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Thinking about buying a home..just have some questions


Maikeru-sama
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I am thinking about buying a home after my apartment lease expires as I will have to probably move anyway because my new job is not close to where I live. Here are some questions I have:

1) Should you buy a house when you are single, or should you wait until you get married?

2) I live in Irving, TX (Las Colinas) and I pay about $810 in total for rent but I am sure that is going to go up when I renew. For people that are familiar with the D/FW area, where could I find out if I could get a house payment around that much or for a little more. I figure that is better to pay $900 or maybe $1000 for a home than pay $800 for an apartment.

3) My Credit Scores are in my signature (as of august 2008), what type of interest rate should I expect?

4) Can you find houses with less than 3 bedrooms? I heard they are rare because they are hard to sell.

Right now I am just thinking about it as I plan to get my MBA or a Master's in something starting next year, so I don't know if I can buy a house and go back to school.

Thanks

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1) Doesn't matter. But that's not a dumb question. You absolutely need to be assessing your entire life when you're considering buying a home. Ask yourself what your financial capabilities and life goals are over the next 5+ years.

2) Use http://www.zillow.com. For a very rough estimate, plan on your monthly payment being about $7 for every $1000 you borrow. (I think zillow has a calculator too).

3.) While your FICOs would have been a shoe-in for a conventional mortgage two years ago, they're rather borderline now with all the Wall St. issues. You might want to consider looking at a FHA loan. Check out the front page of www.bankrate.com for an estimation of the current rates. While those are conventional rates, FHA rates are very comparable. Things can fluctuate greatly though (I recently saw a variation of a whole percentage point over the span of a two-three week period).

4.) Yes you can find them. Starter homes regularly have only two bedrooms. I would guess that would vary on your area though. Again, check Zillow.

5.) You need to show continuous employment for a two-year period. That's a pretty big requirement, but I don't know just how flexible it is. I'm sure one of the pros here can answer it better than I can.

You can find a good deal on housing right now. Odds are prices will continue to drop until the end of next summer and then bottom out. However, I also believe that the Fed is going to almost be forced to start raising interest rates soon to fight the runaway inflation we're heading into. Now's a good time to buy when you consider both the real estate market and the low interest rates available. However, don't buy unless you plan to stay put for at least the next five years. It's going to take a while to recover from this economic hangover.

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IMHO you are long term better off buying a 3 bedroom 1 1/2 bath or 2 bath home. That size opens up a lot larger market for when you sell. don't buy something that is hard to sell, as you will have the same problem in 5 years or so when you want to sell.

The home prices in your area are stable to moving down a bit, there has not been any appreciation in the past 2 years that I have seen.

Get a home that is close to good schools and try to be in the 100-125K range for your first home. When you buy, make it a condition of the sale that the seller provide you with a years home warranty. Have a home inspection done.

Charles

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IMHO you are long term better off buying a 3 bedroom 1 1/2 bath or 2 bath home. That size opens up a lot larger market for when you sell. don't buy something that is hard to sell, as you will have the same problem in 5 years or so when you want to sell.

The home prices in your area are stable to moving down a bit, there has not been any appreciation in the past 2 years that I have seen.

Get a home that is close to good schools and try to be in the 100-125K range for your first home. When you buy, make it a condition of the sale that the seller provide you with a years home warranty. Have a home inspection done.

Charles

So what type of person does a home inspection? A lawyer or is their a niche industry for that?

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  • 2 weeks later...

Yesterday I started the steps to get pre-qualified for a loan.

The Mortgage Planner said that my Credit and DTI Ration was great. Right now my DTI is around 23%.

The question I have is in regards to the Interest Rate. The Mortgage Planner was using 7% Interest Rate as a worst case scenario. She said the Interest Rate depended upon the Stock and Bond Market and that I probably wouldn't know what my Interest Rate is until close to closing.

I asked her what the best case scenario was and she said 6.25% or 6.5%. Is 6.25% or 6.5% a good Interest Rate and is there a way I could get something in the 5s?

She gave me the number of a realtor, so I am going to call him today. However, if my Interest Rate is 7%, I will definately not get a house. I know people with credit that is not even close to mine that have 5% Interest Rate, but of course, they bought their house a few years ago.

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Thanks for the information.

Okay, I just talked to a Realtor and he said he found a house. I want to relay some of the key points and ask you all if you think it is a good deal.

-There are two houses available that cost 175K and 180K to build

-I could get one house for 155K and the other for 165K

-The builder is DL Horton

-For thos who are familiar with Texas, it is the Avalon Community in Wiley, TX

-He would give me $1800 to help pay for buying out my Apartment lease or whatever I choose to do with it

-The builder would give me 5K and pay for the title the title policy. I believe it would total $6500

The only problem is that they would probably want to close by the end of November and that wouldn't give me enough time to save like I would want.

Also, I am paying about $810 in rent, the Realtor said I would be look at almost $1400 to move into this house. That in itself kind of scares me about.

Thoughts?

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Whatever you do, don't rush into this. Buying a house is a major investment and you need to know beyond a shadow of a doubt that you will be able to afford the house today as well as 2 or 3 years from now. Is your employment/income stable? It is a fixed rate or ARM? What about the down payment?

Even if you have to pass on this deal, there still will be great deals available past Novemeber.

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Whatever you do, don't rush into this. Buying a house is a major investment and you need to know beyond a shadow of a doubt that you will be able to afford the house today as well as 2 or 3 years from now. Is your employment/income stable? It is a fixed rate or ARM? What about the down payment?

Even if you have to pass on this deal, there still will be great deals available past Novemeber.

