Buying a house?

[tcck]

So...I know absolutely nothing about buying a house. I have a good job with a steady income and my only debt is student loans. SO and I aren't married and don't plan on it anytime soon, so if I bought a house it'd be in my name. My realtor friend reeeeally thinks I should buy a house instead if continuing to rent when baby comes.

Any tips or advice? Buy or rent? Opinions? Anything, really haha

[babymakes5]

I think your best bet would be to get pre-approved and see what's available in your price range. If you have tons of options, maybe you'll want to take the plunge. If you don't like anything in your price range, you probably want to stay put for awhile. We just bought a house in November, and my only other advice would be to start looking NOW if you're really considering this. It's exhausting and a lot of work, and you won't want to deal with it with a newborn/infant!

[rachydc]

I 100% agree with what babymakes5 says! Very smart advice. We bought our house a year ago in March and it was VERY stressful, definitely don't want that when youre late in the 3rd tri or even with a newborn

[Nittany]

I would suggest making sure that you want to stay in the same place for a while. We bought a house and then wanted to move 2 years later because of things that came up, so I wish we'd just rented longer. But if you think you want to stay put for a long time it might be worth looking in to.

[rachydc]

We also spent a ton of money on furnishing the new place because we were so excited about it and wanted to fill it up. Just be prepared for a lot of costs. Especially with taxes, closing costs, unforseen issues with the home inspection and decorating

[wineandwalter]

Agree with PPs. If you are settled in the area you're living in and plan to stay at least 7 years or so it may be worth getting pre-approved to see what's even possible. It's a process but I'm so glad we bought last April.

[Nittany]

Jan 18, 2015 14:20:17 GMT -5 rachydc said:

We also spent a ton of money on furnishing the new place because we were so excited about it and wanted to fill it up. Just be prepared for a lot of costs. Especially with taxes, closing costs, unforseen issues with the home inspection and decorating

Yes good point. There are so many unexpected costs. And maintenance too! We've had to replace a ton of appliances and a new roof soon, it's just a lot to consider.

[bshelly]

I second babymakes5 . It can't hurt to go ahead and get pre-approved and see what's out there. Keep in mind though, that many banks will approve you for more than you can truly afford, so have in mind a budget you already know you'll want to stick to, so you don't end up house poor. Also, this is a personal opinion, but if at all possible, try to go for a 15yr loan if it's an affordable option. For a $100,000 loan, that could save you $30-$40,000 over the life of the loan. Most importantly, do what is right for you and don't let anyone pressure you into it. Owning a home is awesome, but can be a lot of work, so it needs to be the right decision for your family.

[errsbear11]

I might not be the best person to offer advice, because I also know nothing about buying a house - but I am.

Our accountant specifically told us NOT to buy a house or have a kid until our debt is more manageable (we actually only have DH'S student loans, and only from med scool not undergrad). Several colleagues have also warned against having a child and buying a house at the same time, for the financial stress and stress of owning your first house. However, I'm tired of throwing $$ away to rent, so since we have to move anyhow, we are buying a house. I really don't agree with my accountant's advice, as DH and I both have good jobs, and have the money saved for a house. Apparently we won't see the tax benefits of a mortgage the same as we don't see them for interest paid on student loans - it's all Greek to me

[mtsue]

We just bought and moved in before Christmas! I second (third?) getting preapproved and going from there. Make sure to ask lots of questions on costs...so you're prepared upfront for closing costs, etc.

[akmom]

I agree with what others have said. First, make sure you are planning to be in that house for a while. Between closing costs and realtor fees if you sell again, you would most likely lose a good bit of money if you sell too soon. Second, talk to a loan officer at a bank. They can help you understand what you can afford and how much money you would need up front to buy a house. Third, consider the continuous costs of maintenance. Can you afford to do repairs as needed? Finally, is this the right time for you? Once you make an offer on a house, it can take up to two months to close. Will you want to be moving as you get into your third trimester?

