Home buying first time, humbly asking advice
 

Been planning this for like 5 years and done a lot of research and such but the time has come. I already moved my stuff in storage and renting at a temp job right now.


Working with a lender now to get pre-approval. Will be doing a conventional mortgage with 20% down as that is what the market dictates currently.


Don't really have a specific question just looking for any advice, hints, tips, tricks, etc. as I don't have a mentor to guide me through this

Hey! You're better than a lot of ppl. You got pre-approved. I'm surprised how many ppl don't get it pre-approved before they start searching for the house.

Recently we've bought a house (in March). Not sure how your area is, but pricing are ridiculous. My advice is, be patient. Some days, you wanna pull all your hair out. Also you into all the mortgage options. It was cheaper in closing cost for me to do 5% DP & payout PMI than doing 20% DP. But of course monthly payment was a bit more, but we're talking about <$200 per month. Also need to ask "Is this your forever home? or is this your starter home?" When me & my wife bought our first house, I told her that it'll be our starter home and plan to fix it up and sell it in 3~7yrs. We lived there for 3 & half yrs and sold it to moved into new house.

As you go look at houses, I'm sure you'll have more questions & few retired realtor and finance members can give few tip of advice. Also I'm pretty sure Hum can give better advice than me.

All I can say is with current real estate prices, I don't envy you. Best of luck.

I appreciate your reply.
I wanted to find a forever home. Due to my personal situation and the market I just need to get something. I'm living in an airbnb right now.

So I plan to have this property ~5 years, less if possible depends on a lot of things I cant get into right now.



Not sure what you mean about 5% and payout but my contact is telling me FHA and USDA loans are basically out the window if you actually want to buy something in a reasonable time frame in an area you desire. Which lines up with the research I have done.

This sounds about right. I did my first home with an FHA loan about a decade ago. The time frame it took for the loan to move along the process could best be described as glacial.

Fortunately for me, it was during the deepest depths of the real estate crash and speed wasn't a priority. With the way things are right now houses are selling for 40%+ over asking price, sight unseen cash offers 4 hours after a listing goes live. Unless the place you are looking at is located beside an open air toxic waste dump next to the railroad tracks in the ghetto, it will probably be sold before you can even get someone to look at the FHA loan paperwork.

So what I did was, I did 5% down payment. When down payment is below 20% loan company or bank require you to pay for mortgage insurance (PMI) to cover their ass. Some loan company allow you to pay the mortgage insurance upfront & often time it's cheaper. Example for this is my current house. Current house cost me $525k. 5% dp is $26,250 plus pay upfront the PMI was $6k (roughly). That's total of $32,250 for the closing (of course other feed is excluded in that number). If I did 20% DP on $525k house, that's $105k! My time for closing took 18 days... but loan officer was ridiculously motivated and was on top of everything. But average time to process is about 30days.

Also keep in mind, some seller require you to pay earnest money. Average is $1k, but some demand higher one (like ridiculous $15k!). Good news is, it goes into closing cost.

When you find the house you want to put an offer to and have more solid numbers, recommend talking with loan officer for an options. Hell I went through 3 different loan officers (My bank & 2 different loan company my realtor recommended) til I find the loan worked for me.

I second all of this. ^

Get a private inspection to determine if there are any underlying issues. If they can't or won't be rectified then move on. Major issues can get expensive, minor issues can be used as a bargaining chip on the price.

This is good advice when the market is "normal". In many places people are throwing cash offers at any piece of real estate on the market with zero concessions and forgoing inspections.

