So, how many of my readers are well-versed in the art of home buying?
There’s a townhouse development going up near me that I’m very interested in, and I’d like to do a lot of research about mortgages and buying a home and that sort of thing.
It comes with a garage. Wow. HUGE selling point for me. I’d be able to keep my Jeep topless most of the year.
I just bought a house! :) The best advise is to start gettng prequalified now..then you have a better chance in negotiations. :)
Banks hand out pre-qual letters like penny candy. Find the lowest apr loan of the type that matches your objective for this home (write me off-blog) and get a pre-approval letter. That puts you in a much better position than someone with just a pre-qual. Moreover, if the metro Richmond market is like most of the country, market power now belongs to the buyer. You can be choosy.
chsw
I suggest reading “Home Buying for Dummies”. It really goes through and explains the mortgage process well, and also how to shop for and bid on a house. Also I agree with getting pre-approved. Makes it much simpler during the negotiation period.
Also, think long and hard about the neighborhood and surrounding area, and where you think it will be heading in 5-10 years. Also get a good, thorough inspection.
Thanks for the book suggestion. I have a Borders card burning a hole in my pocket.
I’ve lived in Richmond for five years. I know the neighborhoods very well now. This development is going up very close to where I live, and even though my current apartment complex has gone down in the last year or two, only a few blocks away things are much, much better. And there’s a neighborhood revitalization push going on.
My biggest problem is going to be the money. Years of under- and unemployment has taken a toll on me financially.
I would be VERY careful when finding “the lowest apr loan of the type that matches your objective for this home.” When I bought my home, I’d planned to be in it for a maximum of five years. Eight years later, I’m still here and not planning on moving any time soon. Don’t get a loan with a rate that will force you to sell or refinance in 2-5 years. I have some friends right now that are being forced to refinance or they’ll lose their home– and the rates are not as favorable now as when they first purchased. Please be safe and find a nice, traditional 30-year-fixed rate mortgage. You don’t want to gamble with the roof over your head.
Also– check the references on your home inspector. I don’t know about your area, but in mine basically all you have to do is pay for a license to be a home inspector. If anything comes up that the seller has to fix, be sure and verify that the work was actually done. My seller was supposed to have reshingled the roof. He simply found someone to write a receipt. I was the one stuck with the repair bill (which wasn’t covered by insurance) when it started leaking a couple of years later.
I just e-mailed you a video about how little regulation there is regarding the training and behavior of mortgage brokers. It’s from http://www.money.cnn.com.
However, that was not really the video I was looking for. There was another one on the same site about a month back that talked about a major danger regarding rates. I can’t find that tape, but at least I can give you the main point.
The video focused on the fact that some mortgages that give you a low rate have a nasty trap in the fine print, where it says that the rate will be raised after a couple of years or so.
Also, if you “qualify” based on the low rate, that has nothing to do with your ability to pay the higher rate just down the road.
Be careful. It wouldn’t be a bad idea to spend some money on a real estate lawyer to go over the mortgage contract before you sign. When I sold my mother’s house, I got a standard realtor contract, but I wanted to understand it. So a real-estate friend of mine went over it line-by-line. On the strength of his suggestions, I got the realtor to change some points that could’ve really socked me. Standard doesn’t always mean fair.
Also Meryl, obviously we don’t know the details of your cash flow situation, but if you have significant debt, or lack a regular income, my personal belief is that buying a home is not wise. Yes you are missing the equity buildup, but if you can’t make the payments, finding a cheaper apartment is a lot less damaging than selling your house or getting foreclosed on.
“The video focused on the fact that some mortgages that give you a low rate have a nasty trap in the fine print, where it says that the rate will be raised after a couple of years or so.”
This is true, but the biggest traps are actually pretty easy to spot. “Fixed” means that the rate will not increase; a “30 year fixed” is the traditional kind of mortgage your parents and grandparents probably had. “Arm” means that you have a low rate to start and then it increases. “Interest only” or “balloon” also mean that your payments will increase at a given point (usually by a whole lot).
I’m not familiar with new construction purchase contracts in your area. However in my state, new construction is being sold with a contract that waives many rights that a purchaser would otherwise have, including any defects found after a year. Consult someone in your area who understands real estate purchase contracts and be sure that this isn’t going on in your area. If it is, consider buying someone that is not new construction.