We just sold and bought a house this past year. It was stressful and exhausting, but now we're so excited to be in our long term house. I don't think I would have wanted to do it while pregnant though. We probably would have waited to do it until after the baby was born.

[forevergraceful]

Do you have 20% to put down? If not, they changed the rules to have the PMI be for the life of the loan. Also, find out what taxes run in your area. Where I am taxes are about $5500 a year, that significantly reduces the mortgage that we can afford. I bought a home before SO and I were married and I am very happy I did. We will most likely move someday, but will rent this place out as an income property. Good luck.

[kissandglow]

Agree with needing to check taxes. Our house was 17k in taxes alone last year. Just dont live in IL and I think you'll be ok.

[estamos_tomamos]

Jan 18, 2015 14:53:08 GMT -5 forevergraceful said:

Do you have 20% to put down? If not, they changed the rules to have the PMI be for the life of the loan. Also, find out what taxes run in your area. Where I am taxes are about $5500 a year, that significantly reduces the mortgage that we can afford. I bought a home before SO and I were married and I am very happy I did. We will most likely move someday, but will rent this place out as an income property. Good luck.

This. PMI ain't no joke.

[lukyduky7]

I love the renting life! Not tied down, can try out different neighborhoods. Someone fixes our stuff when broken, not on our own bill. Also you already know your budgeting with current rent versus trying to take on a new type of responsibility payment in addition to new baby. My sister bought a home during her third trimester and is over her head with the new payments along with new baby expenses. Just my two cents

[nikki707]

For us it was worth the investment bc renting around here is basically just as high as a mortgage payment... but taxes make me sad. It took us awhile to find a place so it wouldn't hurt to start looking if you are considering it.

[nikki707]

Jan 18, 2015 14:56:59 GMT -5 kissandglow said:

Agree with needing to check taxes. Our house was 17k in taxes alone last year. Just dont live in IL and I think you'll be ok.

I feel your pain. Our property taxes are 16K. Nj sucks!!!!

[ashiscute]

Jan 18, 2015 14:53:08 GMT -5 forevergraceful said:

Do you have 20% to put down? If not, they changed the rules to have the PMI be for the life of the loan. Also, find out what taxes run in your area. Where I am taxes are about $5500 a year, that significantly reduces the mortgage that we can afford. I bought a home before SO and I were married and I am very happy I did. We will most likely move someday, but will rent this place out as an income property. Good luck.

I thought that was only for FHA? We did a conventional loan with 10% down and we were able to pre-pay out PMI with closing costs.

OP find a mortgage broker you really like and they should be able to walk you through your options. We sold our first house and moved to our second last year and it's a lot of work but it feels great to be in a house we know we can stay in. But it's tough knowing anything (roof, furnace, flooding) is all up to you. You need to make sure you have a solid savings even after purchase and moving just in case.

[erlizamac]

Echoing the pre-approval. We just bought a house about a year ago. It took us about two years to pick a house, mainly because my husband is ridiculously picky. Don't be afraid to ask for things in your contingency - make them fix things that look shady!

[tcck]

I haven't done ANYTHING. One of my best friends (I'm about to be a bridesmaid in her wedding) is a realtor and she'll help me for free. I know we need to move, and around here, a mortgage would be about the same as renting. But all of the unexpected costs is what I'm worried about! Baby was unexpected so I don't have the amount saved that I'd like.

Thank you for all the advice!!!!!! Keep it coming;)

[sutavim2]

There are great programs for first time homebuyers. Since you already have a connection, ask your agent friend to recommend a lender- see what you could get prequalified for and how much everything would cost with closing costs, down payment, and of course monthly payments. Second, if that friend would act as your agent, ask if they would give you money back off of their commission to help with closing costs- I do this for family and friends. Not only are you investing your money when you buy a home, but you are set on payments- they will not go up, only decrease if you refinance. For example, our mortgage payment is only 1350 per month, but if something happened and we had to move, we could actually rent our house out for about 2200-2300 per month- id hate to be paying that in rent every month! In addition, you also have the benefits of tax write offs when you own. Talk to your friend, get some good advice, and first and foremost, prequalify so you have realistic expectations. good luck!

