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Elite Veteran
Posts: 682
  
Location: Northwest | I’m a realtor and in our area a lot of people get a USDA loan (0% down) or FHA loan (3% down). Most people will ask the seller to pay for all or part of the buyer’s closing cost (this is on top of your down payment). If the seller doesn’t agree to this, then you can expect to pay around 2-3% of the purchase price in closing costs (loan fees, title company fees etc). If you can do at least 20% down then you won’t have to pay mortgage insurance! | |
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 Expert
Posts: 2097
Location: Deep South | My hubby and I bought our first house at 21 with a first time home buyer's loan program offered through the state of AL. Ultimately, at closing we only ended up paying half of the closing costs up front, the rest was financed. We had saved up a good bit from selling a couple of horses, thinking we would need it at closing, but thankfully we had it for projects around the house.
We were approved for a mortgage much larger than I was comfortable with though. I suggest figuring out what monthly payment amount you think you can afford, then set your budget based on that. Not what the bank thinks you can afford. The bank doesn't take into account how much you spend on horse feed/hay/farrier/etc.
We looked at houses for over a year. Made 2 offers that fell through. When we finally looked at the house that we ended up buying, I will say that our expectations/standards were considerably lower than when we originally started. We bought it knowing it would not be our "forever home," but as an investment. It was a great deal. A short sale, about to go into foreclosure. We were hoping to make money on it, or at the very worst we knew we could quickly sell it for what we paid for it if we needed to.
I had a 5 year plan. Stay in it for 5 years, then buy the land we really want and build the house we would be happy living in forever. 2 years later our perfect acreage in our perfect location came available. We jumped on it. Sold the first house for 40% more than we paid for it in less than 60 days on the market. We're now living in a tiny house on that land and saving up to build our next house.
And whoever said don't compare yourself to your peers...  I know several who are absolutely drowning in debt/bills/payments they can't afford just to portray a certain image. | |
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 Poor Cracker Girl
Posts: 12150
Location: Feeding mosquitos, FL | I was 27 (maybe 28.. I'm not even sure how old I am now) when we bought our land and built our house. I think we'd saved for two years or so - not second job or anything, just methodical and slow adding to the savings account. I got bonuses at my job at the time so all of those went in the account, tax return, etc. My husband scrapped some of his stupidly massive steel pile which helped put us over the top. I know several people who've sold good open horses to get a down payment.
Since we bought land, I think we needed 20% down but 20% on land is not nearly the amount 20% on a house and acreage was. We got a screaming deal on the property (bank-owned for the win!) in a location with rising land prices, so when it was time to build the house a year later, we had enough equity in the spec'd house and land to not need another down payment. The property was covered in giant pine trees so we sold the trees which helped finance the closing costs and the fencing/barn/stuff that goes with that.
Look for any opportunity to hoard money here and there and it'll add up. Plus, talk to a couple of different mortgage lenders. There's lots of ways to skin a cat and sometimes you just need to keep on making phone calls until somebody tells you yes. | |
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Expert
Posts: 1446
Location: California | I've done my fair share of buying and selling homes, and making a lot of money along the way.
For first time buyers, the absolute best thing you can do is meet with a lender to at least see where you're at. Just because I qualified for X amount doesn't mean you will. They will tell you which bills are best to pay off first, how to improve credit score, exact $$ you should be ready to spend out of pocket.
Secondly, make sure buying your first house you pick an outstanding realtor-soak up all the knowledge you can about the process.
Lastly, when/if you go to sell, I highly recommend you sell BY OWNER. Most realtors do things buyers could easily to yourself! An excellent lender and great title company are way more important and really all you really need! The realtor just takes THOUSANDS (talking 10-30k) for their "percentage" when they barely do anything. Remember, it's your hard earned money put into the place, you deserve as much profit as possible! | |
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 Can You Hear Me Now?
