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Thread: First time Homebuyer Tips

  1. #1
    Cyburbian rcgplanner's avatar
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    First time Homebuyer Tips

    Sooo... I am finally thinking about growing up and buying my piece of the American dream in the next 6-12 months. The main reason is that I am tired of renting and for about what I am paying for a one bedroom apartment in suburban Houston I could get a house. Now I am still working on cleaning up my credit and getting it into good shape and won't be ready to buy for another 6-12 months. I am having an informal meeting with my Credit Union next week to get some preliminary idea on my creditworthiness and hoping for some concrete steps towards making myself a better mortgage candidate. I already have an idea of my credit score thanks to CreditKarma and the fact that Capital One offers a free score once a month. Is it too soon to begin thinking about all of this? I plan on taking a first-time homebuyers class in the fall to make myself eligible for first-time homebuyer programs. Is there anything else i should be thinking about?

    I already have the Zillow app on my phone and it is slowly becoming like crack with how addictive it is.

  2. #2
    Cyburbian WSU MUP Student's avatar
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    Quote Originally posted by rcgplanner View post
    Sooo... I am finally thinking about growing up and buying my piece of the American dream in the next 6-12 months. The main reason is that I am tired of renting and for about what I am paying for a one bedroom apartment in suburban Houston I could get a house. Now I am still working on cleaning up my credit and getting it into good shape and won't be ready to buy for another 6-12 months. I am having an informal meeting with my Credit Union next week to get some preliminary idea on my creditworthiness and hoping for some concrete steps towards making myself a better mortgage candidate. I already have an idea of my credit score thanks to CreditKarma and the fact that Capital One offers a free score once a month. Is it too soon to begin thinking about all of this? I plan on taking a first-time homebuyers class in the fall to make myself eligible for first-time homebuyer programs. Is there anything else i should be thinking about?

    I already have the Zillow app on my phone and it is slowly becoming like crack with how addictive it is.
    I have no financial advice other than the obvious stuff (e.g. "Don't buy more than you can afford!" "You house is a house, not an investment!"...) but as a relatively recent first time buyer (in 2009) I can tell you a piece of advice that I am glad I followed and one I wish I had followed:

    The piece we thankfully followed:
    Buy the neighborhood, not the house - When we were looking a house there were a few houses that we liked quite a bit better than the one we ended up buying but there was always something about the neighborhoods that was a drawback. When we eventually found our house, we fell in love with the neighborhood before we fell in love with the house and realized we could change most things about whatever house we bought, but we could not change the neighborhood without the expense of moving.

    The piece I wish we had followed:
    Once you find the house, do any home improvements that you think you want to do before you move in - There were a few bigger home improvements we said we wanted to do as soon as we closed (redo a bathroom, kitchen, and the front porch and back deck) but decided we were just too anxious to get into the house so we decided to move in and we would do those improvements ASAP. Now, 5 years later, we have done exactly zero of those projects and are just now discussing redoing the back deck. It hasn't been a matter of money, it's just been a matter of convenience, hassle, and effort.
    "Where free unions and collective bargaining are forbidden, freedom is lost." - 1980 Republican presidential candidate Ronald Reagan

  3. #3
    Cyburbian michaelskis's avatar
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    Quote Originally posted by WSU MUP Student View post
    I have no financial advice other than the obvious stuff (e.g. "Don't buy more than you can afford!" "You house is a house, not an investment!"...) but as a relatively recent first time buyer (in 2009) I can tell you a piece of advice that I am glad I followed and one I wish I had followed:

    The piece we thankfully followed:
    Buy the neighborhood, not the house - When we were looking a house there were a few houses that we liked quite a bit better than the one we ended up buying but there was always something about the neighborhoods that was a drawback. When we eventually found our house, we fell in love with the neighborhood before we fell in love with the house and realized we could change most things about whatever house we bought, but we could not change the neighborhood without the expense of moving.

