Could anyone walk me through exactly what expenses to expect when buying my first home?

Question

I am thinking of looking for a small starter home. There are some in my area that I estimate land in my affordablity- I make about 28k per year and I found a great house for about 93k. Just wondering if someone can walk me through the process and give very very rough estimates at what kind of expenses to expect.

Could someone get more specific? Its that "thousands of dollar" thing that makes me nervous about looking into this thing LOL

Answer 1

My best advice is get a good agent, you don't pay for the agent the seller goes...they can tell you about alot of issues you won't know about. When looking at houses remember they can always be fixed up, so look for layout, yard, talk to the neighbors, get a feel for the environment. I got preapproved for my loan before we started looking so I knew how much I could spend, it also gave me leverage when submitting the bid for a house. I neigoiated closing costs with the seller, she had to pay part of closing...In total our loan was for $75K with down payment (which you can not borrow or take a loan for, you have to have the liquid cash or sell something they will ask for receipts if you see something) we sold a car and a jetski for our down payment and closing...our portion was like $3K. We had a 30 day closing. We bought a small house with potential, she had the house built in 1956, keep all the maintenance records...we love it and have made alot of upgrades...we bought in 2001, our house has at least 30,000 in equity in it already....if not more. Good Luck! Check out your agent, never sign an exclusive deal, ask for references and check them out. Good Luck!

Answer 2

First you need to find a lender,and get prequalified.Your exspenses will also depend on the type of loan you will get.If you are a veteran you ca get a VA loan without a down payment.Then there is FHA I believe they charge 3% of the price of the home for a down payment.Then there is a conventional loan I believe they charge 5% to 20% down of the selling price of the home.You will also have other expenses like appraisal,inspections,etc.The buyer is also required to pay closing cost that can run a few thousand dollars.Let's say that you qualify for 100,000,but the home you want is 93,000.You can always offer the sellers 97,000 if they pay the closing cost.That way closing cost will not have to come out of your pocket up front.You will also be expected to pay yearly insurance,and taxes.Have your lender add both of those to your mortgage payment.It is much easier that way!

Answer 3

A GENERAL rule of thumb is 4% closing costs:
includes pre-paids: insurance (14 mo), 1 mo P&I (principal and interest), closing attorney, title search, etc.

*SELLER can pay all of this FOR YOU! (up to 6% of loan $amt): just add the approx. $amt to your offer. WRITE IN THE CONTRACT that "seller to pay up to $xxxx of purchaser's closing costs".

In addition, you will need 5%-20% down payment (depending on loan type).

VERY IMPORTANT: "Adjustable" % mortgages are VERY dangerous... can adjust to more than you can afford per mo!

If per month $payment to "qualify" for the loan is tight: consider a 30 year fixed rate % loan, with the first 10 years "interest only". At the start of year 11, the monthly payment will start amortizing per month at the remaining 20 year schedule. It will be more $per/mo when that time comes, but most probably you will be making more money then, or you will have moved. But most importantly, you have the guaranteed stability of a FIXED RATE % 30-year loan!

The INTEREST paid per year is tax deductible!

Talk to a mortgage broker BEFORE signing a contract. Ask for a "Good Faith Estimate" and a "PRE-qualified" letter. It will make getting the house you want easier because the seller will know that YOU are qualified to purchase his home. You will win out even if someone else offers a little more $money.

Check your own credit report NOW for errors.

If you have a lot of credit debt, ask the mortgage broker if you need to "consolidate" your debts (into one monthly payment lower that the total $monthly owed) PRIOR TO applying for a loan.

Another thing you can do to improve your credit score, if needed, is to call each creditor and ask to speak to a supervisor. Explain to them that you want to buy a house and ask if you can "pay off entire balance" with LESS THAN the total $owed. This will eliminate that monthly payment which might stand in the way of you getting a loan. You'll be surprised as to how many will "make a deal" for a lump sum cash payment...

Your earnings to expected loan amount ratio is excellent. You could most probably afford to go even higher on a purchase price... however, you are being very wise and keeping well within your means.

Happy house hunting!

P.S.
Concentrate on wall placement and size/shape of rooms... ignore the colors and the condition of the carpeting. All of this can be changed for very little $money later and you will have "brand-new" with YOUR color scheme.

HAVE CONTRACT conditioned on passing a ROOFING INSPECTION. Having to replace a roof is an expensive surprise!

Answer 4

Ask a lender for a prequalification and good faith estimate.
You will spend several thousand on things like appraisal, inspection if you want one, loan fees, credit check, recording fees, points if you choose, then you will pay part of a year property taxes, a year homeowner insurance and part of a month interest. A lot of that will come out of your earnest money.

Answer 5

first get a pre approved 30 year fixed mortgage. there are some places (Lennex financial sp?) that has no closing costs. Shop around most closing costs are rip off anyway.