I want to buy a house.

[asellus]

Cross posted from various places...


I want to do this, but to be honest I have no idea where to even start. An apartment is just throwing money away at something I'll never own. I'd like to just skip that shit and be like yay house.

Anyone here know the ropes?

Things I'm wondering:

How much should I really make before even considering this?
What are typical prices for something like a 2 bed 1 bath and a 2+ car garage?
How does a mortgage work? Is it just another name for a super huge loan?
Aren't mortgages like 20+ years? What if I want to move?
What other "options" should I consider in a house (ie, central air, duplex or non, etc)?
Aside from house payments, gas, electricity, and water, what else comes with home ownership?
What should I expect to pay a month for gas? Electricity? What about water? How are they measured?


Thanks a bunch in advance.

[Big Nate]

I am no expert but I would (am) wait to buy a house for at least 8 months. The market is taking a big shit in the bed and you want to jump into that at the last possible second. Meaning the market is way down and it is not going to come back until next winter.

If you buy now (These numbers are all hypothetical and mean dick) you will pay $100,000.00 for a house that will be worth $80,000.00 in one year. So that mean you will lose 20% of your money and end up not making any equity (this is the stuff that you want). So it would be like not buying the house until next year anyway.


Here is a good site with a lot of info. My college business professor uses it so it is not scammy peace of regurgitated shit. Motly Fool (http://www.fool.com/homecenter/homecenter.htm?source=PFinAg)

[Z-licious]

Make sure you can put down a huge down payment too. If you don't have 20% of the house paid off you have to pay mortgage insurance which is like $100 a month or so. Add that on top of the several hundred dollars in interest (since you have such a huge loan) and you're still throwing money away.

[dmention7]

How much should I really make before even considering this?

Well, put it this way, $200k mortgage is going to be right around $1500/month all said and done. There is some wiggle room for local property taxes, mortgage insurance, etc, but that's in the ballpark.



What are typical prices for something like a 2 bed 1 bath and a 2+ car garage?Depends ENTIRELY on the location. My house (small 2 bed 1 bath with a large 2-car garage) in minneapolis cost about $170k. In Eden Prairie it would probably be closer to half a mil.



How does a mortgage work? Is it just another name for a super huge loan?Pretty much yes. It's a large, long-term loan that uses the property you purchase as colateral.


Aren't mortgages like 20+ years? What if I want to move?Here is where the idea of equity comes into play. Equity refers to the difference between the current value of your house and the amount you owe on it. If you want to move before the house is paid off, then you want to be able to sell it for more than you owe on it (and hopefully more than you paid for it to begin with) and then roll the equity into your next house. It works pretty much the same way as trading in a car that you still owe money on.



What other "options" should I consider in a house (ie, central air, duplex or non, etc)?That's entirely up to what you want in a house. Don't worry about this unti you actually start getting out and taking a look at what's on the market.



Aside from house payments, gas, electricity, and water, what else comes with home ownership?Everything. If it breaks or needs fixing, you pay for it. If it needs upgrading, you pay for it. If you want a wall a different color, you pay for it.



What should I expect to pay a month for gas? Electricity? What about water? How are they measured?Depends a lot on what type of heating and appliances you have.

But a reasonable estimate for a smaller "starter" house would probably range from about $100-250/month for all essential utilities (not including phone, internet, etc) depending on time of year and the condition of your furnace, water heater, etc.



If you're serious, the first thing I'd do is go into a bank or credit union that does mortgages, and just have them walk you through the financial basics. They will be able to take account of your income and expenses to give you a pretty accurate picture of where you stand. Once you know what kind of place you could potentially afford, then start skimming the real estate section in the paper, and using real estate searches on the internet to see if what you can afford wil buy you the kind of place you would be happy to own, and where you want to own it.

[Picklz]

How much should I really make before even considering this?
What are typical prices for something like a 2 bed 1 bath and a 2+ car garage?
How does a mortgage work? Is it just another name for a super huge loan?
Aren't mortgages like 20+ years? What if I want to move?
What other "options" should I consider in a house (ie, central air, duplex or non, etc)?
Aside from house payments, gas, electricity, and water, what else comes with home ownership?
What should I expect to pay a month for gas? Electricity? What about water? How are they measured?

There's a lot of info out there as far as the 'how much can I afford', if you search various financial websites a lot of them offer suggestions.

Typical price for a house varies widley depending on where the house is purchased, you can check out some sites like themlsonline.com to get an idea of what houses are being listed at in the area your looking.

Mortgage is more or less a super huge loan, they generally are between 15-30years, there is a whole heck of a lot to know about mortgages. There are different types, ARM, fixed rate, etc. I would reccomend talking to someone that does this for a living, you can usually make an appointment and they will go over your current bills, what you make, etc and help you figure out what you can really afford. I'd suggest asking friends and such that have gone through the process try and find someone who you can trust (via word of mouth), there are some bad lending practices out there, which is how people get sucked into interest-only loans, huge ARM mortagaes (with no max rate), etc.

Options are kind of a personal thing, keep things in mind like how old the major appliances are, does it have a water softener? How old are the furnace, water heater, air conditioner (if it has one) etc. How old is the roof? The siding? When you get down to the point where you found the house you want to by hiring an inspector might not be a bad idea either, especially for a first time buyer. Myself I'd pretty much have to have central air, a bigger garage would be a huge plus, but everyone has different needs.