    The piece I wish we had followed:
    Once you find the house, do any home improvements that you think you want to do before you move in - There were a few bigger home improvements we said we wanted to do as soon as we closed (redo a bathroom, kitchen, and the front porch and back deck) but decided we were just too anxious to get into the house so we decided to move in and we would do those improvements ASAP. Now, 5 years later, we have done exactly zero of those projects and are just now discussing redoing the back deck. It hasn't been a matter of money, it's just been a matter of convenience, hassle, and effort.
    I agree with everything he said. I would also add the following:

    Pay for a good home inspection. Have someone go through every little detail of the house and if possible, be there with them so they can explain stuff to you. If the seller will pay for the inspection, that is great but choose one that you trust in your area based on one friends or coworkers have used. The guy that we used for our house was a friend who also lived in and specializes in very old houses. So he was able to not only point out code issues, he was able to point out improvements that we might want to make, such as putting bubble wrap on the insides of our basement windows in the winter to help keep our basement warm and allow light in.

    Save up for enough of a down payment so you don't need private mortgage insurance. You don't want to be paying an extra 1% every month for money that you will never see again.

    If possible, go with a 15 year fixed rate instead of a 30 year fixed rate mortgage. Take a look at the difference you would pay in interest and think of all the other things that money could go for. You may also notice that the monthly payments will not be double and depending on the rate, are likely to still be in the ball park for what you could afford.

    When you are finalizing your decision, spend extra time walking around that neighborhood. If you see people outside, stop and talk with them. For some, this is not a comfortable thing, but introduce yourself, explain that you are looking to by 569 Easy Way and trying to get a feel for the neighborhood. Ask them what they like or don't like about the neighborhood. You might be there for many years.

    Call the Planning Department (unless you are the planning department) and check to see what the future land use map looks like for the property and the area. It might be a farm field, but in a few years it might be a super wal-mart in a few years. Also speak with the building and assessing departments to see what changes have been made to the house, what the taxes have been, and make sure what they have in their records is correct (you don't want to be assessed for too many bathrooms).

    Call the utility companies to find out the energy costs for the house. Big houses use a lot of heat in the winter and AC in the summer. Know those numbers going in.

    Call up the police department and sheriff's department to find out if there has been any criminal activity at the house and the nature of the criminal activity. If there was a meth lab at the house, don't buy it. That makes a brownfield site look like a kiddle pool. Also, if someone was murdered in the house, make sure you are really comfortable with it.

    Have a survey done. You want to know what you are buying. This is even more important if it is a small lot. Don't trust the fences.

    Finally, something that I did more as a hobby, I went to the archives and researched my house. I looked at old tax records, sandborn fire maps, and even the polk directory to get a list of everyone who has ever lived in my home, and their occupation. I learned who died in the house, learned what changes have been made to the house, found that there was a buried oil drum in the back corner of the yard, and that the house had been divided into apartments in the 30's and then back into a single family home in the 90's. I also learned that one owner also owned a very notorious bar in the 60's.
    Not my monkey, not my circus. - Old Polish Proverb

  4. #4
    Cyburbian dvdneal's avatar
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    I have to agree on the home improvement ideas. You might paint a wall or put in new carpet, but you most likely won't be doing a lot of big remodels unless you happen to have extra cash, are skilled in remodel work, or just somehow highly motivated. I make myself do some kind of work on the house every month or so because we want to improve it, but even that is mostly cheap things like painting cabinets - still a big job.

    If you're buying new construction, don't buy the upgrades. Save some money and expect to buy new appliances and carpeting. Don't finance that kind of stuff into your mortgage or pay their outrages upgrade prices.

    As a general rule, if things look kind of shoddy on the outside like wiring that doesn't seem to be right, then it's probably worse on the inside. Hopefully the home inspector will tip you off to some of that stuff.
    I don't pretend to understand Brannigan's Law. I merely enforce it.

