DH and I are looking to buy a home and don't know anything other than the actual "looking" part. I don't know any real estate lingo and want to learn a bit before finding an agent. I dont want to find out later that I was taken advantage of by not knowing my stuff.

Where do I start? I know where we want to look, the amount we can afford and what payments we can make. Other than the home cost, closing cost, homeowners insurance and property insurance what other expenses am I looking at? (You know, besides upgrades, maintenance and improvements).

I feel totally lost!

By Pamt on Monday, June 27, 2005 - 10:59 pm:

You'll have to have earnest money when you make your offer. This is a check written to show that you are serious in your offer, usually at least $500 up to several thousand. It will ultimately go toward the house and/or closing costs, but if you back out you won't get it back. You'll also need cash up front for a home inspection. In our area that runs about $250. I think the appraisal is rolled into the closing costs. Unless you can put 20% down then you'll have to get mortgage insurance. When you look at the payment you can afford, make SURE you are factoring in insurance and taxes into the total payment because that makes a huge difference. DON'T be lured into more than you can afford. Most agents and websites will tell you that 1/3 of your income should go toward your home. I personally think if you are spending 1/3 of your income on your house payment that you will really be struggling and not have much room for extras or surprises (like new roofs, car breaks down, hospital bills, etc.). Also, owning a home is a lot more expensive than you anticipate just to maintain it and even more if you buy a fixer-upper like we did--not to mention the sweat equity. Oh! And get pre-approved for a loan before you start looking.

With your DH in the military will you actually be somewhere long enough to make buying a home worth it?

By Andi on Monday, June 27, 2005 - 11:07 pm:

If you are serious about buying a home I know two very good agents in Oceanside that can help you. E-mail me if you want the info.

wahooper5@cox.net

By Boxzgrl on Monday, June 27, 2005 - 11:20 pm:

Pam- Dh gets out in 2008 so thats not too much of a worry. If anything he'll have a bit of a commute.

Andi- we are looking in the Temecula/Murrieta area since when DH gets out he wants to works for the PD somewhere in the inland empire. Do you know anyone there?

By Missmudd on Tuesday, June 28, 2005 - 12:04 am:

Since DH is a veteran make sure that you talk w/ the VA concerning a home loan. You dont need the 20% down to avoid the mortgage insurance. There is no down requirement for a VA loan which saves you a ton since you dont buy the insurance. Also if your credit is less than stellar it is easier to get a VA loan than a conventional one. Since your dh hasnt been discharged, see if there is a financial advisor on base that can help you.

By Crystal915 on Tuesday, June 28, 2005 - 12:14 am:

I agree you should look into using your VA benefits. Nate bought a home with his ex-wife with a VA loan, (the loan was through a national lender, but it's insured by the VA) and from what I understand it was simple and really beneficial.

By Anonymous on Tuesday, June 28, 2005 - 12:18 am:

Call around for homeowners insurance. For us it was more inexpensive to stay with the company that we have our cars through. For $260,000 replacement value we pay about $700 a year. There may be a wide difference for different parts of the country and what kind of neighborhood you are looking at. For a $148,000 mortgage we pay 864 a month for the actual mortgage at 5.75% and then 256 goes into an escrow account which pays for the property taxes and the homeowners insurance.

By Andi on Tuesday, June 28, 2005 - 01:07 am:

Yes, I do. Let me know when you need an agent and I will give you the names. They will know all about N.County including the Temecula area.

By Ginny~moderator on Tuesday, June 28, 2005 - 06:05 am:

Definitely shop around for your mortgage. If you can get a VA loan, that is probably a good deal. But, I don't know - do VA mortgages come through the VA or through a private lender with a VA guarantee? If a private lender, shop around and compare rates, not only the quoted rate but the APR.

When I refinanced our house, I decided to pay an extra 1/4 point in order to avoid having to escrow tax and insurance payments as part of each monthly mortgage payment. But, I put this money into an interest bearing account each month so that I have it when the taxes and insurance are due. Only you know if you have sufficient self-discipline to (a) put aside this money every month and (b) leave it alone except for a life-threatening emergency other than the taxes and insurance. I do it because I'd rather I get the interest on the money that would have been escrowed by the mortgage company, and because I found one mortgage company I dealt with was slow in paying the taxes and missed the early payment discount, thus costing me more money.

