Big Step : First House : Help needed!

[6FeetUnder]

Hi everyone,
I've found that this is a great place to get advice on everything financial, so I thought I would bring a few more questions to the table.

I'm going to try to get my first house soon. I have a ~750 credit score, and I will be shopping for my first mortgage and house soon.

-- With a 750 credit score, what type of rates should i be expecting?

-- Where are some of the good places to look online for competitive rates? I believe I will go safe and go for a traditional 30 year fixed loan.

-- I've heard a lot about LendingTree.com, anyone have any experience with them? Anyone hear about them? Any place that you'd recommend?

-- When purchasing a residential property, is it good to go without a realtor or with one?

-- If purchasing from a private seller, I know that you can have them do the loan for say, $190,000, and actually buy the house for $185,000 and have the seller give you $5,000 cash for repairs, upgrades, etc. Am I missing anything big here that may come back to bite me?

-- Any other advise for a first time home buyer?

Thanks!

Chris

[sweeps]

Your credit score is important but not the only factor in securing a mortgage. The size of your downpayment, income-to-debt ratios, and amount of time in the workforce are some other factors that come into play.

Rates are somewhere around 6% right now. It will naturally vary quite a bit depending on the lender and whether you pay points.

Since this is your first home I would absolutely recommend a realtor. It costs you nothing (the seller pays your realtor's fee, usually 2.5%-3% of the home purchase price). Your realtor will keep an eye on new homes for you on the MLS, secure appointments for you, and keep you updated on house buying rules and etiquette.

Note that a realtor is not a replacement for: (a) a home inspector and (b) a real estate attorney. Hiring these people (usually after you've selected a house) is critical.

[jIM_Ohio]

Originally Posted by 6FeetUnder

Hi everyone,
I've found that this is a great place to get advice on everything financial, so I thought I would bring a few more questions to the table.

I'm going to try to get my first house soon. I have a ~750 credit score, and I will be shopping for my first mortgage and house soon.

-- With a 750 credit score, what type of rates should i be expecting?

-- Where are some of the good places to look online for competitive rates? I believe I will go safe and go for a traditional 30 year fixed loan.

-- I've heard a lot about LendingTree.com, anyone have any experience with them? Anyone hear about them? Any place that you'd recommend?

-- When purchasing a residential property, is it good to go without a realtor or with one?

-- If purchasing from a private seller, I know that you can have them do the loan for say, $190,000, and actually buy the house for $185,000 and have the seller give you $5,000 cash for repairs, upgrades, etc. Am I missing anything big here that may come back to bite me?

-- Any other advise for a first time home buyer?

Thanks!

Chris

Interest rates follow the bond market. I got 5.875% last week on a refinance. 30 yr fixed. If bond market drops (10 yr treasury) interest rates will too.

Educate yourself. 3 letters to avoid PMI (Private Mortgage Insurance).

If you put 5% down, look for an 80-15-5 program. 80% first, 15% second, 5% down. Avoids PMI.

If you put 20% down, you can do an 80% first without any fear of PMI.

I used lending tree.com for my refinance. Buyer beware. A few sales people were rude when I chose another lender. If you get an offer, have someone look over it. Good faith estimate tells quite a bit (a lender will create a GFA once they pull credit scores to tell you fees, payments and closing costs).

If you are looking at new construction (I've done this twice), you will not need a realtor or an online mortgage company.

If you are purchasing an existing house, I think using a realtor would be a plus.

Hire a home inspector for $350 prior to closing. If inspector finds a problem, he will save you 10X what you paid him.

Do not trust builder's inspector or seller's inspector. Hire your own.

[Ima saver]

The realtors around here get 7% of the cost of the house, but it is paid for by the seller.

[jIM_Ohio]

Originally Posted by Ima saver

The realtors around here get 7% of the cost of the house, but it is paid for by the seller.

Ohio is a 6% commission paid by seller. 3% to seller agent, 3% to buyers agent.

