So we’re getting ready to meet the load arranger to start the (scary as heck) process of buying a house. There are several fears I deal with in all of this:
- Lack of knowledge about what’s going on
- Lack of control
- Lack of resale value
I like control, I like knowing that I’m doing something the right way, and preferrably the best way. However, in this process I know it’s not going to be the best way, but it will be the way we can do it (I don’t have 20%+ down). However, I don’t understand how the whole process goes, and I’m hoping that I’ll be able to ‘get it’ quickly.
Because I don’t have a complete knowledge of the process and all of the terms involved I feel like I lack control.
Since the housing market is in constant flux I fear that the value of any home I may purchase will suddenly plummet because of any various change that may strike us, our neighborhood or the market in general. For instance, what if our Jerry Springer neighbors that live above us move into our neighborhood and bring the value of the homes down? I can’t imagine that driving by and hearing a young male scream, “You [words I wouldn’t type on my blog]! I’m going to [other words I won’t type] kill you!” I’m pretty sure that will cause some neighbors to want to move, and others to just call the police. Any regularity of either of those will bring the property value down. Also, what if Satan moves into our neighborhood and makes the Jerry Springer neighbors look good? This too is guaranteed to make the prices of the homes in the area go to hell [gosh that one liner amuses me]. And, lastly, what if the housing bubble that some have described us being in pops and I find myself paying the mortgage for a $230,000 house that is actually only worth $150,00 since Microsoft declared bankruptcy, WalMart bought out Target and Bill Clinton won a third term? Think of the catastophes!
So, as usual, I just need to trust God and seek His wisdom while all of this goes down. Pray for us in this as it’s going to be a bumpy ride and I’m going to have to go to the dentist in a week.
No need to fret my friend, as someone who recently went thru this for the first time, there is plenty of material out there (that really helped fill in the gaps for me) and it only SOUNDS scary. Ok, so the actual signing of the papers (where you see $$ all over the place) was a little scary but once you step into your new home, it all melts away. Contact me and I’ll be happy to point you to a few references that will help out. Congrats!
Tips from James –
First: decide how much you can afford to pay per month. Do NOT let the loan folks tell you how much you can “qualify” for; those two numbers can be drastically different. (Related: call the utility companies to get the 12 mo. averages for electric and gas bills. With our last move, we doubled the size of the house and cut the utility bill in half which we then factored into how much the house payment could be.)
Second: shop lenders and brokers. Since you don’t have 20% to put down, run, not walk, but run from any broker that mentions payments that involve the letters PMI or the words Private Mortgage Insurance. You want a mortage for the 80% and a home equity line for the remainder. BB&T offers a home equity line at Prime + 1 (current rate is therefore 5.45%), but their kickback to the broker is modest so some won’t even tell you this exists. The good lenders that want your repeat business will find something that works for you and makes them some money. Someone that is willing to market you a product that involves PMI is in it for themselves. Remember, your talking to a salesmen that is selling you a product.
Third: find a good lawyer. The lender/broker may point you to one, but beware. The lawyer is suppose to work for YOU, you will be paying their fees. The good ones will do some basic research and save you 50% on your title insurance.
Forth: find a good realtor. Just like everyone else in this process, the realtor is in it to make money. If he/she does not listen to what ya’ll want (which should get more refined over time), then find another. If they start blowing you off after two weeks of hunting, find another. We took six months to search for our current house. And remember, as a buyer you want the cheapest price for a house. The seller, the seller’s realtor, and the buyer’s realtor all make more money as the price goes up. Do not let your realtor push you into offering more money or negotiating the price higher. It is actually in your best interest to NOT tell your realtor what your top dollar offer is for the house, they may drop hints to the other party.
Lastly: Location, location, location. Unless your planning on stayin g in the house for 30+ years (we are now), then you should try to balance what ya’ll want in a house, versus what others would find appealing in a house. The first being location. I wouldn’t want a house that was around the corner from a shopping center due to the noise and traffic, but i realize i’m in the minority. You can mitigate the Springer like neighbors with a subdivision that has some reasonable (and enforceable) covenants; Home Owners Associations (HOA) are good in this respect (ask how much the fees are per year or month). If your considering a subdivision that has a HOA, find out who the president is and go meet them. If they’re proud of the fact that they fine folks for their grass exceeding 2.875 inches in height, well, there ya go. You don’t want the most expensive house in a subdivision; the house appraisal value is dictated primarily by those houses closest to it that are similar.
Have fun!