No, it would be a fixed interest rate, I would never do an ARM.

My employment is very stable and I would have to put 3% down.

Right now I am leaning towards continuing to rent.

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Did they ask you if you would be interested in buying the rate down to something you are more comfortable with?

Did you take a closer look at the closing costs, APR, and any other fees associated with doing this loan?

You have made it clear that you are "new" to the home buying process, respectively, but swirlgirl is right, your not in a rush. Take your time and do the research, shop around, you can never ask too many questions. Buying a home is essentially your biggest investment. You want to make sure you do all of your research and are 100% confident going into it before you buy.

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If you don't have prime scores (760+ FICO in this market) and 10% or more to put down, you will not qualify for a conventional mortgage. Period. Credit is very tight at the moment. You can still get an FHA-insured mortgage though, depending on the content of your CR. Generally you need stable employment and a clean CR for 2+ years. Past foreclosures and BKs are ok as long as they're 2+ years old.

Do not work through a traditional real estate agent. They are legally subagents of the listing office. They will not negotiate the price on your behalf and are generally pretty buddy-buddy with builders, lenders, and other people who are trying to get some cash from you. Contact the National Association of Exclusive Buyer Agents (NAEBA) and get a referral. I just closed on my first house last week. I fired the initial (traditional) agent I was working with because I felt she was being less than 100% honest with me. The exclusive buyers' agent we retained--and closed with--was a much, much better experience.

I'm going to echo what other people have said: take this slow. You seem to want to jump into this head first. We took five months to buy our first house: physically toured 20+ houses, negotiated with four different lenders, went through two agents, and spend countless hours researching homes and the home buying process online.

Without a doubt, you're going to get screwed if you're both a) in a hurry and B) inexperienced. The real estate business is lot like the funeral business in that they rely on people making emotional decisions under a lot of stress. You have to keep a cool head about you and read, read, and read some more about the whole process.

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Hi Maikeru-sama

Several things.

First of all, conventional financing is not currently the way to go, for virtually anyone. With FHA you currently have to put 3% down (3.5% in Jan) With all loans, once you get over 80% LTV (percentage of the purchase price you are borrowing) you have to pay something called Mortgage Insurance. FHA MI is about 1/2 the rate of conventional loans.

Interest rates are either the same or lower than Conventional.

Secondly, mortgage bankers work from certain guidelines as far as determining what someone can afford. This is figured using something called DTI (Debt to income Ratio) The problem is that whereas with some people the guidelines fit their spending/saving lifestyle, with others it doesn't You will have to determine what your habits are. I would right now put an additional 600 into a savings account and see what happens with your lifestyle. That is what it is going to be like paying 1400 per month.

Lastly.

Many sales people (Sellers/builders/selling realtors etc) will tell you that the deal will be better if you do something now. Just be aware of that mentality. I assure you that if you don't buy either of these two homes by the end of November, one will probably be available in Dec or Jan or there will be another home on the market that will be just as good.

This is the time in the housing market to get concessions. Ask for 6% of the sales price. you probably won't get it, but if you get 5% that may have you able to "buy down the rate" etc.

I don't understand how he can give you money back to pay to help you buy your apt lease out. That needs to be done above board for the loan to be legal, and if it is done that way, it is a sales concession, which makes you at 4%. That is understandable, but has to be straight up.

Charles

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I was going the FHA route. My median Credit Score is 762, my DTI is around 23%, no baddies and the Mortgage Lender, said I would have no problems.

I have decided to move to an apartment closer to my new job, sign a 7 month lease and save for a house in around June/July of next year.

There were about 2 spec homes I was interested in, but I didn't feel comfortable with the amount of money I would have in savings after I acquired the home.

I am going to attempt to put 20% down and I may increase the loan amount slightly. According to the Mortgage Lender, I may have qualified for about 200K, but I only want 150K.

Yeah, I learned about the 20% down or you have to do PMI. I am told that if you do not put 20% down, once you get 20% equity you can cancel that, but I don't know if that is a right or at the descretion of the PMI Company.

Both the Lender and the Agent were very professional but the REA did try to tell me the 2 houses would be gone soon, but I told him that that tactic wouldn't work and I knew I could find a similar deal 6-7 months from now.

Also, I hope I didn't give the impression that I was in a hurry, because I really wasn't. I was just trying to see what was out there. I will never take on a 30 year responsibility lightly.

Thanks for the help

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OP, I am so envious of your scores!!!!!!!!!!!!!!!!! 8-) I hope to one day be like you. That's right, don't let ant REA tell you that those types of deals will be gone because when you are ready with your scores, income, dp and dti you will basically be able to write your own ticket. Congrats!!!!!!!!!!!!! :lol:

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I'm going to echo what other people have said: take this slow. You seem to want to jump into this head first. We took five months to buy our first house: physically toured 20+ houses, negotiated with four different lenders, went through two agents, and spend countless hours researching homes and the home buying process online.

When you negotiated with 4 lenders, did they pull your credit 4 times?

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OP, I am so envious of your scores!!!!!!!!!!!!!!!!! 8-) I hope to one day be like you. That's right, don't let ant REA tell you that those types of deals will be gone because when you are ready with your scores, income, dp and dti you will basically be able to write your own ticket. Congrats!!!!!!!!!!!!! :lol:

Appreciate it and it is all thanks to this site, which I joined about 3-4 years ago.

The REA was very careful to not play games with me, but he say that the 2 houses he wanted me to look at would probably be gone but agreed with me when I stated that I would probably be able to get those same kind of houses in 7 months.

Now all I need to do is just some more time to save and research further.

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