Since Chase will be graduating here in a few weeks, (YAAAAAYYY!) and with him having a job waiting for him, the idea of buying a house within the next year is a possible reality. Finally!
But being as this is quite a "grown-up" thing to do, we have never done it before. So how does one go about finding the perfect house? Where do you even start looking? How do you make sure all your finances are in order? Where do you find all those killer deals like short sales and the like?
It's kind of scary. A house seems so... permanent. With apartments if they raise the rent you just move to another one! No big deal. So what things did you all consider when looking for a house?
p.s. Lauren only woke up once last night! :)
3 comments:
Yay! How awesome for you guys! Being as we've never bought a house, I have no advice; I'm just excited for you. I'll ask for your advice when we finally get to that point in a few years. :)
It is stressful and exciting both! We prepared first by making sure that we had a huge chunk of change saved and accessible for our down payment. If you can manage 20% of your purchase price, you can avoid paying a monthly private mortage insurance (which would have tacked on an additional $75-$125 on top of our mortage (for several years until you have paid 20% of the principal down) insurance, and escrow had we not had our 20% downpayment). I had a bunch of money set aside for that purpose that I had been saving since I was a teen, but we still saved for a few years to get the rest of it.
Then, you start looking. Make friends with a Realtor and tour as many houses as you can. Look in the papers for open houses and get a mutual idea of what things are must haves, like to haves, and can do without features in a house (i.e. a 2 car garage was a must for us as was having all our bedrooms accessible on the main living floor since we didn't want to haul an oxygen concentrator up stairs every day. I sacrificed having a great yard and an entryway that didn't look straight into our mess!). Get your dreams in line so that when you do find the perfect house for the right price, you will be able to jump on it.
Short sales and foreclosure lists are available at most Realtor offices for free, but beware since many of them have other liens on the property that you may not know about. Do LOTS of research on those homes... and be prepared that short sales are typically a forever long process (the name is misleading!!!) and foreclosures are often missing appliances, doors, electrical stuff, etc (as we learned in our house hunting... foreclosed homeowners are often very bitter and can legally take "anything" that was a part of their house before the bank takes it). We put offers on three different houses before we finally got our current place. We knew our budget and our mortgage broker helped us price out the price range we could afford for our purchase price that would make for affordable payments. One thing that I had not considered however is that property tax rates change frequently, so while we were fine when we bought our house 2.5 years ago, our property tax has gone up each year which has increased our monthly payment by almost $100 a month from when we first closed on our house. It's a bummer and thankfully we were well within our price range so we could manage those unexpected changes. Have fun with the process... the right place will feel like just that... right.
It wasn't nearly as high stress as I thought it'd be. Make sure you have a decent savings set aside to cover a down payment (3.5-5% of the purchase price depending on the kind of loan you get), closing costs (depends on house price, but plan on 3k-4k), and for any fixes the house may need. Even for a house in almost perfect working order, we spent about $300 in some basic fixes we just wanted done (new garage door, outdoor lighting, new sink faucet, etc). If you don't have 20% of the housing cost, you will pay an extra monthly fee in private mortgage insurance, which covers the bank in case we default. For us it's $99 (ugh, ridiculous!) but we will probably be able to take it off at the three year mark.
So if you're comfortable with all of that, talk to a lender. We knew we wanted a specific type of loan that was backed by local lenders instead of sold to large banks, so for us, it was finding a bank that would process that loan for us and then sell it to the lending association. Also, find a realtor. Some want you to have preapproval from the bank first, but most will be willing to help you understand different types of loans and help you through the preapproval process if you need it.
Find out what your local mls (multiple listing service)is, so you can start looking online at different homes and prices in your area. Most realtors will send you a list of homes, we always preferred to search them ourselves and send our realtor the list :-)
Finally, don't be afraid to offer low and ask for extras in the offer. We had several rejected offers, but the house we finally got came at an excellent price, the seller paid our closing costs, and left nearly brand new appliances! It never hurts to ask because the worst they can say is no. It took us a little longer to get the deal we wanted, but it was definitely worth the wait.
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