Buying a home, what do I need to know?

Question

I really want to buy a home in the next year or so. We are working on our second child, due in February, and our lease is up on our two bedroom apartment in May. I have never looked into it before, I don't even know where to start. My credit isn't great (debt from years ago and current student loans), but my husband's is really good. I was also wondering if someone could give me an average of how much the home costs to how much the monthly payment on the loan would be. Like if I bought a $120,000 home, my monthly payment would most likely be..... Any help anyone could give me on this would be much appreciated! Thanks!

Answer 1

Your payment will vary tremendously based on the interest rate you obtain, the length of the loan, your amount of down payment, the taxes and insurance costs in your area, and the type of loan you choose - for example interest only versus regular amoritization. interest only doesn't pay down your principle and should best be used only in a market with rapidly accelerating values or for a house you won't stay in long.

your other costs are significant and often unmentioned. Gardening supplies, utilities, maintenance of all the appliances, walls, floors, outside structures - all add significant costs to owning a home. don't read decorating magazines unless you have lots of money.

you want to think about where you want to live. what should be near you? work? recreation? trees? subways? with the market as slow as it is in most places, you should be able view a property at several times a day/week, and see the rush hour/weekend traffic patterns. if you like to garden, find out what kind of soil there is and if there's enough sun for anything but hostas and azaleas.

when I was househunting, a very helpful thing was to look at that property aerially, either through google maps, or more helpfully, local government data on line. you can find out this way if the property is in a flood zone, near a landfill, bordering a future development (the tract next door may be wooded but owned by a developer putting in a race track), near protected land, etc.

think very carefully before you move about what type of house will be best for your family. draw up a wish list and pare down as you learn what you can afford. you'll probably want a kitchen open to an area where kids can play. do you need lots of closets? do you need big open spaces? quiet nooks? a garage? do you want to open your door and let your kids run out and play or do you want a little more solitiude and then need to walk/drive your little kids to see friends. on your first house, unless you can think about it really really well, you will make a lot of mistakes and therefore learn a lot for the next house.

the most important thing, as you've probably heard, is location, location, location.

you must be realistic so that you don't get yourself into a situation where you must leave your children in day care. it's so harmful to babies, and you don't want to get trapped.

the best way to jump in is to find a buyer's agent. some states probably don't have them. a buyer's agent is a realtor whose loyalty must be to you. if you don't have a buyer's agent, even if a realtor takes you around and appears to be helping you, they don't represent you.

the washingtonpost.com has a 'realtor mailbag' column that is very very informative about househunting.

good luck and best wishes!

Answer 2

I have a great PDF document that outlines the 19 steps to purchasing a home. If you'd like a copy feel free to drop me a line.

To be more specific in answering your questions though:

#1 Fix your credit to the best of your ability

#2 Go to a lot of open houses for the 1-3 months before you intend to buy, to familiarize yourselves with whats on the market in your general area, this will give you knowledge about comparable properties to that which you become interested in and give you leverage when negotiating a final purchase price.

#3 It's hard to determine what your specific monthly payment would be, without knowing if your going to put a down payment of 20%, what type of loan program you get into, interest rates a year from now (I don't have a crystal ball sorry). Having said that, if you put 20% down, fixed your credit some and had a loan of $120k, on a 30year term @ 7% you'd be looking at a payment of $800 approximately. There are so many factors and different types of programs that could effect this though, that I wouldn't take that number as written in stone.

Also, that number only included the principal & interest payments, you must also include the taxes and insurance costs, plus HOA fees if you get a condo or something.

Hope that info helped some! Best of Luck!

Answer 3

You need to first clean up you credit as much as possible.

Your payments are going to be in the vicinity of 600-1000 most likely, however it will depend greatly on whether it is a 15 or 30 year loan and your downpayment.

Are you getting a fixed rate or an ARM? This will change the monthly payments also.

You need to get homeowners insurance also.

30 year fixed rates are close to 7% now and that's with good credit.

You may want to consider getting the home only in your husband's name - this may save you guys money.

Check out any real estate site - they usually have monthly payment calculators on them.

Answer 4

couple of folks have given you the key information, I would add the following
you would need to save some money for down payment depending on overall credit they bank or mortgage company may ask you for 5% or 10% of the overall mortgage you are getting,
also some money for closing cost just to be on safe side, usually sellers pay the closing cost but you never know.
most importantly have money for the repairs or updates on the house... when you own a house you get into the mode of changing things in the house, ( paint, yard stuff, fixtures, etc)

Answer 5

A 120k loan with interest of 7% is right around $800 a month.

Hope that helps!

Answer 6

I went ot lending tree.com.
My credit is OK and my gf's is great.

We got 240K loan for 1970 per month, at 6%
So at 6% your 120K should be under 1000 per month.
This includes impound account for fire insuance and taxes.

Good luck.