Buying a House

[SmilesSoSweet]

Okay, I know we've probably beat this subject to the ground, but here's my question: for those of you that own a place, how did you go about finding a realtor, dealing with mortgage rates, and all that other stuff that comes with it? My lease is up here in six months, but I want to start looking soon before prices increase. I want to know how much I can afford for a monthly mortgage, without having to have a roommate either (that may be tough). I think my price range is between $200k-250k, but I may go as high as just under $300k.

I don't make tons of money, but moving out here I ending up getting a higher paying job and living in a much more afforable city. I'm at this stage in my life that purchasing a house is my next achiveable goal.

I might consider a townhouse over a single family home. A condo might be okay, too, but it still sometimes feels like living in an apartment (my brother and his wife own a condo, but it still feels like apartment style living).

Any advice on how to get started? Most likely I won't have a down payment (unless I win PowerBall tomorrow night!), but I do have excellent credit and I qualify for first time buyer.

[SunDevil]

How long are you planning on living in Phoenix? If you aren't going to be there for 5 or more years, it won't be worth it. You will either have to pay 6% to buy or sell your house. That is a lot of rent payments. And house prices have stayed flat or declined this year.

And a $200k-$300k for a house with no down payment probably isn't what you need at this stage of your life. There will be PMI insurance, property taxes, home improvements/repairs, and utilities. You will be able to find good houses for $130k-160k in Phoenix.

You have to look for a house that is in a good area so it can be resold. Are you looking at new construction, or older houses? Is it in a homeowners association neighborhood(evil, more fees, better resale value)? Do you want a swimming pool, there are some isues with those, but I would get one in Arizona. Are you ready to be tied down to a city and have to make your mortage payments each month?

[SmilesSoSweet]

Hey SunDevil

Here in Phoenix, under $200k is getting really rare nowadays. I am planning on staying out here for awhile. I'm ready to settle somewhere and this is the place I'll be for a few years. I might be able to find something under $200k but I'd be about 30 miles from work and the commute wouldn't be too good. There are a lot of new developments going on right now (I'm even working on some of them at work), but those places are way out in the boonies and I just don't want to deal with the commute. I would rather avoid HOA but if I choose to live in a townhouse, that's almost unavoidable. As for a swimming pool, if I live in a townhouse community there's a good chance there would be a community pool. I don't know how to swim too well (I just took lessons this summer) so I really don't need a pool in my back yard.

I just don't want to rent forever. I'm ready to buy a house because like I said in my first post, I'm at this stage of life that I'm ready to purchase my first place. (There were times I thought I would buy a place with a spouse, but I'm going to hold my breath and wait around for that to happen.)

My other option is to buy a place with my cousin. He's lives in California, but he wants to get his hands on real estate out here. He has VA and military benefits; so we might go in together to buy something. A co-worker of mine just bought a house this summer with a friend. It's a brand new house in South Phoenix and they got it for $200k. Once you leave his development though the outskirts of that area isn't such a great place.

Condos right now are even being sold for over $200k in some parts of time. Yes, the market it level a bit out here, but it's still a hot, demanding market.

[StateNAurora]

Check out programs like this:

http://www.nhsphoenix.org/index.htm

I'm sure there are others in your area. They offer classes that teach the process to firt time buyers. They also offer special mortgage programs and grants to first time home buyers. If you don't use them for financial help I think the classes would be very helpful to get you started on the right foot. I myself am taking a class starting next week. Have you thought buying a hourse yourself and renting out a room? That way the mortgage will be half paid for and you'll receive more tax benefits. For example you can write anything spent on the house in terms of improvements and furnishings if you rent a room out.

[SmilesSoSweet]

StateNAurora,

I may consider renting out a room, it just depends on what I can afford and how big the place will be. It would be nice not to have to rent out a room, but I know if I had to, I would. Thanks for the website. I'll really look into taking that class. It'll probably be good to get expertise from someone that I don't personally know, but knows the home buying process well.

[cheshrcarol]

To avoid PMI, most people get a "piggy back loan", which is basically a home equity and is typically paid off in a shorter amount of time than the rest of the mortgage.

[sunshine79]

I am going through the same thing in trying to buy my first house. I'm going through a mortgage broker that a friend recommended, and a realtor that was recommended as well. I'm sure you know this, but make sure that you get prequalified for a certain amount and then decide from there how much you want to spend. If you find a good mortgage broker, he/she should be able to spend time with you explaining all of the different options for loans. Also, I'm using the Suze Orman book for the Young, Fabulous and Broke and Housebuying for Dummies as reference guides - I'd recommend these as well. Good luck! We put our first offer on a house today and are anxiously waiting to hear if they accept!

