First time home purchase questions

**Eagle** · 05-04-2015, 08:42 AM

Originally posted by ESMonitor View Post

Hello all,

Can you recommend a book for me to read about buying a house? I see there are several on Amazon.

I want to know the do's and don'ts.

I am 42, single, no kids. Live in an apt. I have no debt. Been saving my money. My lease runs out in a year. I may renew for one more 13 month term. No hurry. Although rent here is not cheap, pay $820 mo.

I've been looking at houses on Zillow. I want to get one for around $140k - $150k in a certain area here where I live if I can. I would be willing to make a 20 % down payment.

So much unknown it is kind of dautning. I'm still in my Shire in a Lord of the Rings kind of way.

Any advice on buying my first house? and any books suggestions are much appreciated.

ES

@ES

Buying a house is a big step. I do agree buying a house for the first time can be a little daunting. See this post about the pros and cons of buying verses renting. Is buying right for you? If so then this is what I'd recommend you do when or if you do buy eventually.

1. Make sure the house is what you really want. Make a list of what matters to you. (Examples: 1 story or 2 story? pool or no pool? open area living room/kitchen or individual rooms? how many bedrooms? how many bathrooms? 1 or 2 car garage? large or small yard? what kind of square footage are you looking for? Is this a house you'll have if you do get married and expand your family? etc.)

2. Pay off all your debt before buying a house. This will help your family's financial health in building wealth. This has helped us tremendously after buying our house last year. Both vehicles are paid off, we carry no credit card debt, and we have no student loan debt. Looks like you're already there.

3. Have 20% of the value of the house to put as a down payment. This will help you avoid PMI (private mortgage insurance) that would easily add $50-200 a month to your monthly payment. How much do you have to put down on the house as a down payment? If you're looking at a house in the 140k to 150k range you should have over 30k to put down.

4. Ideally the house is no more than 2-3 times your current yearly salary. What is your household income? Will furthering your career likely result in a move in the near future (2-5 years)?

5. Ideally the house payment should be 25% or less of your take home pay. Shop around for the best value. Don't go with your first house you visit unless you visit at least another 3-4 in the area.

6. Have an emergency fund set up to where you have 6-12 months of expenses in the bank. The roof will inevitably need repairs, the fence might need repairs, you might need to replace appliance, you might need a new AC or heating unit, etc. You seem pretty savvy financially. Expect the unexpected. Be prepared!

7. Everything is negotiable. See how long the house has been on the market. Compare costs of similar houses in the neighborhood. What is the going rate for houses in the neighborhood you're looking at? Is the house you're looking at on the high end or the low end in the neighborhood?

**Fishindude77** · 05-04-2015, 09:05 AM

Have at least 20 down payment.
Do a fixed rate mortgage, duration not to exceed 15 years.
Have some other cash laying around as there will undoubtedly be some expenses you incur to get things squared away after moving in.
Consider the cost of upkeep; law care, snow removal, etc. and equipment required to do that work.

**snafu** · 05-10-2015, 05:56 AM

Buying your 1st house is scary, no doubt about it. Building on what's already explained, I add Location, location, location is most important, you can change nearly anything but location. Urban or suburban? How far to work? Long commutes are exhausting, tolls, public transportation access?

Don't fall 'in love' with a house until you are handed the keys, this is not a time for emotion, facts, stick to facts. Asking price is negotiable and you can ask for anything in the house...the owner can reject. Truly capitalist what a willing buyer ad seller choose. Don't get into a bidding war, it's too expensive . It's important to understand how the mortgage amotorization table works. Unlike traditional loans, mortgage interest is front loaded. For the 1st 10 years you are paying mostly interest, hardly any principal unless you make an extra payment directly to principal. Further, your monthly payment includes municipal [property] taxes, HOA [Home Owner Association] if applicable, and often buyers roll house & personal effects insurance into their monthly payment.

Ask about access to services even those you won't use like schools since you will sell sometime in the future and families need schools.` Do not cheap out on home inspection, accompany the inspector to learn a lot about how your house has been built and what all can go wrong. It helps to develop a criteria to compare housing. We worked on cost per square foot and added or subtracted $$$ for level of insulation, quality windows, garage, easy care siding/facia, easy to manage landscaping, ensuite, bathrm on each level, newer appliances, wood flooring for example.

We ignore decor, colors, as these are the least expensive to change. I ran a typical day in my imagination...return from work, stop for gas [where is outlet], park car, easy access to bring stuff in house, hang up/put away gear? Pay attention to kitchen [triangle] layout, open fridge or oven door without slamming into an obstacle like DW door, sufficient cupboards for my stuff, prep area adjacent to fridge, 2nd adjacent to stove, 3rd adjacent to sink. Is there sufficient space in every bathrm for your gear?

Imagine strangers at the door, what do they see? Can they be corralled in the foyer? Do you have room to greet guests at the door? Check bdrm closets, is there sufficient space? 84" rod? Sufficient space for bed + access around 3 sides? Picture yourself gathering laundry and treking it to W/D and return to bdrm. Saturday AM, how much time to devote to yard care? My personal hang-up is number and placement of electric outlets. Endless list of product needs to be plugged in at the right location. Ok to hang TV on the wall but is there an adjacent outlet?

**ESMonitor** · 05-19-2015, 04:31 PM

Thanks for your help. It's given me a lot to think over.

I initially I thought I would shoot for a $160k house but may settle for $140 - $150k.

ES

**JoeP** · 05-20-2015, 05:28 AM

Every house will "require" some work when you move in. I put "require" in quotes because that word has different meanings to different people. For some, mildly used carpet is ok, and for others it needs to be changed out immediately CODE RED. Same for painting walls, replacing bathroom fixtures, removing wall paper, landscaping, coordinating appliances, etc.

So if you're able to defer the expensive "required" changes, and can chip away at the less critical ones over time, either by yourself or by hiring out, then you can end up saving a lot of money. Clearly, the best way to do this would be to budget and save, rather than put it on a credit card. Obviously, the tradeoff is living in a house that is not perfect for a while...some people can stomach that fine while others cannot (or are not willing to).

For the record: My first house was pretty crappy by my standards, but it was within my price range. For years I tolerated the burnt orange shag carpet, the avocado green wood grain counter tops, the faux "field stone" kitchen wall, the ugly green brittle kitchen floor tiles, and and worn carpets. Over a period of 7 years, I slowly swapped out the worst offenders and got the place looking nice for sale...and we had offers the day after it listed.

First time home purchase questions