How to buy a house in the USA? (1 Viewer)

[RobR]

The disadvantage to this, however, is that the monthly maintenance fee is usually much higher than what the cost would be for you to hire out the most time-consuming services yourself, if you choose to do so.

That can be true. The fees vary from townhouse to townhouse, so it's wise to shop around. The HOA monthly fee also cover trash pick-up and water (at least where I live).

I'm not sure if I agree that it's currently a good time to sell but not to purchase. You could pay more on a house and save on the low interest rate in the long run or pay less on a house and pay more in interests.

 

[BrianB]

The housing market is insane right now. Great time to sell, not a great time to buy. Be careful on price.

Why's that?

 

[Dave Smith]

My wife and I bought a house in Austin last year. Even with all the great advice so far, I thought you might be interested in our experience as, so far as I can tell, our situations are very similar - British ex-pat game developers in Texas.
First thing to consider in our industry is, how long do you expect to be with your current employer? The average length of time spent in one job in the games industry is around three years. If you're going to move on, are there enough places locally so you wouldn't have to sell up to move? In Dallas, you're probably OK, though lots of the houses up there are very insular and only hire people they know.
I'd been over here for three or four years when we bought our place, so I had a decent credit history (bought three cars, had two credit cards, lots of bill histories etc). Despite that, our non-permanent resident status bit us a little bit on the mortgage; basically there's more restrictions and the interest rate goes up a bit. It's not too bad though.
We got a new place; the advantages of this were we could lock in the price in July 2000 with a small ($1000) deposit, then we had until the house was finished (May 2001) to save up the rest of the downpayment, closing costs, and enough for things like garage door openers, a fridge, blinds and furniture. With the rate that house prices were going up in Austin at that time, locking in as early as we did probably made us $20k right there. Friends who bought very similar houses to ours a year earlier paid about $30k less again!
FHA loans are only good for houses under around the $140k mark I believe, ours was way over that so we didn't qualify.
Financially I suspect that buying this house was the best thing I've ever done. Makes me feel less guilty about the cars

 

[BrianB]

Kinda, Dave. Yup, I'm a Brit abroad in the same industry, but my wife's a Texan born & bred with a rock solid credit history & she's been a member of our credit union for a good number of years.
The job market up here sucks nearly as badly as it does in Austion at the moment Yes, there's a lot of 'hardcore' PC developers that keep to their own, but there's a number of much lower profile companies too - like the one I work for. Plenty of other options too if things change in the longterm. I've got zero plans to move on, neither does my wife - her family's around this area which helps greatly.
I never considered the non-permanent status being a factor - thanks for the reminder. If that's a problem, it may be a damn good reason to wait until later in the year when I'll (hopefully!) be permanent.
Hrmmm. More food for thought.

 

[ikiru]

My wife and I just signed a contract to build a house in Corinth. We were going to wait till next year to start, but the mortgage rates are low and we have had some concerns that the price of housing is about to go up (we have heard some rumors). Since last wednesday the mortgage rates jumped from the upper 6% to the lower 7%. That may not seem like much for most loans, but in a 30 year mortgage that is quite a bit.

We were concerned about having enough money to put 20% down (needed to avoid some sort of mortgage insurance), but the mortgage people can tell you ways to get into a house with 10% down and not have to pay the insurance (with a second lein...in which you pay less in interest than you would paying the insurance).

We decided to build because we wanted to get into a new development. Hopefully, the property value will go up when more people come into town.

Good luck!

-ikiru

 

[MickeS]

BrianB, what's your credit history like? I had no credit history for the longest time after I moved here, and I couldn't get credit anywhere before I had a credit history... :rolleyes
Finally I got a card from a department store and that got my foot in the door. Even though I didn't have a very long credit history when buying the house, we got the loan. I assume it has to be fairly easy to get a houseloan if I got one.
/Mike

 

[BrianB]

Ikiru, you've said pretty much what we've been told again & again by friends & workmates - interest rates are going up, and certainly in Coppell, there's just not enough spare land to build new houses on in the longterm. We're considering Lewisville too as property's a good bit cheaper there than in Coppell... But we need to work out our sums & decide what's important for the longterm before we really look around.

MickeS, my credit history is almost non-existant, which is a pain. My wife's is outstanding (as I found out today after checking!). Hopefully that'll balance out... I'm sure our credit union will soon tell us if not.

Once again, everyone, thank you for the *very* helpful information you're sharing. My wife & I really appreciate it.

