Buying a house (RGal!!)

eliza88 · 03-04-2003, 11:57 AM

Bad news, good news...our landlords called us the other night and told us they needed to sell the house, the good news is since interest rates are so low we might be able to buy the house!! I spoke to a mortgage broker yesterday and she reasured me that there is a loan out there for everyone!

What I want to know is aside from the cost of the house, the taxes, and the mortgage insurance--what are all the other costs? What is everything involved in closing fees? Title insurance? Can all of this be rolled into the loan? Any hidden costs? We do not have a down payment--but we do have parents willing to help out if necessary. Also we expect a very fair price from our landlord (being good tenants for 10 years has it's rewards!), our landlords are lawyers and if they can sell the house to us they will not need to use a realtor (he said something to me like we'd split the cost...)

Anyway, all you homeowner's out there--I welcome your advice...Rgal, I'm guessing you can tell me all the fees...

eliza88

Grgranny · 03-04-2003, 02:14 PM

There are some questions I have too. I know I will have a problem with time when I sell mine and need to move. How much time do you have? I expect to take the money and buy another. Mine is paid for. How much does one expect to spend on top of purchasing another residence. Do all realtors use multi listing? It's been 36 years since we built this one so I have forgotten most everything. And at that time we got a 15 year loan.

dlksk8fan · 03-04-2003, 04:49 PM

I am in the middle of selling my house and buying a new one. I have sold 4 houses over the course of 20+yrs and I have to say that buying and selling houses is stressful! That is why we have experts like ourRealtorGal

"Mine is paid for". Grgranny I will probably never utter those words when it comes to my house. Every time I buy a new one the price keeps going up

heyang · 03-04-2003, 07:21 PM

Books like Idiot's Guide to homebuying and mortgages are very helpful. If that contains too much detail, the personal finance guide has a chapter on mortgages.

I'm not sure if points are worthwhile with such low interest rates.

As for splitting the cost, I don't get it. Does this mean they are going to deduct 3% off the purchase price to 'split' the difference. (There's usually a 6% commission taken off the purchase price for the realtors. 3% goes to the listing agency and the other 3% to the selling agency. A portion of that goes to the actual agent who listed and/or sold the property.) If the owners don't use a realtor, they aren't paying any commission at all. Whatever price you offer should be the firm price.

I also wouldn't utilize your landlord as your lawyers. It's a conflict of interest. They might not agree to certain repairs to substandard construction and you may not feel comfortable objecting if they are your lawyers.

It is important to get a good lawyer. Our lawyer found a lien on our house when we were purchasing it. The prior owners had to pay for it. If our lawyer had not found it, we would have had to pay it whenever we sold the house - assuming the buyer's lawyer found it.

You may feel that you don't need an inspection, but I recommend that you pay for a home inspection. (also, your mortgage company will require one. - some people forego it if they are purchasing without a mortgage) I think it's a good idea since the inspector can usually tip you off on certain regulations and such. A friend was buying a condo listed by YHD. The inspector told the homeowner that he was responsible for having the fire department certify his fuse box - otherwise, the closing would be delayed. He also explained the ins-and-outs of the various appliances and provided tips on their care. Also, while everything may look ok, it may prove to be substandard when you sell the property. When we bought our home, the inspector said that the wiring was not to code and that 'pigtailing' would be required. The previous owners had to pay for this since we would not close due to the safety hazard - otherwise, on the surface everything was ok.

With today's interest rates, get the fixed rate mortgage. The rate can't go much lower and will probably go up during the lifetime of your loan.

