Completely OT - need house buying advice!

[JMarie]

I am SO excited - DH and I are finally making the leap from renting to buying and I know next to nothing about what questions to ask, what to look for (we're buying 'used' instead of building), or really anything about the real estate market. I know what I want in a house, I have my must-haves listed (basement, 2-car garage, formal dining room) and my wish list (huge master bedroom, 10-foot ceilings, big back yard), but as far as what questions to ask, I'm clueless. This is such a big step, I want to avoid as many mistakes as possible. HELP! TIA!

JMarie
Mom to Aidan Christopher 01/28/03

[sunny2003]

Congrats on making the buying step - one of the first thing to do is to talk to a good mortgage broker/bank to see how much you can afford - be sure to get pre-approved for a loan (as opposed to pre-qualified) b/c that approval will make you more attractive to a seller. You can check loan rates at websites like bankrate.com (which also gives you a lot of good on-line advice for buying and what to look for) or check with your local credit union (they tend to have good low rates).

I would also suggest you get a good real estate agent to help you with looking for a house - good ones know the area that you want to buy in and know what the market rates are and what you can get for the amount you can affod - generally if you buy through a realtor their commission is paid by the seller so you have to be careful to get an ethical realtor who will keep your interests in mind and not just try to sell you something for the commission. Ask around for referrals from friends, etc. If you don't have a realtor, you will have to do a lot more research yourself when you go to open houses. A realtor will walk you through the whole process - we had a great one who told us about a house not yet on the market - we ended up buying without a formal broker commission b/c our realtor works on building relationships, not just for a fast commission.

That's some basic advice for now - sorry about the long post! Good luck!

[memedee]

The first thing you have to decide is the community you want to live in.
Bear in mind that the most desirable communities ie those that have the best school systems,the best zoning which results in bigger lots and the fastest commute to the nearest city will also be the most expensive.SO you have to decide which is more important the actual house or the community,The only way to get it all is to have a very large budget.
Narrow it down to two or three towns and then go and spend a couple of hours in that town ie have lunch coffee ,visit the supermarket,the parks etc.
If you like the "feel" of the town look in the local newspaper for open houses in your price range.If you find a broker that you like this is generally the best way to go as you will pay the commission regardless so you might as well use his or her expertise.
When you find a house you like the questions to ask would be as follows
Do you have a sellers statement of property condition
If not this is what you want to know
1.How old is the roof,the heating system.
Is the electic updated to 200 amps
2.What kind of system and fuel and approximate heating cost.
3.What elementary school and are they bussed or do you have to take them.
4.Sewer or septic?
5.age of house prior and possibility of lead paint.
6.Plot plan, is there shared driveway any easements?
7.Any water in the basement. Is there a sump pump.
8.Are there hardwood floors under the carpet?
if you want to make an offer find out how much comparable properties in this neighborhood sell for
If you get an accepted offer I would highly recommend that you get a qualified building inspector to check out all the systems and construction.
I also recommend a pest inspection and radon and lead paint if necessary.
Make your offer contigent on these inspections being to your liking.

A good place to browse is realtor.com and domainia.com for sold prices
god luck

[sweetbasil]

JMarie~
Congrats on this new adventure! We're in our 3rd house (the oil business has moved us around a bunch in the 6.5 yrs. we've been married)...this one was our first pre-owned house. While it's taken a lot more elbow-grease, we really feel like it's "ours" now that we've fixed it up to make it like we wanted it. One thing I would definitely recommend, which is becoming pretty standard (at least in Texas) is getting a 1 year homeowners warranty. Down here, most buyers are expected to include that in the sale of their house- they pay for it. That'll cover your major appliances, heating/cooling systems, etc. for a full year upon closing, and has been a real help to us. We had a/c problems when we moved in (August is pretty stinkin' hot in Houston!), and so we paid the $40 service charge (like a doctor's office copay, basically) and they replaced the unit as part of our warranty. Nice deal.

Also, you might consider looking around on the web for home information in your area- as realtor.com was mentioned previously, we also relied on har.com (houston association of realtors) and hcad.org (harris county appraisal district). har is updated more frequently than realtor.com, and hcad lists home values/specs/lot sizes/school district info/etc.... If you're in a large enough county or area, you might be able to do a search for the appraisal district in your area and see if you can access that info online. It's all public information because it's part of property tax info, so it's got to be available somewhere--- hopefully it'll be as easy as using a search engine to find a website, and then the bulk of the research you would've had to do is already done for you.

