Home Buying Questions

emarston1

FI and I are planning on starting the process relatively soon but we have no idea what we are doing.  We've been saving, have good credit, and all that jazz but where do we start?  How long does the process usually take?  Do you find a realtor first and then get preapproved, do you talk to your bank first?  I am seriously lost and starting to feel overwhelmed.

Our lease is up in March so ideally we'd like to have found a place by then but I'm not sure how feasible this is with everything we have to do.

Any advice would be greatly appreciated!  Thank you ladies!

corinne2010

We JUST did this process so here is my input:

I would shop around on websites like www.realtor.com or www.moveinmichigan.com. Find areas of interest, things you want in a home, things you don't want in a home, and things you may be able to live with. Keep in mind the taxes and school district. Also figure out how long you plan on living in this new home. If you plan on having kids, you would want a neighborhood that is children friendly and a good school district. As far as convenience goes, if being near freeways or shopping areas is important to you, start looking in areas close to shopping malls.

After you have a good idea about what you are looking for, contact a realtor. Our realtor sent us several updates every week based on our criteria. We would get a ton of e-mails that met our 3 bedroom, 2 bath requirement and in the areas we were looking in.

During that time, call around to a few mortgage companies and get some quotes. See which person you think you would communicate better with. Some lenders have more restrictions than others. For example, Bank of America would not even consider me because of the amount of time lapse in my employment, but I called 3 other places and they were happy to help me. Interest rate is very important. The lower the better. We ended up using Quicken Loans and despite what everyone says, we had a pretty good experience. I don't think this process is going to be completely seamless, but I got alot of help from our lender at Quicken.

Once you are pre-approved, you can start putting offers in on houses. When your realtor sends you a list of houses that are potential matches, I would recommend doing drive-bys. Check out the neighborhood. Pictures can be very deceiving. Then from that list, tell your realtor and see if they can schedule a showing of the houses. This part became very frustrating to us because out of 10 houses we would go see, we would end up liking maybe 4 or 5. From those 4 or 5, only 1 or 2 were available to see because the other ones already had offers on them. You must have patience. Inventory turns around pretty quickly lately because of supply that is demanded.

If you have any other questions, let me know! I also can give you our realtor's number and the guy at Quicken's name and number. I was a first time homebuyer and I found that everyone at Quicken was very patient with my phone calls and silly questions.

Good luck and happy hunting!
(It really is alot of fun!)

boogerbearoriginal

We just went through the process of buying our first home - it is definitely a bit overwhelming.

Techincally we talked to the bank first, about a year before even starting looking to see where we needed to be financially, what our loan options were, what kind of down payment we wanted to do, etc. But that was more for us to get ourselves situated for the future since we knew we wanted a house but weren't ready to buy at that time.

We started by looking at some houses online to get a feel for what we liked, but you will need to have pre-approval to put an offer in (at least in order for your offer to be taken seriously) so you should definitely get into a bank to at least talk with a mortgage professional. They can asses your options and tell you about what to expect. We ended up getting our mortgage through my credit union - they were awesome and their fees were low and their rates were comparable to the lowest rates online.

From the moment we got preapproved to actually closing on a house was about 3 1/2 months. And we lost about a month of time waiting on bank approval of a short sale that we didn't end up buying and about 2 weeks on a house we lost in a bidding war (long story).

If you have a nice chunk of savings ready and find something you like that is not a short sale you could be closing in about 2 months or less easily.

Let me know if you have further questions - either post, PM or email me.

aprillm730

We also did this, we've been on our home for a month just about.

First we decided on a budget

We hooked up with a real estate lady that Bryan's parents knew

She hooked us up with her go to mortgage company/guy

She sent us lots and lots of listings after asking us questions about what we wanted out of a house

We went out searching for 2 days, we loved a house on the second day

We put in an offer

Offer was accepted

We were in the house within 5 weeks from the day the offer was accepted.

sinnedambition

We got preapproved first.

Decided what we could comfortably afford (for us, this was ALL of our bills on one salary)

Decide where we wanted to live.

Find an amazing realtor (Terry and Pam Johnson from Advantage are AWESOME if you are in Macomb/Oakland County)

Then we looked at houses. We only went out three times. The first time we looked at 12 houses, put an offer in on one and then ended up waiting 3 months (because it was a short sale) and then I lost my job so we lost the house. The 2nd time we looked at 7 houses and didn't like anything. The last time we looked at 10 and found the house we live in now.

Best advice: Go with your gut. If you hate it don't waste your time. Decide on your MUST haves (for us it was garage, basement, three beds, and a big kitchen and backyard), don't settle (there are good houses out there).  And ALWAYS get an inspection!

Julz629

I would definitely get referrals for realtors and mortgage bankers as there are a lot of really crappy ones out there.  I worked at Quicken for about 9 months so I can assure you there are a lot of sleazy ones out there who are just looking to make a buck, but like Corinne said, there are also good ones out there.