[heatherf]

As for the mortgage details, I'd suggest going to a place like Countrywide. They will be able to tell you what you can pre-qual for, and give you the estimates of how much everything will cost. Like Winney said, don't worry about PMI.....I don't think anyone has to pay PMI anymore cause of Piggyback loans where one loan is 80% of the price and one is for 20% of the price. Yes, it's two loans, but it's really not a hassle. As for rates, it will depend on your credit etc. But you should be offered pretty competitive rates from any lender. A friend of mine even used lendingtree or eloan or somthing like that and got a really good offer. As far as closing costs, supposedly they are 1-3% of the price of the house. So expect to come up with 2-10k.

As for realtors, I haven't a clue. But I've heard that it really helps to get one because they can show you houses that technically aren't even on the market yet.

IMO I'd watch out for condos, for a couple reasons. You'll have to pay extra for the Homeowner's Association fees and trying to resell it may prove to be difficult.

[winneythepooh7]

Hey. I didn't make that last suggestion, however here is another very useful site. I think Amy/Capella posted this in another forum. I have it saved in my favorites though :D :

http://www.firsttimehomebuyercenter.net/index.htm

My boyfriend and I have been talking about the interest-only loans. His father is supposed to introduce us to a mortgage broker he knows when the time comes for all of this............For my situation, I think this would be the way to go. I am never going to make a ton of dough, and I think it would take me years to save up 20% of what houses go for in Long Island. My boyfriend could save more than I could, so that would help. Once we actually got the house though, we wouldn't have problems making the payments. Has anyone ever gone this route when purchasing a home for the first time? We are looking for an older house, that will probably need some work, but that we can fix up and turn around, sell it and make a decent profit.

[SunDevil]

http://www.jimmessenger.com/details.php?details=59

Here is an example of a house I was thinking about. I'm not sure what neighborhood/city you are looking in, but there are good and bad areas when looking to resell (This house isn't in the best or worst part of town). They also have very nice, more expensive houses on that site.

[tdko]

In general, right now ain't the time to buy a house for only a few years. I was just reading in Newsweek that houses are usually completely unprofitable. Most people don't believe it (esp. in California :D), but they don't factor in all the costs associated with keeping up a house for a few years.

Figure out what your ideal place is cost-wise. I don't know the exact math, but you should be able to calculate how much your monthly payment is going to be. Let's say it's $2,000. If your current rent is $1,000, then every month take $1,000 (the difference) + $500 (bills/upkeep) and put it in a savings account. $500 is not difficult to imagine, but you are considering a worst-case scenario.

Do that for six months. If, at the end, you have been able to continue eating and everything, you'll know you can afford a house. And if you can't keep it up, then you'll have a few grand in a savings account and you can take a nice trip.

[SunDevil]

In general, right now ain't the time to buy a house for only a few years. I was just reading in Newsweek that houses are usually completely unprofitable. Most people don't believe it (esp. in California :D), but they don't factor in all the costs associated with keeping up a house for a few years.


I would also believe that where you have speculators and flippers not living in the houses that they buy, the prices will fall in the next 5 years. Look t the trends in prices over the last 6 months to 1 year to see what they are doing in your city. Also remember that interest rates might keep going up.

I also think you need to have 6 months of savings to live on if you have no income before buying a house.

[shimmer728]

I was looking at real estate ads tonight for the hell of it, and I really can't believe how cheap houses are out here. There are four-bedrooms going for $40K. I'm not kidding. I saw one (piece-of-shit) trailer for $16K. $16K!! I could put nothing down and have the thing paid off in a few years.

If I did that, I'd start wearing curlers in my hair 24/7 and chewing tobacco. :D

[SunDevil]

Are they only 16k? I could stop paying rent if I bought one of those. :p

[labrat2111]

I was looking at real estate ads tonight for the hell of it, and I really can't believe how cheap houses are out here. There are four-bedrooms going for $40K. I'm not kidding. I saw one (piece-of-shit) trailer for $16K. $16K!! I could put nothing down and have the thing paid off in a few years.

If I did that, I'd start wearing curlers in my hair 24/7 and chewing tobacco. :D

Yeah trailers are very cheap. I have a friend who just bought one and moved in 2 months ago. I saw her place 3 weekends ago and it's pretty nice other than the ceilings aren't very high. She pays 240/month lot rent which includes trash and water/sewer. She pays 219/month for the actual trailer. If she wasn't one of those types who had to have a new car all the time she could pay off her trailer in only 4-5 years and she doesn't make more than 12-13/hr. She just got to the point where she was sick of living under her parent's roof and figured for the price of a modest apartment she can live somewhere closer to work and without neighbors above and below and on each side of her. I'm sure someday too once she pays it off she can always buy some land later to put a trailer on or build a house. And she is a reasonably cultured person -- not trailer trash at all :)

[shimmer728]

Yep, it was only $16K! My mortgage might even be lower than my rent. Actually, yeah, I'm sure it would be.

Another thing about mobile homes is you don't pay prop. taxes.