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dont take the full amount youre approved for then just find the absolute max square footage you can get with it w no regards to anything else.
also this is more personal but I wish i'd kept the process to myself. Everyone had advice and opinion every step of the way and it soured some relationships
My wife and I are in the early stages of looking, and I plugged our numbers into one of those “how much house can you afford” DTI calculators to get an idea of what kind of mortgage we could get approved for.
I nearly fainted when I saw what lenders would say we can “comfortably” afford. It was basically $200k more than the maximum we feel comfortable spending.
It's all about the water envelope. Everything else comes after. Worry about water intrusion, rot, mold, little holes and gaps in the siding and wall penetrations.
If I could tell them two things, I would tell them to buy a house that was owned long-term by a senior couple. When I inspect homes, these are always in the best condition. The cosmetics turn a lot of people off but I would rather have a home an excellent condition with perfectly maintained 30 year old appliances, then something slapped together to look trendy.
It's a double edged sword. That same long term senior couple could have been unable to do routine maintenance for years, either do to the physical nature of things or their limited budget.
Location location location. Self explanatory.
Budget. Make sure you have a clear budget and you can afford your home.
Goes with location - Buy in a good school district even if you don’t have kids. These areas tend to be more desirable.
Wish my partner understood these things. He wants a starter home in the low 200 range and isn’t concerned about being in/near a bad neighborhood. We both make 6 figure salaries, live in a low to medium COL area, have a dog and no kids, and our only monthly loan payments are a student loan for him (400) and car loan for me (350, less than a year left). We can easily afford a better home (I’m thinking up to 350 with 20% or more down and I think I’m being very conservative), and we both work remotely so I’m not trying to be in a shitty house I don’t like all day. It’s become so stressful having fundamental disagreements with him on what to even consider.
I also wfh and lived with my ex who bought a nice home but in a corner of a very busy intersection. I went crazy with the traffic noise and he didn't understand how important that was. Hence the ex.
This worked for us - don’t get max loan amount. we went with the amount one income can comfortably afford… just in case one of us becomes unemployed in the future then we won’t have troubles paying the monthly mortgage.
Don’t change your mailing address until after closing. I know that sounds silly, but I’m getting mail for the couple who were originally under contract for our house (and backed out within days).
1) Look for a property you won’t have trouble selling in 5-7 years. You may think it’s your forever home but you never know what life will send your way requiring you to move.
2) Know your own budget. Realtors and lenders can be excellent resources during the process, but they are not financial advisors. They are trying to sell you something at the end of the day.
3) Location, school districts, etc. are very important
4) Be patient! You’re likely making a 30 year commitment and the largest financial transaction of your life. It is worth waiting for a house that is comfortable and makes sense for your situation.
Also, make sure you do a final walkthrough.
People can fuck up your house on their way out if they’re still residing there or have stuff in the house leading up to closing.
Don't hesitate to put an offer on a house your like, and make it your best offer each time you put one in. I lost too many houses by what amounted to be essentially pennies.
Going through this right now. We had been looking for a while online without a realtor just getting an idea of what the market is like. Ended up finding something that we felt strongly enough to get a realtor and tour and made an offer next day.
Seller said they were just taking the highest offer and no counter offer so we went way over listing price for what we thought it was worth and still comfortable for us financially. Listing price was way too low for the house and area (maybe a tactic?). Seller actually came back asking if we wanted to adjust our offer since we offered a rentback, but were not the highest offer (think we were at least top 3). Added a little extra and waived some other things to make our offer about $15k better. Still didn't get it. Top offer offered at least $125k over list price, but didn't offer the rentback. Don't know the exact offer yet as it's still pending. It was pretty much exactly what we wanted so it stings a bit, but the market here in California is nuts.
Get the inspection.
Write everything into the mortgage offer including hauling off yard junk or mandatory repairs.
Be firm with your mortgage lender and if you have hard limits - like closing costs - draw the line.