Sue-n-Kevin

Sorry, long email coming.......

The above advice is really great, and since it's been forever since I bought my first home, and have purchased one since, I'd say go with the above since it's recent and based on current situations.

I'll reiterate and expound upon the following points though, from my experience and others I know (plus I just re-financed when the interest rates were 4.25%):

- Figure out your budget (just like with a wedding). It's not just what you pay for your rent right now. You'll have taxes & insurance, plus the upkeep on a home. It's not like buying any other thing you have experience with. Unless you are buying a brand new home, that was just built, a house has flaws and ongoing repairs that can cost significant money. In addition to looking for the obvious (number of bedrooms, bathrooms, size of home and yard), consider how old the roof, furnace, a/c, hot water heater are. Make sure you get that info from the realtor or seller. I've lived in my home for 15 years, and have replaced ALL the things I mentioned. I've replaced the air conditioning unit twice! Make sure you actually LOOK at the furnace and hot water heater. There should be stickers on them for when they were installed/replaced.

- Once you figure out what you can seriously afford for the mortgage, taxes & insurance, tack on another $100-$200 a month to that. You will have $1200-$2400 a year in expenses that you don't have now: lawncare, landscaping, internal upgrades, repairs, replacement of appliances, and yes, interior decorating. Some of these expenses are discretionary, some urgent.  

-Because of all the above, saving money becomes more critical once you own a home. Put extra money away that you spend now on restaurants, entertainment & vacations. Pare down, because you'll need that money later. You don't have to eliminate having fun, but you do need to cut it back, because things you want in the future will add significantly to your expenses, especially kids!

-It's a personal preference, but look into placing your auto & homeowners with the same company. I have State Farm, and get a discount for having them insure both my auto and home. Most insurance carriers have this. Another personal preference I have is to have my taxes & insurance rolled into an escrow account instead of having to pay them separately. Unless you are really good at budgeting, it helps when you are not hit with these expenses monthly or twice or year, or however it works where you buy.

- I totally agree with Corinne on the "drive bys". If there is something you've found on the internet, drive by once on a weekday evening, then again on the weekend. Are people taking care of their homes? Are there kids? Are there a ton of "For Sale" signs on the block, and one-two streets either way? This indicates a lot of foreclosures, which means you will get neighbors at some point that you may not want, or worse, the area declines further, which will reduce the value of your home over time.

I hate to sound like "Debby Downer", or like a parent. I've just learned over time that just budgeting for the actual house payment is NOT enough.

It's an exciting and fun time to go house hunting. It's truly a buyer's market, which it was when I bought this home. There is a lot of competition for the "best" bargains, so be prepared for disappointment. When we were looking for the house I'm in now, we must have looked at over 100 in 3 months. It had more urgency because I was 6-8 months pregnant! ........getting into and out of my ex's truck that many times on the weekends! We put a written offer in on my current home  that was well below the asking price. They countered, and we countered verbally. They didn't take our offer. We were heartbroken because we loved this house. We continued looking, but there was no other house we loved as much. Well over 2 months later we heard from the realtor on the house we loved, and they asked if our written offer was still good. We said "No", but our verbal was. They accepted it! We moved in when my daughter was 7 days old.

Don't get discouraged. EVERYTHING that happens in a home search happens for the best. You will end up in the place that you are meant to be.

Good luck.

Knottie1435582995

I totally agree w/ Corinne.  It is VERY important to do a drive by of the property before even telling your realtor your want to view it.  You can save yourself a LOT of time just by seeing the neighborhood/outside of the house.  Our drive-bys usually took a good 2/3 to 3/4 of the homes on our list out of the running.  It truly is shocking how deceiving pictures can be.

My absolute favorite website is www.moveinmichigan.com. It's AWESOME!  I sitll look at it sometimes, even though we already bought almost a year ago

Also, I absolutely loved my realtor.  He was amazing.  Sent me weekly updates.  He usually responded to e-mails/phone calls immediately.  If not, it was always the same day.  There were times I called him at noon and asked if we could see a house in an hour.  He ALWAYS worked it out...even on a Saturday.  I'm serious.  He totally worked around our schedules (cause we were driving in from Lansing to see the homes).  I cannot speak highly enough about him!!!  Let me know if you'd like his name and number.  He works out of Plymouth, and I believe he'll show homes pretty much anywhere.  We ended up buying in Canton.

GOOD LUCK!!!!

boogerbearoriginal

Everyone offered GREAT advice! Ditto the suggestions about knowing what you want/what you MUST have and about drive-bys. We found as we shopped we discovered more strongly what we wanted and what we didn't care about.

The only thing I'd slightly disagree on is Sue's suggestion to have taxes escrowed. You won't have the option unless you put 20% down and some companies never let you pay your own regardless of your equity - but if you do I highly suggest paying taxes yourself.

