house-buying question (Full Version)

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nevaehs_gaze -> house-buying question (9/2/2008 11:03:57 AM)

I'm just wondering how much the average cost is for first-time home buyers in settling the closing costs, the down payment, taxes, other fees, etc. for a home in the $150-$180k range. I have never looked much into it, but my husband and I are in the process of saving money and will hopefully have enough within the next two years to purchase a home. Thanks!



creationtalk -> RE: house-buying question (9/2/2008 11:20:10 AM)

Depends on the program you get your loan under, but for the most part, figure on 20% for a down payment and 3-5% for closing costs.



APZR -> RE: house-buying question (9/2/2008 11:40:16 AM)

Closing cost is usually 3% for conventional financing. FHA will cost you more because on top of the regular closing cost that is usually around 3%, you have 1.5% mortgage insurance and funding fees that are another 1/2%. FHA is a very expensive loan to obtain, but they do allow higher debt to income ratios and you can finance the extra cost. I tell people to avoid FHA if they can, because of the cost and you'll end up trapped with a 98% loan. With almost no equity, you can't sell or refinance if you absolutely must due to an emergency or job change. If you go conventional and can put down 10% and pay the 3% closing cost with cash, then you will get a much better loan. The exact amount of $$$$ you'll need will depend on the purchase price, loan closing cost and attorney fees, as well as what day of the month you close. If you close on the 15th, the lender will charge you 15 days pre-paid interest to get on an even 30 day payment cycle. If you close on the 30th, then you won't have any house payment until the end of the following month. So the day of closing can make a difference of how much $$$ will be required at closing, to the tune of several hundred or thousand dollars.



nevaehs_gaze -> RE: house-buying question (9/2/2008 11:56:44 PM)

Wow, thanks for the tips, APZR!



APZR -> RE: house-buying question (9/3/2008 12:38:21 AM)

Tis what I do for a living. Even if you aren't buying from me or buying one of my houses, I'll shot you straight. I'd rather help someone get into the right home, than just sell you on a monthly payment. [;)]



FreeEagle -> RE: house-buying question (9/3/2008 8:57:31 AM)

If you're looking at buying a home - I'd really look into buying a foreclosed home, or even a tax lien home. When you go to look at homes, don't be in a hurry - there are plenty to pick from right now. Make a list of what you're looking for #rooms, room sizes etc. Pray about it and when you're out looking you will both know the right house before you get through the house. Look at your house as Cost Per Square foot, instead of cost for house. Check with your banker before hand to see what you can qualify for (for most 39% of your take home pay), and don't max your limits. The challenge with most foreclosed homes is you need to be crafty w/ financing, and often can't move in right away. Where as a regular loan you have to move in within 30 days, after closing. Just remember the word mortgage is derived from the Spainish, and means " Debt to Death".



BlueAdept -> RE: house-buying question (9/3/2008 3:26:48 PM)

I will disagree with FreeEagle for the following reasons. If you are purchasing a forclosed home, there are very likely a number of repair items that could need done very quickly after the purchase. Your ability to get in and do inspections could be limited, so you could also have issues with getting a mortgage loan.

Better to pay an inspector to come in and tell you what needs done; then arrange to get either the work done, or a reduction in price so you can get it done.

Something else you will want to think about, what are you planning on doing about furniture for the house? Do you need a new fridge? Dishwasher, washer & dryer....etc. You need to have some extra cash built in for those items as well. What about curtains? etc.... Just purchasing the house will take 10-25% depending on downpayment, then filling it with stuff well that is another whole ball game. You can spend as much or more to put all the furniture in there, and you really don't want to plan on a house payment of XXXX, then get the shocker of also having YYY for the things you put in it.

Saving 20% for the downpayment can save you a huge amount per month. By avoiding the PMI which can add an additional 60.00 a month onto the bill. That 60.00 doesn't reduce the balance, or help you in any way. That is assuming you pay 10% down, only 5% would be closer to 90.00. Here is the link to support that. http://www.westga.edu/~bquest/1997/costof.html

Good luck on your savings.



3cappuccinosmom -> RE: house-buying question (9/4/2008 6:43:15 AM)

The forclosure idea is a possibility. There are some very, very nice homes out there. But you should probably do the search with a realtor and not by yourself because as mentioned, there are some issues a little different than regular home buying.



BlueAdept -> RE: house-buying question (9/4/2008 10:38:16 AM)

You will likely have to pay the realitor out of your own pocket as well, because most foreclosure homes are not being listed by a realitor. Banks don't generally list them with realitors. The former owners might have listed them prior to the foreclosuer but likely that is gone now.

Most realitors are not willing to do this for free, so that is another 3-7% of the sale price. There are realitors that do this as a specialty.



APZR -> RE: house-buying question (9/4/2008 11:47:07 AM)

quote:

ORIGINAL: BlueAdept

You will likely have to pay the realitor out of your own pocket as well, because most foreclosure homes are not being listed by a realitor. Banks don't generally list them with realitors. The former owners might have listed them prior to the foreclosuer but likely that is gone now.

