Chirky

Your priorities sound perfectly in order to me! :)

Visit the neighborhood at several different times of the day and week. What looks perfectly lovely on a Monday afternoon may look like a war zone on Saturday night if there are college students or nutty partiers.

Beware of the realtor trick of showing you crap, crap, and then something marginally better. They are hoping you are so delighted to see something, anything better after the crap that you will jump right on it.

If you buy a more expensive property than planned, make sure you can not only afford the extra mortgage, but the extra property tax.

Good luck, have fun.

The biggest piece of advice I can offer is to get less than you think you can afford, and CERTAINLY, for the love of God, get less than the bank says you can afford. Owning a home is super-expensive - far more so than renting, because of both the things you suddenly have to do that the landlord managed before, and because of the things you *want* to do (go to Target, paint the bedroom, re-do small things here and there). You're going to need a lot of extra money to do those things, whether you realize it or not.

Remember, too, that this is your first house, not your last - it's okay to compromise on things now, because you're not stuck there, you WILL move up and out later in life, and you'll get everything you want eventually. It doesn't have to be right this second.

Also, the tax point is a good one, and a really important one to consider closely when you're looking at neighborhoods. There can be a significant difference between suburbs and towns, and higher taxes do not automatically equal a higher quality of living.

Finally: do houses down there have basements? Florida doesn't, and if there is one thing I could add to my house right this minute, it's a basement.

Buy in a good neighborhood and don't buy into a new neighborhood. Try to find a neighbor hood that's at least 10 years old. We totally got screwed on the house we are in. Our property value has already dropped by $5K. I'm almost livid about it.

#2 - Investigate the schools and the financing.

#3 It's sounds selfish, but be selfish and picky when looking for a home. Don't settle for less than you want

#4 Don't buy the most expensive house in the hood

#5 don't buy a "fixer-upper" unless you are willing to do the work in about a year or have it contracted.

#6 Buy more of a house than you need. Buy a 4 bedroom if at some point you want to have 2 kids. Leave some room for growth.

~Jef

JONNA: Houses down here don't have basements. Something about moisture, I think. Or maybe not. I don't know. But if I could have one, I totally would. Especially after visiting family in the Carolinas. Hoo boy. That basement thing is a sweet deal.

JEF: Let's pretend we are...er, ignorant...and don't know what you mean you say things like "investigate schools." What does that mean? How do we know whether a school is good or not?

I totally agree with jonniker. Do not, DO NOT buy a house that costs as much as the bank is willing to finance. Figure out how much you think you can afford, and then spend less. This doesn't have to be your last house. I have seen many, many people get in over their heads when it looked good on paper.

I also agree that you need to be careful on the neighborhood. Don't buy in one of the neighborhoods they are throwing up left and right around here, with good-sized floorplans, but that aren't that well built, and that anyone and their dog can and will move into, and where the property value will only go down. It's better to get a smaller house that will keep its value than a house that's bigger than you need but that will quickly lose value.

And make sure you have a good realtor. Remember, they work on commission. And ask question after question. Both the realtor and the seller can get in trouble if the don't tell you what under the law they are supposed to disclose, but it would still be better if you point-blank ask if the roof has ever been replaced, if it's ever flooded, if there are any problems with the neighborhood, etc.

Make a budget and figure out what you could actually afford to pay every month FIRST. Then go to a bank or mortgage person and get pre-approved. THEN start looking at your price range.

I agree with everything Suebob and Jonniker said.

Finally, find a realtor that you like and trust. We found ours through a friend's recommendation, and she made the process a whole lot easier.

Keep in mind all the transaction costs that come with buying a home: transfer taxes, lawyers' fees, brokers' fees (if applicable), etc. They add up FAST, and if you haven't budgeted for them, they can be quite an unpleasant surprise after you've scrimped to come up with the down payment and everything else!

And while I agree with everyone that you shouldn't buy as much of a house as the mortgage people SAY you can, definitely buy something you won't want to move out of in less than 5 years. The whole buying ordeal is not something you want to do within a short period of time if you can help it, and you don't want to buy a house only to decide in two years that it's too small or whatever and then have to go through the whole thing again PLUS the selling part. Ugh. If it's a little tight the first year, most likely with raises and bonuses and whatnot you'll be fine by the second (and so on) year(s). As someone advised me, "buy up." But not TOO far up!

