Anybody have any advice on buying a house the 1st time? Are there advantages to being a first time buyer? Also, say for instance the house I am going to buy is going to cost $150,000. Would the bank loan me $160,000, so I can pay for the house and have $10,000 towards buying furniture and stuff? Thanks for the help, I'm just a young guy getting out of college and I have no clue on this subject :o

 

Congrats!

I'm sure your area has special incentives for first time buyers.
I know in Canada, you can take money out of your RRSP and use it for your downpayment without being taxed as long as you repay it.

Habibi's Home Buying Tips:

Take your time and look at lots of homes, it's a big purchase, so there's no need to rush it.

Get yourself a good agent who wants to work for you, they're a dime a dozen. so if your not happy, tell them to hit the road and get someone else.

I highly recommend a professional home inspector (check yellow pages) These guys will earn their fee several times over if they see something you missed.

Once you decide on a house, go look at it more than once (at different times , morning, afternoon, evening) this will help you get a feel for the place at all time, and let you find stuff you missed.

Don't buy a house beside 01XLT, all the dead cats on the property will seriously bring down the property value.

Make sure you budget for the unforseen (there's a *****load of checks you have to write, and things you will need to buy)

** It's possible to get 100% financing, agents call this "creative financing" (You have to have triple A credit for this, and a healthy salary, and you need to find an banker who will work with you.

Happy hunting and good luck
Habibi

 

Buying a new home is exciting, and extreemly dangerous.

I doubt they will loan you an additional 10,000. Especially if you are just out of college. If your home appraises for way over what you are buying it for, then yes, they will loan it to you. I don't know what kinda of salary you are getting, but if you are just out of college, you do not need to be looking at a 150,000 house. I would strongly suggest you find something less than 90,000, and shoot for a 15 yr loan. If you get an FHA loan, you can close with about 3% down.

When buying a home, you should do what you can to put down 20%, to avoid paying PMI. That is just wasted money the bank wants is taking from you. If you can buy your home for 150k, and have it appraise for appr. for 190k, then you will be ok.

Have you already been approved for the loan? What type of financing are you looking at? Conventional, FHA? FHA is about the best thing out there for first time home buyers.

I hope you have really sat down with a loan officer to have them fully layout what payments you will be looking at, in addition to home ins, PMI, home owners assoc fees (if any), loan origination fees, taxes, etc. Find out what the current owners bills are, and then add 20%. Sellers usually understate monthly untilities or have used all the lowest bills from a current year. Many of your items calculated into your payment will not be fully realized till the closing atty has drawn up the papers.

What ever you do, do not bite off more than you can handle. If you have to sell the house in the first 5 yrs, during a 30yr note, you will more then likely loose money. Realtors will change you at least 6% of selling price to list and sell your house. So for a $150,000 home, you will owe the realtor $9,000 to sell your home. I know some people will say you can negotiate that rate with the realtors, but I know they list the commision when they list the house, and realtors will pass over it
and not show when the commision is less than standard. I know that is not ethical, but it happens.

How old is the house, what repairs will it need in 1, 3, 5 years down the road?

If you do buy, I would highly recomend buying a warranty package through American Home Shield. It is well worth it.

Please, get all the information before buying a home. It is a great investment, but you don't want to be married to a house payment, that will change the way you want to live.

There is so much to consider, and I have probably only hit about 15% of what you need to know before buying a home.

 

Well, I'm graduating with an engineering degree, so my job prospects pay around $45k starting out. As for the $150k house, that was going to be my upper limit, I would like one cheaper. I forgot to mention that I'm single and don't plan on getting married anytime soon, so I'm going to rent a room or 2 out to some buddies. I planned on living in a house for around 5 years or so until I do get married and then selling this house and getting one that would suit the needs of wife and kids. Does this give a little more information?

 

When you state ” so my job prospects pay around $45k” do you mean you are estimating you will be able to make around $45k, or do you actually have an offer for a job that will pay $45k?

If you do not yet have a job paying the $45k then there is something very important you should know. The current environment is on the business side. What I mean by that is business is calling the shots and not the employee’s. Therefore what you may think you will earn to what you will actually find may or may not be what you have been told.

I have seen right here where I work hire engineering grads at less, sometimes much less then what they thought they were going to make. There are a lot of unemployed college grads on the market. They, business will only make what business is willing to offer which is the least amount possible at this time.

When the economy takes a turn upwards then it will be the employee’s, to some point, calling the shots. In a hot market those with the skills can have very good luck negotiating their salary and benefits. However at this time that is not so.

I only bring that up if you do NOT already have a job. First thing is to get the job then you will know what you will actually be bringing home. Plus you’ll never get a loan without having a job and proof of income.

You may find it hard to get approved for a loan if you haven’t had any steady employment in your career field. You should see if you can get pre-approved first and then you’ll know what you will be able to borrow. It would really suck if you find a place that you just love and want to find out you don’t qualify for the price.

 

It sounds like you have not spoke with a loan officer yet. I would do so, and find out what you are pre-qualified for, if this is the route you want to take.

I would not count on rent money from friends as means to pay the mort, and the banks will not let you count that towards getting you qualified.

If you make 45k / yr. You will be bringing home about $2,800 - 3,100 / month, after taxes, and ins. (Rough est.) Are you planning on investing into your retirement? IRA? 401k?

