steps to buying a house?

[AllBlackBimmer]

Originally Posted by momentum

ask the realtors how many foreclosers have they close and if you have good credit go straight to a bank like capital one, B of A, chase, compass...

if anybody think they know real estate more then me..... i buy more houses then i buy groceries

What does the amount of foreclosuers have anything to do with anything?

I am not asking this as a smartass, I literally do NOT know.

...If you buy as many houses as you say, please give as many "inside" tips or atleast what the "common" person screws up on or doesn't consider.... Ii would really appercaite it!

[MediaArtist]

Originally Posted by double_j

stick with the standard 2.5 times salary for housing price

This is actually very sound advice. If you can find a home at 2.5x -3.0x your salary in an area you are satisfied with (schools, safety, amenities, etc), this multiplier would be considered safe (even with the horrible market you would be buying into).

Also, avoid FHA.

[MediaArtist]

Originally Posted by fitchesbass

LOL. DC area has some really good incomes - particularly in some of the burbs. Loudoun, Fairfax, and Howard along with Falls church, VA are at the top of the highest income counties (per median) income in the country.

The Median household income for Washington D.C is $58,526, that's not extremely high, or even much higher than the national average of around $52,000.
http://quickfacts.census.gov/qfd/states/11000.html

The median sold price for a home is $449,000. We're talking a 7.6x income multiplier here.

Washington D.C is completely overpriced, and not a great deal according to empirical data, and economic fundamentals.

[xtac]

Originally Posted by MediaArtist

This is actually very sound advice. If you can find a home at 2.5x -3.0x your salary in an area you are satisfied with (schools, safety, amenities, etc), this multiplier would be considered safe (even with the horrible market you would be buying into).

Also, avoid FHA.

Why avoid FHA? 3.5% down even with MI, can be a great thing. I know people like to eliminate pmi, but especially if you can put the 20% that you would have used into a better investment or just have more cash on hand.

[MediaArtist]

Originally Posted by xtac

Why avoid FHA? 3.5% down even with MI, can be a great thing. I know people like to eliminate pmi, but especially if you can put the 20% that you would have used into a better investment or just have more cash on hand.

1) The buyer is already underwater at 3.5% down just based on transaction cost to get in, and potentially out, of the house if they need to. Not to mention any market volatility. If they need more cash on hand, they should probably wait until they can save the cash to do a traditionally financed loan.

2) As I predicted over a year go (no one listened back then of course) FHA is a failed institution that is in a lot of trouble, and will need a bailout. Back when I predicted that FHA was heading towards trouble, delinquencies were at about 10%, and FHA was technically insolvent then. Now 27% of all FHA loans are deliquent:
http://money.cnn.com/2012/07/09/real...cies/index.htm

Guys like TMNT, ABQ325i, NBRider88 were jumping down my throat about why FHA was awesome, but time has proven them wrong, and me right.

You can claim people will be better off paying 3.5%, and investing the money elsewhere, but the stats show they pay 3.5%, and then usually get in trouble because they can't afford the home in the first place. Just look at the underwriting standards, any place that allows a 41% back end payment is just looking for trouble.

The FHA only has 0.24% (yes a quarter of 1%) reserves to cover any potential defaults of its $1.1 trillion dollar portfolio of guaranteed loans. By law the fund is supposed to have 2% on hand. FHA loaners default at a very high rate. It's simply a bad idea, for all of us, to support anyone using FHA, since in the end we will have to pay for any potential bailout (and we probably will anyway).

But you don't have to take my word for it, even though I was right last year about FHA, I don't really have any energy or interest in debating why FHA is failed, and shouldn't be used, I think just looking at the current state of the institution should be clear enough.

[48Laws]

The only, I mean only reason people put 20% down is to avoid PMI. That's it. Ok, so you put 20% down under the assumption you have some equity in your new house but, if the house has already lost money, that defeats the purpose. I say put as little as possible, focus on the better interest rate and jump in when the market shows signs of improving. Why blow $60k, for example when you can use that for emergency funds????

Even if you put $200k cash down on a $300k house, over a thirty year mortgage coupled with taxes, you're getting raped.

[MediaArtist]

Originally Posted by 48Laws

The only, I mean only reason people put 20% down is to avoid PMI. That's it. Ok, so you put 20% down under the assumption you have some equity in your new house but, if the house has already lost money, that defeats the purpose. I say put as little as possible, focus on the better interest rate and jump in when the market shows signs of improving. Why blow $60k, for example when you can use that for emergency funds????

Even if you put $200k cash down on a $300k house, over a thirty year mortgage coupled with taxes, you're getting raped.

Horrible, horrible advice. This is the reason FHA loans are now deliquent at 27% (it was 10% in 2011). What your describing simply doesn't work.

