Buying a Home

[Chazumi]

So I'm here in Iraq, and some of you might know that soldiers get paid quite a bit for deployments, and obviously since there is no where and no time to spend that money it all adds up pretty quick. So I have decided to buy a house.

I'm only 21 so this will be my first home (but not my first rodeo as far as living on my own and balancing expenses). I have a wife and a daughter due end of October. I am looking at a monthly income of about 2400 a month after taxes when I get back, and I will have approximately 30,000$ saved up when I come home.

So what I was wondering is if anyone who has purchased a home before could offer me any tips in this endeavor. Anything at all really since I really don't know where to start. I have been browsing websites for a few months now, getting a feel for pricing and stuff. I think about 220,000$ will be my max on the price of the house. I will also be getting a VA loan and I am OVERESTIMATING at a 6% interest so I can budget.

Does anyone have any helpful ideas they can give me? As far as taxes, payments..what to look for in a house, upgrading it, what I can and can't afford? Thanks in advance!

 

[FriendlyFire]

Aussie Iraq war vet ?
or US Iraq war vet ?

 

[IglooDame]

This is going to be long and rambling, sorry in advance.

- Get a home inspection as soon as possible after making an offer. Period. No matter what your realtor advises. In fact if they don't practically insist on one, get a different realtor.

- VA loans rock, but there's additional requirements beyond what you'd have for normal mortgages (come to think of it, one requirement is certainly a home inspection). Allow more time before the closing than the realtor considers normal (maybe 60days instead of 30).

- What kind of house are you looking for, a fixer-upper or one you don't have to work on much? Decide that in advance, and it's based on how handy you are, how much free time you have, and how lazy/self-motivated you are, not on market rates or how attractive flipping a house is.

- Realtor websites have dozens and dozens of houses listed/showing on their website. You can have a favorite ten houses before you even talk to a realtor, and better yet have the rough gist of the market in your area. Take advantage of the realtor search engines in their websites.

- There's the mortgage, then there's property taxes, maintenance, and buying stuff to put in the house. All kinds of freaky costs come up (I recently shelled out $500 for bat removal/bat-proofing). Don't get a mortgage that your budget can barely sustain, because the other stuff will sink you.

- Take a very critical friend with you when looking at houses, one that you've explicitly told to be a cynical negative bastard. They should be pointing out the negatives in the houses you're looking at, because you'll likely only be looking at the positives (in the ones you really like).

 

[El Justo]

depending upon which state you're buying in, home inspections may be mandatory...or at the very least, protocol for any standard real estate contract. in NJ, they're almost always cited in the K.

anyhow, which state are you looking to buy in? this is important b/c you'd be able to get alot of house for 220K in one state while you'd get about 20 square feet in another

VA loans do indeed kick ass. and this is perhaps the most frustrating of all the tasks associated w/ buying a home. so you're one step ahead i guess. one thing though - stay as far away form reverse mortgages as you possibly can. not sure if they have these w/in the VA sector but i thought i'd mention it.

as for taxes etc - municipalities and cities often differ in terms of compounding their city/municipal taxes into the mortgage note. so like Igloo posted, check to ensure if it's included in each monthly payment. often times, it is.

if you're buying something in a home owners association or condo association, know that there's monthly or quarterly fees charged. sometimes these fees and charges are astronomical. but just be sure to ask a realtor if a certain property is part of an association.

get a title insurance policy. it may seem frivelous and another unnecessary cost. but i've seen some horror stories at my job where a buyer inherits 'bad title' (ie. liens and other encumbrances) and it basically puts you in a world of shee-it. the insurance would cover any glitches or encumbrances which may affect the title to your proprty (ie. it'd pay for any of these that may slip under the radar or if the title agensts miss anything which does indeed happen - i've seen it first hand).

critical things to look for when house shopping: the roof (new or old? beat up? pristine?), possible water damage (ie. in a basement for example - look at the corners of the basement and see if there's any mildew accumulated), the neighborhood (greatly affects the re-sale value, very important imo), the school district (good? bad?), gas heat or electric? (electric tends to be more expensive), well or city water? (some well water can be, well, pretty poor in quality although it depends where etc etc), and to a lesser extent, the yard (unable to grow grass/landscaping? in-ground sprinklers? good or poor 'curb appeal'?). lastly, maybe room to expand? (if you intend on staying a while or if more beebs are on the way).

while the market is imo still way overpriced in many areas, it is a 'buyers market'. so don't be afraid to play hard ball w/ any offers. you'd be surprised how desperate some sellers may be...

