Well as some of you might know, I recently graduated college, I'm still living at home with my parents and I just broke up with a long time girlfriend...

With being out of college, having some money saved from living with my parents, and now no GF to bog down any future plans of staying in the general area that I currently am in...

I have no debt tied to my name what so ever and most of what I'm making is getting socked away.

So I'm thinking, houses in my general region haven't been getting any cheaper in time, this might be the best time to make that leap from my parents house right into my own without the headaches of renting...

I'm not going to rush into this, I'm going to do a lot of reseach on it before I do anything and chances are, I won't even do anything until next year, or perhaps the year after that.

But I thought I had better start studying up on the topic now so that everything down the road is that much easier...

So, ok, my questions are...

Any recent first time home owners out there? If so, any advice, tips, suggestions, or concerns you might want to pass on to a newbie like myself?

Thanks,
Tanner

I'm not a homeowner (I still live with my dad....sigh), but my two cents is not to wait too long. Down here in south Florida, prices are going crazy. The cost of a used house jumped 37% in the last year, and there are no signs that it will stop soon.

Yeah I heard on the radio this morning (NPR) that properity values went up 10 times more than annual incomes in the last year...

That's just insane...

Tanner

avoid California if your not a Millionaire avg. house around my parts is $380K or so.
and i don't live in the big cities either :eek:

Yea, house prices here in California are INSANE! I live in a small city & about 3-4 years ago you could get a 2 br. house in this area for around $80-90K Well, they started building track homes in this area & now that same house sells for around $250K!! INSANE!

Anyway, back on topic! I don't know about WI but here in California they have alot of great first-time buyer programs you might check into. Good luck, this is the best investment, well besides Joe toys of course! ;)

Yea, house prices here in California are INSANE! I live in a small city & about 3-4 years ago you could get a 2 br. house in this area for around $80-90K Well, they started building track homes in this area & now that same house sells for around $250K!! INSANE!

now that is ugly since Beaumont is in the middle of nowhere.

Tanner-

We've done a LOT of research over the past two years. The best couple pieces of advice we can give are:

1. Get your finances in order - check your credit score, make sure you understand what it means and how it can affect your ability to get loans and good rates. Our credit has been shot, so we need another year or so to get everything paid off and start rebuilding.

2. Sock away a chunk of money for a down payment. That will definitely make your purchase a lot easier. Typical down payment amount can run from 5% to 10% of the house price, and although some arrangements let you buy with no money down, you're then paying interest on 100% of the principal instead of 90 or 95%

3. Find a recommended realtor and a reputable mortgage lender. If you belong to a credit union or have a really good bank, even better. A few mortgage lenders are fly-by-night organizations who will lie, cheat, and steal to get you a deal, and even then it may not be a deal. That's not all mortgage lenders, just a handful that ruin it for everyone else.

4. Scout around! A lot of really good deals are foreclosures, which can be found on the web pretty easily. Some great deals are "for sale by owner" (FSBO in the classifieds). Rent to own ain't a bad way to go, either - say you pay $1200 a month, $600 goes toward rent, the other $600 goes toward a down payment on the house. So when your lease is up, you've got a down payment in place.

If you have any specific questions, PM or email me, and i'll forward it to people I know in the field.

And whatever you do, don't look in California, New York, Boston, or Las Vegas. House prices here are just stupid. :D Unless you're independently wealthy or have a reeeeeeally good salary. In that case, move wherever you like!:p

oh and one last thing if your looking to buy a house and it is just you,DON'T DO IT !!! you would be better off with renting or maybe getting a condo,with owning your own home comes the responsibility of house bills such as gas,electricity,water,repairs,insurance,taxs and such.furthermore with just your one income(unless your makeing bucks)you will be lucky if you have anything left to eat with.

oh and one last thing if your looking to buy a house and it is just you,DON'T DO IT !!! you would be better off with renting or maybe getting a condo,with owning your own home comes the responsibility of house bills such as gas,electricity,water,repairs,insurance,taxs and such.furthermore with just your one income(unless your makeing bucks)you will be lucky if you have anything left to eat with.


LOL True but that entirely depends on what you end up buying.

I almost bought a foreclosure for $30,000 in Pittsburgh, and that'd be like a car payment, less, even. So paying utilities and taxes in addition wouldn't have been all that difficult.

