Buying a first house?

Picklepaige

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#1
So, my boyfriend and I are looking at buying a house in about 2.5 years. I'll be out of school then, and he just got offered a full time position at his job, so he should have a good chunk of change saved up for house buying purposes. My question is, is it as easy as it looks?

By the time we're ready to buy a house, our combined salary should be about 50k. We plan on staying in Mississippi for now, so price of living is pretty **** cheap. For 100k, we can buy a 3 bed/2 bath house in a nice part of town with a large fenced in backyard and within walking distance to his workplace.

Right now we have about 15k saved up in our house fund, neither of us have any debts of any kind; saving up another 5k in three years for a 20% down payment will be easy.

I guess I'm confused at how easy this is? The monthly mortgage for the houses we're looking at ($375/month) is less than the rent for the apartment I'm in ($410/month). Living in Mississippi has that for a perk, at least :D Are there hidden fees we should be looking out for? Does it sound like we will be "ready" to buy a house?

We really know nothing about buying a house haha, so it's a good thing we've got a few more years to get this all figured out.
 

JacksonsMom

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#2
All I have to say is :eek: on the prices! Wow, lucky!... any apartment or rental around here, that's in a not scary area, will cost you anywhere between $1200-$2000/month :yikes: Sometimes you can get lucky in certain rural areas and find $800-$900's. Most people I know that own homes have mortgages between $3000-$5000/month. lol.

Sorry I'm no help. But it honestly sounds to me like you're ready! I know the main problem now is mostly getting approved, etc. Do you guys have good credit? If you have enough of a down payment, you should be good. But I'm NO professional when it comes to buying houses and really don't know what I'm talking about. :p
 

Picklepaige

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#3
Yeah, that's the biggest reason I want to stay here haha. We really want to move to the Seattle area but it's SO much more expensive.

On what we make now, we would barely be scraping by in Seattle. In Mississippi, we can own a nice house, travel often, I can have extra money for DOGS and do DOG THINGS, and we'd still have money left over. That made the decision for us ;)

It's crazy how cheap things are around here.
 

xpaeanx

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#4
Cost of living usually reflects average salary. They have cheap housing, but their combined income is only 50k. Housing in my area is closer to the 2k&up mark, but 50k is on the low side of single income for someone with professional training. Most people I know have a life plan of "work here for the money, retire and move there for the cost of living."

My best advice would be to sit down and talk to a few brokers. They'll know what the end cost is and give you an idea of where you need to be to set yourself up properly. And like I said, talk to a few... I've found that's the best way to get the "whole" truth. LOL. And as a first time buyer you will have multiple options for your loan type.

But just do to simple calculations you generally have mortgage+taxes+insurance+(other fees depend on your lender)=mortgage payment. So your mortgage could be $300/month, but your payment ends up being $1,000/month.
 

Picklepaige

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Cost of living usually reflects average salary. They have cheap housing, but their combined income is only 50k. Housing in my area is closer to the 2k&up mark, but 50k is on the low side of single income for someone with professional training. Most people I know have a life plan of "work here for the money, retire and move there for the cost of living."

My best advice would be to sit down and talk to a few brokers. They'll know what the end cost is and give you an idea of where you need to be to set yourself up properly. And like I said, talk to a few... I've found that's the best way to get the "whole" truth. LOL. And as a first time buyer you will have multiple options for your loan type.

But just do to simple calculations you generally have mortgage+taxes+insurance+(other fees depend on your lender)=mortgage payment. So your mortgage could be $300/month, but your payment ends up being $1,000/month.
This is what we're planning on doing, just talking to several people and getting a feel for things. We know there's probably going to be a few surprises, haha.

We crunched the numbers, and $1000 a month would still be very doable for us, even with the added expenses of electric bills, water bills, etc. Keep in mind we have no kids, and do not plan on having kids ever, which keeps costs down a whole heck of a lot. Work is within walking distance for him, and wouldn't be any greater than a 12 mile drive for me, so gas wouldn't be a big issue. We don't eat out a lot or buy too much extra. I go all out for dog stuff, but other than that we're pretty frugal.
 