 

[Jon_Are]

Brian...I have just two pieces of advice: Once you find a home, cough up the money ($300 or so) for a home inspection by a qualified independent inspector. Make your offer contingent on this inspection.

Also, recognize that, just because someone is willing to loan you X dollars, that doesn't necessarily mean you can afford it.

Good luck!

Jon

 

[BrianB]

Also, recognize that, just because someone is willing to loan you X dollars, that doesn't necessarily mean you can afford it.

Oh definitely. Something I've stressed to my wife again & again... A $200,000 mortgage offer doesn't mean we WANT to spend that amount. I wish more people would realise that.

 

[RobR]

Since last wednesday the mortgage rates jumped from the upper 6% to the lower 7%.

Really? All I know (from what the loan people told me) is that it went down from 7 weeks ago. Is there a website that posts the current interest rates or keeps a record of them?

 

[Colin Dunn]

RobR:
Bank Rate Monitor does a weekly mortgage rate every Thursday. They also have a rate trend index, in which economists/lenders guess about the future direction of rates.
The current consensus: Rates will hover

 

[Mike Huay]

Its not a bad idea to go ahead and get pre-qualified. It won't "hurt" you actual credit, but each time someone runs your credit it does knock 2 or 3 points off your score. Its no big deal if you aren't boderline and your lender will likely end up offering you a good rate. It could hurt your chances however if you were going all over town having different lenders run your credit. This someimes happens to people shopping for cars who have several dealers run their credit.

You can estimate it yourself quite easily though before hand. Take the total gross income of the applicants, then find out what 28 per cent of that is. Subtract the total debt payments you make, incl. credit card minimums, car payments, other loan payments. Dont include phone bills, taxes, etc.

The resulting figure is what normal lenders will allow as a mortgage payment, considering your credit score is OK. By reverse calculation then you get the actual mortgage amount allowed.

But agressive lenders will go higher than that, maybe even using 40% or more, instead of 28.

Good luck!

 

[Stacie]

Brian,

I think you're better off not getting an FHA loan if you can avoid it, even if it's a possibility for you. The main problem with FHA is that you're stuck paying PMI (private mortgage insurance) for the life of the loan, even after you've reached 80% LTV (loan-to-value ratio); with a conventional mortgage, federal law requires banks to drop PMI for you once you get to that point -- but this isn't the case with FHA loans. PMI can cost a pretty penny (my husband and I pay about $85 additional a month on a $135K mortgage) and it does you absolutely no good (it's insurance for whoever owns your mortgage). The advantage to PMI is that it allows people who don't have 20% down to buy homes, but it's a good idea to get rid of it ASAP, either by paying your loan principal down faster than scheduled or (if your state allows this, mine (Minnesota) does) by having your home reappraised after you think the value's appreciated enough that you have at least 20% equity. That's what we're planning to do -- we bought our house a year and a half ago in a fast-appreciating area of Minneapolis, so we're going to have our house reappraised sometime this year at which point we're almost sure to be able to drop PMI.

Anyway, I'm no expert, and I don't know what's available in your state/area, but my husband and I have a conventional mortgage, and we only put 3% down. Similarly, my sister-in-law and her husband (also a Brit -- but he has permanent residency) just bought a house with a conventional mortgage and ZERO down. So there's no need to get an FHA loan just to be able to make a low down payment. Also, as someone else mentioned, you can sometimes avoid PMI with a second mortgage. It's something to check into.

Don't know much about your situation, but my sis-in-law and her husband were in a similar position to yours in terms of credit history: hers was excellent, and he had none in this country. The effect that this ended up having on them was that they were approved for a much smaller mortgage amount -- only slightly more than she would have been able to qualify for on her salary alone. As it turned out, this was still adequate to get them the kind of house they wanted, but that might be a limitation you'll have to consider. (I think part of that was also because of the zero-down loan, so if you have a significant amount saved up for down payment, that issue might not affect you).

Good luck!

 

[Micah Lloyd]

I just moved into a brand new house. I signed the contract March 31st, construction started June 28th, and I closed escrow December 31st of last year.

During the construction phase I documented all the trials and tribulations that occurred. I built my web page around this and you can see, step-by-step, what it took to build it. The HOA was an issue for me, also documented on my site.

Anyway, the link is in my signature below...

 

[BrianB]

Stacie, our situation sounds almost identical to our sister-in-law's. Very interesting.