Yeah I heard on the radio this morning (NPR) that properity values went up 10 times more than annual incomes in the last year...

That's just insane...

Tanner

True. The average person in my area (including the neighboring counties to the south and north) can't afford to buy housing any more. A good wage for Florida is $30,000. The average house here costs $250,00 to $400,000. Down here, you have to put up 20% of the cost for a down payment. Teachers, policeman, etc can't afford to buy anymore. It totally sucks.

Actually it is just me...

But like I said, I have no debt to my name, I should have 5 - 10% for the down payment by early next year. I make a pretty decent wage here in WI and I'm content with something small for now... Something in the $150k - $200k area. Oh and I only have about $100 - $200 worth of bills a month for my cell, truck insurance and health insurance.

I'll crunch the numbers may times over before I go through with this, so don't worry, I'll have plenty of dough to eat with...

May have to stop collecting for a while, but that's fine, I have most everything right now as it is, so I'd only be missing new stuff.

Tanner

LOL True but that entirely depends on what you end up buying.

I almost bought a foreclosure for $30,000 in Pittsburgh, and that'd be like a car payment, less, even. So paying utilities and taxes in addition wouldn't have been all that difficult.

yeah but you forget home owners insurance which is mandatory by most if not all loan companies and those prices can sometimes be as much as the house bill.

Looked into that... here in WI its around $500 - $600 annually...

Tanner

PS: The way renting is around here, its just about as bad as house payments. Singles run in the $600 - $700 range. I figure if its only going to cost me an extra $100 or so, why not put in something I'll get back rather then money out the window...

usually rent is in sync with cost of housing so if the rent for a 1 bedroom is about $600-700 a month then houses will be going for about $250K + on avg. as it is we have a 2 bedroom we get for $695 a month which is in a decent neighborhood but housing here has gone awol,also remember with owning a house if you miss a month or 2 of rent you lose the house and everything you paid into it,unlike rent you just lose your apartment.

some things to look for=
i have several frineds who jsut bought houses, and i work with people in the business of real estate
(first- CA is tapped in most areas, but there are still plenty of deals, in particular people fix up houses and resell, or buy big swaths of land with house up north)

OK= try to find an owner deal= !! for one if you cna make a private loan with a person= once you get the house, you still have credit with banks and could theorectically get a loan again for a second house. i know some real finaglers out here!

mainly, if you can make a deal with the owner it is often better for both of you than thru a bank, and just as legal and safe as long as you do all the paperwork.

shop around for loans big time. one of my buddies got a house in a mroe rural area- big house, lots of land, i think $250k = NO MONEY DOWN!
big payment every month, but zero deposit.
personally., i would be going for more down and less per month, but it helps some people.

keep this in mind also when making your investment in a home=

over the last ~25 years home prices have gone up times Four=

however, in the same time, the dow jones industrial average went from
~800 to TEN THOUSAND. that means 800 in good stocks is worth 10 000 now.
really.

it is good to have a home, and some people can flip them over a bunch and make lots of money, but the average person should consider budgeting some $$ for cash investments, like stocks or mutuals

true but remember this property value has petered out to the point it has not been going up here in California in roughly a year and house sales are down,in fact some lenders are trying to get illegal aliens here in California to buy homes since many others are not.

true but remember this property value has petered out to the point it has not been going up here in California in roughly a year and house sales are down,in fact some lenders are trying to get illegal aliens here in California to buy homes since many others are not.

Wisconsin isn't at that point yet. I've heard that about CA and with the properity values I seen down there, I'd believe it.

Here in Wisconsin however, I think there's still plenty of room for prices to go up.

I think the avg. home outside of Madison and Milw. are between 100k - 150k. It isn't until you actually in either city before prices avg between 150k - 300k.

So I'm going to try to find something near Madison, but not in Madison. I'm not too worried about missing payments, I've had a credit card for 8 years and have never carried a balance, made every tution payment on time and haven't dropped the ball on my truck or health insurance yet...

I'm a planner by nature, if I can't make this work, I won't do it. Hence the reason I'm giving myself about a year or two to research it and find something that will work for me.

Just looking for tips on how to get started on this process...