[ABQ325i]

I understand where MediaArtist is coming from, but IMO if you are seriously thinking about buying, you have done your homework, you are not overextending yourself on the purchase price then there is nothing wrong with using FHA to obtain a loan. However, I am not in the mortgage industry and can only speak of personal opinion.

We used an FHA backed loan to buy our house. My wife and I make good money for where we live, she works for a University so our independent mortgage broker got us an even better deal. 0% down. We bought a house in area we loved for 1.5 times our combined salary.

For the record, I don't think I jumped down your throat.

[MediaArtist]

Originally Posted by ABQ325i

I understand where MediaArtist is coming from, but IMO if you are seriously thinking about buying, you have done your homework, you are not overextending yourself on the purchase price then there is nothing wrong with using FHA to obtain a loan. However, I am not in the mortgage industry and can only speak of personal opinion.

We used an FHA backed loan to buy our house. My wife and I make good money for where we live, she works for a University so our independent mortgage broker got us an even better deal. 0% down. We bought a house in area we loved for 1.5 times our combined salary.

For the record, I don't think I jumped down your throat.

I'm just giving you a hard time man. Out of the three pro-FHA guys in that original thread, I will admit you were the least hostile towards me.

I think at 1.5x your salary, buying a house is not quite as risky, even with FHA.

Thought I'd bring you into the conversation to evaluate where FHA has gone in the past year since that original thread that kind of got heated, and locked. I think we can both agree though that I called this one.

[Maestro]

Keep in mind what PMI is for, it is insurance you are paying to protect the bank against the house value dropping below what is owed on the home. PMI will cover the bank up to $100k of lost value. Why would you pay insurance to cover the banks risks. PMI does not help you but cost you, and it money out of your pocket for no value. In this market getting out from under the PMI is hard, the bank will claim your house value drop so you never hit the 20% threshold. Also PMI counts against you when figuring the total loan amount you can afford.

The other thing to keep in mind, yes interest rates are low, but those low rate you see advertise are for people with great credit rating not for someone with no, little or bad credit. Banks will give a lower rate for larger down payments and better credit history.

If you plan to stay in your home, put as much as you can down and get the lowest rate as you can without paying all kinds of costs. If you plan is not to stay then minimize your overall out of pocket costs. Before you follow anyone one advice decide what you goals are. Because some who flips houses or buys them as an investment, may not care about what interest rate they get or what fees they pay as long as they can turn a profit or loss depending on what they are trying to do. Verse someone who is into a home for a long time.

[ABQ325i]

Originally Posted by MediaArtist

I'm just giving you a hard time man. Out of the three pro-FHA guys in that original thread, I will admit you were the least hostile towards me.

Thanks.

Originally Posted by MediaArtist

I think we can both agree though that I called this one.

I will tip my hat to you. You called it

[upstatedoc]

a few things I learned when buying our first house:

Find a good home inspector, not neccessarily the one your realtor recommends.

Shop around for a lender. If you have good credit you will have many options.

Don't be afraid to spend a little more than you had budgeted on a house if you really like it. You'll most likely be there for years and you might as well get something you like.

We were not impressed with our realtor or the law firm that did the closing. My wife was always more prepared than they were. Realtor no-showed at the main showing. Closing lawyer asked my wife for a copy of one of our documents because theirs was missing. Bottom line, no one is looking out for your best interest. They're just trying to make a buck off you.

[solefald]

I have been looking for a House/Townhome (Garage is a must have. Yard is nice to have) for a couple of months now, and the market is terrible. Inventory is low, but number of buyers is very high in San Diego. All data shows that there are 3-5 buyers per property.

I've looked at some places that have literally been on the market for 2 HOURS and already had 4-5 pending offers! People either pay all cash, put 20-40% down or bid $20-30K over the asking price. Many properties get offers without anyone coming to even look at them.

Everything in my prices range either 1950's fixer-uppers or has been flipped. Flipped is nice, however, you never know what was really fixed and what was just covered up in order to maximize the profits. Not really sure I want to buy a fixer-upper.

I'm putting my search on hold till at least October-November. Summer is a bad time to buy, because most of the people want to move during summer. Especially families, so they can put their kids in a new school before the start of the school year.

[MrRoboto]

I agree with the min of 20% down. Don't forget you will have another ~5% in closing costs. Oh and this has to be liquid...don't go borrowing down payments from credit cards, line of credit, etc.

[AllBlackBimmer]

I am the OP, Thanks for all the response!!Some great info in here...

after reading, I should give some more specifics...

I am only 26 like I said, but no wife or kids. The house I want to move into, will not be my "final" house, more of a first home (well duh!) ... I do not mind a SLIGHT fixer-upper, but am not demo'ing the enitre 2nd flr or anything crazy like that.

