Tips on buying a house?
Jul.25, 2010 in
House Buying Tips
I am a 25 year old single mother with a 10 month old son. My goal is to buy a house in 5 years (depending on the market, of course). I currently have bad credit, but have steadily been improving it. In 5 years, I will have paid off my first auto loan. I have been at my job for 6 and a half years and do not plan on leaving. I plan to have 15% to put down, would like to have 20, but we will see how it goes. Any other tips?
July 25th, 2010 at 5:59 pm
Congratulations as you prepare to buy your first home! I think it’s terrific that you are taking the initiative to do this for both yourself and your child’s future. So many people rent thinking that they can’t possibly afford to own a home when they really can.
Ok, here’s my advice:
1) Get pre-qualified. This means find out what you can afford. Meet with a lender and get a ‘pre-qualification’ done. This will tell you what maximum you can afford for a home, no guessing required. Buyers love pre-qualified shoppers because they know they won’t have the loan fall through on them after making an offer. It saves everyone time and money. Oh and one more thing, don’t always feel that you have to go with the MAXIMUM prequalified amount. Buy low if you can, and you won’t be ‘house poor’. You’ll still have money for shopping, furnishing the house (expensive!), and even that yearly vacation you should be taking for yourself.
2) Get a real estate agent. Seriously, you want a professional working for you. Don’t try to do this yourself. You want what is called a "buyer’s agent". Beware: not all real estate agents are buyers agents. They will represent only YOUR interests. If possible, find someone through references (friends, coworkers, family) who have had a good experience with that agent. Until recently, the real estate industry exclusively represented the SELLER. A growing number of Real Estate Agents (and the public) want Buyers to have an equal level of representation in the real estate transaction. The National Association of Exclusive Buyer Agents (NAEBA) is proudly pioneering a nationwide effort to give today’s home-buying consumers the level of service they demand. Make sure your agent is a member of this organization.
3) Buy now if you can (or within the next 3-5 years before the market swings). Now is the time to buy — it’s such a soft market right now that if you can afford to buy now (or within the next 3 years) by all means do so. There are also more foreclosures available now than ever — in fact, there haven’t been this many foreclosures on the market since the Great Depression of the 1930s. That opportunity won’t come again any time soon. And it’s a great opportunity for first time buyers or anyone in a position to buy, such as renters.
4) Know your rights. I’ve put a link to the HUD website (a federal agency) that is devoted to first time home buyers. Attend a free seminar offered by HUD, if you can. You’ve probably heard that the more money you can put into your down payment, the lower your mortgage payments will be. Some types of loans require 10-20% of the purchase price. That’s why many first-time homebuyers turn to Housing and Urban Development (HUD) and Federal Housing Administration (FHA) loans for help. First time home buyers can get FHA loans that require only 3% down – and sometimes less. I bought my first home using an FHA loan and I didn’t have to put any money down. It was great because I was just getting started in my career and didn’t have that much money in cash or investments at that time. Your house will become your investment. Oh one more thing, FHA loans are great for people with bad credit so you shouldn’t have any problems at all.
5) When you are ready to shop for a home and make an offer on what you want, get a home inspection done. Don’t use the company that the seller recommends and by all means don’t let the seller talk you into letting them do it for you (with someone they hire). You want an INDEPENDENT to come in and do a floor to floor analysis of your prospective home. Don’t trust anyone else to do this for you. By all means check references and if possible, ask friends, family, etc. for inspectors that worked great for them. Word of mouth is the best advertisement. Here is a link to 10 questions to ask the Inspector:
http://www.hud.gov/offices/hsg/sfh/insp/inspfaq.cfm
6) Shop for homeowner’s insurance. Here’s a link that tells you HOW to shop for the best insurance: http://www.pueblo.gsa.gov/cic_text/housing/12ways/12ways.htm
Good luck!
July 25th, 2010 at 6:00 pm
get a credit card and use it. If you use it and pay on time you will begin to build your credit back. In 5 years you should have no problem as long as you make enough money to pay your mortgage and any other bills you have.
July 25th, 2010 at 6:00 pm
Sounds like a good start. But housing prices tend to increase, and you may be playing catch-up longer than you expect. So, if you can possibly move sooner than that, I would suggest doing so.
July 25th, 2010 at 6:00 pm
Make sure you hire a buyers agent when you get to that point.
July 25th, 2010 at 6:00 pm
just keep making timely payments on all your debts and make sure that your debt-income ratio is low. this will show that 1) you can afford the mortgage and 2) you are good with money mangement. other than that, the longer you are at your job, the better is looks for you. also, check with the credit reporting agencies and clean up your report as much as possible. meaning: if there is any thing that is a satisfied debt that is still sitting on your report, have it removed.
July 25th, 2010 at 6:00 pm
Honestly, you’re taking all of the right steps already, saving money, staying at your job, building up your credit, paying off debt, just keep doing those things and you should be good. I just barely bought a house a few months ago, and another bit of advice I can give you is to be patient with the process. Sometimes it can get really long and things change, but just take your time when looking for the right place. Oh, another thing, if you can, get a loan officer that can help you get a FIXED interest rate so that your mortgage doesn’t keep going up every couple of years or so. Good luck with everything!
July 25th, 2010 at 6:00 pm
Yes.
1.) Don’t buy a home on top of a mountain, hill, or elevated area
2.) Don’t buy a home next to a mountain, hill, or elevated area
3.) Don’t buy a home very close to a schoolground — those kids will walk by everyday and trash it
4.) Don’t buy a home near an airport, train station, or subway station. You will hear that go on all the time.
5.) Don’t buy a home near a freeway, highway, or major bypass
6.) Don’t buy a home in an area prone to frequent or very severe natural disasters (New Orleans)
7.) Don’t buy a home on or near a landfill. That’s garbage we’re talking about
8.) Don’t buy a home by a river
9.) Don’t buy a home in or near a low-income rental housing area. Renters don’t treat their places with any kind of respect, and your home will lose value due to a trashed neighborhood
10.) Don’t buy a home with serviceable easements running across the property.