AND, stay AWAY from interest-only mortgage financing. Don't do it!!

In addition to what was already said, view the places you're looking at with a very critical eye; see if they have "good bones." That is to say, if you do end up staying there, is the layout/structure of the house itself something you can work with and expand, if need be? Apropos of which, don't get distracted (positively or negatively) by the current decor of the place. (I kept doing that when we were looking for a place. :))

Also, there are a lot of great resources online (particularly some incredibly detailed budget calculators) which force you to take an in-depth look at ALL of your expenses. They're very helpful in terms of figuring out what's realistic for you personally.

VERY IMPORTANT: LIKE AND TRUST YOUR REALTOR! Go to meet several realtors at first. Give each one your list of wants and price range; let them take you out to see a couple of places based on your list. This should give you a good idea of whether or not they are interested in helping you buy a home or if they will just try to sell you a house they happen to have listed. You will be getting A LOT of calls from your realtor - don't get yourself stuck with someone who will cause your eyes to roll when their number appears on caller ID.

On Schools: If you have kids, it's worth calling to get the "report card" on the district. You should be able to get this by calling the principal or superintendent's office; it may also be online at the school district's website. Your realtor may also have comparative information on area schools, too. If you don't yet have kids, this is much less important as the school performance could be radically different 5-7 years down the road.

Finally, HAVE FUN! Gut instinct will let you know when you walk into the right house...until then, enjoy looking around!

1. Your realtor is WORKING FOR YOU. Never forget that. If you don't really like the job they are doing or something just doesn't seem quite right - FIRE THEM! Don't feel bad. Don't hem and haw. Fire them. It's nothing personal. It happens all the time. Be brave and demanding.

2. It seems trite, but LOCATION LOCATION LOCATION. Seriously. It wins EVERY SINGLE TIME. A great house that requires a 4 hour commute to work (each way) is not a great house. Even if you are willing to suck it up and deal with it, think about how difficult the place will be to sell... the next buyer will be thinking "location, location, location".

3. Speaking of reselling - do your homework (look online) and make sure the house is in a desirable school district. Even if you and Roger have no plans for kids in the next 5 years (which I hope is not the case... I want little baby Jessicas running around!), a good school district will be a MAJOR selling point to the next buyer - and good school districts tend to be positive feedback systems in my experience... it's a good school district, so it becomes a selling feature for houses, so housing prices go up, so property taxes go up, so the schools have more money, so they can hire the best teachers, which makes the school district better... I've never heard of a great school district suddenly becoming crappy.

4. But don't make the re-sale value your only priority... make sure the place is someplace you like! I mean it's gonna be your home for crying out loud!!! Hopefully for a long time (selling a house is bee-atch, I hear). So make sure you are comfortable with the neighborhood, the distance to the grocercy store, the existence (or lack thereof) of a cute downtown area with coffee shops and stuff. Make sure you you can see yourself feeling "at home" there.

5. Don't plan to "flip" the house, unless you are VERY good at it. It's hard. And expensive.

6. Don't ever buy the most expensive house on the street.

7. Be sure to look at "comps" (comparable houses in the neighborhood)... but beware of straight up black and white statistics... not all 2,000 square foot homes on X street are created equally... floorplan, usable property, view, roof quality, etc. count!

8. **I'm not 100% on this one, but...** Look into borrowing against your 401K for the downpayment... I think the interest you pay yourself back is tax deductable. (Instead of just saving a bunch of money under your mattress and then plopping it down for the down payment and getting no write off for it.)

9. Don't forget, the interest on your loan (for the part that isn't the down payment) is tax deductable. whee!!

10. Never do an interest only loan - eeek! Make my skin crawl!

11. Don't fall for fresh paint, pretty flowers, and new carpets - cheap cheap cheap!

12. Be prepared to be poor. VERY VERY poor. (Like living on Raman noodles and peanut butter sandwiches poor.) For the first year. After that, I hear it gets better.

My only advice is to double check the plumbing. Especially the pipe from your house to the main line. And if the house you are looking at was built in the 1930-60's, there's probably still clay pipe under there, and it's probably not in good shape. See Dooce and Suburban Bliss for examples of pipe disasters. We need a new sewer pipe and it will be $25,000, not one penny of which someone will be willing to pay for when we sell the house. The regular inspector can only do so much, we really should have had a plumber come out and look at it for no other reason than the age of the house.