Tanner

I have a friend that did the exact same thing you want to do. He is not married and went straight from his Mom's house to his own. He never rented and doesn't regret making that move. His finances are good, no large debts and a steady job so it was a really smart thing to do. Why? He has more money that most of the people he works with. I make more money than him but I also have a wife, a daughter and a second car. So, he actually has more money than me because he doesn't have those expenses. It is a very smart thing to do to get a house now if you can afford it. Lock in a good price and a good rate for the long term. Then if you get married and have kids, you know where you stand on that front.

Don't worry about housing prices in other parts of the country, they have zero bearing on you. Watch your local trends and make a decision based on that. I am in central Florida and bought my house 2-1/2 years ago. The market is so insane that today I could not afford to buy my own house. (I'm talking $50-75K more in value) Granted, I will make bunch of money if I sell it, but I was just lucky I didn't have to wait any longer.

Hey when I get back from vacation hit me up on im and we can go over some things. I can give you some ideas on what to look for house wise so atfer you buy it you are not stuck with more bills.I should be home ina few days..

Tanner.......

I am a first time buyer. I bought this house over a year ago. It is a 3 bedroom, 2 full bath, livingroom, familyroom, woodburning fireplace, full basement and a 2 car garage. Pluse it is close to work.

It took me several years to choose this house. I paid $121,000 for it. it is valued now at about $125,000 When I get the basement finished it will be worth more. 3 house right next to me has done sold for $150,000 range.

One thing I looked for when I was searching for a house was the Tax bill.
Also when I was interested in a house I looked at the past 6 months of "bills" for the house just to get an idiea of cost.
Also I looked for the square footage of the house.
Also I looked at the roof of the houses (a new roof can be expensive)
Also the Central Air, hotwater heater and furnace.
Also the neighborhood (don't want to move in next to "bad" people) In fact there was a house a was interested in and I went to the house acrose the street and talked to the guy about the neighborhood and he at first got mad at me and cused me (why?), but he setteld down and told me that there was a lot of houses that people rent out around there. That turned me off becouse they can get some pretty bad people for rent.
One thing I didn't look for but wished I had now was tree's. Sounds odd don't it? But the tree in my yard shedds it's leaves all summer long I hate that tree.
Another thing I looked for was empty houses becouse I could see every damage to walls or floors ect. Unlike a house that someone is living in that can cover up stuff. My sister had bought a house that someone was living in and I kid you not when they got there stuff out and she walked through again It was in bad shape she bought it thoe, but a year later she had pumped so much into it and it needed more, she gave the house up sold it or something. Don't get diapointed if you buy a house and it does need work becouse every house no mater the age needs work.
Also I looked at ages of houses, don't know about historic houses around you but here if it is historic there are certain laws that take place about them I don't know the details becouse I avoidid them.
I also looked at gutters, doors and windows to see if they needed replaced (that also cost good money)
I also looked for cracks in the foundations and on the basement floors (that cost extra money to fix too)
I also looked around the base of houses to see if ANY wood touches the ground or comes closer than 3 to 4 inches from the ground becouse that couses termites and you don't want thoes little wood munchers

I could think of more but I got to get up at 3:00 in the morning to go to work so got to get to bed.

I hope some of this helps you out. You probly already know it but just thought I would tell anyway........

Tom.............

Thought I'd have some good advice being as I've been in the mortgage lending arena for over 5 years and have also 2 homes of my own, but everyone here has really hit on some great topics. A few I'd toss out to you too (assuming someone didn't already mention them and I overlooked):

1) Many states have first-time homebuyer programs offered through a state agency that give you lower than market interest rates and/or a grant for down payment assistance with NO COST to you. It's pretty sweet. I don't know if Wisconsin has it, but I know Illinois and Iowa do. Ask a lender or do some web searching.

2) Get a Realtor. They're FREE to you -- typically the home seller pays all Realtor commissions. A Realtor will guide you through buying a home, what paperwork you need to worry about, how much to offer, point out potential problems you might overlook, etc.