  5. #5
    OH....IO Hink's avatar
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    If you are changing square footages at all, be aware of the hidden cost of utilities and furniture to fill it. Higher utility bills per month cuts into any savings you might potentially get from renting. You also need to start putting money into the "oh shit" fund. Mainly for the day your heat fails on a 12 degree day, etc.

    Good luck and keep us updated on the progress of your adventure!
    A common mistake people make when trying to design something completely foolproof is to underestimate the ingenuity of complete fools. -Douglas Adams

  6. #6
    Super Moderator kjel's avatar
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    Quote Originally posted by rcgplanner View post
    Sooo... I am finally thinking about growing up and buying my piece of the American dream in the next 6-12 months. The main reason is that I am tired of renting and for about what I am paying for a one bedroom apartment in suburban Houston I could get a house. Now I am still working on cleaning up my credit and getting it into good shape and won't be ready to buy for another 6-12 months. I am having an informal meeting with my Credit Union next week to get some preliminary idea on my creditworthiness and hoping for some concrete steps towards making myself a better mortgage candidate. I already have an idea of my credit score thanks to CreditKarma and the fact that Capital One offers a free score once a month. Is it too soon to begin thinking about all of this? I plan on taking a first-time homebuyers class in the fall to make myself eligible for first-time homebuyer programs. Is there anything else i should be thinking about?

    I already have the Zillow app on my phone and it is slowly becoming like crack with how addictive it is.
    Good for you. Knowledge is key to the success of sustained homeownership. You don't know what you don't know until you need to know it.

    I would suggest that you take a homebuyer education class from a HUD certified housing counseling agencies, most are non-profit and are either free or charge a nominal fee. Here's the locator tool: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. (look for pre-purchase/pre-homebuyer education) You'll get a comprehensive overview of the home purchase process, getting ready to apply for a mortgage, and all the key pieces that need to fit together. They can usually give you guidance in working through your credit issues and may know of specific community lending products that have incentives for first time buyers or people who have completed the education class (like closing cost grants, no mortgage insurance, more forgiving underwriting standards). While I am the real estate development manager, I work very closely with my housing counseling team who delivers these services. Also, check out your state's housing finance agency. They often have competitive interest rates and incentives for first time buyers beyond what your local lender may be offering.

    As far as your credit is concerned go directly to Myfico.com. It is an outstanding resource for all things credit related whether you have great credit, rebuilding your credit, or applying for any kind of credit. Order your 3 FICO scores and credit reports from there, absolutely do not rely upon Credit Karma or the CapOne credit tracker tool as a measure of your actual credit scores that will be pulled by lenders.
    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

  7. #7
    Cyburbian Seabishop's avatar
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    Lots of good advice but I would add to not forget the basics - the condition of the house, heating, roofing, plumbing which can all add up if things start to deteriorate. (Are people in Houston concerned with heating?) And don't be obsessed with granite countertops like the people on those homebuying shows.

    Unless you have a lot of strong friends don't forget moving expenses.

  8. #8
    Super Moderator kjel's avatar
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    Quote Originally posted by Seabishop View post
    Lots of good advice but I would add to not forget the basics - the condition of the house, heating, roofing, plumbing which can all add up if things start to deteriorate. (Are people in Houston concerned with heating?) And don't be obsessed with granite countertops like the people on those homebuying shows.

    Unless you have a lot of strong friends don't forget moving expenses.
    The bones of a house make or break it. Frankly, I'd rather buy an ugly house that has a solid foundation, good framing, updated electric/plumbing, and HVAC than one that looks great on the surface.
    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

  9. #9
    Cyburbian dvdneal's avatar
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    Quote Originally posted by Seabishop View post
    Lots of good advice but I would add to not forget the basics - the condition of the house, heating, roofing, plumbing which can all add up if things start to deteriorate. (Are people in Houston concerned with heating?) And don't be obsessed with granite countertops like the people on those homebuying shows.