People keep saying this, but I just don't get it. Why not buy the house that is the highest property on the street?

Jes: There may be more, but it's my understanding that it's because it will be the hardest to sell, should you decide to move, as it's not commensurate with the value of the neighborhood. For whatever reason, that house will be viewed as overpriced, which isn't entirely inaccurate. Neighborhoods hold value just as homes do, and it's a big gamble to buy a home that is in the highest range of the neighborhood you're scouting.

Also: As for borrowing against your 401K, you can also take out of your 401K without penalty up to a certain point. The government gives you lots of breaks when it comes to your first home. Find out exactly what they are, and use them to your advantage. (I'm not advising the 401K thing, but it's not an entirely frowned-upon decision at all.)

I think I'm echoing most of the other comments, but what surprised me the most about our buying decision is the school district we lived in. We have 2 children, and when we were looking to buy, our oldest was a year away from starting kindergarten. And our NUMBER ONE priority was to NOT be in DISD. We knew we couldn't afford private school if we lived in that school district, so we did some research on several different schools. Plus property taxes vary so much from county to county. (That's what made us decide on Crandall as opposed to Plano - both have good schools, but Collin County sure is proud of their land!) But if you're a few years away from having kids, then don't that be your number one priority. Like someone said earlier, this will more than likely not be your last house. I'm praying the house we're in isn't our last!
Before we even started looking at houses, we made a list (like y'all have done) of things we thought we needed in a house. Big backyard, 3 bedrooms, 2 bathrooms, etc. Then we started on the details. Split bedrooms, Jack & Jill bathroom, walk-in closets, etc. And even if you think you have found something just perfect, (and I hope I don't rain on anyone's parade), you WILL find tons of things you still don't like about the house. But let that be something else to add to your list when y'all decide to buy another house!
Good luck with your search and I look forward to reading all about it! :)

Hmmm no advice. I'm a single renter, what do I have to offer you? But I will say that whatever you buy you can add to the list of resources a little Katie-elbow-grease to help with any painting or yard work needed to spiff that place up.

Happy House Hunting (oh and can I tell you that I'm so excited that you might be staying in the flat land of Tejas for at least a while).

Hmmm no advice. I'm a single renter, what do I have to offer you? But I will say that whatever you buy you can add to the list of resources a little Katie-elbow-grease to help with any painting or yard work needed to spiff that place up.

Happy House Hunting (oh and can I tell you that I'm so excited that you might be staying in the flat land of Tejas for at least a while).

Can I withdraw funds penalty free from my 401(k) plan to purchase my first home?

If you are under the age of 59 1/2, you cannot withdraw funds from your 401(k) plan to purchase your first home without being subject to a 10 percent additional tax on early distributions from qualified retirement plans. However, depending on the rules for your 401(k) plan, you may be able to borrow money from your 401(k) plan to purchase your first home. Your plan administrator should have written information about your particular plan that explains when you can borrow funds from your 401(k) plan as well as other plan rules

Don't forget to budget for incidental repairs throughout the year... My sister likes to say that while she does not pay Home Owner Association fees, she does have repairs to contend with on occassion: fence, plumbing repairs, etc. All houses and yards need maintenance, and that costs money even if its only in materials.

Good luck! I'm envious... nowhere to buy in San Diego for under $400K in a neighborhood I would want to live in :-) I'm spoiled as a renter within a mile from the beach in a neighborhood I can't afford to own in...sigh...

Storage space... somehow, we forgot about this until we moved in and we had nowhere to put all of our crap. Definately make sure you have storage space.

Yes, on the schools. If you plan to stay for an extended period. Which I advize against, you'll want to find out how good the schools are. AND the thugs that hang out in the neighborhoods. The state ranks schools as exemplary ( the best ) down to failing ( obvious ). You want to be in exemplary schools. They are all ranked, but the rankings generally fall into the category of "If you're white and rich your schools are good. If you're poor and ethnic your schools suck." I have stats to support it. This is a happy blog so I won't get into the immigration debate, but ...

