Any ideas where to start when buying a house?

Question

Ok, my husband and I are wanting to buy a house. We already have one in mind. It belongs to a friend of the family. They want us to buy it, also, because they know we'll appreciate it. They have never sold a house, and we've never bought one, either. None of us are really sure where to start. Do my husband and I go to the bank first to see about first time home buyers loan? Or do we wait for them to get the house appraised first? Neither of us want to go through a realtor unless we have to. Please help! Only real responses please.

Answer 1

Go to yahoo real estate and check the neighborhood for going rates on similar size houses and discuss prices with the owner. The owners should be willing to take a pretty low amount, because if an agent is not used, they will be saving around 5% of selling cost. You may want to have the home inspected to make sure there are no surprises as far as maintenance (costs $300 or so). Then check with a few lenders and have them bid for your loan, so you get the best rate. The lender will appraise the house in their costs to make sure the value is close to accurate. Good luck and enjoy your new home.

Answer 2

Always be careful when doing business with family or friends. Emotions may cause poor judgment. Things can get ugly real quick. Just be very cautious, it still can work out great for the both of you.

I know you said you would prefer not to deal with a Realtor. Not a good idea. But, better go to a Real Estate Broker (not just an agent)…
So, the first place to start when buying a home from a friend or family member is a Real Estate broker that will represent you only (Not the other party involved.) One you can trust and one that won't charge you an arm and a leg for just writing up the paperwork. Make sure they do more then just paperwork. You can negotiate the fee, either a flat rate or percentage of the sale. (1-2% at most) … Trust me it’s worth it!!!

The Broker will protect you and your investment. When interviewing a Broker you should be prepared to ask all the right questions... first ask: Why should I pay you a fee to help me buy a house from a friend or family member? And let them list it all out for you in writing. Also, make sure they help you with a current estimate of value on the home. Home inspection, Home Warranty Plans ($400 year), Pest Reports, etc...

At the same time I really recommend you start talking to your Bank, Credit Union, DiTech, lender, etc... Which ever works best for you and you pay the least amount in fees and have the best rates. (I do NOT recommend using the Brokers lender. I just feel it's best to keep that separate so that there is no possible conflict of interest.)

Also check your area of for "First Time Home Buyers" classes. This will help you out with a lot of the basics., Books , videos… educate yourself!!!

I know there is a lot more to talk about. But, this is a start.

Feel free to email me at [e-mail] if you have more questions.

Thanks Stefan

Answer 3

Go to a lender and get pre approved for a mortgage. Make sure you get a 30 year, fixed rate. Adjustable rate mortgages will balloon to a payment that you may not be able to afford and refinancing later might not be an option if anything changes. Make a lot of calls to different lenders and shop around for the best rates and fees.

You will need a down payment of about 3% of the purchase price or more. You will also need 2 years w2's and the last 2-4 paycheck stubs. I don't remember how many bank statements our lender had us bring, but have the last few handy, just in case.

Once you have found a lender you trust and have been pre approved for a set amount, you can start shopping for a home. Since you already have the house you want in mind, it will need to be appraised professionally. As long as the asking price isn't beyond what you can afford, you can make an offer to the sellers. Some states require that you have a real estate agent for this, others do not. You might want to call a realtor and/or a real estate lawyer and ask.

Once you have done all the paperwork with the lender, settled on the purchase price and had the professional inspection etc, you will have to wait a few days to weeks to close. Closing is just the formal and final paperwork making the sale of the home and the mortgage all legal.

Before closing, you will probably be asked to hae homeowners insurance. Again, call around for the best coverage and rates before choosing a company.

Also, remember that you will be paying property tax, a mortgage and homeowners insurance every month. If a lender says that your payment will be 615.00 per month, thats not the whole payment. You will also have to add the property tax, divided by 12, and the homeowners insurance payment to come up with what you will actually be paying each month.

My morgage was for $110,000.00 after our down payment of $20,000.00. Our interest was 5.87. That made our monthly payment $615.00. Homeowners was an additional $115.00 and our property tax broke down to $300.00 per month. That made our actual payment $1030.00 per month. Be careful to take it all into consideration so that you don't end up with a payment that you cannot afford.

Also, ask the sellers for concessions such as they pay for the inspections, cover any work required to bring the home up to code (just in case) and that they provide you with a 1 year home warranty. Home warranties aren't expensive and can be a lifesaver if something in the house goes wrong after you buy. These concessions come out of their final profit, but aren't that expensive, depending on any work the city says needs to be done.