I work in local government and I cannot tell you how often the mortgage companies screw up tax payments - either withholding way more than necessary in a down market like now, sending incorrect amounts, or made out for incorrect accounts, and even NOT paying them on time or at all. Its pretty sad actually. Of course we do get plenty of correct payments, but problems happen enough that its something we knew we didn't want.

Plus that money that is being held in escrow on your behalf could be in your savings account earning interest all year. If you are good at saving/budgeting (and your mortgage company allows you to) I strongly suggest paying taxes yourself. 

In our case the option to pay insurance through escrow was not even available (our mortgage company simply doesn't do that) and while I don't have any first hand experience with that I would personally prefer to pay it myself.

Some people really like having their payments escrowed though - so it really is a personal preference.

emarston1

Thank you for all of your advice.  I have definitely calmed down quite a bit.  Y'all are awesome!

ikleyman0606

My fiance and I just bought our first home in April. We got a FHA loan and only needed to put down 3.5%. We got all of our taxes escrowed into our monthly mortgage payment. Our realtor had us get a preaproval and then a full approval right away. She said that once you are ready to make an offer it is way better to be fully approved then pre. If you live in the macomb or oakland area i can give you are info. She was perfect for a young couple. She helped us and was very honest about each house and condo we looked at. She told us about how much we would have to invest into the house and what we would be able to make from the house when we wanted to sell it at a later date. Also realtor.com and other websites are not up to date. MLA lister that you get from your realtor is uptodate and i recomend only looking on those for houses.

corinne2010

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_michigan-detroit_home-buying-questions?plckFindPostKey=Cat:Local Wedding BoardsForum:88Discussion:ee46359c-7909-43d8-8563-d759cedf6809Post:67ef6853-0cfc-4684-ad5e-bb66d3587e45">Re: Home Buying Questions</a>:
[QUOTE]My fiance and I just bought our first home in April. <strong>We got a FHA loan and only needed to put down 3.5%</strong>. We got all of our taxes escrowed into our monthly mortgage payment. Our realtor had us get a preaproval and then a full approval right away. She said that once you are ready to make an offer it is way better to be fully approved then pre. If you live in the macomb or oakland area i can give you are info. She was perfect for a young couple. She helped us and was very honest about each house and condo we looked at. She told us about how much we would have to invest into the house and what we would be able to make from the house when we wanted to sell it at a later date. Also realtor.com and other websites are not up to date. MLA lister that you get from your realtor is uptodate and i recomend only looking on those for houses.
Posted by ikleyman0606[/QUOTE]

Just an FYI--I don't think that 3.5% down applies anymore. I think it has been increased to 5%. And I also think the PMI went up to 2.25%. It used to be 1.75%. The laws of FHA loans changed April 5. I only know this because we signed our contract and were locked in immedately on April 1. Had we waited, we would have had to follow the new laws.

micheaux

REALTOR here !
I didn't read every post in its entirety, but I do agree with most.

How long does the process usually take? This depends on alot of factors, the type of sale (short sale, bank-owned, private-owned etc.)

Do you find a realtor first and then get preapproved, do you talk to your bank first? I suggest my clients to shop around: credit union, bank, reliable financial institutions that I've dealt with in the past with other clients etc. Your REALTOR should be able to assist you in finding a financial institution, if referrals are needed. So to answer your question you could do either one first, if you feel overwhelmed though maybe you should start with a REALTOR, they may be able to easy your mind and answer some unknowns that you have. You also don't want to look at homes until you find out what you are qualified for. I say this because when this occurs buyers get frustrated and also start comparing the 250k home to the 150k home but are only approved for 150k, don't do it to yourself. From my prospective it helps if you are preapproved or looking to get preapproved soon, this lets the agent know you are a serious buyer, you have to remember that not only your time is valuable but so is the agents, especially since we only get paid on commission. In this market you should be ready to sign a purchase agreement when you've found the house you love and have thought things through. If you love it there's a possibility that several other couples love it as well and they maybe be willing to pay above market value for it as well, just know your limits and stick to your budget.

Also, if you do decide to look on realtor.com,  moveinmichigan.com or realestate.com or any other RE sites keep in mind if you see short sale, the term does not mean the sale will go quickly or be short. The process is usually lengthy and may take several months.

HTH

boogerbearoriginal

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/local-wedding-boards_michigan-detroit_home-buying-questions?plckFindPostKey=Cat:Local%20Wedding%20BoardsForum:88Discussion:ee46359c-7909-43d8-8563-d759cedf6809Post:02f96e23-10b9-4440-aa09-ca7e37ce2a1d">Re: Home Buying Questions</a>:
[QUOTE] Also, if you do decide to look on realtor.com,  moveinmichigan.com or realestate.com or any other RE sites keep in mind if you see short sale, the term does not mean the sale will go quickly or be short. The process is usually lengthy and may take several months. HTH
Posted by micheaux[/QUOTE]

Truer words have never been spoken.

ikleyman0606

We closed on April 17th and it was still 3.5% down just had a friend that closed also a few weeks ago and it was also 3.5% down.