 

[warpus]

So I'm here in Iraq, and some of you might know that soldiers get paid quite a bit for deployments, and obviously since there is no where and no time to spend that money it all adds up pretty quick. So I have decided to buy a house.

I'm only 21 so this will be my first home (but not my first rodeo as far as living on my own and balancing expenses). I have a wife and a daughter due end of October. I am looking at a monthly income of about 2400 a month after taxes when I get back, and I will have approximately 30,000$ saved up when I come home.

So what I was wondering is if anyone who has purchased a home before could offer me any tips in this endeavor. Anything at all really since I really don't know where to start. I have been browsing websites for a few months now, getting a feel for pricing and stuff. I think about 220,000$ will be my max on the price of the house. I will also be getting a VA loan and I am OVERESTIMATING at a 6% interest so I can budget.

Does anyone have any helpful ideas they can give me? As far as taxes, payments..what to look for in a house, upgrading it, what I can and can't afford? Thanks in advance!

I am actually looking into buying my first property right now too, so I have some advice for you.

You need to get a real estate guy to help you find a house. This is not going to cost you a cent. You tell him what you're looking for, and he'll go around showing you properties, and answering any of your questions. That's the stage I'm at right now. He is showing me properties and I am getting a sense of what's out there and how much things cost.

The way he gets paid is he gets money from the seller. You don't pay anything.

Of course, you should also be looking on your own, but these guys are (can be) good.

 

[Urederra]

Quick tip:

Don't buy a very old house, nor a very big one either. The bigger the house, the more you have to spend to maintain it, and to clean it, end the less time you can spend at CFC.

 

[the_elf]

Understanding mortgages and all of the lender paperwork is a big time learning curve. Make sure to spend an adequate amount of time digesting all of the lender BS. Shop lenders, and shop them hard. Don't sign anything about locking in a rate until you are certain that you have the best lender giving you the best deal.

Pit the lenders against each other. Force them to help you understand all of the fees. For each fee they have, ask them what other lenders call that fee (ex., they may have a "document fee" that is another lenders "preparation fee," etc., etc.). Lenders will intentionally not be straight forward about this. If they're not forthcoming with you about how to make their "oranges" into "apples" so that you can compare against everyone elses "apples," tell them that you are going to have to find a more cooperative lender.

For each fee that they advertise, ask them if it's a fee they're willing to waive for your business. If they squirm or say no, tell them if one of your other options is willing to waive it, and that perhaps you'll just need to go with them.

Good luck! Remember...don't get comfortable in the lender's offices. They're all evil, and trying to take you for as much as they can.

 

[Merkinball]

Why do VA loans rock? I think it's one of the biggest jip of the benefits out there. All it is is like...a cosigner. It doesn't lower your rate, it doesn't provide anything to YOU. All it does is provide for the bank if you default on your mortgage.

Chazumi, I don't know if you've been following the housing market, but it's pretty much in a deep slide right now. I might be inclined to be patient and get an apartment for some time. Wait for home prices to go down more to get a better deal, then slip into your home.

 

[Rossiya]

You cannot "buy" a home. You can buy a house, and make a house a home, but you cannot buy a home.

 

[El Justo]

VA loans are nice b/c they typically offer lower interest rates than other lending institutions.

 

[IglooDame]

VA loans are nice b/c they typically offer lower interest rates than other lending institutions.

What he said.

And given the mortgage market tightening up lately, a VA certificate may mean the difference between getting a mortgage and not getting a mortgage.

