First Time Home Buyer

[NeedMoreFans]

My wife and I are starting the preliminary steps towards buying a house. $8000 from the government is too good to pass up. I have a lot of questions, and I could spend hours scouring the internet (and probably will), but I thought I'd ask some questions to experienced home buyers. First of all, before we do anything, we are attending a seminar in a couple weeks put on by Dane County, and when we get through it, we'll be qualified to get some down payment assistance (assuming our income doesn't jump way up in the near future). After that, I plan on getting pre-approved for a mortgage. Here is where my questions begin...

 

How do you go about finding a lender? Do you just go from bank to bank checking what the best rates will be?

Once pre-approved, how long until you have to close?

Can I find out how much a lender will give us without being officially pre-approved?

How do you go about finding a real estate agent?

What is the minimum amount of time that it will take once we get pre-approved to the time we close?

 

Thinking about home ownership is really exciting, but it is incredibly frightening as well.

[JimH5]

Congrats to you. Owning your own home is a great feeling.

A bit of old man advice for you. . .

DO NOT spend all that you can on your mortgage. Home ownership is only fun if you've actually got some money left at the end of the month. You may be tempted to borrow all that the lender will offer you--but don't do it You'll need money left over for repairs, renovation, and your life.

Buying carpeting and paint is fun and cheap. Buying a new roof or furnace is neither fun nor cheap. So make sure that the house is sound, even if it is ugly.

School districts matter. Even if you don't have kids, the value of the house is often affected by the perceived quality of its school district.

Now on to your questions:

How do you go about finding a lender? Do you just go from bank to bank checking what the best rates will be?

Bankrate.com will give you a pretty good indication of what the rates are. You can apply for a loan online, or you can go to a local bank or lender at least knowing what their competitors are offering. Sometimes a bank will sweeten the deal with other financial products (preferred checking, safe deposit box) to entice you.


Once pre-approved, how long until you have to close?

In the past, we've had 45-day windows, 60-day windows. . .it's usually up to each bank. Generally, you "lock in" certain rates, and if you can't close within the pre-determined window, then you get a new rate, either higher or lower.

Can I find out how much a lender will give us without being officially pre-approved?
Yes, a lender should tell you that. You may have to submit an application fee that may be waived if you take the loan with the lender.

How do you go about finding a real estate agent?

Pick someone you like. Whoever you pick will be your "buyer's agent", who then splits the sales commission with the seller's agent.

What is the minimum amount of time that it will take once we get pre-approved to the time we close?

The last house we bought I think it took around 30 days. There can be lots of steps in the whole process. Hiring a home inspector, scheduling the inspection. Having the house inspected by a representative of the lender, doing a title search, doing any remediation of stuff that your home inspector finds, coordinating a moveout with the current owner (buying a vacant house is usually quicker). For a first-timer, that's really where the buyer's agent earns his/her money. . .walking you through all of that. The process is largely regulated by laws that establish timetables on how long stuff can take.


I'm sure there are others on this board who are in the lending trade, or in real estate, and they may agree or disagree with me. I'm just giving you info based on my experiences buying and selling my own homes over the past 20 years. . .

Good Luck!

[hawing]

As for choosing a real estate agent, we started by just going to open houses that seemed like plausible (i.e. in our price range) properties for us. In talking to (or in the case of a few talkative ones, just listening to) agents, we chose one who we thought was knowledgeable and seemed patient with a couple of complete newbies to real estate. That worked OK. It was really nice to have a "buyer's agent" because of our lack of experience with the process, so I'd recommend working with someone willing to do that.

 

By the time we did our second house transaction (involving a sale as well as a purchase), the first agent was no longer in the area, so we acted on a suggestion from a colleague. This also worked just fine.

 

As for a lender, we started with the financial institution where all of our money already was; they offered a good (for 1993) rate. We refinanced the mortgage on that first house like five years later. Our second transaction we also did with our current financial institution - though for reasons too long and off-topic to get into here, we didn't need as large or as long a mortgage this go-round.

 

If you haven't already, start thinking about what's most important to you in a house - large and small details. Minimum square footage? Any style but a ranch? Minimum bedrooms/bathrooms? Size of yard? How much fixing-up are you able/willing to do? Is it a dealbreaker if you have no garage? No dining room? No laundry chute? (Remember, I said small details too.)