Most realitors are not willing to do this for free, so that is another 3-7% of the sale price. There are realitors that do this as a specialty.


Buying, remodeling, and selling REO (foreclosures) is how I make my living. There are a lot of tricks and traps in this business, so you definitely need someone who has many years experience in real estate, valuing, and even contracting. When working with a buyer, I typically act as a buyer broker so that I can properly advise my clients. Using your neighbors daughter to buy a REO, just because she's an agent and your neighbor/friend, can be a big mistake. It's not just about knowing how to "read" a property to estimate repairs, it's about knowing the government and banking system to get them to accept the offer and get to closing... you will be dealing with big box bureaucracies who do not do things in a reasonable order or timely manner. [;)]



relady -> RE: house-buying question (9/5/2008 11:54:11 PM)

quote:

You will likely have to pay the realitor out of your own pocket as well, because most foreclosure homes are not being listed by a realitor. Banks don't generally list them with realitors.
Actually, in our area (St. Louis) this is very not true. All our brokerages have someone in house that specializes in foreclosure listings and they are listed just like any other home.

They can be very difficult for someone to buy who is looking for a home to move into, however. As has been stated, any kind of government backed loan program will not work for a foreclosure.

Almost every buyer I get comes my way initially wanting a foreclosure. See, they think they are going to get a really nice house really cheap. LOL, if the house is move in ready, the bank is going to price it at market. Usually after going through a few homes with no plumbing, and no water lines cause the copper's been stolen they decide maybe a foreclosure isn't for them at all. And when i tell them THEY assume all the risk that usually nails it for them. I've yet to sell a foreclosure to anyone but an investor. to top that off, a lot of the banks want cash contracts.

There are just so many potential issues inherent in purchasing foreclosures that most buyers just aren't equipped to deal with.

Closing costs can run as high as 7%, depending on the lender.

quote:

It's not just about knowing how to "read" a property to estimate repairs, it's about knowing the government and banking system to get them to accept the offer and get to closing... you will be dealing with big box bureaucracies who do not do things in a reasonable order or timely manner.
Couldn't agree more!! Banks are just amazing in their bureaucratic level. It's one of those things you almost have to experience to believe it exists.



nevaehs_gaze -> RE: house-buying question (9/6/2008 6:25:07 AM)

There's a lot to look into! It actually seems quite overwhelming. Is there a concise book or website I could use to research such tips and tricks of the trade? As I mentioned, we still have several years before being able to purchase a home, however, I want to prepare myself as much as possible in that time.



coolfamily6 -> RE: house-buying question (9/6/2008 11:51:31 AM)

12 yrs ago we bought a foreclosure with the help of an agent that specialized in them. He knew his stuff. He asked us how much work we were willing to do and what amount of $ we want to spend TOTAL including any repairs. He only showed us houses within that range.

Our house needed appliances, cleaning, paint, the master bath was unusable and the a/c fixed. It was "red" tagged by the county for the pool being out of complaince but we were able to negogiate the bank dealing with that. We played hardball and were willing to walk away. We bought an 1800 sq ft house for 71,500. The day after we signed our contract the bank got an offer for 82,500 as is, so we knew it was a bargain.

The yard was so overgrown that you could not see the front of the house. It took us and 8 friends two weekends of cleaning just to be able to being working on the repair that were there. We lived in the house from 1993 until 2001; we sold for 130,000. We only invested around $8,0000 TOTAL to fix it because dh did all the work. DH is in construction management, so he knew what to look for as far as the foundation and bones of the house. It pays to know what you are getting into. You cannot go into a foreclosure thinking only of the reward at the end but it can be a good experience.



APZR -> RE: house-buying question (9/7/2008 1:08:52 AM)

quote:

ORIGINAL: nevaehs_gaze
There's a lot to look into! It actually seems quite overwhelming. Is there a concise book or website I could use to research such tips and tricks of the trade? As I mentioned, we still have several years before being able to purchase a home, however, I want to prepare myself as much as possible in that time.



It is overwhelming, that's why I told you to hire an experienced broker! In the current economy, this is a moving and changing business on a daily basis... by the time a book or magazine article is printed, it's already outdated. However, you indicated that you are several years out from being able to buy, and the market conditions will have changed again may times over since. Therefore, it will do you no good to look at anything on the market today.



relady -> RE: house-buying question (9/7/2008 1:13:41 AM)

Since you are several years out from actually buying, what might be worth your time at this point would be getting information on what the buying process entails in your area. Get information on the contract documents used, disclosures given, who pays for what, etc. Knowing those things will remove much of the fear, I suspect. However, keep in mind that rules and practices change with time, so keep yourself updated. Don't bother finding out how things are done in New York if you live in Illinois.

I am with APZR - find yourself a good agent/broker who will keep you on his/her mailing list and help you get yourself educated and prepared for the time that WILL come when you are ready to purchase your home.

Good luck!



nevaehs_gaze -> RE: house-buying question (9/7/2008 11:09:20 AM)

Thanks, all!



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