[6FeetUnder]

Thanks to everyone for their responses.

From what I understand, if you have a relator, even though you do not pay them, can you usually get a better deal on a home because the buyer has to pay less fees (to the realtor)??? Other than the securing of appointments and finding houses, do they have any other benefits?

Chris

[sweeps]

Originally Posted by 6FeetUnder

From what I understand, if you have a relator, even though you do not pay them, can you usually get a better deal on a home because the buyer has to pay less fees (to the realtor)??? Other than the securing of appointments and finding houses, do they have any other benefits?

If you already have a for-sale-by-owner house in mind to buy, then don't bother getting a realtor. Or as mentioned earlier if you're buying new construction, no need for a realtor either.

But otherwise get one. Getting a better deal without a realtor is good in theory, but not so good in practice.

[tinapbeana]

6feetunder:

as a buyer, a realtor may or may not be a good idea depending on how much time you're willing to invest and what resources are made publicly available in your area. for instance, i looked at homes for about a 2 year period. there's a website in my area www.ggar.com which is the Greater Greenville Association of Realtors. they have the MLS properties for the surrounding 4-5 counties on this website, all searchable. most counties around here also offer their tax accesor information online, where i could check assessed footage, slope of the land, whether it was in a flood plain, assessed value and previous years' taxes. for me, these 2 websites provided more than enough information for me to narrow the field down without the aid of a buyer's realtor. once we found a house we were intrigued by, the normal steps of getting your own inspection etc. are relatively easy.

[Scanner]

I agree with Tina: Realtors represent the interests of the seller, not the buyer.

It's possible to construct a buyer's agent agreement but they tend to be rare and the buyer's agent just becomes a "sub-agent" of the seller's agent.

Anyhow, at www.realtor.com, you can do a search on houses, you don't need a realtor to hold your hand through the shopping process. Of course, as you look at the house, the salesman/woman will represent the seller.

My only advice to you, more than probably a .25% here or there on the mortgage is that it is a "buyer's market."

Personally, if I was jumping in right now, I'd offer about 10-25% lower than the asking price, depending on where the seller was coming in.

Don't let the real estate agent say, "Oh, they'll never take that. . ." It's her job to give them the offer and let them say "No" or counteroffer.

Don't make a $10,000 mistake.

Good luck.

[sweeps]

I respectfully disagree. If you've bought a house before, sure, you know what you're doing and you know what you're looking for. Go at it alone if you want. But if this is your first time buying, you need someone who will guide you through the process. And again, it is FREE for the buyer. If you don't have an agent, the selling agent gets the whole 5-6% commission. Don't believe the hype about the price being lower if you come in without an agent.

Yes, there are conflicts of interest. Obviously the realtor would like you to pay more for a house because his commission is a percentage of the final sale. And the sooner you buy, the better for him. So naturally keep these things in mind. But also keep in mind the realtor wants you to go through him again and possibly recommend him to others in the future, so he has a vested interest to make you happy.

By the way if you don't have your own realtor, then the seller's agent is representing both the seller and you at the same time. I don't see how that is any better.

[jIM_Ohio]

Originally Posted by sweeps

I respectfully disagree. If you've bought a house before, sure, you know what you're doing and you know what you're looking for. Go at it alone if you want. But if this is your first time buying, you need someone who will guide you through the process. And again, it is FREE for the buyer. If you don't have an agent, the selling agent gets the whole 5-6% commission. Don't believe the hype about the price being lower if you come in without an agent.

Yes, there are conflicts of interest. Obviously the realtor would like you to pay more for a house because his commission is a percentage of the final sale. And the sooner you buy, the better for him. So naturally keep these things in mind. But also keep in mind the realtor wants you to go through him again and possibly recommend him to others in the future, so he has a vested interest to make you happy.

By the way if you don't have your own realtor, then the seller's agent is representing both the seller and you at the same time. I don't see how that is any better.