You definitely want the Agreement of Sale to say that your purchase of the home is contingent upon several factors: (1) an inspection by an independent inspector AND a satisfactory report that there are no major problems with the house and no problems that will cost more than a couple of thousand to fix; certificates by a termite and wood-eating insect inspector, and for the roof, plumbing, electrical and heating/cooling sytems. Sometimes all but the termite inspection can be done by the same inspector but not always. In the Philadelphia area there is also a requirement for a certificate from the local licensing and inspection board that there are no violations cited against the house and that it meets zoning requirements. If you think you will want to add something - a garage, an extension - check out the zoning rules before you sign the Agreement of Sale.

Check out the neighborhood at a couple of different times - after school lets out, early evening, Saturday or Sunday afternoon. I went back to check the neighborhood of a house I really liked on a Saturday afternoon and discovered that the driveways of two very nearby houses were full of motorcycles with tatooed, sleeveless shirted "good ol' boys" sitting on and around them. Not a neighborhood I wanted to take my 70+ parents into.

Of course, check out the schools every which way. You can have the nicest house in the nicest neighborhood and if the schools aren't very good, you will have to choose between a not very good public education and having to pay private school tuition. I think any parent with kids who will be in school for several years has to make the quality of schools a primary factor when buying a house.

By Karen~moderator on Tuesday, June 28, 2005 - 07:30 am:

I was going to add, if the home isn't new, ask about a home warranty.

Consider access to shopping, bus lines (if they have them there), hospitals, etc.

Check out the utility costs in the area.

Also, as was mentioned above, check out the neighborhood at different times of the day - is it a young, growing neighborhood that your kids can grow up with?

By Amecmom on Tuesday, June 28, 2005 - 08:51 am:

One more expense you are looking at is the home inspection including septic/oil/well etc. if the area has those things. Assk the realtor to recommend several who are certified home inspectors and then call for pricing.
Ame

By Tunnia on Tuesday, June 28, 2005 - 09:21 am:

Also check on whether the house is in an association, the price of the dues, and whether the property is current on it's assessments.

When we closed on the house we are living in now, we discovered that the previous owner never paid their dues. If we had not known to look for that at closing we would have been responsible for paying the entire amount, complete with late charges, before we could use the facilities (lake, pool, parks, tennis courts, etc) and the association could have come in and put a lien on our home at any time. Luckily we knew to check for that and we were able to make the previous owner pay all their back-dues at closing (over $1000).

By Colette on Tuesday, June 28, 2005 - 09:33 am:

You can actually buy "home buying for dummies" If it's like the other "for dummies" books, it probably has some pretty good info in it.

http://www.amazon.com/exec/obidos/tg/detail/-/0764553313/qid=1119965558/sr=8-1/ref=pd_csp_1/002-0460859-3996035?v=glance&s=books&n=507846

By Reds9298 on Tuesday, June 28, 2005 - 11:34 am:

Ditto Ame. Ditto everyone. The home inspection will make or break the house you want. Use a referred realtor only, don't just pick one out (it doesn't sound like you're going to do that anyway), and DEFINITELY figure in the price of property tax, homeowner's ins., and PMI (if necessary) because that can really jack up your monthly payment. Also keep in mind that if you escrow (and you may be required to without 20% down) that your monthly payment will then fluctuate each year because of taxes and insurance. It may go down or up because the bank needs to have a surplus in your escrow to pay for those things. (It might be different with a VA loan, though. Sounds like you should definitely take advantage of that).
The only other thing I have to say is to get as much of a downpayment as possible. You will be so glad you did in the long run for a number of reasons. It's really just money in the bank for you, you can't go wrong with real estate because it's always going up. Good luck!

By Insaneusmcwife on Tuesday, June 28, 2005 - 12:30 pm:

Dave said to look into calvet. Have you already started to look at the homes in the Murrieta area? When I was looking to buy 2 years ago they were well over $300,000. Good luck and make sure you understand everything on that paper before you sign. Incase they don't tell you, you have the option to pay your property taxes monthly in your mortgage. I have some old friends in the Title and Escrow businesses, from when I worked so if you run into any trouble or don't think something is kosher give me a buzz and I'll find out what ever you need.

By Feona on Tuesday, June 28, 2005 - 12:49 pm:

You need like ten thousand dollars a year to maintain a house else it falls down around your ears. They always need something new

roof ($15,000-25,000)
windows
furnice
bathroom
kitchen
new paint
chimmey caps
chimmey cleaning
racoons
pigeons from over hang ($1,400)
wasps removed from garage
Lawn guy to cut lawn
New stairs to the basement
New rug
Clean gutters twice a year at $40 a pop
floors sanded
new siding
walls redone because of painted wall paper ($7,000)

Our house needed all that except the furnice and windows and siding. (We still don't have the new kitchen or bathroom) ($40,000-50,000)

Don't forget taxes which can be over 7,000 dollars (in our area)

Don't you get free housing on base?

