Snarky Brides

NWR- Homebuying question(s)?

Ok. FI and I are starting to get the serious homebuying itch.  Our apartment lease is through next May; we probably won't really really look at houses until early spring.

However, we'd like to at least get an idea of where/what we like.  We're pretty open to anywhere in the whole metro area, so we need to narrow it down a little.

Anyway.  Any timeline suggestions?  We know about what we'd be comfortable paying each month, but we'd like to get pre-approved as well.
Would it be ridiculous to go into a bank this early and start talking about mortgage options? 
What about realators? We're both a little worried about the constant harassment.  (We went to a few open houses this summer and get emails allll the time.)

Ok, really... any advice is appreciated!

Re: NWR- Homebuying question(s)?

  • edited July 2010
    I think a good idea is to get out there and see what you can buy for your money. We went looking recently to see if we could buy a bigger house, and we didn't like what our money could buy in our area. Now we're looking in different areas and that's opened up a whole new set of options for us. We're talking to the bank even though we don't have set plans to move, because we don't want to be caught by surprise later on as far as mortgages go.

    I don't think it's ever too early to gather information. You might also want to see if you can break your lease at all, just in case you DO find something earlier than planned that you don't want to pass up.
  • Sometimes a pre-approval for a mortgage has an expiration, so I would call and speak to someone at a lending institution and find out what the guidelines are for being pre-approved and when you actually plan on "looking" to purchase.
  • - You probably don't want to get preapproved until about 6 months out, because then you'll have to send in updated income documentation again. My advice is to wait until January and you have filed taxes, so you have all the W-2s and everything together. Also, it will make it a little more complicated if you aren't married, I think. 

    - Make sure when you are computing a mortgage payment that you are including property taxes, any HOA fees, mortgage insurance, and homeowners insurance. Those are all usually non-negotiables and can significantly increase your monthly costs. 

    - Survey the neighbors, ask the seller, or ask the realtor to find out the average monthly utility costs for the house. You don't want  a big surprise your first month in the house. 

    - Ask on your local board, friends and family for Realtor recommendations. I used a guy I worked with for my first house, and then a friend of mine from college sold that house for me and helped us buy the new one. It is my experience that the ones that sound like they are trying to hard, usually are.

    - Be realistic about closing costs and your down payment. Get estimates from your Realtor for cash needed for closing before your option period ends. If its not going to work, then you've only lost your option fee (usually $100).
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  • Go meet with a few mortgage companies and get pre-approved. You can also see your credit scores and what your current income/debt ratio is. Personally I would stay as far away from Metlife or Wells Fargo/Wachovia as you could, because they were raging incompetant morons when we dealt with them (like, lost Dh's military eligability paperwork morons).

    Realtor shop like you would be dating. You will probably be spending a lot of time with them and want one you get along with. Let them know what you want right off the bat and don't feel bad for changing your mind during the process. We switched cities 3 times, switched house styles 4 times, and at the end really got to the point where we would say "no" driving up to the house and would turn and go to the next one.

    I had the ultimate in house hunting horror, but I think it's a good idea to be prepared for the worst. We started casually looking in March '09, seriously looking in May '09 (right after the wedding) and did not move into our current place until May 1st (happy anniversary to us!) '10. We had 2 houses fall through at closing, and it was not fun at all after the first month.

    Also, short sales are evil, and inspectors are a must.

    I believe my aunt used to do real estate in that area, want me to get some Realtor recommmendations for you or areas to look in?

  • Our pre-approval was only valid for 90 days.  So that's something to consider. 
    Ditto on pulling your credit reports now.  Make sure everything is correct prior to getting the pre-approval. 

    Also, something weird happened to me in regards to what was being reported by my car loan.  When I first bought the car, my payment was around $450.  However at that point I had not sold my 1st car, and when I did, I used the money I got from that car and put it towards my car loan.  So that dropped my monthly payment to around $250.  However, when the bank ran my information, my car loan payment was still coming back at $450, which was negatively impacting our debt to income ratio.  I ended up having to refinance the car before they would accept that the payment was really $250. 

    Also, if you pay off any big debts prior to being pre-approved, I was told it would take about 90 days before it would show up on their reports when they pulled our credit.  So if you want to pay off anything prior to buying a house, do it 90 days before getting pre-approved so that your debt to income ratio is correct.
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  • OK, I have a question. About how much money is needed to cover the down payment/closing costs (just a roguh estimate)? I know that you can sometimes negotiate with the buyer to cover closing costs, but what about the down payment?

    It will be a looong time before we can buy, as we have nothing in savings, so I'm wondering what we need to do in preparation. Sometimes I don't think we'll ever be able to buy.  
  • Oh, and be prepared for writing a large check when you put in the house offer. For example our offer was $165k and we had to write a check for $1600 as proof that we were serious about purchasing the house. If the deal falls through due to the seller or inspection you get the money back. If you just decide that you don't want it anymore with no fault to the seller you won't get it back.