You also need to visit the neighborhood at all times of the day and during the week. Friday and Saturday nights are great nights to see when you will need to call the police to get your neighbor to shut up from his 3rd wild party this week.

But don't let all this scare you, unless you get in a crappy new neighborhood like we did, you are usually ok.

~Jef

Don't buy the most expensive house on the street because it's hard to sell when it's time to get rid of it.

~Jef

HI -
I have to agree - what the bank tells you can afford is not really what you can afford. We went 30,000 under what the bank said we could afford and some months I wonder how we are going to eat. I guess if you had no other bills, but....

And don't buy a fixxer-upper. While it sounds like fun and wow what you will have to show for it later, it isn't. And you won't work on projects like you think you will. Its taken and year and 2 months so far to finish the basement we thought would take a few weekends.

I have no advice for you (living in the Bay Area, I need to score a half a million dollars if I want to own; eek), but I feel like thanking each and every one of your commenters for advice that will hopefully someday do me some good.

Oh, and as for not buying the nicest home on the block, I always thought that was because it makes you a target for thieves. I guess that says something about my experience living in the ghetto and also my delightful general paranoia.

Wow, you got a lot of info from your readers. Are you guys really thinking of staying in Dallas? YEAH! Don't tease me though.

I am about to close on my 2nd house...and in a town I've never lived in before which is the hardest part. Really have to trust a realtor's opinion of neighborhoods and go on a lot of "1st impressions". Main advice:

1. NO ADJUSTABLE RATE MORTGAGES (ARMs), you absolutely want a FIXED rate mortgage...some lenders will try to sell you an ARM because it will have low payments initially. But then 5 years down the road when the ARM expires, you get stuck with the interest rate at that time, and it could be high! Thats a chance you take with an ARM. Same thing with the Interest only loans...don't do it! You don't build ANY equity in the house, its like renting.

2. The whole, "biggest house on the block"...to me it makes sense because who wants to buy the most expensive house in a "lower priced" neighborhood when you could have the smallest house in a nicer, "higher priced" neighborhood. I have also heard to buy closer to the front of the neighborhood if possible. If you live in the back, and the streets on the way to yours go to pot, it could keep some sellers from being attracted to your house as they drive through "junk" to get to your cute house!

3. Try to make extra payments to "principle" with bonus money from work or returns on your taxes...this builds up your ownership in the house and gives you more equity.

Good Luck!

It all depends on your budget. My husband and I bought a modest (but beautiful) home, with payments within our budget. We made a decision to buy a home because the interest rates were good and because we found a house that we both could agree on. Now finding that house that we both agreed to was the amazing part. But we tried to keep as much emotion out of it as possible. This was a business decision and we tried to treat it as such.

1.To me a newer home (less than 10 years old) was important. Less things to go wrong, possible that a warranty would still be on it from the builder.

2.Wood floors were a big thing for me. I absolutely LOATHE carpet.

3.Decent sized back yard and no pool. Pools are expensive to maintain and I couldn't imagine using it all that much to justify the expense.

4.We did what's called an 80-15-5. 80% of the mortgage on the first lien. 15% on the second lien. 5% down payment. Our first mortgage is a fixed rate. Our second is a 7 year ARM. We knew we wouldn't be in our home for more than 7 years so we will probably sell it before the 7 year ARM is up. If we decide to stay then we'll either keep the interest rate on it (which can change once per year after 7 years, and caps at 10%) or refinance the second. We were willing to take the risk with the ARM because of the time we would be in the home and because the rate was so low during the 7 years. We split up the mortgages for two reasons:
1. We didn't have 20% to put down
2. If you are over 80% on a mortgage PMI is required and I refused to pay extra money to insure my mortgage. We also don't escrow our taxes and insurance. At the beginning of each month we pay the mortgage and in the middle of the month we put enough money for taxes and insurance into a high interest CD or savings account. That way we make interest off our own money instead of the mortgage company making the interest.

4.We made friends with the prior owners of our home. It made our transition and theirs too, much easier. They were able to give us certain information about the house that wouldn't be in an inspection or a disclosure.

5.Just remember, if you don't like the paint colors, or the carpet colors, or the counters those are things that can always be replaced later. What was important to me was the structure of the home and the layout.

6.Attic/storage space. This comes in handy big time.

