Home buyers and/or....

[92xj]

....financially smart people with home buying knowledge.

I have decided that with this move and new job that I want to be in the market for my first home. I went to the bank and got pre approved. I told the lady that I wanted to keep my payments the same or very close to what I am paying in rent right now. In order to stay at this figure I would be able to take a loan out for 125k. For this area, that kinda money would get you a nice little 900-1500 sq ft home. Plenty big for me. This weekend I started looking around and decided that I might want to jump up to the 150k range. I can afford that now, but I honestly hate spending my own money and live on a very strict budget for myself. I am now thinking that I would like to wait til Jan/Feb to buy after my raise. Do you think these low interest rates will continue to be the same rate early next year? Also, with the 8k kick back for first time home buyers ending the end of November, is this something that I should try and get in on now? I know it would be nice to have the 8k but I also dont want to settle for something that I kinda want when I could have saved a little more and got something that I really want. I am not exactly sure what I am asking here. I guess just a discussion of advice and knowledge.

[Doe-ee]

Well, an 8k savings is hard to ignore. If you wait until 2010 will the rates go down enough to make up for it? Who knows what the future holds there. It's all a gamble. But I'd rather be paying my own mortgage instead of someone else's and imo the sooner you start the sooner you'll be done. Take the plunge!

Good luck with whatever you decide.

[KirkV]

I agree with doe-ee and you have to remember that your wages will continiue to go up over time in most cases. So the payment may be tight now but will ease up over time.

With interest rates in the low 4's and 8K to boot I would jump on what you can afford now.

Good Luck

Kirk

[sluggunner]

Get in NOW!!!

1.) Home prices are going to start to go up again, they already are in my area. 2.) Interest rates are very likely to go up substantially, maybe not by January, but they will be going up SHARPLY!!! Trust me on that. 3.) ONLY take a FIXED RATE LOAN. Do not screw yourself with a variable interest rate. 4.) Make sure you spend the money on a good home inspection. it is money well spent. 5.) Make sure you buy a house that is low maintenance, i.e. brick, or sided with anything other than wood. Painting a wood house every couple of years is a major pain in the neck. 6.) Since energy costs are going to skyrocket in the next couple of years, look for a house that has decent newer energy effecient windows and LOTS of insulation in the attic. Good luck to you. Home ownership rocks!!

[snapper]

May also want to check into the 8k tax break for first time home buyers. My understanding on that was that it was UP to 8K. It worked on a % of the value of the home. If I understood it right...it was like 10% of $ spent...so you'd have to be buying a $800,000 home to get the 8K. You'd only get 1K for a $100,000 home etc...

Not 100% sure on that...but I'd try finding out if I were in the market for a new home.

[m gardner]

We just printed untold amounts of money which will cause inflation and it's always good to be a debtor during inflation. As long as your mortgage is fixed rate.

Mark

[stevebeilgard]

i say jump now. we just got warned by the feds that interest "may" be going up. i think things are about to skyrocket. obama is about to make jimmy carter look smart.

here's what i suggest. stop talking with realtors and start talking with banks. get their forclosure lists and immenent forclosure lists. select from there and capitolize on someone else's misfortune. or, try another avenue. put an ad in the paper (or check the forclosure ads in your local paper) and bail out someone getting forclosed on. just work with the bank forclosing and get the forclosure people to assign you their home in liew of then getting forclosed on. you can be selective and save a lot of money, while getting a preferred rate from the bank doing the forclosure AND helping out the people getting forclosed on.

[Tominator]

Oh, the stories I could tell you, lol.

Buy as much house as you can afford. Real estate is usually a pretty good investment.

[Newarcher]

No better time....

It appears that many of the communities in America are starting to rebound in pricing. So you are probably as low as you can go with respect to pricing of the home. With the credit offered by the IRS, more gravy.

As far as interest rates, they are at historic lows right now. There really is little option but for them to go back up unfortunately.

Here's some advice you didn't ask for:

1) Don't let your emotions get the best of you. Pretend you are buying this home based on a list of priorities given to you by your boss (make a list of what is important to you).