Answer 4

do not get a realtor. all a realtor is, is a glorified appraisor that gets a chunk of the $$$ spent on your home. they usually take a % of the total sale. they will usually say..." we will sell your house for you for a minute % of your total sale.....less than 5 %". well, last time i checked, even at 2.5% on a total sale of $300 k is $7500. so if you know the people that you are buying the house from, call 'em up.....sit down with them and have a chat about the situation.
yes, your friends should get the house appraised. dont just get one though...get a couple appraisals. banks...credit unions and such are good places to ask about appraisers. not only will an appraisal justify the cost of the building and the property, but it is fair to both parties....and peace of mind. but at the end of the day...you both should and hopefully are at rest with the given price.

while they are having the house appraised, i would look for a building contractor/engineer to view the house as well. not only does this verify the buildings structural integrity, but they are good at suggesting improvements in efficiency. an engineer will find any "hidden costs" that you and i might not see .... especially if there has been major renovation or add ons to the building.
he/she will point out any problems that exist or that may arise. point out to the building owners, that you are going to get an engineer to come have a look at the place, again, not only for peace of mind, but good communication is important and often lacking when many parties are involved. if anything, you want to be true to your friends.....engineers and sale agents come and go with the wind. if there is a problem....a second opinion would be good to get. and ultimately, if something major does have to be fixed (either now or in the near future), it is alot better to know ahead of time than at the last minute, one downside of this...is of course it will affect the price you are wanting to pay for the place.

once they've gotten an appraisal and someone with a "building sense" has looked at the house to make sure it is sound and fit....then you two parties sit down and discuss the price obviously.

this is when you go to the bank to check out mortgages. the bank will be of great help in explaining steps that take place in a mortgage as well. but ultimately try to stick with one lawyer to do the transfer of title (sale of the house and land to you).
i have found by personal experience, it is a great way to conduct a sale by getting/agreeing on one lawyer to carry out transfer/sale of land title(s). it saves so much time and money, and far less chance of miscommunication and other errors......which ultimately ends in more $$$ spent. 1 lawyer...1 person to communicate with....1 person to call....and, at the end of the sale, 1 bill to pay, which is split in half because you've been using only 1 lawyer and 2 parties are paying the bill.

this does all take time......but with good communication...1 lawyer and a helpful mortgage specialist (banker)....you will do just fine.

Answer 5

In addition to the advice already given, you can read books and websites regarding first time home buying before you contact a realtor or mortgage lender to start the process.

Also, you can also check to see if the state you live in offers special incentives and assistance for first time home buyers. Check out the link below for more details.

Good luck!

Answer 6

i agree with ups guy. get the paperwork.. u can also get it all online for probably $100.00 for all of it. and it depends what state u are in. in california there happens to be 9 disclosure docs that have to be signed and recorded.

also (i buy and sell houses every month as an investor never been an agent, never desire to be), but u said they were 'friends of the family'..... well be on the safe side, order a title report from the escrow/title company. about $70, or i'll charge u 50 since i pay a monthly fee and get unlimited.... (70-90 is avg title search). they may not know if they accidently forgot to pay taxes, or somethin could have happened accidentally like forgot to pay a mecahnic bill.

anyway like the other guy said the escrow officer can 'help' u with the process, but they don't have the legal obligation to be 100% helpful.

i started using attorneys to close my deals (as opposed to realtors), and that cost me about $2,000.00 per house (they proofread the contracts, make sure both parties sign where they supposed to sign etc and dot all 't's and 'i's.

2000 for me is not a high cost since the houses i deal with are 700k and up. (not that i'm rich, but i do make about 40k per house i sell and put it all in my roth ira tax free no capital gains ever... ok ok sorry tangent!)

u don't need a realtor. u are both principles in the transaction.
escrow won't be able to completly close the transaction unless everything is correct. its nerve racking, but its as normal as childbirth.... or natural i mean!

Answer 7

If the both of you have a banker that you trust then I would certainly go and ask their opinion and see what they say. I am sure they have some type of real estate listing where they can help you. If not, then enlist some help of other family members who have purchased homes/houses. I really can't help too much because we had a realtor. I do hope it works out well for you all.

Answer 8

You should go to the bank first and see how much you can afford. On the mean time do not take out anymore loans, max out your credit cards because your credit score will be low. When you do get a lawyer or agent all the appraisal's, house inspections or whatever needs to be done will be on contract.

Answer 9

Since you have no experience and your seller doesn't either, it probably would be better for you to deal with a realtor. I'm also skeptical of "friendly" business. Lines need to be drawn when there's a large amount of money changing hands. It seems like your lack of knowledge and friendship with the seller could make things tricky.

(and I am not a realtor, by the way!)

Answer 10

first, let the buyes go to any lender (bank) and see if he qualify for the amount of the loan,
2nd, go to any office supply office, buy the house purchase contract, (set the price& help)bring it to any escrow they will help you with almost everything.
the lender will be in charge of the loan,
take it easy the lenders are in top of everything all you need is a approved borrower and a contract in your hands.
good luck