3) Go to a bank for your loan. Even the mortgage brokers that aren't outright crooks will still gouge you for as much as possible on a loan, jacking up your rate and points paid. I'd recommend a small or mid-sized local bank in your area since many of their lenders aren't paid only on commission like big banks and mortgage brokers. Also, start going to the big boys like Wells Fargo and US Bank and you're going to have to deal with a bunch of their internal red tape. Local banks really do care more about the average customer than the mega-banks. I've worked at both and speak from experience.

4) You mentioned you have no debt currently. Have you had any? No credit on your credit report is almost as bad as having bad credit. Pull your credit report from https://www.annualcreditreport.com/cra/index.jsp. It's free courtesy of the FACT Act that went into effect last December. Shoot for your credit score to be at least 650 or so. Lower than that isn't going to kill your chances for a loan, but your fees or rate might be higher. If you have no credit, go out and get a credit card or two, maybe a small car loan.

5) Don't shop just for rate. Make sure you compare total fees between lenders as well. A lender is required to give you a Good Faith Estimate of closing costs within 3 days of your application. Anymore, many give it to you the same day. Many will give you a rough guess over the phone too.

6) Calculate out how much YOU can afford per month for the house. Don't buy the maximum house you can just based on what your lender says. Their basing their loan approval on a bunch of statistics and know nothing about how you spend your discretionary income.

7) Don't buy unless you intend to stay put for at least 4 or 5 years. Even though housing prices have increased dramatically lately, there's absolutely no guarantee they'll keep doing so. Staying put 4-5 years at least means you stand a good chance of regaining most of your closing costs as well as the interest you'd pay over that time when you finally sell.

8) Make sure you have a good room for your Joes. Seriously. And think about what else you want from a house. Make a list. 2 car garage? Air conditioning? You don't want to hate your house in 6 months because you compromised for something you really wanted. Take your time. My wife and I looked for over a year for our current home, and knew it was for us when we finally found it. This may not be quite as important as you're unlikely to be in your first home forever, but you'll likely be there awhile.

9) Shoot me an email if you have any questions. And if decide to move to Iowa, I can hook you up with a nice loan deal! :)

GET IT IN WRITING....everything. If the realtor tells you something...get it in writing. If you are buying new and the builder tells you something...get it in writing.

Most of this other stuff is pretty common sense but I'll throw it in anyway:

Obviously dont over spend yourself. Make sure you have enough cash left over after moving in to get stuff like window blinds etc. If you want to buy new...try and find a subdivision that is just starting out. We were like the 4th family to buy a home in my neighborhood. My exact house is now selling for about 50-70k more than we paid. They usually have lower prices until they sell enough houses to start generating income for the builders. Also try and figure out how fast the homes are selling in that particular neighborhood. If no one is wanting to move in...you wont develope much equity. If you dont mind living rurally, you can get much more house for your money and also property taxes are a lot cheaper.

If you can afford it, I'd recommend a garage. We still havent gotten cars in ours but it's real useful to store stuff in. :D

Most important of all...make sure you have room for your Joes!

A few more notes:
Check your credit score...even if you think you have good credit. I had a collection for a phone bill through Pacific Bell for when I 'lived' in California. Trouble was...I've never even been to cali and at the time the service was on that house...I lived in Italy! Of course I had military orders proving I wasn't even in the country so it wasnt too difficult to get it removed from my credit report.

Look at the neighborhood....is there a lot of houses for sale...like more than usual? This may be a sign to say away from that 'hood. If need be, stop at someone's house and ask them about the neighborhood. Pick your house carefully...you will have to live next to your neighbors so try your best to pick good ones! We saw a real nice house we were wanting to buy but next door it looked like a bicycle chop shop!

Try and find out what is going to be going on in your neighborhood. Is your house going to be under a flight plan for an airport that is close by? Is there a city dump near by or are there any plans on putting one near you? Are there any plans for interstates, bypasses, etc near you? Things like this can lower the value of your home.

My wife and I were looking to have a house built in this one particular area. Was going to be a nice little cape cod style home sitting on a little over 2 acres. The deal fell through and we ended up moving where we are now to a two story on 1.3 acres. A year later we decide to drive back down there and see what they ended up putting on that lot. I was sure it was going to be a real nice house and we would end up leaving upset. We get down there...the neighborhood looked almost like it did a year before. Hardly no more houses were built. (in my neighborhood they sell faster than they can build them). Also...running right through my yard (or the yard that would have been mine)...and the builder 'forgot' to mention this to us...there were high tension power lines. Sure, the big metal frame in my back yard would be a pretty cool jungle gym for the kids but still! :rolleyes: Thank God that deal fell through!! A lot of maps will show 'proposed paths' of high tension wires or major interstates that is planned.