Jules

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#6
Well, you'll have to pay homeowners insurance (taxes are rolled into our mortgage) and probably will probably want to up your emergency fund a bit, because whatever breaks is on you (and you might want to update the house, etc).

It sounds like you guys are pretty good and responsible with finances. The best advice I can give is to run your own numbers. Check how much utilities in the area are, run your own expenses and figure out what your comfortable paying for a mortgage. We bought way below what the bank told us they would lend us (we used about half the amount) and started making extra and overpayments to payoff the principal aggressively. We've been in our house for 4 years now and paid almost half off (we've also refinanced). We knew we wanted to move in x number of years down the road, so this will give us a great headstart for a down-payment on the next house (and wiggle room when selling). If you live in a market that allows you to do it, too, I would take advantage of it.
 

Laurelin

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#7
I guess I'm confused at how easy this is? The monthly mortgage for the houses we're looking at ($375/month) is less than the rent for the apartment I'm in ($410/month). Living in Mississippi has that for a perk, at least :D Are there hidden fees we should be looking out for? Does it sound like we will be "ready" to buy a house?
Yes there are lots of random fees!

Mortgage is only part of your payment every month. My mortgage is lower than my rent payment (which was an old crappy duplex less than half the size of my house btw). You also have property taxes and insurance rolled in as well. I think there's a couple other things in the payment too- PMI since I put down < 20% for mine. My TOTAL monthly payment is about $300 over my rent payment even though my mortgage itself is cheaper than my rent.

There's also fees when you buy a house- inspection, processing fees for your mortgage, earnest money (goes towards down payment though), closing costs.

So just beware.

Oh and my first week moved in I needed repairs on my main sewage line. Yay welcome to home ownership! lol

I only put down 10%. I did a traditional loan and they required me to put down 5+%. I ended up saving more for an emergency fund and didn't want to empty that out, which was great because right around the time I was going through the mortgage process was when everything in my life seemed to break- computer, washer, car, both dogs. lol While you're going through the lending process it's important not to have to change finances too much so having the ability to pay out that stuff in cash without dipping into savings was a bit rough.

I'd start getting stuff in line now vs later. Probably talking to a lender and knowing their requirements would be best. That way you know where you stand and where you can improve. Start pricing things to see what you can get for your money and start keeping a monthly budget. Most places recommend around 25-35% of take home pay towards housing. Or no more than 1 week's worth of pay. I'd just play with some of the numbers though.

And expect the bank to offer to lend you WAYYYYY more than you want. I did end up getting a house 20K over my initial budget. But the bank gave me almost 100k over my budget. There would have been no way I could have actually afforded that much house. So yeah... stand firm on your price point and don't get tempted to over extend.
 
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Laurelin

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#8
The actual process though was easy and went smoothly for me. I think just making sure you have ducks in a row and you have an idea of what is on the market for what price.

I also live in a relatively low cost of living area and its amazing. I don't know how people make it in high cost of living places.
 
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#9
The other advice is good, and this isn't a reflection or judgement on your relationship, but I would be very wary of buying something as sizeable as a house with someone I wasn't married to and if you still do, I'd have a contract written up that states clearly who is responsible for what and what happens if the other wants out.
 

Lyzelle

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#10
As someone who is so tantalizingly close to buying their first house...

Pull your credit reports. It makes a huge difference. In everything. You want the best credit possible by the time it comes around. That means study up, have at least one line of credit of a couple different types open, build a history if on time payments, etc etc.
 

AllieMackie

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#11
The other advice is good, and this isn't a reflection or judgement on your relationship, but I would be very wary of buying something as sizeable as a house with someone I wasn't married to and if you still do, I'd have a contract written up that states clearly who is responsible for what and what happens if the other wants out.
Um. All of this. I speak from experience.
 

Sekah

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#12
Wow holy low cost of living, Batman. Jeeeeeez.