    Unless you have a lot of strong friends don't forget moving expenses.
    I have to agree with the counter tops. It's a nice feature if you can get it, but I wouldn't make the decision based just on that. I think a new granite counter runs about $5k installed.
    The oh shit fund and home warranty things are great advice too. All that stuff is yours to maintain now or will be soon!
    I don't pretend to understand Brannigan's Law. I merely enforce it.

  10. #10
    Cyburbian rcgplanner's avatar
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    All fantastic advice everyone! Fortunately I am pretty modest in my home needs. I want a house with good "bones", a fenced yard for the dogs, a modest but roomy kitchen. I am not one who is obsessed with granite counters, I would rather have a gas stove! In SE Texas we don't worry too much about heating, but a/c is a huge killer so a well insulated house is a huge help. The kicker here is property taxes and most newer subdivisions have HOA fees and even MUD (municipal utility district) taxes which can add an additional $200 month towards the mortgage price.

  11. #11
    moderator in moderation Suburb Repairman's avatar
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    All great advice so far.

    Knowing that you are looking in Houston...

    One of the first major questions to ask is age of AC equipment & whether they have maintenance records on it. The heat plus humidity is very taxing on AC equipment. That is something that can jump up & bite you in the ass in Texas.

    Also, ask neighbors about flooding. The floodplain maps in Harris County and surrounding counties should not be trusted.

    Mold inspection.

    Date of construction--you'll want to consider this for hurricane windload codes

    "Oh, that is all well and good, but, voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is tell them they are being attacked and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same way in any country."

    - Herman Göring at the Nuremburg trials (thoughts on democracy)

  12. #12
    Cyburbian Masswich's avatar
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    I agree with almost everything here. However, I am not sure I agree about the 15 year mortgage. Mortgage debt and interest payments are still debt and interest, but you can always make the 30 year into a 15 year by making larger payments. It's nice to be able to scale back to the lower payment of a 30 year if needed. You will need to have some willpower to do so, and the interest rate on a 30 is a little higher, but it's much more flexible.

    I am a fan of the 30 year fixed rate no points mortgage. Points are only good if you are sure you will be in that house long enough to make that money back in savings. Variable rates are tempting but rates really are never going to be much lower than they are now - lock them in for 30 years!

    I would also take the temperature of the neighborhood you are buying into - is it in decline, growing, what? Part of that is the bond rating of the city it is in. But part of it is just hunch.

    And resist buying a larger space than you need unless you expect to have a growing family in the next few years - heating it and cooling it (and cleaning it) ain't worth it.

  13. #13
    Cyburbian Mud Princess's avatar
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    Quote Originally posted by Masswich View post
    I am not sure I agree about the 15 year mortgage. Mortgage debt and interest payments are still debt and interest, but you can always make the 30 year into a 15 year by making larger payments. It's nice to be able to scale back to the lower payment of a 30 year if needed. You will need to have some willpower to do so, and the interest rate on a 30 is a little higher, but it's much more flexible.

    I am a fan of the 30 year fixed rate no points mortgage. Points are only good if you are sure you will be in that house long enough to make that money back in savings. Variable rates are tempting but rates really are never going to be much lower than they are now - lock them in for 30 years!
    For your first home, a 30 year mortgage is fine - it'll give you much more flexibility. We are on house #3 (I bought my first house 20 plus years ago), and it wasn't until we bought this one that we had enough equity built up to afford a 15 year mortgage.

    I don't know about your credit union, but a lot of times financial institutions will tell you that you qualify for up to X dollars per month -- an amount that's far more than you feel comfortable with. Go with your gut here. You don't want to be spending so much on your mortgage than you can't afford anything else and don't have a cash cushion for emergencies.

    As far as home improvements, some things can wait. When we bought house #2, we had the hardwood floors refinished before we moved in. That's the sort of thing you're not likely to do while you're living in the house with all your stuff. Of course, there may be structural improvements, issues that need to be taken care of right away as recommended by your home inspector. That's a different story.

