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mjroche
May 16, 2005, 6:37 PM
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A good inspection only costs about $3-400. One other tip is to put down enough that you don't have to pay private mortgage insurance; it's a total rip off and gives you no benefit whatsoever. In general, be careful with picking a lender; there's a lot of them out there that say no closing costs, and then hide them in the closing documents.
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madriver
May 16, 2005, 7:01 PM
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the object is to replace income with assets..
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waynew
May 17, 2005, 4:02 PM
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Thought I'd read that we're at or near a 'value peak' in housing and that home prices are being held high by record low mortgage rates. But as the economy shifts, those pricey houses won't continue to appreciate and could even become a liability. Think that means don't stretch to buy something, and certainly try to avoid a variable rate loan... And while economics certainly isn't my strong suit, I think that its good advice to pay extra on the mortgage to reduce the term
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cerikpete
May 17, 2005, 4:41 PM
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You can also do a second mortgage which makes up the difference between your down payment and the amount needed to reach 20% (if you don't have enough to reach 20% to begin with). This is nice because PMI is not tax deductible, whereas the interest on the second mortgage is.
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superdiamonddave
May 17, 2005, 4:50 PM
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Walk around the home shortly after or even during a heavy rain to see if there is a drainage issue.
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dookie
May 17, 2005, 4:51 PM
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In reply to: A good inspection only costs about $3-400.
I think that totally depends - ours was around $650 for a good through inspection (in northeast CT). We got a huge book about our house with pics and everything he found that we might need to work on.
This inspection is also is a huge benefit if something is found that could cause a buyer to back out of a deal - our house was in fine condition except the front porch supports will need replacing in the next few years. Because of that (and the attic not being fully insulated), the sellers took $1000 off the house for us - to compensate for the work that we'd need to do. :)
Erik is right you can do a 20/80 mortgage, I know a few who have done that, but I'm not sure what the qual's are for that kind of deal, I think there are some pretty certain criteria that need to be met for that kind of deal. And it does have its drawbacks
In reply to: The main drawback is a biggie. If the house loses value -- a possibility in overheated markets where these loans might be especially tempting -- the owner ends up owing more than the house is worth. That becomes a problem if the owner needs to sell the house or wants to refinance the loan. In such a case, the owner has to come up with cash to repay the loan in full.
http://www.bankrate.com/...gages/20031113a1.asp
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bluenose
May 17, 2005, 5:04 PM
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The only best advise I can think of is to buy with the plan that you can stay there forever. Others have already hashed out the mortgage and inspector stuff here.
Don't get caught buying "for now", think of kids, school etc. I bought a "for now" smallish home with a five year plan and the market sagged on me. Couldn't sell for $30K under our purchase price. 5 yrs turned into 13 years and the market went back and we sold for $25K over purchase. Now I bought a house that we could easily see us retiring and staying in.
Oh...set your mortgage up with biweekly payments. It shortens your actual amortization by making an extra monthly payment each year, in case you don't "get around" to making extra payments, saves in interest costs too.
Good Luck.
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reno
May 17, 2005, 5:13 PM
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Property value (and thus, tax) is public record. Get that info. Look for areas that have increased slowly and steadily over the years. Yes, this means you'll pay more in tax. It also means your investment will grow.
Crime rate is public record. Go to the local police station, ask them to give you a report of how often they respond to the general area (use the zip code) for 9-1-1 calls. If you ask, you can probably find out how often it's something minor and BS, and how often it is something serious.
Factor in commute time. Is this house farther from work? Will your gas expense go up?
Be open to all finance options. The safest bet is to save a big Down Payment, and get a good rate. Other options exist, but they've all got some sort of catch.
Get your credit report NOW. Fix any errors.
If you have a 401(k), investigate if you can borrow from that to make the DP. Mine allows it, and I have to repay the loan in 5 years, but since I'm borrowing from my own savings, it's no big deal.
Don't get tunnel visioned into your friend's house. While it'd be cool to live close to pals, are you willing to put up with them knocking on your door at 3 am, drunk? What if you and them fall apart from friendship? What if the inspector misses something, and you get stuck with a $10,000 repair for something your friend didn't mention? Keep options open.
Plan, plan, plan. Then plan some more.
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slablizard
May 17, 2005, 5:19 PM
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Registered: Oct 13, 2003
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Absolutely.
Bought a house 4 years ago now, still happy and all, but we didn't realize the whole house would shake a bit everytime th train passes ( 2-3 times a day). No big deal, but something that can help you negotiate the price eventually.
In reply to: make sure you spend some time in the home. if the seller only lets you see it for 5mins at a time theres probably something wrong with it (like trains passing by). also inspect the building for sings of moisture, cracking and landslides. |
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cindylou
May 17, 2005, 11:15 PM
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ZOZO - I'm a Real Estate Broker. I'll send you a buyers packet. It covers everything: inspections (a must), down payment, debt to income ratios, private mortgage insurance, title insurance, possession, contracts, mortgages, expected equity gain, appraisal, survey, closing costs, home owners insurance, credit scores, etc.
Or, if you're going to be at Shelf this Sunday, I'll bring it with me and walk you through it. Its a complicated process but homeownership can be very rewarding both mentally and monetarily.
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cindylou
May 17, 2005, 11:28 PM
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[quote="waynew"] and certainly try to avoid a variable rate loan... /quote]
Actually, most people refinance on average every three to four years. Changes happen, birth, divorce, death, jobs. IMHO, I would avoid an ARM (adjustable rate mortgage) that changes after the first year but an ARM with a fixed rate for the first five years will commonly save about 1/2 of a percentage point on your interest rate. For example, if you purchase a home with a mortgage of $150,000 at 6% interest amortized over 30 years, your principal and interest portion of the payment (does not include taxes or insurance) would be about $900 per month. If you reduce the interest to 5.5%, your payment drops by $50.
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atg200
May 17, 2005, 11:45 PM
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Registered: Jul 27, 2001
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another perspective:
even if you don't have 20% of a house payment(who really does for their first house in an urban area?), the mortgage insurance is certainly not throwing your money away as much as rent is - my mortgage insurance is $80 a month for a 200K loan. considering that my mortgage payment is only 150 a month higher than rent on my old place was, i can afford to spend that 80 a month.
the tax credit for buying a house helps a lot if you are one of those evil upper middle class types.
you will become home depot's bitch after you buy a house. definitely factor that into expenses - i hemorraged money for the first three months while i got set up with loads of tools i didn't have, minor repairs, one major renovation, stuff to take care of the lawn, additional stuff for the house, etc.
think about how much the utilities will be, particularly if you are coming from an apartment. i just about had a stroke when i first saw my gas bill. your house will likely be bigger than any apartment you have ever had before, and it gets expensive in a hurry to heat or cool the house.
owning a house sure is cool though. i closed on mine about 6 months ago now.
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