. You will probably end up somewhere in between those two extremes.

Even if you don't do this, for whatever reason, always add a chunk of money as a "principal only" payment. If your mortgage is $1100 a month, add another 90 bucks, or more if you can.

There are some mortgage calculators online that show how much more quickly you can pay off your mortgage, and save TONS of money.

Play with this one a little to see what I mean.

[Cow Poke]

All good points. As far as affording a house, you can always trade up as you can afford more or want to move to a new area.

Absolutely - we started out in a wee house (didn't have anybody from whom to inherit land or property ) and paid faithfully to get the equity up, then used that as the down payment for our next house.

We're actually at that state where we're looking at downsizing, and should have a considerable hunk to put toward a smaller house. In my case, it pays to have a mortgage, because I get to deduct "housing allowance" as a minister - otherwise, I'd be working toward no mortgage.

[Cow Poke]

Also, it's MUCH easier these days to do your own research. Most County Tax Assessor records are online and FREE.

Also, there are a TON of realty sites that let you look at PRICE HISTORY --- maybe the LAST time a house sold, what did it sell for - what was the OPENING sales price, and how much has it dropped. What are "comps" (comparable sales of houses in the area)

Remember that even an "appraisal" is just a number - it doesn't mean the house is WORTH that amount, it's just an evaluation.

In reality, the house is "worth" what somebody is actually willing to PAY for it.

AND -- don't be in a hurry - don't let them pressure you into buying something you're not ready to buy, and don't be afraid to counter offer.

Look at the TAX history on the house -- if property taxes on the house DECREASED, while surrounding Property Taxes remained constant, there's a good indication that there's something wrong.

Similarly, if the Taxes on that house INCREASED suddenly, it's good to know why. Often, you can get a better feel for the actual value of the house based on its TAX assessment than an "appraisal". (Depending, of course, on your local taxing authority - just something to look at)

[Cow Poke]

Oh, and check for special home buying programs in your state.

MANY states have some form of "homes for heroes" discount for law enforcement, emergency responders, teachers, veterans etc.
And there are "first time home buyer" programs.

HUD.gov has some excellent information, including some of the special programs mentioned above.

[DesertBerean]

And consider paying half every two weeks. If your payment is, say, 1000, pay 500 on the first and 500 on the 15th or whatever. This will impact the interest on the principal.

[Cow Poke]

And consider paying half every two weeks. If your payment is, say, 1000, pay 500 on the first and 500 on the 15th or whatever. This will impact the interest on the principal.

Yes - but this has been so effective that some Mortgage Contracts tried to disallow this. If I remember correctly, they were slapped down, but make sure your Mortgage Contract allows for this.

One of the Churches I served had $100,000 in debt, and they were collecting money all month (every Sunday) then making one payment. I convinced them to make a payment every Monday for "whatever money came in", and showed them an amortization chart showing how drastically "the SAME MONEY" would impact repayment. They got so excited, they decided to "add extra", and pay it off even sooner.

There's no good reason NOT to do this if your lender will allow it.

[Cow Poke]

Also, MANY lenders will give you a lower interest rate (hadn't talked much about those) if you allow them to draft the money from your account automatically, or have a minimum balance, or any number of other conditions. This is, besides getting a discount, a good way to make sure you NEVER FORGET to make a payment, and keep your Credit Score top rate.

About 2 years ago, Chase Bank called and asked me to come in to talk to them about my mortgage. They were offering a lower interest rate on a RE-FI with ALL CLOSING COSTS PAID BY THEM. This is pretty unusual, but they explained they realized I could go to any other bank and Re-Fi, and wanted to keep my business. Sure enough, they sent a crew of re-fi specialists to my house, and we re-financed my loan for FREE in my living room.

BE CAREFUL ABOUT REFI, though -- often the closing costs don't make it worthwhile unless you plan on staying in the home for a long time, and unless there's a sufficient gap between your old rate and the new proposed rate. It HAS TO MAKE SENSE.

[Thoughtful Monk]

Oh, yeah... be SURE to pay for an inspection - it will give a "third party" view of problems with the home, and you can assess whether these are worth it or not.

YES, YES, YES, YES!!!!!!!!!!!!!!!!!!!!!!!

A friend of mine was looking at a house and he thought it looked great. His friend he took thought it looked great. It failed inspection badly and my friend was spared buying a house that would have need thousands of dollars in structural repairs.

I did it when I bought my house, too. As I recall, four items and none were urgent needs. I moved in the fall and had the stuff the following spring. I've actually been here so long I am thinking its time to get a new inspection done.

[Teallaura]

On the finding the thing side:

Realtor.com

Trulia

Zillow

[Zymologist]

Thanks, all. Again, this is very preliminary. I'm just getting an idea of what to expect, look for, etc.