[sutavim2]

@pianolove our PMI was 5 years and 80% of the original price you paid- since our values have increased significantly, we just refinanced to get PMI off. Its not the best decision in the long run, but with baby on the way, it made the most financial sense since it decreased our mortgage by $250 every month.

[forevergraceful]

Jan 18, 2015 15:44:59 GMT -5 @pianolove said:

Jan 18, 2015 15:24:17 GMT -5 cornpop311 said:

I don't think this is true or it may depend on the loan.
For non FHA I believe it's illegal for them to continue charging PMI once you reach 80% loan to value.

I don't think so, we were told to keep track of our pmi because it does not automatically come off. Banks don't want to take it off once you've reached it; they make money off of that. Also, a friend of ours got burned because his contract stated he would pay pmi until the maturation date, which he found out when he reached the 80% and tried to get it taken off.
Maybe it's different for different areas?

I am not completely sure on the new rules. But this was passed last year. I bought my house before and have a PMI. It goes away after 5 years and 20% of the loan payed off. New rules, would be that it would be there for life of loan, unless you refinance. But, a mortgage broker would be able to explain exactly what she is getting into. 

[forevergraceful]

Jan 18, 2015 16:04:53 GMT -5 @pianolove said:

Jan 18, 2015 15:51:51 GMT -5 sutavim2 said:

@pianolove our PMI was 5 years and 80% of the original price you paid- since our values have increased significantly, we just refinanced to get PMI off. Its not the best decision in the long run, but with baby on the way, it made the most financial sense since it decreased our mortgage by $250 every month.

You had to refi to get it off?? Yeah the rules are definitely different here, we have to provide proof of 80% in a written request and then they just remove it, no refinancing required. There isn't a set time period that we have to pay it either, it's just until we get to 80%

You can refinance if you have equity in the home but haven't yet paid 20% of the original loan. If you just pay 20% of the original loan and 5 years has passed, then it automatically goes away. 

[wineandcake]

Wow, this all confuses me so much. I'm up in Canada and things seem a little different. DH has a mortgage on our first house, but we're renting it out right now. Our second house was paid in cash by my dad since it was so cheap and we're paying him back for it (houses in our small middle of nowhere town average 40-60k so reasonable to pay cash). And taxes are ridiculous for some of you! We pay 3600$ a year in property tax, I thought tht was ridiculous, I can't imagine 17k

[Nittany]

OP FWIW I say it sounds like you might not be in the best position to buy right now and I wouldn't want to see you rush anything. I'd reevaluate after the baby is here and you see how finances are going and when you can bulk up your savings.

[bshelly]

PMI laws changed as of April of last year. It used to be that you could drop it at 80%, but now it is for the life of the loan.

ETA that's for an FHA loan

[sutavim2]

@ pianolove yea, we've just had the house a little over two years and the values have increased significantly. We refid so the pmt would go down, and make it easier on us when baby comes. We were contemplating selling and getting a new home, but this way I can be a SAHM with the low payment.

Also... Another good first timer purchase would be a condo/townhouse. It's yours, but so much less maintenance. You just have to make sure the HOA fees are worth it

[CALEO]

We love our house. It's also a huge pain in the butt. Our ceiling has leaked twice. Ugh.

[danious]

Someone might have mentioned this... But just because you're preappoved for an amount, don't take that as what you can actually afford. There are so many random hidden costs that you might not be thinking about. Taxes, utilities, furnishings, repairs, upgrades, insurances, basic fixes... Random things that might be included in apt living that you don't realize can be so much higher on the other side!
It's really worth it to know your budget backwards and forwards.