    Good luck!

  14. #14
    Cyburbian
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    First question to ask the realtor: How quickly can I sell this house?

    Never fall in love with a house. Admire a house, like a house, respect a house, but don't fall in love with a house because it'll cloud your judgement. I know people who "fell in love" with a house and ignored all the flaws and downsides to the neighborhood, and when they eventually realized they needed to sell, they had great difficulty selling the house because they ignored the flaws. A house is an investment and you don't want to be saddled with a white elephant. The often ignored reality is that if you buy a house that's flawed (whether because of the house's characteristics or the neighborhood) you are much more likely to want to sell it eventually.

    Buy into the best school district you can afford. Houses in excellent school districts sell quickly. If the worst comes and there's another property crash and you still need to sell, you will sell a house in a good school district much more easily than in lesser districts.

    Buy the cheapest house in the most expensive area you can afford (this usually overlaps with the school district comment above).

    If you're a young urbanite and don't want suburbia, buy as closely as possible to the ground zero destination for young urbanites, and preferably in close proximity to some type of public transportation.

  15. #15
    Cyburbian Cardinal's avatar
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    Quote Originally posted by WSU MUP Student View post
    The piece I wish we had followed:
    Once you find the house, do any home improvements that you think you want to do before you move in - There were a few bigger home improvements we said we wanted to do as soon as we closed (redo a bathroom, kitchen, and the front porch and back deck) but decided we were just too anxious to get into the house so we decided to move in and we would do those improvements ASAP. Now, 5 years later, we have done exactly zero of those projects and are just now discussing redoing the back deck. It hasn't been a matter of money, it's just been a matter of convenience, hassle, and effort.
    I would give the opposite advice. Live in a house before you start to change things. Sure, paint a room before you move furniture into it. But wait on the kitchen or bath remodel, finishing the basement, or other big projects. After you live int eh place a while you will begin to notice little things. The sink is too close to the stove for two people to work comfortably. The flow might be better if a door were moved or an opening widened. Better lighting is needed over here. An extra vent would help to keep that room a little warmer/cooler. You don't get that from a walk-thru, a room with no furniture, and the software at Home Depot. Oh, speaking of furniture, don't forget that a home is bigger than an apartment. Think of a budget over the next year or two just to get the furniture you will need.
    Anyone want to adopt a dog?

  16. #16
    Cyburbian chupacabra's avatar
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    When I bought my first house I discovered my new "landlord" was a cheap asshole.
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  17. #17
    Chairman of the bored Maister's avatar
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    Quote Originally posted by Cardinal View post
    I would give the opposite advice. Live in a house before you start to change things.
    Off-topic:
    I had a prof who used to semi-joke the best way to lay out sidewalks/pedestrian paths on campus was to do nothing the first year and then see what paths formed in the grass and put sidewalks in those locations the next year.
    People will miss that it once meant something to be Southern or Midwestern. It doesn't mean much now, except for the climate. The question, “Where are you from?” doesn't lead to anything odd or interesting. They live somewhere near a Gap store, and what else do you need to know? - Garrison Keillor

  18. #18
    Cyburbian Linda_D's avatar
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    I'll add another important thing to check: floodplain location. I would never, ever, ever purchase a home in a flood plain nor one that needed flood insurance because I've seen way too much devastation from floods to even consider a house near running water. Heck, I wouldn't buy a home just outside the 100 year flood plain. Just because your house is in the 100 year flood plain doesn't mean that if it flooded 4 years ago, it can't flood again next week ... and it will flood again.
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  19. #19
    Cyburbian DetroitPlanner's avatar
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    Quote Originally posted by Masswich View post
    I agree with almost everything here. However, I am not sure I agree about the 15 year mortgage. Mortgage debt and interest payments are still debt and interest, but you can always make the 30 year into a 15 year by making larger payments. It's nice to be able to scale back to the lower payment of a 30 year if needed. You will need to have some willpower to do so, and the interest rate on a 30 is a little higher, but it's much more flexible.

