Buying a house in 4-5 months, Help me avoid mistakes.

[Maleficus]

So I'm a first time home buyer, I'm getting what I believe to be a good deal (I have the property all lined up, it just won't be ready until sept/oct). What are some pitfalls I should avoid? I'm leaving this intentionally vague, anything you feel I need to know will be appreciated ranging from setting up a home network where the wireless doesn't suck (is this even possible?) to insurance policies. pretty much anything at all.

I'm putting 10% down on the house, I'm not a typical ATOT millionaire.
I own 1 car (it will be paid off before the house purchase)
I have some student loans - my only debt.

I need all furniture and appliances.

Tips?

 

[Eug]

Go to your bank and get a pre-approval assessment, to see how much you'd be eligible for.

And then set up a budget for yourself, preferably much lower than your max, cuz your max allowable is often too high real world.

 

[Maleficus]

Go to your bank and get a pre-approval assessment, to see how much you'd be eligible for.

And then set up a budget for yourself, preferably much lower than your max, cuz your max allowable is often too high real world.

Thanks for the reply, I have already spoke with multiple banks / lenders and gotten my preapproval for the loan amount and setup a budget that leaves me with around 750 dollars a month according for $200 a month of misc. spending, putting aside some for savings each month, and over estimation of bills for food/gas etc.

 

[MustISO]

New construction or resale?
If resale, find a recommended, reputable inspector. Knowing what you're getting into is very important especially if the house is older.

 

[MongGrel]

Go to your bank and get a pre-approval assessment, to see how much you'd be eligible for.

And then set up a budget for yourself, preferably much lower than your max, cuz your max allowable is often too high real world.

Good advice.

Looks you have though, but ya might still hedge a bit more for emergencies.

Least you're head is in the right spot.

 

[Scotteq]

Don't forget to factor in "The Thousand Dollar Rule" when you decide how much mortgage you will carry.

Something breaks that you don't personally know how to fix??? Thousand bucks...

 

[Imp]

Try not to get emotional and subscribe to the sentimental aspects of owning a home. By this, I mean watch out for bidding wars, stretching your finances, ignoring the investment aspects of real estate, etc.

When you get down to it, a property is an illiquid financial instrument and not just a "home".

 

[velillen]

Set aside as much as you can right now for things youll figure out once you move in. Youd be amazed how much you think it great till you live there and then you have ot go change it. For instance i moved in and instantly had to change all the lightbulbs cause they used some POS purple tinted ones that took 5 minutes to get to brightness everywhere. Not a big deal but it was 50 bucks. When you just move in 50 bucks here and 50 there adds up pretty quick.

 

[Maleficus]

Thanks for the replies guys!

It is a resale, buying from the original builder/owner. The house is about 20 years old. The house is obviously going to be inspected surveyed etc. The owner has disclosed the problems with the house and is also purchasing a 1 year sellers warranty for anything that may go wrong with the house in the first year, I will probably pick that up and continue it after the initial year runs out, we'll have to see.

I'm opting to have a reasonable amount of money liquid after the purchase instead of putting down an extra 5% on the house, so the thousand dollar rule should hopefully be covered.

Imp: I feel like Im not going to make myself house broke by doing this, ~750 a month left over after bills and setting aside some for savings and misc. spending seems reasonable to me. Am I missing something?

 

[Eug]

I don't know the rules in Texus, but make sure you budget for stuff like lawyer fees, registration or land transfer fees/taxes, etc. if you haven't already. The bank may have already given you that info, and if not, they probably can. Property tax too, and a good chunk of money for heating/cooling/maintenance. I know you have some of those numbers already, but if you haven't already, it's a good idea to get the info direct from the owner.

Also, if you have much of your downpayment in the stock market, I'd recommend cashing out what you need, or if not all of it, then at least a portion of it now, and then gradually cash out the rest you need when you get closer to the actual purchase.

I started cashing out over the course of a year. I did lose out on some gains during that year (2007), but having the cash is much safer. A colleague of mine left it in until the last minute, and then the stock market crashed just before her closing date. Big loss - this was in 2008 IIRC.

