Buying a house

NOTE: This is a repost of a post I am deleting. You may have noticed that I am having some malware issues with this blog. . .

It has been a long time between posts. I've been busy. Unfortunately (for anyone hoping I'll post to my blog), it looks like I will stay really busy until November-ish, at least. We have put an offer on a house, negotiated with the sellers, had our offer accepted, conducted a home inspection, renegotiated with the sellers, and now look like all is set for our purchase and sale. I will not be discussing the specifics on my blog (at least not until we close), but it has been and continues to be an emotionally draining and time consuming experience.

I will say right now that I did not expect the process to be so emotionally draining. I knew we were supposed to not get attached. We were going into the process with continued renting as a perfectly viable fall back option, so there should have been no pressure. When push came to shove, though, emotions still kicked in and uncertainty runs high. We feel like we have found a great home that will become our own, but it is definitely a fixer upper. For now I am looking at it like an exciting adventure. We'll see what I am saying about it this winter.

The process of choosing a mortgage has not been any easier. Luckily, that is mostly a matter of crunching the numbers and picking the one which comes out on top. We had a number of referrals and one of them ended up giving us the best deal. We expect everything to go well with that. Assuming it does, I will definitely blog about it later.

This will probably be my last mortgage and house post until after we close on August 25th. Then I will be very busy fixing the house and getting it ready for winter, so I will hopefully write more about the whole process in the fall. Maybe I'll blog about other things in the interim, but I will be a bit busy. Should probably start packing. Should probably have started packing a week ago.

Home buying links

Here is a rather lame post that is just a bunch of links that I have found useful or think will prove useful as we earnestly start the home searching process.

Mortgages

• http://www.realestateabc.com/loanguide
  
• http://www.lendingtree.com
  

Real estate agents

• http://www.realtor.com
  
• http://www.realtor.org
  
• http://www.greatbedfordhomes.com/index.html
  
• http://www.LetsGoHome.com
  

Boston

• http://www.boston.com/realestate
  
• http://www.boston.com/realestate/community
  
• http://www.hud.gov/local/index.cfm?state=ma&topic=homeownership
  

Guides

• http://michaelbluejay.com/house
  
• http://www.hud.gov/buying/
  

Blog posts

• http://20somethingfinance.com/blog/2008/02/26/you-may-be-ready-to-buy-your-first-home-if
  
• http://www.getrichslowly.org/blog/2008/12/17/6-must-have-characteristics-to-look-for-when-buying-a-home

More home buying advice from a friend

At the beginning of March I also emailed a friend of mine to ask for some thoughts/comments/advice on buying a home. He purchased a home this past summer, so I figured he would have some good insights. I was right. Here are a few of the things that he shared.

• Trust your instincts as to the layout of the home you want. For example, if you know your family lives in the kitchen, don't sacrifice the kitchen size for other things.
  
• When you are looking at houses, picture where you would put all you things. Do the closets make sense? Is there a place for coats? Is there enough room in the master bedroom?
  
• Make a scenario to work from for collecting good faith estimates (GFEs). That way you can present the same information to various people and banks and get comparisons. Be honest, and they will hedge offers because they haven't done the actual research yet, but this can be useful.

He also pointed out a couple of excellent sites. First he suggested I listen to a bit of an NPR podcast about the current state of the economy: Bad Bank. Next, he mentioned how he had found his lender through Lending Tree (more on that later, as I use it).

Small loan or small down payment increase?

A while back I posted a question to Yahoo Questions:

How do I handle a small outstanding loan (payable in full immediately) while preparing to purchase first home?

I have a few thousand dollars of outstanding college loans and am looking into purchasing my first home this summer. I could easily pay off the loan with savings, but that would eat into my fairly pathetic down payment. I just read that paying off debts helps your credit score, which is why I am asking. Until now I was trying to maximize my down payment.

The response was mixed, although slightly leaning toward using the money toward the down payment.

How much house can I really afford?

One thing that Home Buying for Dummies stresses is that mortgage companies can only tell you how much they are willing to lend you, not how much you can actually afford. However, it was unclear to me how to figure that actual number out.

Then I remembered that my Personal Finance class has provided tools for calculating these sorts of things. Here are two useful ones for my situation:

Maximum Mortgage Payments for LDS - this one is nice because it is relatively simple and it takes into account tithes, offerings, and other donations. Just thirteen fields, all of which seem like something close to normal English (not Financese).

Home Loan Comparison with Prepayments Refinancing - I haven't really looked at this one yet, but it seems more complicated. It uses macros. However, I expect it to be useful when comparing mortgage offers.

Navy Federal Credit Union

A friend has mentioned Navy Federal Credit Union many times with regards to how good they are for mortgages. He tends to be very enthusiastic about Navy things, so I normally regarded his promotion of NFCU as more of that. However, as actually getting a mortgage became much more real to me and as PMI became something I might be paying in a year, NFCU's mortgages with no PMI suddenly looked really attractive.

Here is what my friend says about NFCU:

The reason is they require far less up front than anyone else I know AND they are amazing to work with. Our realtor (we used the same one twice) bragged about these people who worked really hard for us in a tight squeeze. The example I'm thinking of was with our last purchase. We were pre-approved with a certain rate that expired after a certain time period. The rates would have gone up after the period expired. We found our current house with a little less than a month left in the period and the whole process usually takes at least a month or more. BUT, they worked with us and kept our loan process moving quickly and we finished with 2 days to spare. That kind of service was apparently unheard of.

So, if you have an in to NFCU, I would also suggest adding them to your list of potential lenders. Probably towards the top.

Maybe we can buy a house?

A few weeks ago my wife and I were talking about future housing plans. Our current apartment is fine, but in several ways it is less than ideal. Our lease ends at the end of the summer, so there is an opportunity to move there. As we talked, we thought that if it is going to be a couple more years before we buy a house then it might make sense to move into a rental home. We also decided to get some real information about what home ownership takes.

Up until this point we were going off our own vague understandings. Most of this was based on the fact that the economy is collapsing and my personal finance class. In other words, we were pretty sure home ownership in New England just wasn't going to happen in our near future, if ever.

We knew this was an assumption based on poor information, so we resolved to learn a little bit more. I emailed my father to get some advice. He suggested four things:

Check out some books from the library. This was an idea that had slipped my mind. I ended up requesting three books through my library. One of them ended up not being what I was looking for. I am currently reading the Geek's Guide to Home Buying and it seems to be a good introductory text. I am still waiting to get Home Buying for Dummies.

Check out on-line resources. He specifically mentioned http://www.realestateabc.com, but there are a whole slew of them. I'll probably talk about some of the other useful sites I have found in later posts.

Check out government help for buying a home. The stimulus bill gives an $8000 tax credit to first-time home buyers before July 1st. A bill from last year had offered a $7500 interest free loan through taxes. I doubt you can add the two together, but I do not actually know yet. The dates do seem to overlap.

Check out areas where you actually want to live. I had pretty much set my sites on one area because I knew schools were good. That community has houses $100,000 more than those in other neighborhoods my wife was looking at. Unfortunately, we don't really know much yet about the areas we are looking. This is something we are investigating further.

That was the first step, taken a few weeks ago. We are going somewhat slow through the process and learning a lot along the way. I'll try to get caught up with the information.