Other expenses to consider with a house over an apartment - your going to pay property taxes, generally $1000-2000 a year, depending on what the house is worth / where its located. As mentioned before if you dont have a very large down payment you will also be stuck with mortgage insurance which I guess runs around $100/mo but I'm not sure on that. Beyond that any maintenance that comes up you are responsible for, so its a good idea to budget for that.

Townhomes are a nice middle ground, you build equity and eventually own it, you do have an association fee of around $100-200 a month but you also aren't responsible for any of the exterior mantenance (roof, siding, drivway, mowing the lawn, snow removal, etc). Down sides are they can be harder to sell, and you still have a shared wall or walls with neighbors usually.

I highly reccomend talking to a mortgage person (I'm sure they have a more offical title than that), and even a realestate agent, don't let anyone pressure you into buying before you are ready or spending more than you feel you should / can. Also there are first time home buyer classes that are put on, often for free that would be worth attending.

Some countys offer first time programs that offer lower rates, 0 down options, or other forms of assistance, make sure to search these out once you have an idea of the area you want to buy in.

Nate offers good advice, if you can wait untill at least late summer / early fall, prices are going to continue to fall as a lot of the ARM's are up in the 1st and 2nd quarter this year, which is likely going to increase the forclosure rates.

[mndsm]

Keep in consideration property taxes too, they will bite you in the ass if you buy in the wrong area.

[Nekko Noir]

This is a great website where you can search for homes on the market (I believe the link is also Minnesota-specific). I used it a lot when Jay and I were looking to buy a house. The nice thing is, there is an advanced search option where you can pick your budget range, location(s), preferences and wants (# of bed/bath, amenities, etc) and it will pull up all the homes that meet your criteria and it's a great way to figure out what you can afford in your price range in different locations (don't be surprised if the quality of homes vary drastically between different locations, that's just the nature of real estate - it's all about location, location, location!!). There are also many homes with pictures and virtual tours, so it's kind of cool.

http://msp.themlsonline.com/home

As everyone has mentioned above, the best first step would be to consult with a loan officer or real estate agent (most of them will refer you to a good loan officer that they work with if you don't have one already in mind). Do some research, see who will give you the best rate if you have the patience and time, but just proceed with caution and don't get suckered into anything you don't want or are unsure about. A good loan officer and/or real estate agent will be more than happy to explain anything and everything you don't understand. Once you get your pre-approval (recommended) and paperwork set up, then comes the fun part where you actually get to go and look at houses!

If you need a good reference for real estate agents, the guy Jay and I used was referred by a co-worker/acquaintance of mine, and we thought he was very cool and a really nice guy. He also referred us to a loan officer that we really liked. If you want more information and are interested, PM me and I'd be more than happy to give you their information. Happy Hunting! :)

[AJ]

First thing is first, get yourself into a Mortgage company and find out what you woudl be approved for. Then start looking around at houses in various area that fall in that price range. Also remember if you are a first time home buyer you will get a a little more benefits.

I could also provide a very solid resource for a real estate agent. He's been in the game many years and really was great to work with. I'm pretty familiar with the process since we just bought a short time ago and I also work for a company with a homesale program which allows me to understand some of the other behind the scenes aspects.

[asellus]

. . . I'm pretty familiar with the process since we just bought a short time ago and I also work for a company with a homesale program which allows me to understand some of the other behind the scenes aspects.

By all means, tell the story. :D

[AJ]

Well the steps I would first take are:

- clear some CC or monthly payment debt. Anything that reflects on your debt to income. You don't have to wait for shit to post to your credit report, just have docs to prove it's paid off. This is a huge part to being comfortable when buying a house, simply because that mortgage payment isn't the only thing that comes along when buying a house. If you can afford 2k a month in the end on a mortgage don't borrow over what would end up being $1500 a month all said and done (include est utilities), you'll be gratefull down the road when other exspenses and additons come up. Like a $30k 4 car garage for only $250 a month on a 30 year fixed rate loan. ;)

- analyze what you want to spend and do everything you can to get locked in with a fixed rate. You may end up getting approved for $250k, but may only want the payment that goes with $190k. Understand that in todays market, $190k can get you a house in the $210k, to $220k range as long as it's not a popular property. Some property will simply hold value cause they remain appealing among comparable listings. So feel free to lowball as you see fit. If you end up being that asshole they laugh at, figure it's the only time you'll see this person. Do it anyway. This is advise I've gotten from several people who have seen everything from being told no, to being called back in 60 days to accept that lowball offer, only to be offered even lower and still accept.

I'll add more of my input a bit later, gotta get the hell home.

[ij1889]

ian one question, are you going to stay here in minnesota??? if not then dont buy a house, i just moved from texas and what my mom was paying on the house was about $1600 a month and it was a pretty big one story with 4 bedrooms and 2 baths in a good location, brand new it cost about $168,000 so its better to rent for the moment. but the real thing that rapes you is the taxes, its like taking a mini cooper up the ass, if you rent you dont pay taxes.

[dmention7]

Sure you pay taxes, it's just built into your monthly rent. That's why Mr Landloard hands you a CRP every january so you can file for a property tax refund.

Property taxes are all relevant. Mine are a relatively minor part of my mortgage payment.


However, I do agree that you shouldn't buy unless you plan on owning the place for several years. The exception is if you have the money or real estate savvy to gamble on your property appreciating significantly in a short period of time, or if you plan on buying a fixer-upper and renovating it.