Joser Posted February 4, 2010 Report Share Posted February 4, 2010 Well, As the Topic title says...I would really appreciate ANY kind advice you guys have on purchasing a home for the 1st time...Right now my girlfriend and I are in the pre-approval process and the mortgage company is giving us a 30yr fixed FHA loan at an interest rate of 5.5%...Haven't signed anything yet so any tips you guys have would really help me out... Thanks!!! Quote Link to comment Share on other sites More sharing options...
cwest94 Posted February 4, 2010 Report Share Posted February 4, 2010 The only advice I can give is to take your time and make sure you inspect everything over the best that you can when you go looking at a house. I took a high power flash light with me so that I could see every dark inch of the basement and attic. I was pre approved and had a nice low interest rate, so having that already done made things easier when home shopping. Putting in a offer on something can be a lot of fun as well, NOT! Thankfully I'm done looking for myself and can't wait to be moving here very soon. Quote Link to comment Share on other sites More sharing options...
Eddie Posted February 4, 2010 Report Share Posted February 4, 2010 I would recommend having a reputable home inspector check the house. This is not where you want to skimp and save money. Quote Link to comment Share on other sites More sharing options...
04CHASE Posted February 4, 2010 Report Share Posted February 4, 2010 you still have a long way to go , i just bought a house with an fha loan as well . we got 30 years fixed @ 5.0% here it is a real pita buying a house right now . there are alot of people buying and not alot of house's being released by the banks from repo's. i looked at over 100 house's and put in probably 20-25 offers before i finally got one accepted. once the offer is accepted you need to get a good inspector out and have him go over the house thoroughly. i think we paid our inspector like 250-300 for the inspection. it was worth it . only minor fixes were needed to the home like a tile on the roof slipped so i fixed that and some of the outside awnign had dry rot which i also fixed. we remodeled the entire home before moving in so that took care of everything. new sinks/cabinets/ appliance everything possible. its a long process but its great to have your own place. especially with a nice garage. Quote Link to comment Share on other sites More sharing options...
Tzer Posted February 5, 2010 Report Share Posted February 5, 2010 Congrats on your soon to be purchase. Ask about a Home warranty. It's only about $300 or so depending on where your located I'd imagine. I'm still kicking myself in the azz for not getting it because it would of covered the Heat Pump going out while our home was for sale and saved me a few grand. UGGGGGHHH! Search Home warranty.... Here's a piece from a search I found. "Traditionally, home warranties are often used as incentives when purchasing or selling a home, but they are available to any homeowner and are renewable. They typically cover air conditioning and heating systems, appliances, plumbing and electrical systems. When a repair is needed, the homeowner must contact the home warranty company to schedule a service contractor to come out, assess the problem and make the repair. A deductible that ranges from about $50 to $100 is required for each service call. Real estate agents often recommend sellers offer a home warranty because they say statistics point to a quicker sale. For buyers, it can offer comfort in knowing that many major appliances and repairs are covered" Quote Link to comment Share on other sites More sharing options...
SSmoothSilSS Posted February 5, 2010 Report Share Posted February 5, 2010 Look around for a better interest rate you should be able to find at least a %5 rate. And get the home inspection, if the inspector finds something wrong but a minor fix you can use it to bargin the price down. For instant if the house has LP Siding, most people got a rebate check several years ago and never replaced it. I got $10,000 off the purchase of my home for this. Clay Quote Link to comment Share on other sites More sharing options...
fox_forma Posted February 5, 2010 Report Share Posted February 5, 2010 (edited) You will lose your mind most likely during the searching and bidding process. I did at least. Stay far away from short sales unless you have a long time to sit back and wait it out. With bank owned homes don't expect them to fix anything as part of the offer, 90% of the time they won't. There are a ton of places out and try to narrow down what you want and stick with it. I knew what I wanted and started going off the path a little and almost got a place I most likely would be pissed about now that I look back on it. IMO avoid HOA's. There friggin Nazi's, at least around here they are. As for your interest rate, as I recall your not locked into anything until you put an offer in and it get accepted, then its up to your broker to bid your offer out and try and get you the lowest rate. Good luck and let us know how gray your hair gets!!! Oh and home warranty is the way to go. Old Republic is the company I use, not sure if they are nationwide or not but they have fixed several things already and I def got my money's worth. Now I am figuring out how to get a new fridge and washer out of this deal. Edited February 5, 2010 by fox_forma (see edit history) Quote Link to comment Share on other sites More sharing options...
cwest94 Posted February 5, 2010 Report Share Posted February 5, 2010 Oh, and make sure you have a good agent who will actually work for you. The one I was working with screwed me BIG TIME on a house I wanted more then anything and I lost it because she didn't do her job correctly. Quote Link to comment Share on other sites More sharing options...
brobradh77 Posted February 5, 2010 Report Share Posted February 5, 2010 I agree...get some one to inspect your house and get the seller to pay closing costs..those can be a few thousand bucks real quick... As for warranty I got a 1 year program but I cancelled it..my AC went out in July on a weekend and I called and the people that would cover the warranty were out of dallas 2 hours away and all i got was a answering machine and when they called 3 days later they would not do anything until the following week so I ended up paying a local person to fix it...IMO a waste Quote Link to comment Share on other sites More sharing options...