    Also don't make yourself house poor. Our absolute top budget was $190k, but we told our Realtor and ourselves that $175k was our absolute top. You want to have extra money each month for all of the little things.
  • Katie- definitely let me know of any realtor recommendations (or horrors!) I have a few coworkers who have also purchased homes, so I have some ideas, but I'm always up for more information!

    Sarah- we were wondering about that whole not-being-married thing.  I'm also switchings jobs this fall and will (likely) get a significant raise come spring.  I'm ok getting a low-ball estimate on the loan though. Stupid question- does it cost anything to get pre-approved?? 

    MilkDuds- totally onboard with the credit score.  I actually had my identity hacked (not as terrible as totally stolen, but I had a credit card opened in my name), so I've been monitoring my credit pretty regularly.  It's *finally* back into the good range after about 2 years of fighting to get it cleaned up.

    Sept- we do have the option of breaking our lease, I guess.  It's like $200 for each month remaining or something? Unless we find a subleaser (easy to do.)  FI is all upset, but I figured- if we're dropping $150k+ on a house, we can figure in another grand to break the lease if needed ;)
  • Sarah brings up some great points.  Our property taxes are about $600 a month, although I know it varies from state to state.  In Texas all the counties have websites that list how much they have valued a house at for the year, so it's easy to figure out how much property taxes are.  We used those sites when looking at foreclosures that were priced very low, but were valued higher by the county.  In some cases, the property taxes pushed the payment over what we were comfortable spending. 

    If you are really interested in a particular house, ask the homeowners how much their electric/gas/water/etc. bills were.  We were able to get the bills for the previous 6 months which helped us budget. 

    If you are looking at a house that has an HOA, be sure to check their by-laws.  Some HOAs are really picky about certain things.  An HOA in the same city as me said that you could not park trucks in your driveway.  Some people didn't know this before they bought a house in that neighborhood and it made things very difficult for them.
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  • Thankfully, my dad has offered to help us out with a down payment if needed.  FI and I don't have a TON in savings (especially after the wedding), but our apartment rent is insanely cheap right now.  We're using that as a way to save like crazy.

    That's good to know about the 90 days thing, Steph. 

    FI and I are planning on paying off all credit cards (too many) before the wedding, so waiting until about February to really look sounds like the best idea.
  • Steph- FI and I were just looking up property taxes this morning!  That's what led me to just post this question.  I figured you all have been through it before :)

    From what I've been told, MN sucks for property taxes, but as long as we have a realistic estimate, I'm ok. 
  • The amount down depends on the loan, but I know when we were looking 3% down were big, I think 10% down was normal. We went VA loan so we didn't need a downpayment but had to pay a $3000 fee which rolled into the loan.
    Our house was $175k and I believe closing costs ended up around $11,000, paid by seller. I believe our agent said they normally run $4k - $15k depending on the price of the house and people involved.

    You also have to take into account moving costs, inspection (about $300 each time we needed it), start up fees for utilities, etc.

    One thing our lender stressed was not changing jobs within 60 days of the deal. If you switch jobs after getting the pre-appraisal they could withdraw the approval or change your rate because you are now looked at as a risk.

    Our pre-approvals were free, but I don't know if that was a VA thing or normal.
  • In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_snarky-brides_nwr-homebuying-questions?plckFindPostKey=Cat:Wedding BoardsForum:17Discussion:1a0174d4-3ebc-43f2-9af3-348e686bbbd5Post:d4819158-f95e-4794-ad29-c130a5c346fd">Re: NWR- Homebuying question(s)?</a>:
    [QUOTE]Stupid question- does it cost anything to get pre-approved??  Posted by Steph0871[/QUOTE]

    I'm not sure about each individual bank, but we went through our credit union and it was $75. 
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  • Holy crap, $600 per month for taxes? I love my town *hugs house*

    Taxes were a bit part in our look too. We had two houses with the exact same asking price, but one had $700/year taxes and the other had $3000/year taxes. That's a big difference in monthly payment.
  • In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_snarky-brides_nwr-homebuying-questions?plckFindPostKey=Cat:Wedding%20BoardsForum:17Discussion:1a0174d4-3ebc-43f2-9af3-348e686bbbd5Post:3a6d197b-a934-4940-afe0-68ad4f8d89ba">Re: NWR- Homebuying question(s)?</a>:
    [QUOTE]In Response to Re: NWR- Homebuying question(s)? : I'm not sure about each individual bank, but we went through our credit union and it was $75. 
    Posted by steph13055[/QUOTE]


    This makes me cringe.  I wonder if I should be buying a house when a $75 fee annoyes me ;)  Obviously this will be the largest purchase I/we will ever make, so I should feel a little concerned over the costs.