We've found that with all three houses, we've ended up sinking *at least* $10,000 into "little things" and upgrades- from mowers, refrigerators, appliances, etc. to window coverings (that's NOT including recarpeting, repainting, and any major remodeling we've done in this current house). Seriously, those folks at Lowe's/Home Depot will know you well by the end of the summer!

Feel free to e-mail if you need any further info, if I can be of help, etc. And good luck...you've got a lot of work ahead of you, but it'll be lots of fun, too! :)

[dueinmay]

Congratulations! This will be exciting. My husband and I are also looking to buy for the first time, but we've been doing so for the past 4 months, so I have at least some experience to offer. One thing is, much depends on what kind of market you are looking in. We are looking in DC/Northern Virginia, which, much like where we moved from (southern CA), is an extremely competitive market. (What I mean: we recently put an offer in on a house the first day it was listed; there were five other offers; four of the offers -- ours included -- had escalation clauses, committing to pay a certain amount over whatever the highest offer was, up to a certain point; in the end the home sold for $30,000 over the asking price). I hope you are not in a market like this!! It certainly takes the fun out of the process! Also, in situtations like this, other buyers will offer to waive the home inspection or even the appraisal in order to make their offer more attractive. We have not been willing to do this so far and have lost out in other bidding wars because of it. But not to be so negative - I think unles you are looking in the metro area of a major city, your experience will be much better!!

Anyway, I second the advice above about taking the time to seek out a really good Realtor. If you can find a good one, it is a great help. I read an excellent book called something like "Helping Your Realtor Get You the House You Want" (wish I could remember the actual title - I'll try to find it). Good advice on how to interview potential Realtors, what specific credentials to look for (GRI and CRS are two special designations to look for - means Realtor has undergone extensive additional education), and most important, to be sure you understand the concept of agency in your state. I highly recommend you go with a "buyer's agent." They are legally bound to represent YOU and your interests, not the seller's, which is what an undesignated agent does. You pay the same commission either way. You can find more info on this as well as names of buyer's agents in your area on these sites:

http://www.naeba.com/home.html
http://www.rebac.net/Home.aspx

Hope this helps!

Rebecca
#1 due 5-13-03

[August Mom]

You've received some great and very detailed advice. I have two things to add. Just for your own information, you may want to use one of the on-line calculators (such as at LendingTree.com) to see how much of a house you can afford -- and then look at houses that cost less than that. You typically qualify for houses with payments of around 25-28% of gross income. We wanted some cushion so we weren't struggling to make the mortgage payment. It has been a very good move for us. We have some friends who are cutting it so close that they even limit what groceries they can buy, etc. Also, think again about your requirement for a formal dining room. That was on my requirement list too and I rejected every floor plan without a formal dining room. Now, we've lived in this house 3.5 years and I can count on my fingers the number of times we've used that room. I had grand dreams of entertaining, etc. that never came to fruition. Now that we've added a baby to the mix, it seems even less practical and I wish we had one of those great rooms that I kept rejecting. BTW, our formal living room has transformed into DS's playroom. LOL Think about it again.

[egoldber]

You've received lots of good advice. I'll just try to add a few things we've learned. We've owned 3 different houses now and every time we get a little "better" at it. :)

I would definitely find out what loan amount you qualify for, BUT also calculate backwards from what you see an ideal mortgage for you being. Every time we have bought a house, we have only bought a house that is 1/2 or 2/3 what we "qualified" for. If you buy as much house as you qualify for, that doesn't leave much room in your budget for much else. Also, think about what you want your finances to be when you have a second child (if you plan to). I don't know your situtation, but if you think you may want to stop working with a second child (and some moms do), make sure to have a mortgage you can afford on one salary (which is never a bad idea anyway).

Like someone else said, make sure to budget for LOTS of $$$$ after you buy a house. Whenever we move into a place we practically live at Home Depot and Target for about two months afterwards.

Community and location are just as important (if not more important) than the house. Think about where you like to hang out, shop, etc. Having a house that is close to those things have a lot of intangible benefits.