Location: When you hit the middle of nowhere .. Keep driving | JLazyT_perf_horses - 2017-11-13 5:00 PM
I bought my first house last year and I was 28. I was able to put down 20% luckily, which included a $6,000 grant. I was fortunate enough to have enough leftover from my college savings account my parents had started when I was a baby, so I will say it was a lot easier for me to do than it is for a lot of people. My house was $110K and my monthly payment is $675 right now, that includes taxes & insurance escrow. I was paying $820 in rent for an apartment before hand. However I'm going to tell you to make sure you don't wipe out all you have for a down payment. Since buying the house I've had to put over $10,000 in repairs and a new roof I wasn't prepared to pay for quite yet. Insurance paid for a good chunk of the roof luckily, but I still am recovering from that. My furnace is also from 1989 so I'm biting my nails waiting to have to replace that too, which I'll have to take a loan out for. Many get lucky and have few things go wrong, however my house was totally remodeled by a Do It Yourselfer who I'm pretty sure learned how to do everything on crappy youtube videos, so I have lots of things to fix in the future. From the listing, walk through, and initial inspections it appeared updated and move in ready....nope, it's not. So definitely have a financial plan for things that go wrong and make sure you're taking into account all the things you'll need to buy to fill the house as well. Furniture, decorations, paint, small cosmetic changes, they all add up. Really look into the expenses of the house, what the last 12 months of electricity has cost. You can call the company and ask for a 12 month average. If there's propane make sure you've budgeted for that, my old furnace sucks up the propane like nobody's business and my heat only gets turned up to 64. Remember you're going to have water bills, trash bills, all that fun stuff. Adds up. By the end of the whole thing and being there for a year I realized that the apartment was actually much cheaper, but my money is going towards something I can kind of get back in the end. Make as much of an extra payment on the house as you can each month, even if it's $10 extra. Adds up, interest kills you. By the time I'm done paying my house off I will have paid as much in interest as the actual loan amount and the house won't be near worth that much. So pay, pay, pay. Get roommates if you have to. A roommate for a year could add up to a nice emergency fund even!
Ditto to this... save more then you need always, you never know when your furnace goes... or your roof has a leak... or your hot water tank breaks... or your stove, laundry machine, dishwasher, leak in the basement.... and then if you want to do any renovations it all costs a lot of $$$$. There is a lot of stuff you have to handle when you own a house that you never had to worry about when you leased.
I can't help you with the payment options or give you advice since it works differently up here, have all your taxes up to date, paperwork in order, and always read the fine print. It was my most stressful but rewarding experience.
Edited by ndiehl 2017-11-16 9:39 AM
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Elite Veteran
Posts: 682
Location: Northwest | *almost there* - 2017-11-14 4:52 PM
 I've done my fair share of buying and selling homes, and making a lot of money along the way.Â
For first time buyers, the absolute best thing you can do is meet with a lender to at least see where you're at. Just because I qualified for X amount doesn't mean you will. They will tell you which bills are best to pay off first, how to improve credit score, exact $$ you should be ready to spend out of pocket.
Secondly, make sure buying your first house you pick an outstanding realtor-soak up all the knowledge you can about the process.
Lastly, when/if you go to sell, I highly recommend you sell BY OWNER. Most realtors do things buyers could easily to yourself! An excellent lender and great title company are way more important and really all you really need! The realtor just takes THOUSANDS (talking 10-30k) for their "percentage" when they barely do anything. Remember, it's your hard earned money put into the place, you deserve as much profit as possible!
I agree that selling by owner is the best course of action if possible. Not everyone has the time or desire to market their property themselves though. Whenever I meet with a potential client I always ask them if they've considered doing FSBO and explain to them what that would entail plus the money they would save. I feel like this is part of offering great customer service. I also wanted to note, that the amount a seller pays a "realtor" and what a realtor actually makes are two very drastically different numbers. Everyone thinks realtors are rich and make tons of money but this couldn't be further from the truth in my opinion. | |
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 Extreme Veteran
Posts: 460
| All great advice! So these loans through FHA and USDA, are these just around right now because of how high the housing market is? Should I be worried about those sort of loans for first time buyers going away? I still want to have a decent lump sum of money saved, and I know I won't be comfortable enough until next year. Do you think those loans will still be around in another year or so? I just don't want to miss out on my chance, if they are only going to be around for a short while, I might have to figure something out to take advantage of that now... | |
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 Elite Veteran
Posts: 889
| Katielovestbs - 2017-11-16 10:10 AM
All great advice! So these loans through FHA and USDA, are these just around right now because of how high the housing market is? Should I be worried about those sort of loans for first time buyers going away? I still want to have a decent lump sum of money saved, and I know I won't be comfortable enough until next year. Do you think those loans will still be around in another year or so? I just don't want to miss out on my chance, if they are only going to be around for a short while, I might have to figure something out to take advantage of that now...
No, those loans don't "expire". They are offered year round. Now, they might come out with some special financing from time to time and those may have expiration dates, but any USDA, FHA, VA, rural development is always available. | |
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Rad Dork
Posts: 5218
Location: Oklahoma | Katielovestbs - 2017-11-16 10:10 AM
All great advice! So these loans through FHA and USDA, are these just around right now because of how high the housing market is? Should I be worried about those sort of loans for first time buyers going away? I still want to have a decent lump sum of money saved, and I know I won't be comfortable enough until next year. Do you think those loans will still be around in another year or so? I just don't want to miss out on my chance, if they are only going to be around for a short while, I might have to figure something out to take advantage of that now...