    I am a fan of the 30 year fixed rate no points mortgage. Points are only good if you are sure you will be in that house long enough to make that money back in savings. Variable rates are tempting but rates really are never going to be much lower than they are now - lock them in for 30 years!
    I did this on my first home. Sound advice for those who need it. Converted to a 15 when I refied to buy a cottage. My current home is a 15 too, but it is affordable but my bank is the family trust. I don't want to let my debt linger any more than it needs to. I guess this is the luxury of living in a flyover state where homes are still relatively affordable unless you get silly.
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

  20. #20
    Cyburbian rcgplanner's avatar
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    Quote Originally posted by Linda_D View post
    I'll add another important thing to check: floodplain location. I would never, ever, ever purchase a home in a flood plain nor one that needed flood insurance because I've seen way too much devastation from floods to even consider a house near running water. Heck, I wouldn't buy a home just outside the 100 year flood plain. Just because your house is in the 100 year flood plain doesn't mean that if it flooded 4 years ago, it can't flood again next week ... and it will flood again.
    Here in SE Texas it seems the floodplains are always changing based on what happens in big storms. The city I am working for now is in the process of finally updating our FEMA maps from the effects and improvements from Hurricane Ike which was in 2008. The comment about windstorm is a good point too. In Galveston County (and maybe parts of Harris County) insurance is higher because it requires a windstorm policy but most cities are in a coastal wind zone for building code requiring 120 MPH windstorm engineering, thanks again to Ike. If you buy a house that is pre-Ike and pre-120 MPH windload you are paying a lot more for your homeowner's insurance.

    I am still a ways off from buying and now the major thing I am doing is paying down my credit cards and starting to save for my payment shock, the difference between rent and a mortgage payment (plus taxes, insurance, maintenance budget, etc.)

  21. #21
    Cyburbian MD Planner's avatar
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    As a licensed Realtor I'd say there is some good advice for you here in this thread. Always good to be on top of your credit score and report. I'd suggest you seek out a good buyer's agent. Ask friends and relatives who they have used. Zillow, Redfin and the like are good places to start but they are also notoriously out of date. I get many leads from those sites (that I have to pay for) and then when I look up the house someone is interested in it is already under contract or even settled already. A buyer's agent essentially works for you for free. Buyers don't pay commission, a lot of people don't realize that. In most markets, an agent can show you any home for sale, no matter who it is listed with. You want someone in your corner, so calling the listing agent is not your best bet. You want someone working for you who doesn't have a financial relationship with the seller. A good buyer's agent can take all the information you've provided about what you're looking for and design a search that will send you new and updated listingw immediately, sometimes days before they hit the other sites. A good agent will also be knowledgeable about the various lending programs, particularly for first-time home buyers and those that require smaller downpayments, i.e. USDA, VA, FHA. Beware, as an overreaction to the housing bust, on a loan with 3.5% down, FHA will now require mortgage insurance for the life of the loan. You can't stop paying once you reach 20% equity in the home.

    Another piece of advice I give people is to ask your agent who they would recommend as far as lenders go. In my experience it is so much better to be able to deal with someone local rather than a lender several states away. There is a lot to be said for the ability for everyone to stand around in the lenders office with hands on hips figuring out what to do when something goes wrong. And something will go wrong. Maybe it's a title issue, or required home repairs by lender or something else. Relationships are important.

    Feel free to PM with other questions.
    He's a planner, he's a dreamer, he's a sordid little schemer,
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  22. #22
    Cyburbian DetroitPlanner's avatar
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    Quote Originally posted by MD Planner View post
    Beware, as an overreaction to the housing bust, on a loan with 3.5% down, FHA will now require mortgage insurance for the life of the loan. You can't stop paying once you reach 20% equity in the home.
    PMI (mortgage insurance) = the Devil. Don't go there unless you have no other resort and the total payment (PITI: principal, interest, taxes, insurance) is less than renting. Total waste of money.

