Purchasing a home advice

[Mountainman]

So i am pre-approved for a loan here in Bozeman and am starting to look for some places. Being 22 i know pretty much nothing about this process and what is involved. I've been reading anything i can get my hands on but want to get some advice from everybody on here that has bought a house. Basically am curious on the mistakes people made or certain aspects they wish they had known before purchasing.

[flatNshallow]

...for the love all that's Holy... my anus is bleeding!

CLASSIC.

[Conundrum]

Rootskier is a realtor in the Hamilton area. It's a couple hours away but he might be able to offer up some pearls of wisdom.

[SnowTigress]

mountain man-
some advice from someone who just bought a house this summer:
look into state programs for first time home buyers. they usually do 100% financing for really low rates (which is important since the interest rates are rising) and no PMI, 30yrs fixed (the way to go rioght now). I got one like that and didn't have to break up the loans into 80%/20% which saves a lot of $ on the monthly payment. I went through Bank of America's ACORN program. Check it out!
PM me if you have specific questions...I learned a lot in this process!
good luck!

[altagirl]

Find a realtor you like and sit down and discuss the process (it's a little different in each state). Feel free to interview as many as you like, and tell them you're doing so, and then pick one. You don't pay a realtor for their services when you're buying - the seller in the transaction pays their realtor, who shares the commission with the buyer's realtor. A good realtor can generally work out deals with "for sale by owner" types or places that aren't even on the market too. I've done it and it worked out just fine for everyone involved.

I'd plan that before you go "house shopping", you sit down, discuss the process, review what forms you'll be using (the purchase contract), and what fees you'll need to pay (for things like home inspection, etc.), and general timelines. Then go over what you're looking for, and start narrowing things down on the MLS. If you're familiar with the neighborhoods, you might go right out and start looking with your realtor, but it often makes sense for you to take the list of possibilities and drive around yourself. Chances are you'll rule out a bunch of neighborhoods or houses that once you see them in person, don't measure up to their ad. Ask prospective realtors how they do things if you have a preference.

[KevinDineen]

Smart move. I wish I had bought a house in Gunnison when I was 22. I would have saved a lot in rent and would have made a nice bit off it.

My advice: Don't play around with weird loans--go 30 year fixed.

Otherwise, the process is easier than it seems. find a place you like, make an offer, and they either accept, reject, or counter. Once you're under contract, the title company basically walks you through the whole process.

[P_McPoser]

^^^Listen to her... (edit: I mean Altagirl)

I was in your position two years ago, 21 and stupid as to the process. I went into a realtor office, said "Hi, I'm Paul, I want to buy a house, but I don't know fuck all about how to do that." They were very helpful, and had some good advice as well as some pamphlets and what not that were very helpful at outlining all the steps and procedures involved. It was easy and hardly a headache, being a first time home buyer opens some doors finance-wise as well.

[boarddad]

Don't, under any circumstances, agree to pay PMI! They'll try and sell you on the fact that you can get it taken off the loan once your LTV ratio goes down but the bank has no incentive to make that process easy and believe me, they won't!

[lemon boy]

thirty
year
fixed

[freezorburn]

In most states If your NOT putting down 20% you have to pay PMI.

You get around it by getting a variable rate mortgage basicaly a second mortgage and pay off to 20% to get rid of that PMI crap.

It like 100 bucks out the window every month


FOR THE LOVE OF GOD, DON"T EVER TRUST ANY REALITOR. THEY ALL TALK A LOT OF SMACK Get whatever advice you can but be leary.

Realators even the ones that are "workin" for you have a conflict in interest. They make more money the more your willing to pay for a property.

[The AD]

I think it's great you want to buy a house at 22. That wasn't even on my radar screen at that age!

Here's my advice. Once you buy your house make sure you have access to some money for repairs. Shit happens when you own a house. The furnace might go out, the sewer might back up, etc. These things can blindside you if you don't have a little extra money around to cover them.

Other than that, just don't rush it. Wait for a house you like. No sense rushing into buying a place that you just think is o.k.

[Cirquerider]

Realtors generally have a fiduciary responsibility to the SELLER, unless you have a specific contract witha realtor to represent you exclusively as the buyer. The seller is who pays them, and you must assume that's who they represent unless you have it in writing otherwise. That means that until you have a writen agreement, you are talking with the enemy. They must disclose your ability to pay, your negotiating strategy and spending ceiling to the seller. They should tell you who they represent, but this disclosure often gets misplaced when a first time buyer is on teh chopping block, I mean walks in the door.

So I agree with Altagirl's advice to talk with realtors to find out who you want to work with, but don't get specific about looking at houses, what you can spend etc, until they have an exclusive buyer representation agreement. I kid you not.

[4matic]

Difficult to quantify but I would say buy as much house as you can and the house you want within reason. An extra $100k more than what you thought you can afford is really not that much on your monthly payment. If you see something you really like do everything you can to get it.

I've slapped myself so many times for not spending the extra cash on something I really wanted.

[altagirl]

FOR THE LOVE OF GOD, DON"T EVER TRUST ANY REALITOR. THEY ALL TALK A LOT OF SMACK Get whatever advice you can but be leary.

Realators even the ones that are "workin" for you have a conflict in interest. They make more money the more your willing to pay for a property.

Come on, dude. A good Realtor makes their living by referral.

You know how much extra money I'd make if I got you to pay a couple extra thousand bucks by not negotiating the best deal I can for you? Not much. Compare to how much extra money I'd make if I got you a screaming deal and you refer me to all your friends?

If you have a realtor who screwed you for a couple bucks, you need to quit working with morons.