 

You and your wife could each make a list of things that are important to you, share the lists, and decide together what you most want and (just as importantly) what your dealbreakers are. Then as you start to go to open houses, you can more quickly assess which ones you really want to pursue and which can be bypassed.

 

It can be frightening and definitely stressful at times, but I really like being a homeowner. Remember, it's productive debt.

[wallus]

I literally just bought a house and will be closing soon. My advice? Use the Internet to search for houses. The first house I inquired about ending up being the one I bought. The only other advice I have is to take your time and not get attached to any one house. There will always be another house on the market.

[Invader3K]

Lots of good advice already, but I'll throw in my two cents, as a relatively new home owner (wife and I bought our first house in late '05, still living in the same place):

 

Visit lots of different houses would be my advice. Don't feel like you have to rush and make an offer on the first one that sounds good. If you check the listings, if it's like the area I live in, there are good houses coming onto the market on a weekly basis that are probably selling below what they normally should. It's a great time to be a buyer.

 

Also, be honest about how much work you are willing to do on the house if it has some issues or is a "fixer upper." I am personally not very handy, so that ruled out some places we looked at initially in our lower price range.

 

Finally, work with an agent you trust. We were fortunate to know quite a few realtors, but ended up going with a close family friend of my parents. Maybe this isn't an option for you, but if you know someone well, may as well work with them.

[RobertR]

I'll add, paint is cheap. There are much more important things to worry about than the color of a room. Also, the correllary is paint before you move in. That way you only have to move furniture and boxes once.

 

Pay particular attention to the basement. You really want to make sure you don't have water/foundation problems. Those are expensive and no fun.

 

Also, I agree, don't borrow to your limits on the house. You'll have many more expenses than just the house, utilities, food, furniture, maintenance, etc.

 

Robert

[NeedMoreFans]

Regarding getting a loan...

 

Now that credit isn't as easy to come by, will lenders cap the amount you can borrow based on your income and down payment? Will they also take employment into consideration? My wife works full time in a stable environment...her job isn't at risk of being eliminated. But I work as a substitute teacher and part-time event manager...neither of which are "steady" incomes (though subs are always needed). That will change if I get a teaching contract this summer, though.

 

We are sort of stuck between a rock and a hard place. If I'm not under a contract, we could qualify for a bunch of down payment assistance, which could help increase the amount we could get or lower our interest rate. However, as soon as I get employed full-time (and we haven't closed by that time), our income would be above the threshold and we would no longer qualify, but we won't have enough of a down payment to get a good loan/rate.

 

What kind of cash do you have to have to get a loan for, say, $190,000? Can you get a loan for any amount no matter your down payment?

 

I'm very scatter-brained right now about this whole thing, but it's the lack of education that is causing it.

[FVBrewerFan]

Not much too add other than there's no reason for a buyer to use a real estate agent. They are getting paid by the seller and their motivation is to sell homes in their inventory, not to find the best house for your needs. Now if you want to pay a commission you could, I just see that as a waste of money. Check the papers, internet, etc. and you can find homes on your own. Find neighborhoods you like and jsut drive through. Best of luck!

[lodiness]

I went through WHEDA to get my loan. It's an agency meant for first time home owners. Some of the things are like you only have to have 3% down instead of 5%. and they usually have rates about a point lower than most banks offer. Here's the website www.wheda.org . They were pretty helpful, and they'll give you a list of banks to go through and things to keepin mind. Like don't overspend. When I figured it out I thought that I could afford a house for $160,000. Glad I didn't spend that much. I spent about $120000, and I am comfortable. Hate to see anyone "House Poor"

[Godspeed]

Not much too add other than there's no reason for a buyer to use a real estate agent. They are getting paid by the seller and their motivation is to sell homes in their inventory, not to find the best house for your needs. Now if you want to pay a commission you could, I just see that as a waste of money. Check the papers, internet, etc. and you can find homes on your own. Find neighborhoods you like and jsut drive through. Best of luck!

A buyer's agent doesn't necessarily work for the seller. Hypothetically they could, but the good ones wouldn't solely point you to properties they are selling. Also, in Wisconsin, the buyer pays no commission to the buyers agent on a sale if used.

