Anyone own a home? Good update #23

[Freedom]

Karen said line up a lawyer. My understanding is that, out where you are, a Realtor handles it all and few people use an attorney. (Here in the East, we need both a realtor and an attorney.) For your first time, I strongly advise you to have a Realtor to walk you through step by step. It can be overwhelming, and having someone who knows "now do this" "next make that phone call" will save you lots of agony in the long run. You can line up a Buyer's Realtor, someone who represents YOU. It may cost you a bit extra ($300 to $500?) but well worth it!

Have a home inspection done.

I was going to say 60 days from offer to move in. But I didn't use a REaltor so I goofed up on a few things.

Go to your bank and get preapproved. It will speed the process along. It doesn't cost you anything for that step, at least it didn't when I bought 5 years ago.

[Edwina's Secretary]

I am in the fourth home I have bought. In Illinois you use a lawyer for the closing...here in California that is not how it is done. States are different.

The home inspection is soooo critical. Get references on the home inspector and don't just use the one your realtor suggests.

Also decide what you will do about real estate taxes. The first two houses I bought when I was single. I prefer to escrow my taxes. My husband and I do not agree on this.....

[Pembroke_Corgi]

Thank you for all of the good advice! It makes me realize how little I know about real estate!

We have decided to start by seeing if we can qualify for a home loan and how much we can afford. I am a little concerned about out-of-pocket expenses, especially since I saw at one lender that the closing costs alone were 3% of the purchase price (average homes in this area are over $200,000- we are hoping to find a home for $150,000 or less).

Denver was once the foreclosure capital of the country (it's lower now) so there are many homes that are at auction or can be had for less money than going through an agency. The bad thing is that apparently it can be hard to get approved for a loan as a result. I guess we'll see what happens. I'd really love to own a home- $1000 a month towards rent doesn't go towards any future investment like a mortgage payment would. I also put a ton of books on hold at the library about buying your first home, so hopefully I will do my research well.

p.s. I used to have a Pembroke Corgi. My family got him from the Humane Society in Toronto back in the 70's. We had him for 15 years. They are great dogs!! Does yours nip your heels when you run?

They are great dogs! My dogs don't nip but they will always run after anyone running!

[Twisterdog]

I've bought two houses, one in Colorado, and a business. In all cases, all I did was find a realtor I liked and trusted. My realtor did all the work, all I did was sign papers and show up at closing. I did have an inspection done on the properties.

[Emeraldgreen]

You might be able to see if you can get all of the closing costs included in your mortgage/loan. We've used a mortgage broker the last two times and she was awesome. She did all the leg work and submitted our financial details to a number of banks until she found us a few banks that were willing to give us a loan and then we picked the one with the best interest rate. The fee for a mortgage broker depends on where you live and on the broker themselves. Ours cost about 3,000.00 but, she gets paid after the mortgage goes through and the money comes from the mortgage, she just rolls her costs into it. And, the second time we used her she got us a mortgage with a bank here in canada called TD Canada Trust and the bank had a deal that they would pay half of our broker fee's so we only had to pay 1,500.00 and it was just added to our overall mortgage. I think it's totally worth it if it can help you get your foot in the door.
Also, both times, we put an offer in on a house and put a subject on the offer that was 'subject to financing' and requested 3 weeks to get our finances in order. It was during that 3 week period that our mortgage broker went to bat for us and found us financing. If she hadn't been able to, the offer would simply expire and nothing would be lost except for the opportunity to buy that house. One of the times we were trying to buy a house we needed some extra time, above and beyond the 3 weeks so we contacted the realtor and told them so. The seller gave us an extension of a week and that gave our broker some more time to find us a lender.
I agree, putting 1,000 each month towards a mortgage instead of to rent just makes sense. Getting your foot in the door is the hardest part but once you do, you'll be able to begin building your investment with each monthly payment as you watch your mortgage get smaller and smaller. I hope everything goes really well for you.

[caseysmom]

Yes usually the closing costs get added into the mortgage, and its a good idea to have tax and insurance folded into your mortgage also. If you can get a 15 year mortgage you save a fortune on interest.

[Rachel]

its a good idea to have tax and insurance folded into your mortgage also. If you can get a 15 year mortgage you save a fortune on interest.

Oops, I have to disagree a bit on this opinion. If you get a 30 year mortgage your monthly payments will be less. You can always pay extra toward the principal any time you have the funds to do so. (Be sure there are no prepayment penalties in your mortgage contract). You can thereby get the benifits of paying off early and saving what you would have spent on interest just like you would have if you had a shorter mortgage, but you have the flexibility to do it as your circumstances allow.

As to taxes and insurance, I like to be in control of that myself. If I send in the check, I know these things have been paid and on time, rather than rely on the mortgage company to do it for me (and probably for a fee). With mortgages being bought and sold so many times there have been stories of an inordinant amount of time having to be spent trying to follow up and correct errors when someone hasn't done their duty. Sorry Edwina's Secretary, I'm siding with your husband on this one.

I guess I would add that you should shop around for a mortgage. Closing costs can vary quite a bit between banks. Be very inquisitive about each little detail and try to understand what each charge is for. Get it in writing if you can before making a decision which one to go for. The rate of interest is perhaps the easiest thing to understand.