If you don't buy, the realtor does not make a thing...

[sweeps]

Originally Posted by jIM_Ohio

If you don't buy, the realtor does not make a thing...

Your point?

[scfr]

Critical: Have the home inspection done!!! Do not skimp on this step. Ask for references from people you know. (We once made an offer on a house but when the inspection was done found that there was standing water in the crawl space and the support beams were rotting. In an earthquake, the house could collapse. Needless to say, we were able to pull out of the deal and were very grateful.)

Important: Be leery of any references to outside companies that your realtor makes (title companies, mortgage brokers, etc.) They might be getting a kickback and therefore are not making the recommendation with your best interest in mind, but theirs.

Nice: Look for a realtor who will refund part of their commission to you. Here in my area, there is a service called Redfin (www.redfin.com) that refunds 66% of the buyers commission. Unfortunately, they aren't in Colorado yet. Ask around, there may be something in your area. Since it's your first time buying, you will probably want a realtor to help you, but it's not necessary to pay the full commission.

Good luck to you! It is a big step!

[jIM_Ohio]

Originally Posted by sweeps

Your point?

"Yes, there are conflicts of interest. Obviously the realtor would like you to pay more for a house because his commission is a percentage of the final sale. And the sooner you buy, the better for him. So naturally keep these things in mind."

The conflicts only exist if you actually BUY the property. 3% of a zero purchase price is $0.

RE agent wants the price to be a positive number, but if there is no sale, there is no commission.

The RE agent I work with sells LOTS of properties... every sale is important. Find a good agent and work with him (her). It's in everyone's interest for the deal to actually happen.

[sweeps]

Sorry, but I still don't see your point. Are you agreeing or disagreeing? If anything the fact that your realtor may get *nothing* intensifies potential conflicts of interest because the realtor may push you to buy *something*, even if buying is not right for you.

But -- as I stated, there are many ethical realtors out there, and again, they depend on referrals and repeat business, so it doesn't pay for a realtor to screw you over.

I completely agree with scfr's comments. Get a home inspector. Get an attorney. Ask for recommendations from friends and relatives. Don't go with anyone recommended by your realtor -- that will minimize conflicts of interest.

[jIM_Ohio]

Originally Posted by sweeps

Sorry, but I still don't see your point. Are you agreeing or disagreeing? If anything the fact that your realtor may get *nothing* intensifies potential conflicts of interest because the realtor may push you to buy *something*, even if buying is not right for you.

But -- as I stated, there are many ethical realtors out there, and again, they depend on referrals and repeat business, so it doesn't pay for a realtor to screw you over.

I completely agree with scfr's comments. Get a home inspector. Get an attorney. Ask for recommendations from friends and relatives. Don't go with anyone recommended by your realtor -- that will minimize conflicts of interest.

The realtor would rather get 3% of something than 3% of nothing. In our case our realtor became the buyers and sellers agent when we sold our townhouse... and he even lowered commission when buyer started complaining of everything left and right.

We have sold one house and bought two new contruction.

The builder referred us to the realtor and he sold our townhouse and got a commission from the builder when we closed as well.

We referred same realtor to my Brother in law, he sold their house after another realtor had it on market for 9 months without any action.

I have used a home inspector, home appraiser and handyman referred by this realtor (I agree on using a home inspector). I believe he is ethical, and I am impressed with his customer service. I would refer anyone in Cincinnati to him. First class. First class salesman too.

One thing which impressed me with our realtor is he sets expectations well. We sold when housing market was hot, but he reminded us that condos/townhomes are a niche market. Low maintainance, low move in costs. He has us get a new carpet and paint some walls well before we ever put house on market. Did not take him long to get people coming to the house. First offer fell through, second offer stuck (even though buyer was jacka$$).

[kv968]

Originally Posted by Scanner

My only advice to you, more than probably a .25% here or there on the mortgage is that it is a "buyer's market."

