So I am going to buy a new house..

[Neosutra]

And I am filled with alot of excitement, as the house is very beautiful and my wife and I have been working toward this for a while.. But at the same time we are both very nervous, and just going through the loan paperwork and all the new home paperwork is making my stomach jump back flips.

Does anyone have any life experience, or good tips, for making this process go smoother?

Any "man I wish I would have known this..", or "wow that worked great for me".

Thanx.

[Fhqwghads]

The best advice I can give is if you don't feel like the signing process taking 3 hours, tell the agent to shove the papers at you as fast as possible. When I bought my home the first time they went through every... freaking... document. Subsequent refinances I just said skip the explanations and point to where I sign. By the time you're ready to sign, if you don't know what the deal is with your loan you're screwed anyway. Just make sure you know the type of loan you're getting and make sure you're signing the same thing you agreed on. Beyond that it's all moonspeak with lawyer hieroglyphics.

[Tyche]

Paperwork is coming no matter what, accept it and sign your little life away. If the broker/mortgage company you are working with have a shady past, or seem shady to you, bring an attorney. I spoke with my broker extensively before I settled on a purchase. Here's some tips I'm sure you've read in a million places, but i'll just re-iterate them, because I fucked up my first home purchase.

1. Don't fall in love with the house, fall in love with the deal. If you fall in love with the house, you will be more than willing to overpay, then you feel obliged to overspend on materials inside the house. Falling in love with homes often leads to losing money when you sell. If you're buying this house, plan on staying in it for a while, as there's a good damn chance that the housing market will bottom out by the end of 08.

2. Location! Location! Location! This is where I fucked up. bought a house, and shortly after, my fiancee got pregnant. I hate the school she'll be attending if we were to stay in this residence for that long. Now I have to wait for this housing market to springboard and sell. Make sure to look at everything, neighbors, schools, recreation, etc etc.

3. Fixed rate. Enough said.

4. First time home owner loans. Sometimes you can get really low fixed rates because it's your first home purchase.

5. Making offers. I assume you are past this point and already put in an offer, but in this market, you can pretty much offer anything. If you saved some cash for the closing costs, good chance you can simply make the current owners pay it (up to 3% i think). Just say "I'll give you 'x' amount and you can cover the closing costs as well...Then take the extra few thousand bucks and buy some paint or w/e.

6. Down payment. I don't know if it varies by state, but if you don't pay a certain percentage down, then you have to purchase mortgage insurance. Basically, insurance that covers the amount of money that the mortgage company loses by auctioning your house at the courthouse steps if it were to foreclosed on. Pay as much down as possible. Most companies also allow you to pay extra money every month that is added strictly to principle...interest free. Take advantage of that.

That's all I can really think of right now.

[Neosutra]

Awesome, thanx guys ^^.

[Mizango]

I remember going through this process and I will spare you redundancy of repeated everything that has already been said, but I wanted to say to you "Congratulations!" This is a day both you and your wife will always remember, enjoy the process. As nerve racking as it is, it is an awesome feeling when you all stand up from around the table after literally signing 100 different forms and papers and they hand you the keys to "YOUR" house.

Congrats again.

[Norelco]

Heh, I was about to make a thread on this as well because my wife and I are looking for our first house. We're afraid to pull the trigger though.

[Skyylya]

FIXED RATE is all I have to add. If you get a variable interest rate, you'll regret it when your payment doubles. Even a 1-2% increase in an interest rate can add 600-1000 dollars to your mortgage payment depending on the principal balance remaining.


congratulations. I'm probably at least 4-5 years away from buying a house at the most, and i'm already excited about it. Me and my fiancee watch HGTV and those house shows all the time, they are actually quite fun to watch and informative for certain things.

[sephir]

1) make sure you can afford the monthly/weekly payments on the mortgage. Most of this sub-prime mortgage thing happening is because people couldn't afford the payment but still bought the house regardless.