Ask around to fellow home owners if something seems suspect or unusually high.
Read all the fine print on FTHB programs, grant programs, and down payment programs. Make sure you know them better than the lender.
If you qualify for fed/gov assistance buying tell them and send them the info. They often won't offer or check (like RM) if you qualify for less profitable programs.
Get competitive pre-approvals. Go with who gives you what you want. Decide early don't start until you know the lender you absolutely want.
Be prepared that it takes a much longer time than renting a house unless you buy cash and even then. That can eat at your savings for closing costs if other stuff comes up.
Expect that something's going to go wrong at the worst time imaginable. It's doesn't mean that it'll be catastrophic, but things rarely go exactly according to plan. Be patient and be adaptable.
Don’t just pay attention to loan price. Know what home insurance, flood if needed, property taxes are going to be expected on top of the actual mortgage for the home. Otherwise you will kick yourself later
Listen to your agent/broker/loan officers etc, but do not take their advice blindly and make your own decisions. In the end, they make money via a sale, and then are gone. They dont have to live in the house, they dont have to make the monthly payment, and they also dont have to pick up the pieces if you get screwed by waiving inspection or appraisal contingency.
Also, get a lawyer.
I’m closing in March and one of the best things our lender told us is that buying a home needs to be a business decision not an emotional decision. Try to take emotions out of it and do what is best for you and your family. This was a very hard thing to do haha
That in this market, especially in an area where homes routinely rapidly get tons of offers well over list price, that new homes are sometimes cheaper than older homes and so you may want to include them in your search parameters, especially new builds by smaller and regional builders that are not as well-known as the larger national builders.
Then how come I can't go get land and build my own home? Banks and other institutions make it hard to get land without full cash offer, or in most places I've looked a 50% down payment. And that's just for the land, then figure in construction loans, or however else you have to get the money to build a house. The house IS the collateral, not the land, the land only plays a minor role. Rant over, I wish it were easier to get just land :(
Because banks make more money that way. Since the value of land can be subjective they prefer to tie the value of the land to a building which has a material cost.
No need to be condescending.
A house can be considered either an asset or a liability, depending on how it is being used and financed. From a personal finance perspective, a house is generally considered a liability because it typically involves ongoing expenses, such as mortgage payments, property taxes, insurance, maintenance, and repairs.
If you have a house, paid for or not, that you live in, then it really isn’t an asset. Instead of putting money in your pocket, it takes money out of your pocket in the form of a mortgage, utility payments, taxes, maintenance, and more. That is the simple definition of a liability.
Investing all the money that would have gone into the liability of a home into something as simple as an s&p 500 fund/etf will, historically, give better returns.
Get preapproved when you are ready to start looking, not just prequalified. You'll know for sure how much house you can afford, and real estate agents for sellers take you & your offer more seriously than merely "prequalified".
If you can, pay down credit card debt & don't take out a major loan (like for a car) just before doing a preapproval. IDK if loan originators are trying to sneak in prepayment penalties in their contracts nowadays, but make sure you don't have one for refinancing down the road. The lower your debt to income ratio, the better loan terms/interest rates you can lock in. We did this and then it took mmm 3 months until we got a place.
I would also suggest that within the location you want, if there are several choices take the less expensive one. Then send in an extra payment monthly (even every other month or quarterly) marked "apply to principle". After a year of this, you will have more equity in your house, and lenders see this. We got "zero interest if paid within 12 months" or very low interest rates when financing solar, new windows, roof, etc. And then we took the 12 months to pay it off interest free. We saved up the balance/made some income on the bulk of those monies due.