RealtorGal · 03-04-2003, 09:19 PM

Hi Eliza, I do not know in which state you live, nor do I know real estate practices outside California. However, I can give you some general information. It is very important to find a really good loan officer, who will give you a GOOD FAITH ESTIMATE for your monthly AND closing costs. This should include PITI: Principle, Interest, Taxes and Insurance. You should speak with this person about the costs of rolling your closing costs into the loan. Most people come up with these costs when purchasing a home but some elect to have them rolled into the loan. These closing costs should be detailed in your good faith estimate. A good portion of your closing costs would be your loan origination fee (or "points" ). There are escrow fees to be paid to the escrow company. Who pays title insurance varies not only from state to state but even different parts of a state. The loan officer will explain that you generally need to have a certain # of months mortgage payment in the bank, but that may not be required by your lender. In some states, attorneys handle all the paperwork. In California they do not. Realtors (or their transaction coordinators) do it all (I choose to do my own, but that's my controlling nature!). I don't know how it is in your state.

A title search is imperative due to possible liens against the PROPERTY. A physical inspection conducted by a LICENSED CONTRACTOR is extremely important in my opinion because often times all may appear to be okay but under the surface, things may be amiss. In CA, you generally need a clearance from a termite company in order to secure a loan. A termite company needs to inspect the house and issue a clearance. In CA, the seller is responsible for the inspection. Until recently, sellers automatically paid for termite repairs. The new contract allows this to be a negotiable item.

Have there been any insurance claims on the house in the past 3 years? Insurance is a big hot button these days, especially if the OWNER or the BUYER have made a water damage claim in that time period. Insurance must be in place prior to close of escrow.

The new contract in CA is long and complicated. I do not know how it is in your state.

Again, you really need to find a REPUTABLE loan officer. You want someone who will ensure, for example, that there is no pre-payment penalty for paying your loan off early. If you are putting less than 20% down, you may be able to avoid paying MORTGAGE INSURANCE by having the lender arrange for FIRST AND SECOND MORTGAGES. This will save you a lot each year.

Interest rates are at a historical low, so now is really a great time to get into the market. We may never see these rates again in our lifetimes.

RealtorGal · 03-04-2003, 09:40 PM

GrGranny, what do you mean by "How much time do I have"?

I would highly recommend you retain the services of a reputable, knowledgeable Realtor when you do decide to move. You should also consult your accountant so you can address the matter of capital gains taxation and how you may avoid paying it.

To all of you, let me put in a plug for retaining the services of a Realtor. For buyers it's a no brainer--you don't pay them (their commission is paid by the seller), so why wouldn't you want to be represented in the most important and costly purchase of your lives? Personally, I study and read CONSTANTLY to keep abreast of current laws and practices. CA is a lawsuit-happy state, and I want to protect my clients. You may think you're saving $$ by "doing it yourself" but I can assure you that in the end, you are not. Sellers statistically make LESS money when selling on their own DESPITE the commission paid (and the MAJORITY of sellers do not end up selling their home on their own, turning to a Realtor when their home doesn't sell). Avoid lenders masquerading as Realtors. They get a license (that's the easy part) but they often know next to nothing about real estate. They offer a slick deal; but in the end, the seller and buyer DO NOT benefit. I had a deal recently with a very nice lady working for one of these outfits. Mine was her first transaction. She'd been trained on the lending end for one week, but when it came to selling real estate, her broker told her, "Oh, you don't need any training. Just go show some houses."

Guess who had to basically train her as the transaction went on? Yup. Me. She was a lawsuit waiting to happen, and she is just LUCKY that I was on the other end of the transaction and not some creep, who could have taken advantage of the situation. I had MONTHS of training, and I continue to train as I study for my broker's license. Nothing is FREE--a good Realtor is worth every cent he/she is paid.

Would you diagnose or operate on yourself if you were not well? So why would you not trust a qualified professional Realtor and respect their skills?

In short, work by REFERRAL. Get friends, family members to refer someone experienced and reliable. Show that person loyalty and it will pay YOU dividends.

Okay, now I'm getting off my soapbox.

heyang · 03-04-2003, 10:22 PM

If you're looking for a good realtor, don't use YHD. The reason they take such a low commission is because they only list the property and arrange appointments for the prospective buyer to see the property. The owner actually shows the property.