    Still, FI and I have been trying to watch money a lot more lately (wedding? homebuying?), so I've become a little protective of my bank account. haha
  • In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_snarky-brides_nwr-homebuying-questions?plckFindPostKey=Cat:Wedding%20BoardsForum:17Discussion:1a0174d4-3ebc-43f2-9af3-348e686bbbd5Post:965cd882-b6a7-407a-9861-738c0d18c871">Re: NWR- Homebuying question(s)?</a>:
    [QUOTE]Holy crap, $600 per month for taxes? I love my town *hugs house* Taxes were a bit part in our look too. We had two houses with the exact same asking price, but one had $700/year taxes and the other had $3000/year taxes. That's a big difference in monthly payment.
    Posted by katiewhompus[/QUOTE]


    holy crap.  From what I've been seeing, taxes here are about $3500/yr for a $200k house.
  • The Nest has a lot of great advice for house buying :)

    "The best and most beautiful things in the world cannot be seen or even touched, they must be felt with the heart." ~ Miss K ~
  • In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_snarky-brides_nwr-homebuying-questions?plckFindPostKey=Cat:Wedding%20BoardsForum:17Discussion:1a0174d4-3ebc-43f2-9af3-348e686bbbd5Post:834a4a50-f8b6-444a-8cf5-7570d5c1c42d">Re: NWR- Homebuying question(s)?</a>:
    [QUOTE]In Response to Re: NWR- Homebuying question(s)? : holy crap.  From what I've been seeing, taxes here are about $3500/yr for a $200k house.
    Posted by Steph0871[/QUOTE]

    In NJ, mom pays almost 10K for taxes and one of her friends is sliding up towards 15K a year.  It sucks here, which is why FI and I are saving to move to NC or MD/DE after we're married.   We have some time to save, though :)

    Good luck!
  • Hi Steph-
    I'm actually selling in mpls as of last month and moving to my FI house.  My taxes for  about a $130,000 home are around the $1500 a year mark.  Over the past 10 years it really has varied quite a bit.  Note that you can set up an escrow so that you are not paying out a lump sum all the sudden.  I cannot recommend enough that it is a good idea to go for a home below your approved loan rate as you can expect that the taxes will keep going up and sometimes more than your wages might in a year.  Also it is a great idea in that the first year there will be all sorts of expenses that just seem to add up (like lawnmowers, and rakes and flowers for the garden) that you just don't really think of.  Not to mention any renovations that you really want to do right away.  I have a great realtor as well - that I cannot say enough nice things about. Let me know if you need a name.  I also interviewed quite a few before selecting as their fees can really be drastically different.
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  • I didn't read through all of thse in detail so someone may have mentioned already, but my biggest advice is to actually not get pre-approved until you are ready to seriously start looking. Every time your credit is pulled within a certain amount of time span it will count against you negatively. I learend this the hard way. I was speaking with one bank and after I went through the processes I realized they were trying to screw me over. So I switched banks, which meant that they had to pull my credit again. By them doing this is actually knocked my credit literally one point below where I was forced to pay a point (an extra $1,000 in my closing costs).

    If you find the right house, with the right interest rate (they are really only going to go up from here) then it is probably worth it to break your lease.
  • In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_snarky-brides_nwr-homebuying-questions?plckFindPostKey=Cat:Wedding BoardsForum:17Discussion:1a0174d4-3ebc-43f2-9af3-348e686bbbd5Post:4e2b7b08-6b4c-40ef-b561-3446f7d406e4">Re: NWR- Homebuying question(s)?</a>:
    [QUOTE]In Response to Re: NWR- Homebuying question(s)? : In NJ, mom pays almost 10K for taxes and one of her friends is sliding up towards 15K a year.  It sucks here, which is why FI and I are saving to move to NC or MD/DE after we're married.   We have some time to save, though :) Good luck!
    Posted by npasquale16[/QUOTE]

    That makes me want to cry! We purchased out home for $175k (but it's assessed at $250k which is where the taxes are based on) and it's only $1050/year for taxes. Then again, that's why we moved out of the city lol.
  • In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_snarky-brides_nwr-homebuying-questions?plckFindPostKey=Cat:Wedding%20BoardsForum:17Discussion:1a0174d4-3ebc-43f2-9af3-348e686bbbd5Post:52624441-f258-4b41-888d-47afd080d225">Re: NWR- Homebuying question(s)?</a>:
    [QUOTE]In Response to Re: NWR- Homebuying question(s)? : That makes me want to cry! We purchased out home for $175k (but it's assessed at $250k which is where the taxes are based on) and it's only $1050/year for taxes. Then again, that's why we moved out of the city lol.
    Posted by katiewhompus[/QUOTE]


    It's insane here and by no means does my mom have a huge house.  In Fi's hometown, a huge, multi-bed and bath house, is about $250K.  Here, it would be about $900 K easily.  Most of my kids live in homes that are appraised in the high 900s to low millions just because of the county and location (and even with the market they're still very high).