When looking at house, try to look beyond the current decorating. This can be really hard to do especially if a place is decorated to the extreme. But a few thousand dollars in paint, carpet and wallpaper can completely transform a house that isn't decorated to yuor taste. It's more important to have a place that is located where you want it to be and has a floor plan that is livable for you.

A good realtor is worth their weight in gold. They should be able to help you understand your house needs and help you get that house. But remember that there is not ONE perfect house. If you lose a house you think is perfect, another one will come along.

Good luck! House hunting is VERY exciting!

[Momof3Labs]

One thing specific to Illinois - the state keeps a scorecard/ranking of the different school districts. I know that it is online but don't know where - maybe start at the State of Illinois website. We used that a lot to eliminate a number of areas that had mediocre school districts.

Also, when you figure out your mortgage payment and what you can afford, be sure to factor in property taxes! They are pretty steep in some areas (we pay $5200/year)! And PMI if you are putting down a smaller down payment!

And when looking at a house, keep in mind that some remodeling is easy/cheaper (like paint, carpeting, wallpaper, window coverings, landscaping, etc) and some is VERY expensive (like bathroom fixtures, kitchens and exterior siding). Don't get me wrong - that easy/cheaper stuff adds up VERY fast also, but not as quickly as bathrooms and kitchens!

Happy house shopping!!

[Shirale]

Fantastic advice here- wish I had seen some of it b/4 we started the house buying process! :-) One book that I read that I founbf helpful was "100 questions every first time homebuyer should know" by Ilyce R. Glink. I found it in my local library. She goes through the process step by step and is very thorough. A good realtor is important, but I found a good home inspector to be even more crucial. We actually went through the buyers realtor (b/c we just called the # on a for sale sign on a house that we liked) which wasn't so fabulous, but Thank G-d we had a great inspector (the inspection took over 4 hours) and an amazing lawyer who helped us through everything. One other tip I thought was interesting, was that we were told that the smartest thing to do is to buy the smallest house on the block b/c you can then add on, remodel and sell for a profit (since the other houses around all cost more) rather than have the nicest house on the block b/c when it comes time to sell, the price will be out of line for the neighborhood. The other thing we did was to scrape together the full 20% so that we didn't have to pay the additional PMI. Depending on where you are looking to move prices and taxes will vary drastically! For what we paid for our house (in NJ) we could have bought a huge mansion on a couple acres of land in Cleveland, for example! The taxes in the NJ area where we are, are somewhere between $7000 and $12,000. ouch. Also- look at the neighbors! anyhow- sorry so long, please email if you have any more Q's and I am SO excited for you!!!!!

[C99]

One of the best books I read for house-buying advice was Home Buying for Dummies.

Definitely find a good realtor -- a good buyer's agent will help you navigate through everything else, including what the odds are of finding what you want, where you want it and at the price you want to pay. A buyer's agent is paid commission through the seller, so you don't have to worry about that.

hth

[dogmom]

I must say buying a house was the most exciting and stressful thing I did until I got pregnant! I second everything that's been said so far. I'm on my third home purchase, the first with my DH. The three things I didn't hear from people that I wish I known before I bought my first two places.

1) Remember, it's your first house, it doesn't have to be "perfect." You will probably move sometime in your life. I passed by some perfectly great houses the first time because the person I was buying with had unrealistic expections. My absolute favorite home was my condo that I wasn't in love with, but fell in love with after I moved in.

2) Get a good home inspector. Two of my home inspectors were great, one not so great. It makes a huge difference. So many people just pick one from a list the real estate people given them. I bought a historic house one time. You can actually find ones that specialize in historic homes!

3)Mortgage brokers usually have better mortgage rates. I went to banks only the first two times, it can make a big difference.

Good luck!

Jeanne
Mother of Harvey 1/16/03

[JMarie]

Y'all have been SO helpful - I am realizing I am even more clueless about this whole process that I'd origially thought. So, how much do you think we should set aside for things not included in the purchase of the home, like inspectors, agents, etc? We've got the down payment covered and want to put as much possible toward that, but should I also figure a certain amount for other expenses? TIA!