2) pay down the mortgage as much as possible. A mortgage is a long term loan with an interest rate meaning that over the years its value will increase (ie. take out a $300,000 mortgage with a 30 year plan, in the end it will be $550,000 if you add up all the payments). Paying off the mortgage as fast as possible will open up your income faster so you and your wife can spend more of your money on things for the both of you.

3) understand that the market hasn't hit rock bottom-yet. Again with the sub prime mortgage thing, the market hasn't hit the bottom yet so expect for your home to depreciate in value for a little while. Don't freak out about losing some of its value, just make the payments and finish off the mortgage as fast as you can.

[Norelco]

congratulations. I'm probably at least 4-5 years away from buying a house at the most, and i'm already excited about it. Me and my fiancee watch HGTV and those house shows all the time, they are actually quite fun to watch and informative for certain things.

Yeah, I'm obsessed with this channel now. I love House Hunters, My House is Worth What?, and Property Virgins. The lighting show is cool too. Sometimes the shows depress me though, cuz people are buying houses for like 500k to 1 million like it's nothing.

edit: Also wanted to add, if you can manage to get 20% down on a house, do it! Do it to avoid PMI.

[Neosutra]

congratulations. I'm probably at least 4-5 years away from buying a house at the most, and i'm already excited about it. Me and my fiancee watch HGTV and those house shows all the time, they are actually quite fun to watch and informative for certain things.

Yeah, I'm obsessed with this channel now. I love House Hunters, My House is Worth What?, and Property Virgins. The lighting show is cool too. Sometimes the shows depress me though, cuz people are buying houses for like 500k to 1 million like it's nothing.

edit: Also wanted to add, if you can manage to get 20% down on a house, do it! Do it to avoid PMI.

Well, about the down payment. I am a veteran so I am trying to get a VA loan, fixed rate. I am hoping that will get me covered at a good rate, with not too much money down(would like to keep my savings for emergency), and get rid of PMI.

I had someone mention in here about options to pay a certain amount of your principle every month which sounded like a great idea.. Is there a name for that or do I just ask my lender about it?

[Tyche]

I go through Countrywide for my mortgage. I can't say that all mortgage companies do this, because I really don't know.

http://img246.imageshack.us/img246/1145/mortgageoy0.jpg

Countrywide has been absolutely excellent. I have all my insurance, taxes, etc payments divvied up so that I just pay an extra bit of cash per month, then send countrywide my insurance/tax bills and they'll just pull it out of escrow and pay it for me. It's literally hands off/worry free.

[Jones]

An option if you can't make the usual 20% down to avoid paying a PMI (personal mortgage insurance) is to take out what's known as an 80-10-10 loan. Basically you put 10% down, take out a first mortgage for 80% and a second mortgage for the remaining 10%. Most people think this is a silly idea, since you'll have 2 monthly payments, but in reality it's not.

The basic philosophy here is that you'll save money because the interest (especially with today's rates) on the second mortgage will be less than the PMI fees that you will have to pay over time. The second mortgage will usually have a higher rate than your primary, so any extra cash you have, put toward paying the 2nd mortgage off first. My wife and I did this plan and currently we are paying the minimum payment on our first mortgage and are finishing off our second mortgage in less than three months. I estimate our savings to be about $3800 over paying the PMI during this time.

Best of luck to you...it certainly is a buyer's market atm.

[Tyche]

Should also add that you may change mortgage companies once or twice unbeknownst to you. Mortgage companies sell mortgages to other companies. Don't fret if you have one lender, then 3 months later get a letter from another lender saying that they are your new mortgage company. Everything you signed for in the original mortgage will still be locked in, interest rate/monthly payment amount, etc...

[oxx2]

1. make sure u get a solid home inspector to give u as much credits as possible to give you some price negotiation power

2. as said above fixed rate is the only way to go

3. make sure this is the home you really want, if you aren't under pressure to move out of your current digs don't unless u know for sure you are making the right choice

4. don't sign on a house you dont think u can afford or ur gonna get raped

5. include any renovation costs in your mortgage calculations. the less money out of your pocket the better

6. make the biggest down payment you can afford

[Izzy]

I go through Countrywide for my mortgage. I can't say that all mortgage companies do this, because I really don't know.

http://img246.imageshack.us/img246/1145/mortgageoy0.jpg

Countrywide has been absolutely excellent. I have all my insurance, taxes, etc payments divvied up so that I just pay an extra bit of cash per month, then send countrywide my insurance/tax bills and they'll just pull it out of escrow and pay it for me. It's literally hands off/worry free.