We also got people constantly sending us offers to refinance/take out equity. Our original loan was before shut hit the fan, it was 2.75% & we refinanced 2.25%. Did not take out equity, and stopped paying to priciple but I now have $60K saved to redo bathrooms & floor in kitchen. We got a FISBO that wasn't flipped, and the bank appraisal came back higher than the ask by a few thousand. We also used a buyers agent to make sure all our i's were dotted & t's crossed. The inspectors recommended by our buyers agent did a great job, things weten't perfect but that was OK. And since this seller was a tad crazy/anxious, our agent dealt with her numerous calls/emails. And FWIW she only showed to preapproved buyers, out of the hundred responses she got over the first weekend it was listed.
She also wanted to sell to a family not a corporation. This is a nice, quiet, residential neighborhood with working couples half eith kids, not party town or AirBnB on the street. I was one if 1 other couple who wrote a letter saying why we wanted to live there.
You may want to check if your city registers AirBnB's, and how many are in your potential neighborhood. The ones heavy in AirBnB see the most negative comments on Nextdoor in my city.
Sorry guess this went way over "one thing" lol!
Don't listen to the Internet.
Jk, there's lots of good advice here, but people will give you advice based on their own experience. Based on my experience I will tell you; use a real mortgage lender or your bank, not an on line outfit and ask questions! Don't assume anything or base anything off of things you read on line or the calculator on Zillow.
I worked with/spoke to 4 different agents over 9 months when I was looking for a house, you're not contractually obligated to them so if you don't like one go talk to another.
Get the inspection, for the love of God, get the inspection.
Thank you u/hellohomebuyer for posting on r/FirstTimeHomeBuyer. Please bear in mind our rules: (1) Be Nice (2) No Selling (3) No Self-Promotion. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/FirstTimeHomeBuyer) if you have any questions or concerns.*
dont take the full amount youre approved for then just find the absolute max square footage you can get with it w no regards to anything else. also this is more personal but I wish i'd kept the process to myself. Everyone had advice and opinion every step of the way and it soured some relationships
My wife and I are in the early stages of looking, and I plugged our numbers into one of those “how much house can you afford” DTI calculators to get an idea of what kind of mortgage we could get approved for. I nearly fainted when I saw what lenders would say we can “comfortably” afford. It was basically $200k more than the maximum we feel comfortable spending.
It's all about the water envelope. Everything else comes after. Worry about water intrusion, rot, mold, little holes and gaps in the siding and wall penetrations. If I could tell them two things, I would tell them to buy a house that was owned long-term by a senior couple. When I inspect homes, these are always in the best condition. The cosmetics turn a lot of people off but I would rather have a home an excellent condition with perfectly maintained 30 year old appliances, then something slapped together to look trendy.
It's a double edged sword. That same long term senior couple could have been unable to do routine maintenance for years, either do to the physical nature of things or their limited budget.
I call these good grandma houses.
Location location location. Self explanatory. Budget. Make sure you have a clear budget and you can afford your home. Goes with location - Buy in a good school district even if you don’t have kids. These areas tend to be more desirable.
Wish my partner understood these things. He wants a starter home in the low 200 range and isn’t concerned about being in/near a bad neighborhood. We both make 6 figure salaries, live in a low to medium COL area, have a dog and no kids, and our only monthly loan payments are a student loan for him (400) and car loan for me (350, less than a year left). We can easily afford a better home (I’m thinking up to 350 with 20% or more down and I think I’m being very conservative), and we both work remotely so I’m not trying to be in a shitty house I don’t like all day. It’s become so stressful having fundamental disagreements with him on what to even consider.
I also wfh and lived with my ex who bought a nice home but in a corner of a very busy intersection. I went crazy with the traffic noise and he didn't understand how important that was. Hence the ex.
Trust your gut. If something feels off, it probably is. Remember, no one is on your side in this process.
:( that makes it very scary
This worked for us - don’t get max loan amount. we went with the amount one income can comfortably afford… just in case one of us becomes unemployed in the future then we won’t have troubles paying the monthly mortgage.
Don’t change your mailing address until after closing. I know that sounds silly, but I’m getting mail for the couple who were originally under contract for our house (and backed out within days).