If you live in your house for 5 yrs, and lets say you have a 5% rate, you will have paid down a 150,000 note to about 136,000. When you sell your house, lets say you sell for 150,000, realtor gets 9,000, plus your closing costs, you will end up with about 4,000. You will have paid at a minimum $50,000 towards that house. This is ins, pmi, and all the other fun stuff involved. I wish I knew the PMI amt % to let you know how much you will be throwing away each month, on a 150k home.

Owning a house is a huge invest, and a great long term invest. If you plan on selling the house in 5 yrs, you need a 15 yr note. This way you can apply more money toward the principle, thus when you sell, you will get more back. A 15 yr note will put you at least 1,180 /month at 5%. Granted int rate is just a guess. It could be higher or lower. I would never suggest to anyone to get a 30 yr note, especially someone who plans on selling their house before it is paid off.

I am not trying to sound like a pesimistic person, I just hate to see people jump into things without knowing ALL the pros and cons. There is no way I can type in all the stuff you need to know, and research.

I would suggest you check out Dave Ramsey. He is a financial guru, nationally synd. talk radio program, strong Christian, and will help you view your money in a whole new light. (daveramsey.com) His philosophy (which my wife and I are now living by) "Live like no one else now, so you can live like no one else later."

We were bringing home over 60K after taxes, etc, and had a home for 100k on 15 yr note. We got out of that, and we are living so cheap (safe and happy), it is scary, but in 10 yrs, we can buy the home of our dreams (not the 100k home), with cash, and still have plenty left over in case of emergencies, travel, or to just have fun with. This is based on neither of us getting raises etc. Think about a life with no payments.

I have recomened Dave's book to dozens of friends, and I wish so much that someone would of showed it to me when I first got out of college.

I won't even begin to discuss the damage "buddies" can do to a home, plus the impact they will have on actually find a significant other.

Please take your time in getting a house, if that is what you really want.

 

never believe college advisors or the propaganda they distrbute to get you into a major. Most people are extremely diapointed with the salary they have to take straight out of school without any experience

 

There is some good advice on here already, but just wanted to offer my $0.02.

Get a good mortgage broker. There is a huge difference in the skill and abilities of these professionals. The right one will find the best loan for YOU, and not try to cram you into the loan that pays them the most commission. The right loan can mean thousands of dollars in difference to you, so make sure you are working with someone you can trust.

Talk to your friends and family for recommendations on a mortgage broker.

 

My only advice is to make sure the windows can be blacked out easily, and that the rook is readily available without use of a latter to replace and tin foil that may be displaced by weather or black helicopters. We all know what the tin foil is for.

 

With an Engineering degree, I'll bet you a nickel he gets the $45k, or really close to it.

Decoy, two years ago I was in the same boat you are. Fresh out of college (Texas A&M...Whoop!), making approximately the salary you are looking at. I would offer the advice of waiting a bit before you buy a house. What happens if you get to your new job and hate it? What about if you find a better deal in another town? I think that living in an apartment for 6 months or so is a good idea. It'll give you some time to get a feel for what your finances are like, give you time to warm up to your new job, and give you time to learn an area. Take that time to look at a bunch of houses and decide what the best deal is for your situation. You may even decide that you want to build a house. Don't wait too long though, paying rent sucks hardcore!

~CHL

 

Thanks for the replies guys. Yes, that is what I have been offered in salary, I will let you know what job I will take and stuff like that. Back to the house thing, I'm not jumping to anything, just asking questions from people who know better than I. My parents are helping alot with my questions, and I will make a wise and informed decision once everything falls into place over the next couple of months. As far as investing money, I will invest in the company's 401k, and I am starting an IRA account. I have learned alot from one of my professors, who is very wealthy and knows what he is talking about. Basically, once I have a job lined up and I get comfortable in it, then I will decide whether I will get a house or rent an apartment w/ a couple of buddies. Anyways, thanks for the advice, and I will make a decision in a few months. My parents said they had no problem with me still staying at home for a little while longer (Not 10 more years ) till I get comfortable in my job and decide what I will do. Thanks for the advice, I will make an informed decision within the next few months

 

I'd be all over that like white on rice. Seriously, thats a sweet deal. My brother did that for a year and saved enough to make a good, healthy down payment on his first house. I, on the other hand, moved to the big city and rented an apartment, so I couldn't take advantage of the offer. I would have done it if I could though.

 

decoy562:

Sounds like your in great shape then... and as CoolHandLuke stated, if at all possible take your parents up on their offer, of course chipping in some money to help out...

 

Wrong answer. You get an apt with your buddies, you get a house by yourself. Need company? Get a dog. Buddies can tear up a house that you will have to fix. A dog you can spank.

 

Get a home inspector for sure. Don't buy the home warranties, they have fine print that requires you to pay for most everything anyway and cost far more than they are worth. A good inspector should find any major problems.

Hire a lawyer to go over all of your closing papers before closing, not all title companies and realtors are honest, same for mortgage companies. The few hundred dollars you spend can save you a lot of grief if a few small things are "missed" or "overlooked' by these so called professionals.

If the house is occupied before closing, demand to do a walk through just a few hours before you sign everything. Not all sellers are honest.

Think with your head, as an engineer you probably already do that but don't let a beautifuly landscaped and manicured yard sell you on a home. The maintenance required to keep it looking that way will eat ALL of your free time.

Take your time and revisit each place that you like several times so you can see what traffic is like on weekdays as well as weekends. You can usually get a chance to chat with at least a few of the neighbors that way. You don't want to be stuck with a mortgage payment and be surrounded by people you dislike or vice versa.

Have fun and good luck.