 

One advantage to using a buyer's agent is their access to the MLS database and access to the properties at non-open house times, which may be more convenient to the buyer. When we bought our house, we came from across the state and had about a 4 month window until our lease ended while pregnant with our first child. Doing all the searching on our own would have been a huge pain, considering we only had weekends to work with. But if you're determined to do it on your own, there's no harm in that either. It just takes a little bit more effort.

[dadofandrew]

I'd simply pick the most attractive real estate gal...we've used a couple guys over the years, and other than pick up a commission, they did little. Also, I'd look for a buyer's specialist, as they won't have 20 houses on the market to be fielding calls about.

 

Any buyer's agent will work for you, look for houses that work, find potential problems, and so on. You can look on the internet and get a good idea nowadays. We looked at 20-25 houses, and now, we'd probably eliminate many online and look at 5. My wife knew the house she (we) was going to buy as soon as she saw it on the MLS report that he printed up for us, and now, all that is online.

 

Doesn't Lending Tree give you several different banks best offer just by filling out a form? Your bank is most likely to deal with you, or the places that do this all the time, like Ditech.

 

Once you're pre-approved, you can wait forever to buy a house, as long as your income does not change. You may need to get a new approval every 60-90 days, but no problem. You can negotiate closing, quick or slow.

 

You can close as quick as a week or two after the sale if the house is empty, and the seller is local.

 

Don't forget to do a house inspection, and insist the seller pay for it. If they refuse and the house is more than a few years old, move on. In a buyer's market, I assume most have already done one.

[mothershipconnection]

I definitely recommend a buyer's agent. Mine did a ton of work for us, scheduled the inspections and everything, and as a buyer you don't pay for them, they get half of the 6% paid by the seller.

[southpaw121505]

How do you go about finding a real estate agent?

Pick me http://forum.brewerfan.net/images/smilies/smile.gif

 

I know this is an old thread but there are a few things I'd like to touch on here.

 

we've used a couple guys over the years, and other than pick up a commission, they did little. Also, I'd look for a buyer's specialist, as they won't have 20 houses on the market to be fielding calls about.

 

Come on, seriously? We've used a couple of guys over the years=guy agents wont work as hard? And there is no such thing as a buyer's specialist, only agents that don't have listings. You want an agent that works both sides, and good ones it won't matter how many listings/clients they have, they will take care of you.

 

Not much too add other than there's no reason for a buyer to use a real estate agent. They are getting paid by the seller and their motivation is to sell homes in their inventory, not to find the best house for your needs.

You are misinformed my friend, when I'm working with a buyer I could care less who listed the property they buy, I want to find the best one to fit their needs. You think I want to waste my time showing inferior homes just because they are in house? I make the same either way.

 

I also think you are confused on the "paid by the seller" topic. Agency laws are a bit funky, so you aren't the only one confused on the topic. If you sign a buyer agency with an agent, then he is working in your best interest, you are his client. Referrals account for so much of our business, you can trust me when I say my one and only goal is to make my clients happy, that's how my phone keeps ringing in the future. You may have had a situation where you were working with an agent but you didn't sign a contract, in that case that agent by law has to work in the sellers best interest and is considered a subagent of the listing broker. So even though you had lunch with this agent, he showed you 20 houses, he CAN'T offer you client level services. Some people get afraid of signing a contract right away because what if you don't get along with the agent? I like to offer a one day contract, almost as a trial run so they can see how I work. That way if they happen to fall in love with a house I can represent them as their agent and not as a subagent. Even if you sign a contract later, you have to work under the conditions that you were in when you saw the house with them. Your agent should be explaining the difference to you between customer and client.

 

The other thing is negotiating. I'd bet you my car that I can get your offer accepted for lower than you can, there's a lot more to an offer than a number. Do you really think you can get the same price negotiating on your own against a listing agent as opposed to having an agent represent you?

 

 

 

 

 

 

[MJLiverock]

I'd recommend a buyer's agent as well. I've used one on both of my home purchases and couldn't be happier. They know the market better than me and know what was just listed and having posibly been through the new listings can steer me towards or away homes based on what I've told her. I can't imagine the amount of time she saved me on my last purchase. Looking at ads online or in the paper work to a point but I didn't want to drive around seeing houses that looked good in a couple pictures only to find multiple obvious disquallifiers that the agent may already know about having either seen the house already or knowing the neighborhood.