2) Here's a biggie...oh what a biggie. Once you find a home, drive the neighborhood as many times as you can. We have owned three homes and two of them have been horrible when it comes to neighbors. Basically, we moved into a bar twice. Turns out that quiet neighborhood wasn't so quiet. Weekend parties, foul language (the worst of foul) shouted nights and days, loud music, etc. Currently, we live next to a couple drunks whose winner 30 something children live at home--we call them the garage cavemen because their garages are nothing but an open bar for drunks to congregate in and talk like sailors. So drive that neighborhood nights, weekends (especially during college football season and NFL sundays).

3) Talk to the neighbors (as many as you can). Most of the time there is a gentleman's agreement that when your immediate neighbor is selling, you clean your place up and make nice when potential buyers are around. But talking to neighbors 3 or 5 doors down tells the real picture. For instance, my neighbor immediately across the street is a combined family with four kids of driving age and he and his wife. We didn't know that on most weekends, there are four to five cars parked on the street immediately across the street from our driveway, which looks like trash lives there and makes it hard to back out of my driveway and almost impossible to back a trailer into my driveway. Oh yeah, he's a mechanic so he buys junk cars, leaves them in everyone's way for months, and eventually sells them. Complete trash. Had we talked with the neighbor's 3 or 4 doors down, we would have known that we were next to/across from people who could lower the property values in government housing.

4) Use your instinct. If something doesn't feel right...move on. Don't dismiss that voice in the back of your head that is called uneasiness.

5) Get a good house inspection and be there for it. Things many inspectors miss....water damage around windows and door frames (many are made with soft wood that rots and windows and door frames are VERY expensive to replace). Rotten trim that is painted over. If there is a jacuzzi tub, fill it and run it while the inspection is going on...check for leaks before you leave. Look hard for signs of water damage or smells of mildew in basements. Check for polybutlene piping and masonite siding or Lousianna pacific siding (make sure of these because they are huge problems in my area).

6) Never buy the most expensive home nor the cheapest in any given neighborhood.

Lastly, google 'zero dollar budget' and read about this form of budgeting. This is where you put your paycheck at the top of your spreadsheet and then spend every penny of it. You may have plugs into savings or 'blow money' but you should have zero left over. This helps make sure you focus on what you spend your money on and makes you identify every dollar in and every dollar out. Many people who think they aren't able to buy a home find money and feel like they got a raise when they use this budgeting method.

As far as the house payment, I think that 25-30% of your pay is the max you want to spend each month on a house payment. More than that and you decrease your flexibility.

I COMPLETELY disagree with anyone suggesting you buy the most real estate you can buy (respectfully of course). There are plenty of people who overbought (50% or more of pay goes to housing) and they are bankrupt or homeless/renting again because they lost their home. That's not what you want. That theory works when real estate is appreciating at 20% a year...but what happens when it drops 40% because the American people elected fools who put people in homes they couldn't afford because they are minorities or ethnically 'disadvantaged'.

Hope this helps.

New

Edited October 12, 2009 by Newarcher

[92xj]

Thanks all for the advice.

I am still waiting on my transcript to come from college. The bank needed a two year employment history and since school was involved in those last two years they want the transcript as well. Guess they need this for first time buyers. No big deal, should be here tomorrow.

I went looking at homes this weekend and found a couple that I am really interested in. Tomorrow I will make a few phones calls and set up times to take a look.

I believe that I might wait til Jan. to purchase once I get my raise. The houses that I looked at in the 90-125k range made me really want to jump up to the 150k range. I think I would be more happy in a new and or newer home than a 10-25 year old home.

Time will tell with what I decide.

Again, thanks for all the help and info. There are a ton of things I need to think about and figure out what I want out of this.

I am sure I will have many more questions and will update this thread.

-Ben

[Jeramie]

If it were me I would be looking right now. I dont think things will get any cheaper. There has to be a limit no matter the economy. If the year end pics up (which is very possible) then things will be very different the first of next year as far as home buyers are concerned.