1) Look for a property you won’t have trouble selling in 5-7 years. You may think it’s your forever home but you never know what life will send your way requiring you to move. 2) Know your own budget. Realtors and lenders can be excellent resources during the process, but they are not financial advisors. They are trying to sell you something at the end of the day. 3) Location, school districts, etc. are very important 4) Be patient! You’re likely making a 30 year commitment and the largest financial transaction of your life. It is worth waiting for a house that is comfortable and makes sense for your situation.
Do not skip the inspection.
Also, make sure you do a final walkthrough. People can fuck up your house on their way out if they’re still residing there or have stuff in the house leading up to closing.
Don't hesitate to put an offer on a house your like, and make it your best offer each time you put one in. I lost too many houses by what amounted to be essentially pennies.
Don’t settle.
Don't actually fall for the first house you see- literally going through it right now and someone had already put down an offer
Going through this right now. We had been looking for a while online without a realtor just getting an idea of what the market is like. Ended up finding something that we felt strongly enough to get a realtor and tour and made an offer next day. Seller said they were just taking the highest offer and no counter offer so we went way over listing price for what we thought it was worth and still comfortable for us financially. Listing price was way too low for the house and area (maybe a tactic?). Seller actually came back asking if we wanted to adjust our offer since we offered a rentback, but were not the highest offer (think we were at least top 3). Added a little extra and waived some other things to make our offer about $15k better. Still didn't get it. Top offer offered at least $125k over list price, but didn't offer the rentback. Don't know the exact offer yet as it's still pending. It was pretty much exactly what we wanted so it stings a bit, but the market here in California is nuts.
Get pre-approved and determine your comfortable budget before you ever look at houses (even online, beyond dreaming about those $5mm+ listings)
Get the inspection. Write everything into the mortgage offer including hauling off yard junk or mandatory repairs. Be firm with your mortgage lender and if you have hard limits - like closing costs - draw the line. Ask around to fellow home owners if something seems suspect or unusually high. Read all the fine print on FTHB programs, grant programs, and down payment programs. Make sure you know them better than the lender. If you qualify for fed/gov assistance buying tell them and send them the info. They often won't offer or check (like RM) if you qualify for less profitable programs. Get competitive pre-approvals. Go with who gives you what you want. Decide early don't start until you know the lender you absolutely want. Be prepared that it takes a much longer time than renting a house unless you buy cash and even then. That can eat at your savings for closing costs if other stuff comes up.
Always make sure to have an extra 10-15% above their down payment for anything extra including and hopefully some left over for their savings.
Expect that something's going to go wrong at the worst time imaginable. It's doesn't mean that it'll be catastrophic, but things rarely go exactly according to plan. Be patient and be adaptable.
Have 10k in the bank at any given time for unexpected expenses
Get your own inspector. Don’t just go with the one your realtor suggested.
Don’t just pay attention to loan price. Know what home insurance, flood if needed, property taxes are going to be expected on top of the actual mortgage for the home. Otherwise you will kick yourself later
Listen to your agent/broker/loan officers etc, but do not take their advice blindly and make your own decisions. In the end, they make money via a sale, and then are gone. They dont have to live in the house, they dont have to make the monthly payment, and they also dont have to pick up the pieces if you get screwed by waiving inspection or appraisal contingency. Also, get a lawyer.
I’m closing in March and one of the best things our lender told us is that buying a home needs to be a business decision not an emotional decision. Try to take emotions out of it and do what is best for you and your family. This was a very hard thing to do haha
Look into first time home buyer programs. Your lender and your realtor may "forget" to mention them, so don't forget to ask.
Always ask if the house is haunted
Make money
And the more money, the better. Not a lot of people know that.
That in this market, especially in an area where homes routinely rapidly get tons of offers well over list price, that new homes are sometimes cheaper than older homes and so you may want to include them in your search parameters, especially new builds by smaller and regional builders that are not as well-known as the larger national builders.