People that live in that neighborhood are your best souce of information. Have they had any trouble with the builders? How is the water pressure? Does your neighborhood have a covenance?

If you are buying used...get your own inspector to come out and look it over for you. This way you can be sure the seller just didnt 'mask' problems that will end up coming and biting you in the end. Also...if you are buying a used house that is almost 20 years old...plan on replacing the roof soon. Your roof will generally last 20 or 30 years...depending on the shingle used etc. I just bought new so I wouldnt have to worry about it. I plan on getting a new house before this one needs a new roof!

Before we bought the house we are living in now we were renting a 3 bedroom house. For about a hundred or so more each month we could buy one. I figured why pay for this other guy's mortgage when I'm not getting anything to show for it. I say screw renting if you can at all help it.

Cant think of anything else right now!

Clutch your lucky if $380K is average for your area. I was out on the San Fernando Valley today (outside of L.A. for the people who dont know) and I saw some condos there that are selling for $450. Houses there start at around $750K

My friend just sold his house that he bought 8 years ago for 450K for 1.3 Million. It's crazy, and the farther out you go it doesnt get much better. Southern California is almost totally tapped.

one more thing you should think about is if the area your thinking about moving to has any type of renovation or construction going on beware with the new supreme court ruling out they can kick you out of your house and only pay you what they think its worth.

My GF and I just bought a place, and we got what we could afford (which was not much), but man, are we PAYING for it, so to speak. We took a month to repaint and clean it, and we still didn't get it all done. While I was in Chicago, she got the kitchen done, but we still have to paint almost half the house, replace carpets (the previous owners had a dog, which my cats have picked up on and have been BOMBING the carpets in one hallway) and just fix a LOT of badly rigged repairs. like, they MADE a doggie door out of wicker placemats on a screen door. We had to replace all the screening there. Yeah, i know it isn't a big deal in THAT instance, but man, dropping tons of $K's on a place then getting nickel and dimed to death HURTS. And being a HOMEOWNER takes precedence over being a JOEOWNER. Suddenly, the cash from pieces in your collection starts looking good.

Time for me to chime in on this too. I work for a mortgage company as a supervisor in customer service, and I'd like to just add a few things to what has been said. I bought a house before I started working for the company I do now, and there are lots of things I wish I'd known before buying. Here's some things to consider:

1) 15 year vs 30 year mortgages. If you can afford it, definitely go for the 15 year. The interest rates are generally 1/8 to 1/4 percent lower than a 30 year loan, and more of your money will go towards principal faster, which will build equity. When we got our loan we had an interest rate of 8.375% for 30 years. Our principal and interest each month was approximately $690. The first month we made ur payment $640 went to interest, and only $49 or so went to principal on a $90,000 loan. When we refinanced, we got a 15 year rate at 5.5%. Our P&I went up about $60, but when we made our first payment the amount that went to principal was $340 or so, a big difference.

2)Read your loan documents! Most people when they go to a closing just want to know where to sign so they can get their keys and get to their new home, I know because that's how we were. Take the time to review the docs the closer is showing you. Take extra time to look over the note and the mortgage agreement to make sure everything is correct (Your name, interest rate, payoff date, etc). the docs are made up by processors and since they are human mistakes can and do happen. If you can catch a mistake before you sign it will be resolved much quicker than if the loan gets boarded. I would ask for your docs before you go to closing, you have the right to request them 24 hours before you close.

3) Escrow. Escrow accounts are used to collect your taxes and insurance payments on a monthly basis. Some loans (Like all FHA loans) require escrow accounts to ensure funds are beiong collected for these and not being spent on GI Joes : ) . SInce your taxes and insurance premiums almost always go up each year, the amount of escrow collected will increase yearly. Our company runs an analysis on all escrow accounts each year to make sure the correct amounts are being collected. We get a lot of calls about this each year.

I could go on and on, and if you need any advice drop me a pm or email, I would be more than happy to answer any of your questions!