I'm sure it varies from place to place, but if I remember correctly, in closing the house I had to pay for legal fees, land transfer tax, home inspection... And now that I have the house there's bi-weekly mortgage payments, property tax, home insurance, utilities, car insurance, gas, TV/internet, phones and then the obvious food, etc. Then you want to be putting money away towards savings and retirement. If I remember correctly, when my husband and I crunched the numbers before buying a house we were off by about 25% in monthly expenses. Then there are weird unanticipated expenses that crop up more often than you might expect. I found that once I bought a house, everyone in the world felt entitled to our money.

And nthing a written agreement between you and your partner before entering into something of this magnitude.

I personally put down as much of a down payment as I could, and we're trying to pay off the house relatively quickly because we can and because we're not keen on debt.
 

Fran27

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#13
The main hidden fees really are property taxes (it's what makes it more expensive to buy than rent here), and obviously all the repairs, that REALLY add up. In 4 years we've had to replace 3 appliances, for example (and one of the burners on the stove stopped working), redo the bathroom because we had a major leak, and repair the faucet in the kitchen because of yet another leak... So it cost us $6000 total I think? And we have some pretty bad leaks in the basement as well if it rains a lot, but we'd be looking at thousands to fix that.

We're actually sorta joking about what's going to break next. My bet is the oven.
 

Laurelin

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For me the biggest surprise cost has been homeowners insurance. It's 1.5k/year higher than the estimators I used. Definitely look into that! Our cost of living is average/low but the hail, tornadoes, and earthquakes means we have very high insurance costs.
 

Sekah

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For me the biggest mystery has been property tax. You can either pay it monthly for 6 months, then have 6 months off, or you can pay it monthly for 11 months and have 1 month off. WTF? It ain't cheap either.
 

Laurelin

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My property taxes are rolled into my Mortgage. They weren't too bad I don't think.

It's still cheaper to buy than rent though here. Rent keeps going up. I could not rent a house at all for the total monthly payment I am paying. I'd have to be in a duplex or apartment. I was looking at an apartment if I didn't buy (cause the duplex was that bad) and the price was comparable to my mortgage for my house.
 

joce

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#17
Omg I wrote out a huge post and it was eaten fml. Seriously!!!

Anyway easy to get approved. People with foreclosures not that far out are getting approved. Which is ridiculous!

I loved our mortgage guy. Could call him any time and he answered any question on any type of loan. We looked for years because of our requirements(ten plus acres,two school districts which are huge so why did it take so long lol!)We ended up doing 3.5 down conventional since we bought a 100 year old house that needed a new roof, plumbing, air, floors, walls, horse fence, deck( safety issue since door can not open to nothing), chimney and inner chimney and electric and more. So I did not want to do loans and more loans.

Anyway he does michigan and ohio if anyone wants to use him. Really really reccomend him. No fees either. http://www.goldmedalmortgageinc.com/Home

I would go see a broker now to get an idea of if you need to do anything different. There are actually credit repair things out there that work. He pointed one out to my husband who's credit score is almost as good as mine now and that's shocking!

Biggest thing is look for a good inspector. It all happens quick once you find a place. My old boss sold his place and new owners inspector walked into foyer, said looks nice, and walked out. My inspector did a couple hour pre inspection, we were all here together all day. We knew we would find all kinds of things on a 100 year old house. I got a typed report in a binder with pics. He was great. Go to the inspection. Ask questions.

I didn't really have any surprised by the time everything g was done. Just wish we had better internet here lol!
 

Romy

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#18
See if you qualify for FHA or a USDA loan. They only require a 3.5% down payment. FHA is a lot more flexible about what they will loan on, but there are some extra fees involved with them.

If you do less than a 20% down payment you also have to buy title insurance in addition to homeowners insurance.

So, there are some tradeoffs with the higher vs. lower down payment. With a small downpayment, you pay more fees. But it leaves you with a bigger cushion in case there are some catastrophic house repairs right off the bat, one of you becomes unemployed, etc.

Higher down payment = fewer fees and lower monthly mortgage payment.
 

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