Regardless, you STILL NEED TO MAKE YOUR OWN DECISIONS. Getting a realtor doesn't mean you don't need to think. You still pick the house and decide what to offer for it, etc. They can pull comps, and give their opinion, but it's still your decision. If your realtor pushes you to buy a house that's more expensive than your budget allows, tell them no. You're the boss and you make the decisions. They just represent you and what you want. If you're completely unrealistic and wasting their time, they can drop you as a client just like you can drop them if they're bossing you around.

And yes, sign your buyer broker contract once you pick a realtor. It benefits you as well as the realtor. And if it turns out you hate your realtor, 99.9% of them will let you out of it rather than try to keep working with you. You can ask about that ahead of time too.

[El Chupacabra]

Go to your local Barnes & Noble/ Borders megabookstore, pick up a few guidebooks on house buying. Well worth the $20-30 you'll spend on the books, so you'll have the peace of mind of knowing what you're getting in to. Also these are relatively impartial sources (i.e. not your realtor or loan agent, who are both biased in favor of getting you to buy a house).

[Trackhead]

Be cautious and keep copies of every transaction or paper you sign with everyone.

Don't fall for any bullshit in the loan arena.

[TyWebb]

thirty
year
fixed

Great advice and it'll be even better advice a couple years form now. Stay away from the arms and 40 year etc..I can however see the reasoning behind a 30 year with interest only for the first 10 years. As long as the rate is fixed for the duration.

The advice I learned the hard way: the location is more important than the house. The house can be improved, but the lot/land/neighborhood cannot. It can make the house impossible to sell, and the sweat equity you put into it will never be worth what it should be.

[OBernhardFranz]

remind me of story on time ma bought house. she is doctor and tried to get the place hospital close so i could train to be L.A.P.D. try not too hard to get lost in area but found out that it was near the 607 line to dusseldorf. so stoked so hop on get taken down for about three months. slept at buds just surf couch and try to find the right finance.

[Crinkle]

reading a few books is a great start.

I bought using a FHA, (first time homeowners), which lets you get low fixed rates with minimal down. Get referals from local people you trust for realtors and finance people. Working with a mortgage broker taught me tons. He called me and got me the best possible rate for my circumstances, the only day that the rate dropped lower. PMI is unavoidable unless you put 20% down or use a mixed rate loan (80% fixed and 20% which is adjustable, but will be whatever the Prime Rate is, plus a percentage) this is a good way to go to avoid PMI if you are going to have excessive funds and pay that 20% off in a short period of time, if not, as interest rates go up, so does your payment on that 20% loan. Once you have 20% equity in your house, you can get rid of PMI, its a process, but it can be done. Keep reading, that is your best bet. Find out what the total amount is going to be, ie bottom line, add up closing costs, sometimes HOA fees can be a killer in condo's/townhouses or certain communities. don't go to high above what you think you can afford and good luck

[daPig]

I wouldn’t be too worried about the realtors. Its the mortgage people that can really stick it to you. They can come up with all types of fees, etc. Here's my strategy. Find four or five of them, try big banks (Wells Fargo, etc.) as well as loan brokers (they will sell your loan to a big bank anyway). Get good faith estimates from all of them. Then play them against each other. You’ll be surprised at the nice rates you can get once you establish that someone else has presented a better rate. I just call them up and tell them they have been beaten by such and such and that I would be happy to email them the proof. It takes a bit more legwork but when you’re talking about large chunks of money and 30 year loans it really adds up.

Watch out for origination fees, some banks will try to charge you 2K to write you a loan where they are going to make 150K in interest. The greed never stops so watch every fee, and every charge.

Simplify your mortgage. Staying with a single mortgage will save you the fees associated with the second. There are front end fees and frequently there are back end fees on seconds, pre-payment penalties, etc. There may be circumstances where a second mortgage will cost you more than PMI payments. You can also wait a little while and have your house re-assessed. An increase in value can result in an increase in equity to the point where you can have the PMI cancelled.

[Meadow Skipper]

Do your own legwork looking for a house - don't expect the realtor to figure out what you really want and find it for you. It could happen that the realtor finds a great place for you, but if you go to lots of open houses, work the ads, and drive around neighborhoods that interest you, then ask your realtor to go with you to places that you like it can shorten the process considerably and help you find the right place.

[fez]

so mountainman, after all this advice...



are things any clearer for you?

[RootSkier]

Like Conundrum said, I am a Realtor in MT. I have a good friend in Bozeman who is an agent, too, but he is in Las Lenas right now.

In any case, I agree with pretty much everything except the "don't trust any realtor" bullshit. It's just like anything else - there are ones out there to make a buck and there are ones out there who care more about ending up with a happy client - whether you choose to buy now or wait awhile.

My one bit of advice is this: just because you are approved for $XXX doesn't mean you should spend that much. Most lenders will qualify you for FAR more than you would want to spend every month.

There are some unique loan programs that avoid mortgage insurance, too. We bought our first house with a USDA Rural Agriculture loan...and it was in town. 100% financing and no insurance (I believe you pay something like half a percent one time payment at closing to insure the loan.)

So find a good lender who you like and trust. I would be MORE than happy to refer you to my friend...feel free to send me a PM if you want to get set up with a young guy who works hard and skis harder.

-jesse

[frozenwater]

Never a bad idea to get a home warranty or at least an inspection. When I sold my 2nd house the owner insisted on it and actually discovered some electrical issues I had to fix. Sucked for me but it saved him some coin.

[Bunion 2020]

Talk to me at work tomorow dumbass..... And no this doesn't mean about more money.

The housing market is slowing, even in Bozangles. Take your time, get your ducks in a row and be patient.....

And no you can't buy the house in front of me.