JMarie
Mom to Aidan Christopher 01/28/03

[memedee]

the agents fee comes out of the purchase price so no need to budget.
Lawyer for purchase and sale could be 1000 to 2500 depending on whether your lawyer is also the bank lawyer.
Inspections 250 to 500 depending on whether you do radon and pest.
Lead inspections 150.
Also typically in my area Boston houses are not sold with refrigerator or washer dryer.They are often included but are not part of the house unless it is a built in like a sub zero.Mortgage application 150 to 200.Closing costs from the bank and points if applicable.
You also need to have an insurance binder at the closing for the value of the house not sure what that would cost.
Also factor in moving cost generally 150 to 250 an hour plus miles.If you dont have a lot of big things you could move yourself
f with a u haul van.
btw when you hire the lawyer try to get a flat fee it is more economical.
hth

[egoldber]

If you sit down with a mortgage broker, they will go through all the typical "fees" required in your area to buy a home. I would budget around $1000 for various inspections. I think that sweetbasil's extimate above of $10,000 for "extras" after you move in is in the right ballpark. You can do it for less, of course, if you are on a really tight budget, and all those expenses may not be all at once. But if you need to buy appliances when you move in, a washer/dryer set is usually around $1000, a refrigerator is usually around $600 and up. And then you will probably want other new things to make your home more livable (organizers, baskets, shelf paper, area rugs, bookshelves, floor lamps, baby gates, cabinet locks, etc.) all of which quickly add up to a lot of money. If you plan to redecorate and remodel, then you need to consider that budget as well.

[Shirale]

JMarie,
I would speak to a Mortage Broker first thing, get pre-approved b/c when they do that they also give you an estimate of what closing costs will be, minus the lawyer fee (usually around $1000) and home inspection (ours was around $500). Plus we spent at LEAST $1000 at Home Depot in the past 2 weeks! (moved 2 weeks ago)and it is not over yet! Anyhow- in the book I mentioned in my other post there is a whole worksheet of the related expenses to moving, closing costs etc. Lucky for you interest rates are so incredibly low, you don't even have to think about paying "points"
Also, one more thing- when you meet with a Real Estate Broker keep in mind that they may show you homes above your budget in an attempt to get you to buy a more expensive home...we had one broker who we told our price cap to, and she showed us four houses (the first 4) that we $100,000 above what we told her!!!! Makes you feel sort of disappointed when you get inside the houses that are in your price range!!! And houses here are ridiculous- $400,000 for 3 bedrooms...although in LA it is much worse! :-)

[JMarie]

We're looking in the Chicago suburbs and thankfully, we both work for a bank. We'll get a great deal that way, hopefully, but I do agree the cost of a home is ridiculous. I really want four bedrooms, but that is just astronomical! I just don't want to 'settle' for a townhome - there are some very nice ones around here, but I'm just concerned about a few years down the road, having more kids, and not enough room. I don't think I'd want to move again so quickly...

JMarie
Mom to Aidan Christopher 01/28/03

[C99]

JMarie,

We just bought our house in Chicago last year. Like you, we wanted to find a house rather than a condo or 2-flat. We paid about $3-4K in closing fees, including a $500 legal fee, and about $700 in inspection fees (but we had two inspectors). All of our appliances were included in the purchase price (this is something you'll specify in your contract), so we didn't have any of that. One thing that you'll have to watch out for is taxes. We're in the process of re-financing now and our (actually, Elgin-based...kinda funny) mortgage broker told us that if were in the suburbs, the assessments on our house would be about 4x what they are in the City. For some reason, that surprised me more than it should have.

hth

[mharling]

I'm also in the Chicago area, so let me know if you need a recommendation for an attorney. One of dh's high school friends has done numerous transactions for us and I highly endorse him!

Mary
EDD 4/5/03

[sweetbasil]

One more thing I just thought of- go to Home Depot.com and Lowes.com (if you have either in your area) and register as a soon to be mover (usually one of the two offers coupons in the USPS change of address info packet)...you'll get a coupon for 10% off your purchase. There is fine print, so read it carefully.

While remodeling our kitchen last month (it's still happening....), I applied for and received the Lowe's 10% off coupon. The appliance guy said it didn't apply to special orders, and I asked him to show me that in the fine print- he couldn't find it, but a manager verified that it didn't apply. I said okay (mentioned they might talk to corporate about changing the coupon's wording to reflect such a policy) and placed my order anyway, but went home and e-mailed the lowe's corporate address. Two days later, the manager of my local store called and invited me to come in and get a refund for the 10% difference. So I ended up with over $300 back just for the asking. yipee!