First time Home Buyer

I've been thinking about it a lot lately, and I am coming to believe the time is coming quick when I need to quit renting and buy my own home.  Several promotions at work have put me in a position to do it (I think) and one I get my debts paid off (approx 6 months) I will be able to afford my own place (i think).  My big questions are, how the hell do I go about this? 

Obviously I need to figure out how much I can afford.  I checked several online calculators and got differeing results.  Some said I would end up paying x, while others said y, and the difference in price was pretty crazy.

I guess basically I am just looking for general info.  Thanks guys!

I know this is going to sound like a smartass reply...but it isn't...The book "Home buying for Dummies" seems pretty good if you need a basic intro into the home buying process. I have not read it, but thumbed through it after a friend said it helped him out.

It is like 15 bucks through Amazon.

Cool, I will check it out.  Not a dumbass reply btw, I was gonna look at it anyways....

I pretty much know what area I want to be in, I just dunno how to go about it. 

Check out House and Home based web sites. Read as many articles as you can and crunch the numbers. I mean overdo the numbers. Financing on different base rates, different banks, w/ PMI, w/out PMI, FHA based loan, regular conforming, non conforming, points.. everything. Do the research. Know everything about the neighboor hood you are looking, talk to people who live there if you don't know the area very well. Research the school system, crime rate, tax situations. Become OCD on terms, apr, rates, realtors, what really happens, process. Talk to people who have done it before and just recently. Know what you want in a house and what you are willing to settle with if you find a great house in a great area that lack a couple of features you want that possibly could be added (ie fireplace, 1 and 1/s bath instead of two) The more you know about it the better off you will be to get the best deal.. If you are buying in six months to a year. Start prepping now. Research, watch homes for sale and watch the prices. Go to open homes and watch for estate sales because sometimes the house is for sale as well, put the word out the friends and family you are getting ready to look and ask them to keep it in mind just in case they know someone getting ready to sell. . Good luck

Fulkrum78... do you have any RRSPS? if so you could use then as a downpayment. I know here in Canada we have 15 years to pay them back. I put as much as I could before the tax dealine and got a few thousand back this year in taxes which are going to cover my lawyer fees and land transfer tax and other closing costs. In Canada you can buy a house with 0 down as well. The interest rates are at a 30 year low so your overal payment will not be that high. My suggestion is only buy what you can afford. The first few years do not take much off your overall cost of borrowing. If interests rates increase alot you may be stuck with a house you cannot afford. good luck man. Also try and get a secondary loan and pay off all credit cards and other loans. I got a 10000 loan to pay off my wifes CC's and mine , saves alot on interest and you can pay off the loan alot faster

I know the area well, been renting in it for years.  Tired of that.  Not worried about schools (no kids, no wife/significant other), but they are good in my the area. 

I am confused as hell about the whole conforming/non-conforming loan thing.  Would probably be an fha loan.  Dunno about pmi... 

Looking at 2 bedroom minimum, 2 bathroom min.  Aside from that I am fairly easy on what I want.....

It is confusing and can be overwhelming.. just take it one thing at a time. I'd start now so when things really start rolling you are not feeling the pressure as much which could lead you to miss something small that could really hurt you if you are not careful and unlucky.

I chose a non-conforming loan/ 5/1ARM because I didn't know where i was going to be in five years. I get a lower rate now and if I am still here in five I intend to re-finance at a 15 year. Go with what works best for you. THis you have to research and decide what you like about each loan option out there.

I would got for a house that has at least 3 bedrooms, because usually easier to sell. But if you have an unfinished attic that can be converted to bedroom space that would work and/or a two bedroom with larger back yard to add an addition on.

I'd prefer a 3 bedroom as well.  I have a bunch of crap I could stick in there. 

 

What exactly is the 5/1, 7/3, etc thing?  I know the first number is generally the number of years you get the intro rate, but what is the second number? 

Thanks again to everyone for their advice and help, I truly appreciate it!

Well I have a five year fixed, then after it will be a variable rate for the next 30.. Rate variation will not exceed a certain percent from year to year with a cap of 1%. For me it was best since I didn't know where I'd be in five years anyway.. if I am still here I will refinance at a 15 year mortgage

Hey Robert, I'm the guy who sent you to Mike Cole a while back. I have some good info on mortgages I'll try to email you in the next few days.

Hey Russ!  how ya been?

Heard about Mike's medical troubles?

Would love the mortgage info.  Very much in the planning stages of this now, nowhere near buying yet.... 

I'll take any help I can get!

I changed jobs so I'm out of the loop now, had no idea he was having medical issues. Is your email still Fulkrum@igui...?

There are a lot of options out there right now. Try to find a reputable mortgage broker and talk to him about the loans they can offer.

Russ- same addy.  Mike has Crohn's disease.  Last I talked to him, he was bumping my appt for a 2nd tat.  He seems to be having problems getting the right meds to treat it...

email sent!

Most banks won't make you pay a pmi if you put down at least 20% of the loan.

I dont know where you're located but a lot of places have special offers for first time home buyers. In North Carolina it depends on the city. The ones I've seen have you put down three percent, sometimes nothing, and you still won't have to pay pmi.

As long as you stay there for a certain time frame, usually 3-5 years, you won't have to pay the money that the city paid for closing costs or whatever. Not really sure about what is included for what they pay. But, if you do leave early, you will have to pay extra.

I'm buying a home using an 80% mortgage, 15% equity line, and 5% down. If you don't have the 20% down, that is a way to get out of PMI.

Also, some first time buyer programs offer no PMI, but they are usually ARM programs (at least from what I've seen), so you could be at the mercy of the market once the fixed period runs out.

Boxingfan has a good point. PMI can throw your payment up quite a bit and really limit how much house you can purchase. A loan that is comprised of a mix of mortgage and equity can be a good way to avoid the extra fee.

My mortgage guy was telling me about 2 newer programs that they are starting to offer. One is 100% financing of your home with an equity line...no primary mortgage needed, no pmi involved. Of course it is a variable rate and with the fed about to raise rates it probably doesn't make much sense unless you like to take some risks with your financing.

The other is called an option ARM...you get a statement with 4 different payment amounts. One is a 30 year payment, one is a 15 year payment, one is an interest only payment, and one is what is called a minimum payment. Basically, they assume a rate of 1.25% for the first 5 years of the loan for the minimum payment. Your actually rate is LIBOR + 2.55% which would put you in the mid to high 3's in actual rate. You can make the minimum payment based on the 1.25% rate and the difference between that payment and the interest only payment is added to your principal balance up to 125% of your homes value. IMO, you'd have to be freakin' crazy to buy a home with this financing with the thought of just using the minumum payment, but I guess with the high price of home in certain areas people are betting on their futures and getting in using the minimum payment in anticipation of being able to afford the other payments later.