 

[Merkinball]

How do VA loans give you a lower rate? It's not like you are getting the loan from the VA. You are getting the same loan from the bank as everybody else. It's just that you are more likely to get the loan because the bank has less risk if they give you the loan. It doesn't result in any sort of financial benefit to the veteran. It's just a guaranteed loan for the bank.

 

[El Justo]

well, if one has pristine/grade A credit then there's no real difference b/c lenders will be fighting tooth and nail to get you a note. however, for 1st time buyers and those who may not have outstanding credit, a VA loan takes alot of the BS out of it all...and that includes interest rates, PMI, adjustable/balloon rates, etc etc.

 

[mrt144]

How do VA loans give you a lower rate? It's not like you are getting the loan from the VA. You are getting the same loan from the bank as everybody else. It's just that you are more likely to get the loan because the bank has less risk if they give you the loan. It doesn't result in any sort of financial benefit to the veteran. It's just a guaranteed loan for the bank.

It's a guaramteed loan to the bank so the risk of default is lower

and because of that, the risk doesn't need to be hedged by a higher interest rate on the loan.

 

[DragonHawk]

I am actually looking into buying my first property right now too, so I have some advice for you.

You need to get a real estate guy to help you find a house. This is not going to cost you a cent. You tell him what you're looking for, and he'll go around showing you properties, and answering any of your questions. That's the stage I'm at right now. He is showing me properties and I am getting a sense of what's out there and how much things cost.

The way he gets paid is he gets money from the seller. You don't pay anything.

Of course, you should also be looking on your own, but these guys are (can be) good.

This is NOT the recommended way to get an agent. Since the sellers are the ones paying, these agents work FOR the sellers, NOT you (buyer). I am not saying seller agents are bad, but their primary objectives are getting their clients' houses sold, not finding the right house for you.

 

[IglooDame]

This is NOT the recommended way to get an agent. Since the sellers are the ones paying, these agents work FOR the sellers, NOT you (buyer). I am not saying seller agents are bad, but their primary objectives are getting their clients' houses sold, not finding the right house for you.

Maybe it depends on the state. In New Hampshire, they need to disclose in writing (and you need to sign it) as a seller's agent or a buyer's agent. Either way, their commission comes out of the seller's pocket. When they're a buyer's agent, their duty is to you and not to the seller.

But that said, they do have an interest in you buying as quickly and as expensively as possible, so while they can be extremely helpful it is well to keep that little bit of data in mind.

 

[Japanrocks12]

from what little experience I've had..

watch out for those pesky interest rates. 10% or 15% is far too excessive. we bought a house just last year and every single mortgage payment has gone to paying just interest.

 

[JerichoHill]

You need to get a real estate guy to help you find a house. This is not going to cost you a cent. You tell him what you're looking for, and he'll go around showing you properties, and answering any of your questions. That's the stage I'm at right now. He is showing me properties and I am getting a sense of what's out there and how much things cost.

The way he gets paid is he gets money from the seller. You don't pay anything.

This is wholly inaccurate. A buyer's agent is only going to get paid if you buy, so he will pressure you to buy. In addition, they get paid off of the standard 6% commission, which the case that there is a buyer's and seller's agent is split 3%/3%.

Rather if you do not have a buyer's agent but do it yourself, you can make a lower offer but agree to a higher commission to the seller's agent (say 4.5%) Or offer the seller's agent to be your buyer's agent (same thing). You wil save 20K+ with this method.

Do not trust realtors. They have to EARN your trust, especially in a down market. Do not take a realtor if you wind up doing that unless they have 15+ years experience.

 

[JerichoHill]

from what little experience I've had..

watch out for those pesky interest rates. 10% or 15% is far too excessive. we bought a house just last year and every single mortgage payment has gone to paying just interest.

what kind of rate is that? You must have gotten a jumbo loan and arm product?

I will assume that this guy's VA loan will be a fixed rate. Get nothing but a fixed rate.

 

[JerichoHill]

oh and go here for some good advice.

www.getrichslowly.org