I went to school for architecture, and know basic building codes, problem areas, what a "bad structure" looks like, etc, so hopefully I can use all of that to my advanatge. also, I have family and friends that can help with any rennovations so I am not worried about that.


As far as a down payment - this seems to be a hot topic here...

-- some of my friends have bought houses with 3%-5% of their houses (around the 100k mark in my area)... many on here are saying 20%... I can honestly say, I do NOT have 20% (or $20,000) to put down on a house...

... I could have this, but would need to save up for another year or two which I am not trying to do really...

remember I am only 26, I am looking to make the BEST DECISIONS I can now that will help me now and in the future.

I will continue to ask ?'s and make comments in this thread - this thread has seem to seriously take off which is awesome!

Thanks guys for all the help...

...of course a garage of some kind is a MUST... my e90 needs to be parked somewhere

[smyles]

Originally Posted by MediaArtist

The Median household income for Washington D.C is $58,526, that's not extremely high, or even much higher than the national average of around $52,000.
http://quickfacts.census.gov/qfd/states/11000.html

The median sold price for a home is $449,000. We're talking a 7.6x income multiplier here.

Washington D.C is completely overpriced, and not a great deal according to empirical data, and economic fundamentals.

When people say "DC area", they mean areas surrounding DC, not the city itself (even though there are some nice areas in DC too now).

[smyles]

Originally Posted by AllBlackBimmer

-- some of my friends have bought houses with 3%-5% of their houses (around the 100k mark in my area)... many on here are saying 20%... I can honestly say, I do NOT have 20% (or $20,000) to put down on a house...

Check if there are any local programs that assist first time buyers, similar to FHA but w/o FHA-like costs (points, PMI, etc.) that I'd try to avoid as much as possible.

[S_M]

Originally Posted by upstatedoc

a few things I learned when buying our first house:

Find a good home inspector, not neccessarily the one your realtor recommends.

Shop around for a lender. If you have good credit you will have many options.

Don't be afraid to spend a little more than you had budgeted on a house if you really like it. You'll most likely be there for years and you might as well get something you like.

We were not impressed with our realtor or the law firm that did the closing. My wife was always more prepared than they were. Realtor no-showed at the main showing. Closing lawyer asked my wife for a copy of one of our documents because theirs was missing. Bottom line, no one is looking out for your best interest. They're just trying to make a buck off you.

Good tips.

A big help for me was having a good mortgage broker. She got me a lower rate than I would have gotten myself by shopping different outlets, and streamlined the whole closing process to make it very simple. She knew everyone, both attorneys, the title insurance guy, agents, etc. My head hould have spun off if I had to handle all that paperwork and check writing without help. Definitly worth the cost.

I was equally impressed by the home inspector. Super knowledgeable guy.

I would agree that agents are just there to take your money. The first time we walked into my home she had nothing but bad things to say, how overpriced it was, it was too small, they spent too much on finishes etc. By the time I was ready to put the first offer in it was magically "perfect". She was also very pushy to show homes that were listed with her company, for obvious comission reasons. I'd tread lightly with your agent.

Again it's all dependent on location. Here on Long Island, the value of my home will probably never be much lower than what I paid, just because of the value of the land. My 1/4 acre lot is appriased for far more than the structure. If you are liquid enough to put 20% down, and see yourself staying there for a while, the current intrest rates are certainly in your favor, and IMO its still a great time to buy in many locations.

[number335]

Do research on your lender. Check reviews and not just go by the best interest rate being offered. Some lenders are difficult to work with and can cause delays in the escrow process.

[.b0link]

What about condo/townhouses? I usually am really against them, but some of the ones I have seen in San Diego appear to be fairly large and really nice. At the moment a SFH is just out of my range.

I am scared by HOA's. Especially coupled with the fact that if something major needs to be fixed that they can come after the owners for 1k's of dollars for say a new roof or something. I understand that those items are also a necessity with a SFH but you do have a bit more control over them.

Also, I will be the first to admit that I know barely anything about home ownership, the process, or anything. Just trying to learn.

Made the decision after making E6 to continue the navy as a career til retirement, and with my new orders am considering buying a home using the VA benefit after i do my next deployment and can save up a decent down payment.

[ABQ325i]

Originally Posted by smohr33

I would agree that agents are just there to take your money. The first time we walked into my home she had nothing but bad things to say, how overpriced it was, it was too small, they spent too much on finishes etc. By the time I was ready to put the first offer in it was magically "perfect". She was also very pushy to show homes that were listed with her company, for obvious comission reasons. I'd tread lightly with your agent.

I would make sure that my buyers agent was not the sellers agent also, even better if they didn't work for the same company. Referral's are the best bet.

[ABQ325i]

Originally Posted by upstatedoc

Find a good home inspector, not neccessarily the one your realtor recommends.

A great buyers agent will give you the names of a few home inspectors who they have used when purchasing a house before.