Most of the bases have been covered already, but a helpful tool is to check out the county assessor's information, for any prospective property you are looking at. Madison, is pretty comparable in size to Des Moines, so I'd think they would have that online for you to check out. Atlough the assesed price may be off (almost always low), it gives you general information, such as previous buyers and what they paid, and gives you a general idea of how the property value has increased. You can also check neighbor's info and see what the market trend is in that area. That's what most home loaners look at right off when you go in for a loan, or so I've been told. Good luck in whatever you do. It sound like rate's are going way back up, so I'd say the sooner the better.

Tanner, money wise buying is always more smart than renting. In time the house will be yours, something that renting will never do. Recently we bought a house in the 330K region. This is a normal price for an average home in the Amsterdam-area. Prices went berserk the last couple of years, increase of 15% per annum was normal. Now there is a slight levelling, but it will be going up soon again. Not like crazy, but it will.

Buying is never a dumb decision when looking at the long term. When you start living together in a couple of years you can sell with a little profit and make a good downpayment on your next home. In the Netherlands in general mortgages have a duration of 30 years. Interest is at low rate, but to me it feels I still pay a heck of a lot. I have the percentage fixed for the next ten years. I pay a little more, but when interest goes up, I still pay the same. No sudden surprises that will have me sell my home. I expect my salary to increase the next couple of years, so in the end it will only be easier affording the house.

If I recall right you are a University-graduate as well. Don't know how American carreers go, but from my personal experience the first couple of years when working your salary will probabely increase the quickest. If you buy now in a couple of years you can easily afford it. I started working straight after University at 23, at 26 I was making double what I was making at 23, at 30 it was doubled again. I am 33.


it is good to have a home, and some people can flip them over a bunch and make lots of money, but the average person should consider budgeting some $$ for cash investments, like stocks or mutuals

Stocks will increase more, but they tend to go up and down. In general houses and property only go up in time. If you only own on it won't get you loaded, but it is a very good investement. Even if you sell at same price, then you have lived in a home for "free" all the time: off course I haven't included bills, maintenance, etc.

Hey tanner,
Hit me up next time your on IM. Little info you probably dont know is my parents are realestate agents.
Later
Dave

Just bought a house in april, and have been looking since 2002. so I figure I'd chime in as well-

Pre qualify- That's almost the first thing a realtor is going to ask you....are you prequalified? Basically you are starting the loan application before you even look at houses. The bank will judge your debt to income ratio and your credit history, then come back with what they would loan you. That's a powerful tool to have in your hands if you know that you are pre-qualified for up to X amount of dollars.

Pick a local bank- You can get better rates sometimes through mega banks and brokers, but in my experience the brokers can really work you over if you aren't careful.

Get a realtor- But don't sign a long-term contract with them. I had a terrible experience with a crappy realtor, and it took 60 days to get out of contract with them!

Be patient- we looked at probably 100 ghetto hole houses that were in our price range before we came across our super-nice home. It's amazing what people will ask for dumps- especially in this market.

If you sign a contract, make sure the house is inspected, top to bottom...and be there for the inspection. You'll be amazed at what we found in the two houses we made contracts on before we found the right home - (sewage underneath one, mold in the attic on another)

It's a crazy deal...but it can pay off huge in the end. Houses right around mine (3 houses down) are selling for 10-15K more than what we paid for ours...just in the last 3 months!

Gez...

Thanks for all the advice! Man, I'm going to cut and paste a lot of this into a word doc and archive it for when I'm doing research.

Thanks again everyone for your input!

Tanner

Hey,

I was in the exact same situation you about a year ago. I had just graduated college and I was living at home and I had saved a good amount of money in college. After I moved out of state (from Arizona to Washington) I got a appt for 6 months. The reason for such a short lease was so that I would force myself to look into houses because I knew if I didnt I would live in the appt forever. So after a few months I did research and started finding locations around where I lived that were: close to work, good neighborhood, nice houses, decent prices, ect... Once I did that I found a real estate agent that was willing to work for me, not the other way around. Don't hesitate to have them drive you all over town, that is their job. And I would reccomend getting 2 loans if you cannot afford the 20% down because PMI is not worth it at all. Hope this helps.