When my ex-boyfriend bought his condo, YHD did nothing after the offer was accepted. The inspector informed the owner of certain procedures and my ex of his responsibilities. Also, YHD never asked for a 2nd deposit which surprised my ex-boyfriend's lawyer at the closing.

Also, be wary of internet banks. My ex-b/f used one - it took 6 months for him to receive his coupon book. The 1st time, they mixed his old and new address together. The 2nd time, they resent to the mixed address. The 3rd time they corrected the street, but got the city wrong. 4th time was the charm. On top of that, no one could tell him what his exact payment was when he didn't have his coupon book. Sorry , can't remember the name of the bank.

Grgranny · 03-04-2003, 10:36 PM

"How much time" What I was thinking about was the time between the sale of the house and when you have to get out. I have'nt much money to get another place without the money from the house and I don't want to move twice. I have no idea how much I will have to spend until I sell the place. Leaves you kind of in a bind as there wouldn't be any time to find one without the money from the sale of the house. I plan to get a less expensive place but there are a lot of places I couldn't move to because I have to think of my daughter. I figure when I move whe will probably live with me as it would be less expensive for both of us and she would have a driver. Also, she is allergic to so much stuff I would have that to contend with. Right now she can't live with me as there is something here she is allergic to. Mainly the radiation or something like that. I do have people that can check out where I want to move to so will be sure.

RealtorGal · 03-04-2003, 11:02 PM

<span style="color

urple;font-family:georgia;font-size:small;">You should speak to a good loan officer (not an Internet fly-by-night for reasons stated above) about perhaps taking the equity out of your house so you would have the money to buy a new house NON-CONTINGENT upon the sale of your own house. The minus here is that until your house sells, you run the risk of owning two homes at the same time. I do not know how the resale market is in your state and whether you could afford to take that risk.

The other alternative is to sell your house first, negotiate a long enough escrow period (60-90 days) to enable you to find suitable replacement housing. If you have a 60 day escrow period on your current home, for example, it takes you 30 days to find a replacement home, you could have a 30 day escrow on the new house and close CONCURRENTLY. A good Realtor would put all this into the contracts. In our new CA contract for example, there is an addendum available that would provide the seller with 17 days after acceptance of the offer on his current home to find suitable replacement housing (i.e. get into escrow on a new house) or the purchase contract on his current home may be cancelled.

eliza88 · 03-07-2003, 12:01 PM

RGal and heyang--thank you so much for your input! I feel like I am being pulled in so many different directions now--nonetheless it is very exciting that we might be able to afford a house. We live in Seattle and oh how I wish we had bought 10 years ago!! But then we thought we would only be here for 2 more years, so...

Our landlords should be getting us a price for the house by this weekend and I am meeting with a mortgage broker (hey a fellow redhead!! Can't go wrong with that

on Monday so hopefully we will know by mid next week how much we can afford. This weekend we are going to look at some open houses to see what else is out there as well as get a better feel for what our house is worth. Friends have given me referrals for real estate agents...We have until the end of May to either buy our house or move, sigh, wish there wasn't this time frame<img src=http://www.ezboard.com/intl/aenglish/images/emoticons/ohwell.gif ALT=":\">

All this house stuff is keeping my mind off of Worlds!!

Thanks again!
eliza88

mathman444 · 03-07-2003, 12:30 PM

Eliza, I don't have the knowledge to give you any advice about this, except: DO IT! Buy as much house as you can reasonably afford, then sit back and watch your equity grow. Seattle is a wonderful market in terms of potential property values. Like you said, if you'd invested in real estate 10 years ago you'd be sitting pretty.

Plus, OK, I am very conservative when it comes to money. The satisfaction that comes with owning your home outright -- you'll always have a roof over your head, come what may -- is worth quite a lot all by itself. Good luck!

Mathman