 

[MrSquished]

i'm a new real estate agent but have been getting mentored by senior agents.

during the next 4-5 months do not do anything that can affect your credit. no big purchases on any card, don't lease a new car, etc... let's say you have 8 credit cards but you really only use 4. don't cancel the other 4, now your overall CC debt is spread across half the cards as it was before.

you can be approved for a mortgage tomorrow but the bank will check again closer to closing. you want to keep it the same.

if your agent is a good agent, they will recommend you a home inspector. since you are using a mortgage the bank will pay for an appraisal. they will only lend you whatever is less - the appraisal price or the agreed upon price. anything over the appraisal you will need to cover.

this is in the NJ RE market.

here in NJ we have an attorney review process. again get a rec from your good agent who to use. must be a lawyer that just does RE. around here the going price for a good RE attorney is $1300. and about $300-500 on a home inspection dpending upon the size of the place.

 

[Maleficus]

I'm trying to keep debt minimal (obviously) so I'm not looking to borrow more than the value of house minus down payment.

I did learn that about making major purchases and changes, got that covered.

I already have most of my money moved that needs to be moved so should be good there.

I'm going to start trying to acquire furniture and beds, anyone have a good line on where and how to pick those items up? Amazon, local places, any special insight? I've honestly never purchased major appliances before outside of stuff like a TV/tech

 

[MrSquished]

unit is not coming with any major appliances? here they just have to provide a stove, that's mandatory.

i'd save the money for the appliances and buy them once you close, as those are some bigger purchases like a fridge, dishwasher, etc...

 

[yottabit]

I would recommend hitting up Craigslist etc for some cheap temporary furniture to both help cushion the financial expenses and also give you a feel for what you actually want. Ikea also has some really cheap stuff that is plenty functional in short term.

Typically moving into a place that's completely empty you can fall into a trap of "I need it now" and end up spending a good chunk of change on non-ideal furniture. It might take a while of living in the house for you to actually figure out what the right look is for furniture and the right functionality that you need for furniture/appliances.

If you are going to buy expensive furniture then at least take the time to make sure it is something you'll be happy with for a while and is appropriate for the space. Also if your willing to wait a little you can take advantage of any seasonal sales furniture stores might have. It's very hard to get good resale value on furniture IMO which is why I say all this. It's a little easier to get closer to retail price reselling hardwood furniture (desks, etc) than things like couches, beds where you'll typically have to take a huge loss.

Also how long do you see yourself staying in this house? That makes a very big difference as far as any advice you should get. If you think you'll only be there a couple years to few years I'd stay away from getting any furniture, etc that's too "specific" or might not work in other environments.

If you are planning on someday trying to sell the house for a profit then make sure any renovations or upgrades you do will positively impact the resale value (bathroom/kitchen upgrades > than a man cave, or server room etc)

 

[Maleficus]

I plan to be in the house for some time, I have no intention of moving in the near future. You can never rule it out though, life and opportunities, all that jazz.

I have no intention of trying to fully furnish the house once i move in, just looking for ideas.

I have clearly misrepresented this to a large degree, it has a stove/microwave/fridge/washer/drier/ The fridge is on its last leg (IDK how, that is just what the owner told me) and the washer/drier are a bit old but functional. stove/wave seem fine.

Furniture I think I will need basically everything, I will probably snag a cheap couch somewhere and some cheap tables. The only big furniture thing I see myself buying off the bat is a nice king bed.

 

[Lyfer]

Congratulations!

 

[ultimatebob]

I wouldn't buy another house unless I had money for 20% down plus another 5% for closing costs.

If you can't afford a 20% down payment now, how do you think that you'll afford selling it in a down market if you have to move?

 

[MrSquished]

Just furnished a 1 bedroom with about 40% of my old furniture, 60% from Ikea and Costco. The super cheap Ikea stuff is kinda flimsy but the middle range stuff is pretty solid stuff and good value for $$$.