It's complete insanity in some markets right now, and I don't see how it can be sustained at this level long term. My wife and I would really like to get into another property but things are far to dicey right now. We are just sitting on the sidelines waiting to see how this clown show shakes out.

get pre-approved for a realistic amount--i was told the pre-approval letter sometimes makes it's way to the sellers, so it's better to be approved for an amount closer to the offered price than being approved for a drastically-higher amount that makes it feel like you're lowballing them for your own entertainment.

technically, i could've been pre-approved for a $300k loan because of how banks like to use pre-tax income instead of actual take-home pay for the process, but a payment at that level would've been the majority of my take-home pay, not even including utilities, insurance, or buying stuff like furniture...


i bought back in 2017. the market is a little hotter now than it was then, but not very much. people repeatedly told me to be prepared to pay at least 20% over asking, and if i couldn't make an offer within the first 24 hours, it wasn't even worth looking at it.

the first house i looked at felt right, but being the very first house i'd really looked into, i didn't want to move too fast. so i convinced my realtor to set up showings at 4 other houses. that second one, sold in 12 hours, $30k over asking. the other 3 were very clearly not what i was looking for for a number of reasons.

at that point, house #1 had been on the market for 2 weeks. they were asking $180. i offered $130. my realtor warned me that they'd likely be offended, but this was the game.. they met at the table, and we agreed to 150. a lot of the reasons for getting this house had specifically to do with it being very well-kept, but entirely original to 1972. everyone else wants a new house with the stainless appliances and granite countertops. i found a house that the previous owners cared enough to maintain it, but not 'keep up with the jones' '. but that's exactly what i wanted-- styled in a way that no one else wanted, well maintained enough that i didn't have to clean up sh!t from others.

point is, be willing to compromise, or try to see the bigger picture that everyone else glosses over.


otherwise, agreed on the inspection, but take it with a grain of salt. it seems half of them miss things, or are trying to sell you something...

My sister in law was trying to buy a house for over 2 years in Boston, the pandemic didn't help. Wound up with no inspection, offering 10k over asking price, but she got a house.

+111


I've told a few friends lately, if you can wait a couple of years (2-3 is my best guess but who knows) it's best to do so. This insanity can't continue forever and we have a lot of oddball market issues (covid, no evict, etc) that need to be resolved. It's estimated that 2.3M houses haven't had their mortgages paid but can't currently be kicked out either right now. If that glut ever comes to market, prices will hopefully drop like a rock.

I got my house for $215k in 2011 and right now houses are going in my neighborhood for 450k in a week. This is insanity.

If it were the stock market, I'd say DCA into it. But with a house? I'd wait if you can.

I got my first house last year, 3 months before COVID really hit the fan. But my biggest advice is to check your zoning regulations. At least where I live, our house has a lot of potential for expansion and what not, but our zone does not allow us to do much or anything, since whatever we do, the edge of the new structure has to be within 50 feet of the property line. Currently everything on the house is at that range, so that means not much is going to be expanded and what not. If you have plans to make this house your forever home/upgrade the house, really look into that.

Another thing, depending your area, is the condition of your gas/oil tank, furnace, roof, water-well, septic tank, water heater. Much of them may not apply to you, but just make sure all those have been repaired or replaced within the last 10 years or so. It can get very expensive to replace any of those.

Walk with your inspector and see everything that he sees. When we had ours, I walked right beside him and even caught some things that he missed. Just don't get greedy with the owners about repairing things, focus on the big tickets.

Invest in a generator, really, you never know, if the house comes with one, maintain it.

Paint the interior before you move it, not after, trust me, is a PITA. Grab color samples, tape them to the wall you want to paint, and look at the color depending of times of the day. Same goes for refinishing floors, the stench is horrible and you'll want to do it all in one take.

Invest in a step ladder, a flashlight, and basic household tools (Hammer, pipe wrench, basic tool-set)
Dont forget to buy toilet paper.

Once you close and are getting ready to move in, buy some water and other drinks, put them in the fridge, comes in handy when your moving in having a drink readily available.

I'm not familiar with the US market and how mortgage rules may differ, but all I can say is that getting pre-approved is an excellent idea and will take away some of the stress while you are shopping.... no wondering "can I actually afford this?" when you find a place you like.

Good luck!