    This is a newer wrinkle. I am glad I am not in this position. MD, what if you put down say 5 or 10 percent? Is term-long PMI still in effect?
    We hope for better things; it will arise from the ashes - Fr Gabriel Richard 1805

  23. #23
    Cyburbian rcgplanner's avatar
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    Quote Originally posted by MD Planner View post
    Beware, as an overreaction to the housing bust, on a loan with 3.5% down, FHA will now require mortgage insurance for the life of the loan. You can't stop paying once you reach 20% equity in the home.
    Wow, that is not news I want to hear. This makes me want to cool my heels a bit and keep raising that score. My credit union has a mortgage that is 97% financing and you only pay PMI until you reach 20% equity, which they estimate is 60 months, but the require a pretty decent score. MD, are you familiar with a program called NACA? Someone I talked to mentioned that program but said it is very difficult to qualify and can be very slow. Feel free to PM if you know more, thanks!

  24. #24
    Cyburbian Random Traffic Guy's avatar
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    Some good advice in this thread. Sounds like you are good on budgeting. I am always amazed at what the banks and brokers will offer based on your income. My wife and I did about half of what was offered, and would still feel strained by cash flow if our incomes hadn't risen as we got established.

    My advice is to spend a lot of time around a prospective house, to make sure nothing can hit your pet peeve. Meeting the neighbors is good, but just walk the streets too. Sit in a parked car with the windows down and just listen. Find that 15 minutes per day when the local school lets out and you can't move on the roads. Find the guy with the loud motorcycle who revs his way out of the neighborhood at 6:30 each morning, or the guy who repairs his jetski each Saturday morning. Listen to the people racing on the nearest highway at 11PM each Thurs/Fri/Sat night. Find if airplane flightpaths may be over the house if the wind is in a certain spot.

    Take the time to do a full commute in from the house to work, and back to the house in the evening. Think about doing that every day. Consider where else you may be working in the next few years, how would that change? I once looked at a fantastic house on the south side of our metro area. The commute was very easy into downtown, where I was working at the time. But nearly every other firm in my business was located on the north side of the metro area, which would have made the commute much more onerous. So we ended up buying on the north side of the metro area. Sure enough, within 2 years I had changed jobs and now enjoyed my very short commute to the north side.

    Our 3 top rules of thumb for house location:
    1. No HOA
    2. Not located on a street with a center stripe (proxy for acceptable vehicle traffic)
    3. Not located west of workplace (hate the sun in my eyes when driving)

  25. #25
    Super Moderator kjel's avatar
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    Quote Originally posted by rcgplanner View post
    Wow, that is not news I want to hear. This makes me want to cool my heels a bit and keep raising that score. My credit union has a mortgage that is 97% financing and you only pay PMI until you reach 20% equity, which they estimate is 60 months, but the require a pretty decent score. MD, are you familiar with a program called NACA? Someone I talked to mentioned that program but said it is very difficult to qualify and can be very slow. Feel free to PM if you know more, thanks!
    Avoid NACA like it's the bubonic plague. There's nothing they can do that you can't do yourself.

    FHA requires PMI for the life of the loan now since it essentially took a bath during the housing collapse. Other loan products will cancel PMI once you have 20% equity. The FHA is rolling out something called HAWK later this year that will reduce the upfront PMI payment by 0.50 points and the annual PMI premium 0.10 points. If you make good on your loan for 18 months, starting the 3rd your the annual PMI drops an additional 0.15 points. This will be for first time buyers that have attended the 8 hour HUD certified housing counseling class that I previously mentioned.
    "He defended the cause of the poor and needy, and so all went well. Is that not what it means to know me?" Jeremiah 22:16

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