Jaymz Posted February 5, 2010 Report Share Posted February 5, 2010 on a FHA loan you will HAVE to have the house inspected, out of your pocket before purchase. Keep in mind this is a good thing however; it might cost you in the end. For example. For me and my wife to be eligable for our first home, we had to not only put a new roof on the house ( $10,200 ) but also had to install a new hvac system ( $3200 ) before the loan was approved. In the end it was all worth it though, and we received $8000 of it back ( tax credit ) Btw... not trying to be an ass, or push into you private life but becareful whos names you put on the loan.... I noticed you mentioned "gf" Good luck to you ! Quote Link to comment Share on other sites More sharing options...
Tzer Posted February 5, 2010 Report Share Posted February 5, 2010 I agree...get some one to inspect your house and get the seller to pay closing costs..those can be a few thousand bucks real quick... As for warranty I got a 1 year program but I cancelled it..my AC went out in July on a weekend and I called and the people that would cover the warranty were out of dallas 2 hours away and all i got was a answering machine and when they called 3 days later they would not do anything until the following week so I ended up paying a local person to fix it...IMO a waste I wouldn't call the warranty a waste. Sounds like you got by with a simple fix where in my case the unit was 17 years old and it was 5K to fix. Therefore the ins would be worth it. Sure it may not of been repaired in a couple days.. Sorry still stewing over this LOL... Again it's all going to depend on age, location.. It's all a gamble but it's one I'll purchase for as cheap as it is. Now I didn't purchase one on our new home.. It was new, builder covered it for a year ;) Quote Link to comment Share on other sites More sharing options...
Black2003SS Posted February 5, 2010 Report Share Posted February 5, 2010 1. Some home warranties are scams. Read the fine print on whats covered. 2. YOU hire YOUR independent home inspector to inspect the home. DO NOT use your realtors "guy" or the sellers "guy". Find him on your own in the yellow pages to ensure he is truly working for YOU. Cost should be around $250-350. Make sure they are licensed. 3. Not all interest rates are created equal. Anyone can find a better rate...for more money. Rates change daily and cost money. There are points to buy down an interest rate. There are good points and bad points. My only advice is...work with a DIRECT LENDER. Do not work with a broker. If you are considering FHA, see if there is a FlagStar bank near you or a local credit union/bank that deals in FHA loans. Ask about points. Ask about loan origination fees and loan discount fees. How much are each? Origination fees are not tax deductible, loan discount fees are basically prepaid interest points and are tax deductible. Most people do not know this. Under no circumstances should you be paying anything for a loan origination fee. If they are charging you this...run dont walk away. The way rates work is there is a range that comes out everyday. Today, for example, the range might be 3.8% to 6.0%. There is ALWAYS a zero point rate for that day. It might be 5.0%. That means with X credit score, a qualified individual should get 5.0% for no points. Of course though, the loan officer might charge extra points for a higher commission (I did it all the time). Regardless, you are still thinking about that 3.8% rate, I know you are, because thats all anyone ever focuses on. Ok. You want the 3.8%? That will be 3.25pts. What are points? Points are a percentage of the total loan amount. So if you borrow $100k, 3.25pts would be 3.25% of $100k or $3,250. So your loan discount points would be $3,250 and that would be in addition to your other closing costs. Why would you do that? Well, it has to make financial sense. If you look at what your payment would be at the zero point rate and then what it would be at the 3.8% rate, take teh difference. Now you divide $3,250 by however much it saves you in monthly payments. In this example, at 5.0%, the monthly principle and interest payment would be $536.82. At 3.8%, the payment would be $465.96. So by "buying" the rate down, as its called, you would save $70.86. The time of return on your investment would take 45.8 months to recoup the initial investment, so really 46 months, almost 4yrs. The question you have to ask yourself is this, will you keep the home for 4 years? Most likely. Will you keep the LOAN for 4yrs? Not so much, especially if you gain equity and do what everyone else does, take out equity for home upgrades/repairs. If you know for 99% certainty that you will keep the loan beyond 4yrs, buying the rate down makes sense. In perspective though, if you actually kep the loan 30yrs to term, you would save $25,509.60 over the life of the loan. That is a good chunk of change, but you have to keep the loan that long. Now, adding that extra money back onto your monthly payment every month, would cut about 7 years off of your loan. So you could pay it in full in 23 years. That is a basic crash course in how rates work. The sad part is though that I would estimate that a vast majority of the public make love to their interest rates (metaphorically). They hug them, squeeze them, covet them like gold, and brag about them in the locker room that somehow a an eighth of a % makes them better than someone else. Quite comical actually. In addition to buy down points, there are many other factors that go into figuring out someones rate. There are adjustments. Going back to our 5.0% zero point example, notice I said for someone with X credit, say 700 or 720 credit score. Ok, well, maybe you only have a 620 credit score for whatever reason. Well, you are higher risk, so the lender/investor on the loan might add a 1pt risk adjustment, meaing, now your 5.0% rate costs you one point. Maybe the 6.0% had a -1.0pt cost, so now your zero point rate could be 6.0%. Maybe you only had a 680 score and there is a .25pt adjustment, etc. This is basically how it works. Now...you might have a 10-20% down payment, and as a result, perhaps they could consider that less risk and give a .5pt credit adjustment, maybe moving your zero pint rat down to say 4.75%. The fact is, two different people can and will walk into the same lender on the same day and walk out with two very different interest rates and closing costs because of their situations being so different, whether it be credit score, down payment, the size of the loan, the type of home (condo, 2unit etc), and even location sometimes. 