Hrm. Oh well, we'll see what the credit union says when we go talk to them this weekend. Thanks for all the wonderful advice, people.

 

[Ken_McAlinden]

The main advantage of buying a home is that you are living in an appreciating investment with tax advantages. Where I live, I can reliably expect the value of my home to go up by 6% or more every year. 6% appreciation does not sound like a lot at first glance, but consider that it is 6% of the full value of a house in which you have 10-20% equity (reasonable for a first time buyer), and you are looking at earning 30-60% of the amount of money you initially put into the house in one year. For a $150,000 house, this amounts to $9,000 the first year and more than that each subsequent year. I have oversimplified, somewhat, not taking into account one-time fees such as closing costs and mortgage points, but the basic idea is there.

If your monthly payment less tax advantages of deducting interest and property taxes versus taking the standard deduction is comparable to the rent you are paying now, then you could be earning thousands of dollars a year by just dealing with the inconvenience of maintaining your home. In addition, unless you refinance or have an unfavorable variable rate, you will not have to worry about your monthly payment going up a la having your rent raised. Your property taxes and utilities will, of course, increase with time.

On the other hand, if property values where you live are stagnant or do not appreciate much, the advantages I spoke of are considerably lessened.

Regards,

 

[ikiru]

Brian,

If you are interested in Lewisville, I recommend Corinth. Its just 10 min from Lewisville and you get more house for the money. One of the 3300 sq ft houses in Corinth goes for around $210,000 whereas the same house goes for over $350,000 in the Lewisville/Coppell area. Plus the lots are bigger in Corinth without having to pay a lot premium. Our lot is 11000+ sq feet and after the house is built, we will have 20 feet from the side of our house to the fence (if the neighbors have a similar sized house, then there is about 40 feet between houses...which is a lot these days). There is even a development that has 20,000 sq ft lots (but Im sure there has to be some lot premium involved).

Lewisville is quickly becoming very crowded and there are fewer and fewer new developments going up. Also, even though Lewisville boasts excellent schools, some of the schools in Lewisville proper (LISD also covers Flower Mound, Carrolton, and Highland Village) are not as excellent (my wife is a teacher). So if that is a consideration...

The downside of moving further north is the Lewisville Bridge and I35.

Good luck in your hunt! Remember, when you look to build a home, add about $20,000 to the base price because of all the "upgrades" you want..berber carpet, tile entry, garage door opener, tile in bathroom instead of carpet (which I think is gross...Im a guy, I know how dirty the bathroom floors get), 42" cabinets, crown moulding, sprinkler system, wallpaper, security system, etc...

-ikiru

 

[MickeS]

Yeah, the thing ikiru said about upgrades is very true. It doesn't even seem to matter how much is included with the base price of the house, they'll always have upgrades available that you HAVE to get.
/Mike

 

[MickeS]

This article in The Onion reminded me of this thread.
Home-buying up among Lame-O's
"Purchasing a home is not the act of a pessimist," said Frank Nothaft, chief economist at Freddie Mac. "But it is the act of a dweeb. Sure, renting costs more over time than owning, but do you want to spend your weekends cleaning out leaf gutters and fixing the garage-door opener, or do you want to be happy? Life is way too short, people. Loosen up."

/Mike

 

[Michael D. Bunting]

I'm reviving this thread At least I'm trying:
Situation:
My wife and I are looking at buying our first house here in the Pacific Northwest, which is in the neighborhood of $170,000.
This price includes all the available "upgrades" we wanted, including the lot premium, etc.
This is a 2289 sq. ft home, featuring: 3 BR, 2.5 BA, 2 Car garage, with BONUS ROOM (My future dedicated media/HT room!!!). Decent sized lot, with a good view of Mt. Rainier from the 2nd floor. Alot of home (2289 sq ft) for the money, in this area anyway.
My FICO score is 662 (Not the greatest - I know)...but it's better than I thought it would be. I'm not sure what my wife's FICO score is...but I would bet it is a tad bit better than mine (maybe even signifigantly better).
I had a few problems with credit about 8-9 years ago - which even included a bakruptcy filing:frowning: But ever since then - I have immaculate credit with no late payments whatsoever.
Someone mentioned earlier in this thread that with a FICO score over 600 - that you should be good to go on getting a mortgage. Does this still hold true?
I'm going to speak with a mortgage lender later this week or early next week to see where I stand.
So, does my FICO score of 662 put me in the good to go range?
Thanks for any info and any help!