Personally, if I was jumping in right now, I'd offer about 10-25% lower than the asking price, depending on where the seller was coming in.

This is definitely something you want to keep in mind. You do possibly have another advantage by being a first home buyer that's often overlooked. You don't have a house to sell. That may not sound like much of a good thing but it can be. If you get into a bidding war with someone who has to sell their house before they can purchase the one you're bidding on, all things equal, you're got the advantage of mobility. Keep that in mind also and you may be able to use it to your benefit when negotiating a price.

[LuxLiving]

6feetunder, one thing an agent can do for you is tell you as a first time buyer what kinds of bond money & grant offers are out there available only to first-timers - meaning dollars that come into the deal to make it easier for you to get in a home.

Be sure to ask about them!

[jodi]

Originally Posted by Scanner

I agree with Tina: Realtors represent the interests of the seller, not the buyer.

It's possible to construct a buyer's agent agreement but they tend to be rare and the buyer's agent just becomes a "sub-agent" of the seller's agent.

Anyhow, at www.realtor.com, you can do a search on houses, you don't need a realtor to hold your hand through the shopping process. Of course, as you look at the house, the salesman/woman will represent the seller.

My only advice to you, more than probably a .25% here or there on the mortgage is that it is a "buyer's market."

Personally, if I was jumping in right now, I'd offer about 10-25% lower than the asking price, depending on where the seller was coming in.

Don't let the real estate agent say, "Oh, they'll never take that. . ." It's her job to give them the offer and let them say "No" or counteroffer.

Don't make a $10,000 mistake.

Good luck.

Sorry, Scanner, I have to call you out on a few things here. First of all, I AM a realtor, so I have a little first hand knowledge (although some might call it a "bias!)
As for saying that a buyer's agent is a sub-agent, that's incorrect. When I introduce myself to a prospective client, I have to explain to them exactly who I am working for - the seller as a listing agent, the seller as a sub-agent, or a buyer's agent. 95% of the time I am a buyer's agent, working SOLELY for the buyer. If a dual agency situation arises (where two agents for the same office represent both the buyer and seller), it has to be disclosed immediately and agreed to in writing by all parties. Then our office would do what is called a "designated" agent, where one agent is assigned to act directly for the benefit of the seller and the other for the buyer. Both sides still have exclusive representation.
As far as saying that the agent showing you the house will be working for the seller, that may or may not be true. If you call a name on a sign in front of a house and ask for that agent, they will be working for the seller, as they have contracted with the seller to list that house. However, if during the course of your conversation you ask about a different house (that is not listed by that agent), they can "shift" to become a buyer's agent representing you for the purchase of that house. I have shifted roles often in working with buyers. It just needs to be disclosed what type of agent you are acting as.
Lastly, as a realtor, it is our job to give advice on price based on current market trends, length of time on the market, etc. Yes, we are obligated to present an offer, even if we think it is too low. However, and this has happened more than a few times to me, I will advise a client if I think a lowball offer might jeopardize his chances of getting a house. If they decide to go ahead, I will write up the offer. Sometimes the seller will get so offended that they refuse to look at any subsequent offers from the buyer. Yes, it happens. I feel that it is my job to be honest with the buyer about the possible consequences of an offer, yet I will honor their wishes if they want to move forward- I have to. I always take the time to draw up a market analysis for both my buyers AND sellers to determine a fair market price for the house. This way, buyers can know if they are getting a good deal or if there is wiggle room to negotiate lower.
As a buyer - I would absolutely recommend an agent. There is no cost to you - at all! Only the benefit. As far as searching for houses online, most listings take several days to make in online. I don't know where you live, but sometime that's all it take to sell a house. When I work with someone, I can set up automatic e-mails from the Multiple Listing Service to send new listings to my clients the minute they are entered. You can't get much faster than that Good luck!

[sweeps]

I was wondering when a real estate agent would chime in.