 

In both cases the agent I used (different one each time since my first woman moved away) handled all the paperwork for offers, thought of things to ask for I never would have thought of, set up inspections, not to mention having access to the lockbox keys for personal showings, did all the negotiations, etc. She even told me to lower my offer on a house by $5,000 below my first thought since she thought it would be accepted.

 

I agree with Southpaw in a way that - - yes a buyer's agent is incentivized to get you to buy a house since they get paid a commision on the sales price but they also don't want to waste your time and theirs showing you houses you aren't going to buy because of price or taste, or whatever.

And most aren't really interested in pushing the price up for a higher commission if you think about the math of it. In the instance of my house it was $5,000 lower that she recommended I offer - - her half of the 6% is $150 on that amount then subtract the agency take, taxes, and she probably gave up less than $50 from her pocket to get a sale completed.

[NeedMoreFans]

We used a buyer's agent, and I would do it again in a heartbeat. He acted as our buffer when we came in with a ridiculously low offer, so we were shielded from the swearing and name calling that went on. He did all of our paper work, arranged everything for us, and made it very easy at closing. The sellers left our house in a disgusting state, and he even paid for someone to clean it. I was incredibly happy with our agent.

[hawing]

We used a buyer's agent, and I would do it again in a heartbeat. He acted as our buffer...

I'll echo NMF on the value of having someone as a "buffer." Our last move was prompted by a neighboring business (a hospital) contacting us, through their Realtor, basically saying, "sell us your house." Since they had contacted everyone else on our block about selling before they contacted us, we weren't completely surprised, but we both felt more at ease having a buffer between us and the corporate types. So we found an agent (through word of mouth), described the situation and what we wanted to get out of it, and he made it happen. The house we'd identified to move to was for sale by owner, so it was helpful to have his guidance on the purchase transaction too.

 

Since the buyer of our house was already motivated (and with the economy in good shape at the time, probably flush with cash), I doubt our transactions were particularly difficult for our agent to carry out. But for us, the expenditure was well worth not having to deal directly with the hospital people. Not everyone would value that, but we did. So I think there's a place for a buyer's agent.

[dadofandrew]

The big thing about a buyer's agent is they work for you...the other realtor works for the seller...they are under no obligation to tell you anything not legally required (the basement floods). An experienced realtor can tell you what stuff is likely to be replaced, if the roof looks like it's crap, and so on.

 

There's no reason not to have one, as they get paid by the seller. Otherwise, the seller's agent pockets that share as well, probably by not telling you stuff.

[PeaveyFury]

they are under no obligation to tell you anything not legally required (the basement floods). An experienced realtor can tell you what stuff is likely to be replaced, if the roof looks like it's crap, and so on....... probably by not telling you stuff.

 

Most things they would otherwise be telling you would be caught by your home inspector, just for the record.

[southpaw121505]

And most aren't really interested in pushing the price up for a higher commission if you think about the math of it. In the instance of my house it was $5,000 lower that she recommended I offer - - her half of the 6% is $150 on that amount then subtract the agency take, taxes, and she probably gave up less than $50 from her pocket to get a sale completed.

I'm glad you recognize this, some people assume an agent wants nothing but the highest commission. When in reality we just want a deal you are happy with so you feel comfortable coming back to us in 5 years when you sell, or when your friends or family are looking for a realtor you are likely to refer us. If I can expand my sphere and more potential deals come of it down the road, I'm not worried about a "smaller" commission now.

 

 

Most things they would otherwise be telling you would be caught by your home inspector, just for the record.

 

This is correct. Most agents aren't going to say much about a roof because they aren't the ones climbing on it. Just like a home inspector doesn't tell you what contingencies to put in the offer or what to counter, etc.

[dadofandrew]

You only have an inspector look over the house you make an offer on...your buyer's agent is with you every house.

[southpaw121505]

This is true but I don't know what you're expecting an agent to tell you about a roof from the ground. If there are any adverse facts with the roof then that's disclosed in the condition report anyways. If it's something more complicated then it won't be recognized from the ground.

[dadofandrew]

Our agents showed us stuff like tiny cracks that probably meant foundation problems, rodent problems, the age of stuff in the utility room, and so on. He would tell us what type of siding was on each home as we walked up.