4. Always always always read every single document form top to bottom no matter how long it delays the closing and no matter how boring it gets. If you are pushed at closing to "hurry up" and sign "here", have the ability to walk away or tell them you are going to read everything. They pressure people at the closing table to hide adjustable rate terms, pre-payment penalties, etc. A good loan company and title company will be able to provide your final closing documents 2-3days for review prior to your closing appointment. 5. Whether the market is trending up or down, lock the dam interest rate when you sign your purchase agreement and have accpetance from the seller (this is important). If the loan officer tells you that he cant lock you, he's lying. Its your right to lock whenever you want. Ask for a locked interest rate disclosure agreement when you do. This protects you from any "surprises" at the closing table as far as rate or discount point changes. If they wont provide this to you, they are in violation of RESPA laws...again, run dont walk away and find another lender, even if it costs you the home you want. Loan Officers and some Real Estate agents will ALWAYS bet on the borrowers emtional attachement to the home they want to purchase and leverage it in their own advantage to get more money out of you. They bank on the fact that if they push you around a little bit, you will accept a sudden rate change, or increase in costs because you are almost there and closing is a week away, no way will you be able to walk away from your deal, especially if you have earnest money deposit invested, that you stand to lose, based on the terms of your purchase agreement. 6. NEVER EVER use your Real Esate Agents "guy" for financing either. If offered, decline, if the realtor refuses to work with you if you dont use their guy, find another agent, simple as that. Any agent can find the same home listed in the MLS. 7. Never work with an agent that only pushes their listings, they are working for you, make them find the home you want, not the one they want to sell you. 8. There is so much more, this is, like I said, a crash course. But if you have any specific questions, I would be happy to answer them. 9. Best of luck to you in your new home. 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brobradh77 Posted February 5, 2010 Report Share Posted February 5, 2010 I wouldn't call the warranty a waste. Sounds like you got by with a simple fix where in my case the unit was 17 years old and it was 5K to fix. Therefore the ins would be worth it. Sure it may not of been repaired in a couple days.. Sorry still stewing over this LOL...Again it's all going to depend on age, location.. It's all a gamble but it's one I'll purchase for as cheap as it is. Now I didn't purchase one on our new home.. It was new, builder covered it for a year ;) Still stewing over what? It was over 100 degrees outside and I have a daughter so yes when the AC goes out its a big deal...It was called American Home Shield...It was thrown in with the closing costs and I cancelled it...I was told from people that also "HAD" it they couldn't get anything done either. Quote Link to comment Share on other sites More sharing options...
Black2003SS Posted February 5, 2010 Report Share Posted February 5, 2010 (edited) Still stewing over what? It was over 100 degrees outside and I have a daughter so yes when the AC goes out its a big deal...It was called American Home Shield...It was thrown in with the closing costs and I cancelled it...I was told from people that also "HAD" it they couldn't get anything done either. Your unfortunate situation demonstrates precisely why buyers need to do their home work on the warranty provider before biting hook, line, and sinker (not saying you didn't because I don't know if you did, but obviously, you aren't happy with the warranty company). Some of these warranty companies are fly by night just like their automotive after market warranty providers. They pop up overnight, sometimes in a hole-in-the-wall office, take everyones money for the warranty premiums, then disappear, taking the money with them, and leaving honest hard working people out in the cold (or in your case, the heat). Edited February 5, 2010 by Black2003SS (see edit history) Quote Link to comment Share on other sites More sharing options...
Joser Posted February 5, 2010 Author Report Share Posted February 5, 2010 (edited) Wow...Thanks for all of the responses guys!!! ... @ JaymzSS... haha thanks for the tip but trust me it's cool man...My so called "girlfriend" and I have been together for about 8 years, We have a 4 year old boy and our new babygirl will be arriving next month...She keeps asking me when I'm finally gonna man up and marry her and I tell her she has to wait 'till the 10 year anniversary so it can make our wedding "extra special"...lol...so that still gives me two years of being a free man...lol...but seriously we will be married sometime in the near future Thanks again guys for all of the advice...I will def be looking to get the home warranty as well as the home inspection and hopefully not be pressured into making any serious mistakes... @ Black2003SS, thanks for the long list of Info...If i have any questions i'll be sure to let you know... Edited February 5, 2010 by SSinThaNorthWest (see edit history) Quote Link to comment Share on other sites More sharing options...
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