First time home buyer programs are not going away. :)
You can do USDA for 0% down (just know there are property restrictions... you can’t go buy a home on 30 acres with that) conventional 3% down, FHA for 3.5%. Just plan on refinancing in a few years if you take on a loan with private mortgage insurance. The important thing to is to talk to a knowledgeable lender and know what’s possible for you. Know exactly what title company quotes are and what will be collected for reserves if you’re escrowing. Some states even have down payment assistance/grants that will cover a percentage of your down payment. Roll in closing costs/seller pairs (if you’re okay with that) and you’re set! I only started working in the mortgage industry a year ago and can’t believe all the opportunities that are there.
No need to worry about not having a large line of credit to qualify, just don’t max out your current lines. No one would ever buy a house if they never owned anything more expensive than their vehicle. | |
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Expert
Posts: 1446
Location: California | 07milch - 2017-11-16 7:43 AM
*almost there* - 2017-11-14 4:52 PM
 I've done my fair share of buying and selling homes, and making a lot of money along the way.Â
For first time buyers, the absolute best thing you can do is meet with a lender to at least see where you're at. Just because I qualified for X amount doesn't mean you will. They will tell you which bills are best to pay off first, how to improve credit score, exact $$ you should be ready to spend out of pocket.
Secondly, make sure buying your first house you pick an outstanding realtor-soak up all the knowledge you can about the process.
Lastly, when/if you go to sell, I highly recommend you sell BY OWNER. Most realtors do things buyers could easily to yourself! An excellent lender and great title company are way more important and really all you really need! The realtor just takes THOUSANDS (talking 10-30k) for their "percentage" when they barely do anything. Remember, it's your hard earned money put into the place, you deserve as much profit as possible!
I agree that selling by owner is the best course of action if possible. Not everyone has the time or desire to market their property themselves though. Whenever I meet with a potential client I always ask them if they've considered doing FSBO and explain to them what that would entail plus the money they would save. I feel like this is part of offering great customer service. I also wanted to note, that the amount a seller pays a "realtor" and what a realtor actually makes are two very drastically different numbers. Everyone thinks realtors are rich and make tons of money but this couldn't be further from the truth in my opinion.
It's on my legal documents on all the houses I've sold what both realtors walked away with--hefty amounts. Yes, they have to pay taxes, 401k, but we all do. | |
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Elite Veteran
Posts: 682
Location: Northwest | *almost there* - 2017-11-16 11:05 PM
07milch - 2017-11-16 7:43 AM
*almost there* - 2017-11-14 4:52 PM
 I've done my fair share of buying and selling homes, and making a lot of money along the way.Â
For first time buyers, the absolute best thing you can do is meet with a lender to at least see where you're at. Just because I qualified for X amount doesn't mean you will. They will tell you which bills are best to pay off first, how to improve credit score, exact $$ you should be ready to spend out of pocket.
Secondly, make sure buying your first house you pick an outstanding realtor-soak up all the knowledge you can about the process.
Lastly, when/if you go to sell, I highly recommend you sell BY OWNER. Most realtors do things buyers could easily to yourself! An excellent lender and great title company are way more important and really all you really need! The realtor just takes THOUSANDS (talking 10-30k) for their "percentage" when they barely do anything. Remember, it's your hard earned money put into the place, you deserve as much profit as possible!
I agree that selling by owner is the best course of action if possible. Not everyone has the time or desire to market their property themselves though. Whenever I meet with a potential client I always ask them if they've considered doing FSBO and explain to them what that would entail plus the money they would save. I feel like this is part of offering great customer service. I also wanted to note, that the amount a seller pays a "realtor" and what a realtor actually makes are two very drastically different numbers. Everyone thinks realtors are rich and make tons of money but this couldn't be further from the truth in my opinion.
It's on my legal documents on all the houses I've sold what both realtors walked away with--hefty amounts. Yes, they have to pay taxes, 401k, but we all do.
That’s what I meant about the amount a seller “pays” and what a realtor “gets”. For example, my firm gets 40% right off the top and then I start deducting all expenses, taxes, insurance out of that. But Yes, sellers pay a lot...hence why I encourage people to sell FSBO when possible. Also, say you pay 5% in commissions, that means selling agent would get 2.5% and the listing agent would get 2.5%. Then you would take 60% of the 2.5%. Then you take your 30++% in taxes out then you start ducting your expenses. The number you take home gets small real fast. Not trying to argue that fact that sellers do pay a lot, just trying to stop the misconception that realtors just make bank for doing “no work”.
Edited by 07milch 2017-11-17 4:31 AM
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