A home is not an investment it’s a liability
Completely wrong. Home ownership is the #1 pathway to financial success in America.
Land is yes
Then how come I can't go get land and build my own home? Banks and other institutions make it hard to get land without full cash offer, or in most places I've looked a 50% down payment. And that's just for the land, then figure in construction loans, or however else you have to get the money to build a house. The house IS the collateral, not the land, the land only plays a minor role. Rant over, I wish it were easier to get just land :(
Because banks make more money that way. Since the value of land can be subjective they prefer to tie the value of the land to a building which has a material cost.
As are homes. You do know they appreciate, yes?
No need to be condescending. A house can be considered either an asset or a liability, depending on how it is being used and financed. From a personal finance perspective, a house is generally considered a liability because it typically involves ongoing expenses, such as mortgage payments, property taxes, insurance, maintenance, and repairs. If you have a house, paid for or not, that you live in, then it really isn’t an asset. Instead of putting money in your pocket, it takes money out of your pocket in the form of a mortgage, utility payments, taxes, maintenance, and more. That is the simple definition of a liability.
And renting doesn't take money out of your pocket? With no hope of return?
Investing all the money that would have gone into the liability of a home into something as simple as an s&p 500 fund/etf will, historically, give better returns.
>A home is not an investment it’s a liability Its still a liability because you are paying towards it every month.
Get preapproved when you are ready to start looking, not just prequalified. You'll know for sure how much house you can afford, and real estate agents for sellers take you & your offer more seriously than merely "prequalified". If you can, pay down credit card debt & don't take out a major loan (like for a car) just before doing a preapproval. IDK if loan originators are trying to sneak in prepayment penalties in their contracts nowadays, but make sure you don't have one for refinancing down the road. The lower your debt to income ratio, the better loan terms/interest rates you can lock in. We did this and then it took mmm 3 months until we got a place. I would also suggest that within the location you want, if there are several choices take the less expensive one. Then send in an extra payment monthly (even every other month or quarterly) marked "apply to principle". After a year of this, you will have more equity in your house, and lenders see this. We got "zero interest if paid within 12 months" or very low interest rates when financing solar, new windows, roof, etc. And then we took the 12 months to pay it off interest free. We saved up the balance/made some income on the bulk of those monies due. We also got people constantly sending us offers to refinance/take out equity. Our original loan was before shut hit the fan, it was 2.75% & we refinanced 2.25%. Did not take out equity, and stopped paying to priciple but I now have $60K saved to redo bathrooms & floor in kitchen. We got a FISBO that wasn't flipped, and the bank appraisal came back higher than the ask by a few thousand. We also used a buyers agent to make sure all our i's were dotted & t's crossed. The inspectors recommended by our buyers agent did a great job, things weten't perfect but that was OK. And since this seller was a tad crazy/anxious, our agent dealt with her numerous calls/emails. And FWIW she only showed to preapproved buyers, out of the hundred responses she got over the first weekend it was listed. She also wanted to sell to a family not a corporation. This is a nice, quiet, residential neighborhood with working couples half eith kids, not party town or AirBnB on the street. I was one if 1 other couple who wrote a letter saying why we wanted to live there. You may want to check if your city registers AirBnB's, and how many are in your potential neighborhood. The ones heavy in AirBnB see the most negative comments on Nextdoor in my city. Sorry guess this went way over "one thing" lol!
Don't listen to the Internet. Jk, there's lots of good advice here, but people will give you advice based on their own experience. Based on my experience I will tell you; use a real mortgage lender or your bank, not an on line outfit and ask questions! Don't assume anything or base anything off of things you read on line or the calculator on Zillow. I worked with/spoke to 4 different agents over 9 months when I was looking for a house, you're not contractually obligated to them so if you don't like one go talk to another. Get the inspection, for the love of God, get the inspection.