Your mortgage is 75% of my rent...fucking NYC.

[Meloria]

If you don't have a large enough down payment and you end up having to pay PMI, if you move out of the house before 4 or 5 years part of your PMI will be refunded.

If you are going with a Sally Mae (I think) mortgage you will be required to stay in the house for 10 years.

Find out if the people you're buying the house from are "do it yourself"ers. Ours were and they put in parts of the furnace wrong, so our AC was running when we were attempting to heat the house, several electrical sockets don't work properly, and they installed several doors, closet rods, and shelves incorrectly.

Get a good engineer/inspector for some of the above reasons along with leaky plumbing that we found the first week of moving in. We did have an inspector, but apparently not good enough.

The woman we bought the house from attempted to back out of the deal after we had put our down payment on the house. If for some reason you want to back out you MUST go through your realtor. DO NOT call the party that is buying/selling the house. She called my fiance when he was at work crying her eyes out saying that the house was the only thing her kids had. This happened a good 2 months after we had been approved for the loan and put down our down payment.

If you are purchasing in winter and you live in a snowy area keep in mind you won't be able to check if the AC is working until it warms up. You also won't necessarily get a good idea about the state of the driveway and yard when its covered in snow. The driveway was the first improvement we made on the house because it was coming apart in pieces when we were able to move in in the spring. Once the snow melted we found that our yard is a playground for moles, there are tracks everywhere.

If the person selling the house asks to stay for a month or two after you close make sure you do a walk through at closing and another walk through after they move out. They should also be paying you rent at the price of your mortgage.

One thing that drives me nuts about our house is that our bathroom doesn't have an electrical outlet in it. It's something I didn't even think about looking for. I'll never make that mistake again.

I realize this post sounds like I hate our house, but I really don't. There are just things that I wish I knew a couple years ago when we were looking for our first home.

[Tyche]

I almost forgot about this....SUPER IMPORTANT!

Make sure sure sure sure sure......

**No early payoff penalty.**

Goodness make sure you have this in your contract.....If you wanted to sell your house and payoff the mortgage, you could end up getting fucked.

[Khamsin]

I bought a condo (30 yr fixed, FHA) at the end of 2006, and for 2007 I decided to itemize my deductions and will be getting $3000 back because of the interest.

What sucks, though, is looking at your 1098 from the mortgage and finding you paid $15k in interest and only $3k on principal throughout the year.

I guess I know where my refund will be going.

[Olo401]

3. Fixed rate. Enough said. 4. First time home owner loans. 6. Down payment.

Another idea that you can try out, particularly given the current environment, is to purchase a home at auction. It sounds a little fishy, especially since in such a case you'd be buying a home that was recently foreclosed, but you can end up with an incredible deal if you play it right.

[evilbau]

just wanted to add that pre-payment penalty also applies to re-fi because essentially you are paying off your old loan and getting a new one.

Don't pay down your loan fast unless you understand the ramifications of doing so. It will tie up your equity in your home and will also speed up the schedule where the deductibility of your interest will phase out more quickly (itemized deductions will not be greater than standard deduction faster). There is also the opportunity cost in that reduced interest payments may not equal other investment opportunities (it may not even equal HYS in some cases) depending on your rate.

If you insist on paying quickly, look into using a HELOC or something similar combined with your cash flow to maximize your float interest on your money. This is similar to 'mortgage accelerator' scams which you pay 2k+ for, but it is easily managed on your own if you understand the math and timing of payments. This will cut down your interest paid significantly. You must also know when you get cash and when you have to pay other expenses.

Some of the advice here is not good, I won't point out which ones, but read about this elsewhere. Don't just walk into this blind, arm yourself with knowledge and enter the contract with your eyes open to the ramifications.