    We rent now, but we've decided we have to move once we're married.  We could never afford anything here with our salaries and still be able to enjoy life.
  • That sounds like the difference between our old town and here. We went to a few open houses just to get ideas for what we like. We could get a 800sq ft townhouse (2 bd, 1 bth) for $499k, or we could move out there and get a 2008 construction 4 bd, 2bth for $200. Buh bye DC.
  • Same with us. I talked to both of my parents about house stuff last year... my mom has a pretty decent house- about 2000 sq ft, HUGE yard, blahblahblah and she paid about $135k in 2005.  A similar house here is easily $250k. Sad story.

    Bell- please feel free to PM me any info :)

    Thanks for all the advice, ladies!
  • In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_snarky-brides_nwr-homebuying-questions?plckFindPostKey=Cat:Wedding BoardsForum:17Discussion:1a0174d4-3ebc-43f2-9af3-348e686bbbd5Post:4dfabe6b-9cb7-4023-bc13-9dc5afb265d7">Re: NWR- Homebuying question(s)?</a>:
    [QUOTE]We bought last winter.  Started seriously looking in Jan, closed in Feb. We walked into a deal we couldn't turn away from, but it caused us to SERIOUSLY scramble.  Two suggestions from our experience:<strong> If you receive a large monetary gift, make sure that the person who gives you that gift is going to be available to prove that it was a gift. We were required to show three different sources that a $1,000 gift from my g'ma was indeed a gift, not a loan</strong>.  I am not sure how far back the bank looks, but ours was within 3 months. If you are going to try to buy close to your wedding and you do plan on changing your name, either do it right away or wait. I don't know if this is common practice, but our bank recommended since I hadn't changed my maiden name, it would expedite the process to keep it until house had been purchased (I guess searching for two names-married and maiden- would have taken more time? I don't know the validity on that one, but it seemed to make sense)
    Posted by mag920[/QUOTE]

    Omg yes this. My mom gave me a $1000 check for my birthday and it caused all sorts of drama the day before closing.  Also make sure you have your past years taxes (we had to go back 3 years), along with recent paystubs, and bank statements.
  • In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/wedding-boards_snarky-brides_nwr-homebuying-questions?plckFindPostKey=Cat:Wedding BoardsForum:17Discussion:1a0174d4-3ebc-43f2-9af3-348e686bbbd5Post:52624441-f258-4b41-888d-47afd080d225">Re: NWR- Homebuying question(s)?</a>:
    [QUOTE]In Response to Re: NWR- Homebuying question(s)? : That makes me want to cry! We purchased out home for $175k (but it's assessed at $250k which is where the taxes are based on) and it's only $1050/year for taxes. Then again, that's why we moved out of the city lol.
    Posted by katiewhompus[/QUOTE]

    Holy cow - I knew Wisconsin was high but I am cringing now! Our house was $180,000 and taxes are over $4000 a year.
  • The Realtor is paid through closing costs. If you pay closing costs then you pay for your Realtor, is the seller agrees to pay closing they are paying your Realtor.

    But yes, the Realtor doesn't get any money until you close. I felt so bad for ours. They worked every weekend for a year to get their money.
  • I would suggest checking with your bank to see if they can do a pre-qualification.  They look at many of the same things that they would like at if you were to do a pre-approval, but it's not as "official" as a pre-approval.  IIts basically a rough draft of a pre-approval, but will give you an idea of what you may be pre-approved for.

    Then, when you are serious about looking, get a pre-approval done.  When I bought my first house, it was not as common for people to be pre-approved.  Having my pre-approval helped the seller choose me over someone else who had offered more, but was not pre-approved.

    I also recommed sitting down with the loan officer to figure out what kind of documentation you will need for pre-approval and loan closing.  Each bank typically requires the same info, but some require it for different time frames (for example - first house I had to provide 3 yrs. tax returns, second house I had to provide 1 yr. of tax returns)

    It's a great idea to pull your credit report along with paying for the credit score.  It will give you an idea of where you stand now, and it will help you find any discrepancies.  That will help eliminate surprises when you are ready to close.

    I also agree with PP's about documenting any monetary gifts you receive.  I was required to prove that my downpayment was actually mine, and not a loan (ie - it had to be in my bank account at least 90 days prior to closing).

    Talking to a loan offer should not cost you anything (at least it doesn't around here).

    Good luck in your house hunting!
  • IF you plan to look at any forclosures or short sales, the process can take quite a while.  a friend of mine finally closed on his short sale property 6 months after his offer.  not all of them take that long, but it's something to think about.  you can get some great deals on these properties, but they are also sold 'as is'.
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