By Mrsheidi on Tuesday, June 28, 2005 - 02:22 pm:

We got USAA homeowner's insurance and it was the cheapest.
Also...try looking at www.forsalebyowner.com
you will get a better deal since the brokers aren't taking any. you can talk them down more.
i would research schools, crime, and just go by word of mouth. that helps a lot!
try your local freecycle group...there is usually a discussion group that you can post these types of questions and the general public in your area can give you advice.
HTH!

By Reds9298 on Tuesday, June 28, 2005 - 05:57 pm:

Well it IS expensive to own a home, that's for sure, because there's always something either that needs to be done or that you just WANT to do. If you are handy you can do lots of the things feona mentioned on your own. I've never had anyone clean my gutters because we have a ladder and can do it ourselves. Painting is the cheapest thing to do to a house, and we roofed ours ourselves, top of the line shingles for about $2K. Kitchens and bathrooms are the most expensive thing to a house, so when looking, really think about that. Our kitchen had been redone, but not our bathrooms, so we thought that was okay. I wouldn't pay someone to cut my lawn unless my legs were broken, but you do have to consider that you will need a mower and outdoor supplies. If you want to landscape your home, that's quite expensive, but it might already be done for you. Heating, cooling, windows, roof....major things so really consider what's been done to the house before you buy it. We live in the boonies so we have had problems with mice, raccoons, and wasps and you can take care of these yourself with a little D-Con and some major wasp spray from Lowe's for about $15. We've lived in our home about 6 years and when we were looking (oh so many houses!) and found a few that we liked, we sat down and talked about what we could and could not live with about them...like one needed a new K, new bathrooms, and carpet throughout. We weren't willing so passed it up. It's all about weighing how much it will cost to make changes vs. how long you'll live there vs. what you can actually afford.

AND...keep in mind, it's been our experience that just because the bank will lend you a certain amount doesn't actually mean in real life you can afford it! Figure it out on your own and don't rely on your lender to do it for you.("Afford" is also relative) You don't want to be house rich and cash poor.

My best advice is downpayment, downpayment, downpayment

By Boxzgrl on Tuesday, June 28, 2005 - 06:10 pm:

We've been looking and for now I think looking is as far as we will get for about a year. We're trying to play it smart by paying off all debt besides vehicles. If all goes as well as it has been, we should be comfortable enough to buy in February/March. I'm just hoping that by that time houses have gone up extremely. The same houses we were looking at in Jan. 2003 for $280K in that area are now selling for $100K more. It's ridiculous. House buying is like playing the lottery. I hate it. But we're slowly trying to phase the military lifestyle out of our lives and live like civilians.

And yes, military housing is kind of "free". DH gets an allowance once a month that would go towards a place to live if we did not live on base. Since we do live on base, we dont get that. We never see the money and its never deducted from a checking account, so in a way it's free. But at the same time, if we buy a house we can use that allowance (roughly $1300) to go towards our mortgage. Thats how we see it.

By Jilly on Tuesday, June 28, 2005 - 07:15 pm:

When we were looking to buy our first home (we just bought our second and are renting out our first), we bought "The Idiots Guide to Buying and Selling a Home." It answered so many questions in an easy to read manual.

I'd start with either this one or the "For Dummies" book. Good luck! It's not nearly as frightening as it seems at the beginning!

By Kaye on Tuesday, June 28, 2005 - 07:58 pm:

One important thing to know is it is just walls! Don't fall in love with a home, think very logically about this very major purchase! Make a list when you look through about what you would have to change for it to be your dream house, what do you really need to change, etc. Then put some numbers down. In general, the flooring is a big deal, it is one of the most expensive things to redecorate. We have now bought our 4th house (we have been married 13 years) and we have been here 2 years. I feel like a pro when it comes to house buying now! I would suggest that you really put down on paper what you think you want in a house. It is expensive to move, so what you get is usually where you stay (we had company moves). But most things can be renovated. What does it cost extra to own over renting? Usually the bills are more, because the space tends to be bigger. We do our own lawn, but had to buy a mower, and edger, etc. Easily we spend 100 dollars a month on house stuff, this month it was fence boards and nails for a repair on the fence. We hire out very little, but it still adds up. I can't imagine renting though. A big must is a home warranty, it will cover major mishaps like washer dryer, fridge, air, etc. Oh and if you can in CA get a buyers realtor, one that represents you, this is free, it won't cost you a thing, but they will bargain on your behalf.