 

[WiseUp216]

OP, I made a similar thread in February that ended up with 9 pages of good advice:

http://forums.anandtech.com/showthread.php?t=2367319

Coincidentally, we just had our offer accepted today for a great house.

 

[Carson Dyle]

Find a couple of roommates with furniture. They'll pay a significant portion of your mortgage and keep you from going into debt buying sofas and tables and chairs and whatnot. Expect to live like a college student for at least a couple of years. Nothing wrong with that. In fact, if you're young it can be a lot of fun.

 

[Maleficus]

OP, I made a similar thread in February that ended up with 9 pages of good advice:

http://forums.anandtech.com/showthread.php?t=2367319

Coincidentally, we just had our offer accepted today for a great house.

Awesome! thanks. Also Congratulations.

 

[velillen]

if your agent is a good agent, they will recommend you a home inspector. since you are using a mortgage the bank will pay for an appraisal. they will only lend you whatever is less - the appraisal price or the agreed upon price. anything over the appraisal you will need to cover.

Never just go with whoever your agent says to use. Do your research on them first. Many work together and get kick backs for the referrals. Not saying they will give ya a bad inspector but just to do your research first

 

[Maleficus]

Find a couple of roommates with furniture. They'll pay a significant portion of your mortgage and keep you from going into debt buying sofas and tables and chairs and whatnot. Expect to live like a college student for at least a couple of years. Nothing wrong with that. In fact, if you're young it can be a lot of fun.

Unless something drastic happens there will be no room mates in my future.

 

[marvdmartian]

1. Do NOT use the inspector that the realtor recommends, unless you've received recommendations for that inspector from at least 2-3 other, independent sources (friends, etc.). The one the realtor recommends earns their bread and butter from referrals like that, so they're (subconsciously) more likely to overlook nagging little details (which is in the realtor's favor, NOT yours). I noticed this, within the first year of owning my house, when I spotted things that should have been obvious to the inspector.

2. Make sure you thoroughly check out the neighborhood, and the house. By this, I mean go through the neighborhood (driving AND on foot), various times of the day & night, various days of the week. When I bought my house, I failed to check out the neighborhood AFTER work, thus failed to notice my neighbor's lovely pair of German Shepherds, who thought the ENTIRE neighborhood was theirs, and barked at anyone within sight......meaning, I couldn't enjoy my back yard, if they were outside, unless I was willing to wear earplugs. :thumbsdown:

Also, talk to folks you might meet in the neighborhood, and ask them about the house. If they look at you as a positive addition to the neighborhood, they're more likely to let you know about little things the realtor failed to mention, or that the owner failed to tell the realtor. Basically, how the owner has treated the house and property, during their tenure.

3. Finally, as the present owner if they can provide you an average billing for utilities, throughout the year. Most of the time, the utility bills have that information, so you can get a feel for what the water/sewer, garbage pickup, natural gas &/or electricity will run you, BEFORE you move in. Will help you to budget, that's for sure!

 

[MrSquished]

Never just go with whoever your agent says to use. Do your research on them first. Many work together and get kick backs for the referrals. Not saying they will give ya a bad inspector but just to do your research first

Like in any profession, there are bad apples. But by the time you get to the point of a home inspection, you should be able to tell if your agent has your best interests at heart or not.

Take their recs and do your own research as well. But don't be paranoid that most realtors are working kickback schemes. You will see, the best agents are ones that build relationships and get those referrals from you down the road. You should be able to figure this out during what is often a long process in finding and closing on a home.

That ain't happenin if they screw you on things like home inspection. A home inspection in NJ is $300-500 bucks. You think I want to screw you for maybe a $100 bucks kickback from some home inspector when your referrals down the road will net me thousands and thousands in commissions?

You will never suggest that realtor again. I want you to refer me to any of your friends and family looking for years to come. And from them come more referrals. That's how it works with good agents. From shooting RE photography the last 2 years for the best agents (only good agents hire pro photographers), I see how they operate. They work really hard to do the best job for you as their client.