Oh one more thing I forgot,

We refused to buy a home that was in a homeowners association. It is expensive and it's actually been studied and proven that being in one doesn't necessarily keep your neighborhood on par. They are there to tell you what to do with your own home and that's basically it. We didn't want a company telling us what we could or could not do with something that we were paying for, plus paying them too!

Geez, sorry. I'm bogarting the comments but I also have some insurance advice:

Don't fall for a company giving you an HO-A or an HO-A+ on your homeowner insurance. Do your homework and insist on getting an HO-B or an HO-3. There are still companies in Texas that sell HO-B's or better. Ho-Bs are more expensive but if you have a large water damage claim then it will be worth it.

If you currently have an insurance company that doesn't sell the HO-b than be willing to walk away from them. I've seen several people leave the company I work for to go to a lower priced HO-A only to have a water damage claim later and to be left holding a $10,000 bill.

You can check out the companies in Texas that are currently selling an HO-B or HO-3 policy. If you can't decifer their lingo feel free to email me. It's what I do all day long!

http://www.opic.state.tx.us/hoic.php

Last week I had a great conversation with Mo about home buying. I wanted to post it for anyone who is considering buying a home, because she had a ton of great information to offer. My comments are in bold to help separate the conversations:

: Dude. All this talk of HO-As and HO-Bs lost me. I thought you were talking about HOA (homeowner associations) until you threw insurance claims in the mix. What? Am sufficiently confused.

MO:
LOL...I know! It's all confusing, the Ho-As and HO-Bs and HO-A+'s. If I weren't in the business I would be confused too! Just remember an HOA is a Homeowner Association, and HO-A is a Homeowner Policy A (sometimes called an HO-A+) then there is a Homeowner Policy B. It may not seem like a big deal while you're in the middle of buying a home but it can come back to bite you later.

If you'd like me to go into more detail I'd be happy to. Anyone who wants to hear anything about insurance policies is a Godsend to me. LOL I talk about it all day long so I don't mind explaining it at all. Also, my husband is in the mortgage business and is able to give you some no pressure, no sales answers to any questions you might have about mortgages.

JES: Wow. You two are like a walking home-buying mecca.

Yes, please elaborate on the pros and cons of each HO-A(+) and HO-B. That will help, considering I've NEVER, ever, ever, ever heard of a homeowner policy. (Is it like renter's insurance? Because i HAVE heard of that. I even have it. But only because of Roger.)

MO: "Wow. You two are like a walking home-buying mecca."
-- ROFL...I guess in a way we are then. It took us 7 years to buy a house and when we decided to do it we put a lot fo thought into it. It was a big deal for us but it was something that we knew would be a permanent situation, at least for 7 years.

I'll give you a quick rundown of the differences in the renters policy and the homeowners policy. Try to keep it simple and we can always elaborate later.

A renters policy covers your posessions and your liability when you live in a rented dwelling. So if you burned the place down (or your neighbors did) and lost all of your posessions then you would receive money to replace your belongings up to the limit of the policy. So if you only have $20,000 in personal property coverage but you have $50,000 in actual stuff and the place burns to the ground, you're only going to get up to $20,000.

Where it gets really confusing is the difference between replacement cost and actual cash value. The basic difference is that replacement cost will pay for what it costs you TODAY to go out and buy the exact some item. So if you have a 5 year old TV that you paid $1000 for, and it would cost you $1500 to buy the exact same TV today, then replacement cost on your policy will pay that $1500. If you have actual cash value instead of replacement cost the policy will only cover what the actual item was WORTH before the theft or fire. So if you paid $1000 for the TV but it's cash value was only $150.00 then you'd only get $150.00. So in the end, always get Replacement Cost! :o)

Completely confused yet? Hope not cause it gets better! LOL

A homeowner policy covers the home (aka "dwelling"), your belongings, and your liability.

Say you buy a $250,000 in North Dallas. It's sale value is probably more than what it would cost to actual replace the home if it were to burn down to the ground. So you'd insure it for $200,000. The dwelling coverage would be $200,000. Then your personal property coverage would be a separate percentage of that amount. With my company it would be $140,000.00. So you'd have coverage on the home for $200K and a separate amount of $140K for your stuff inside of the house. If the house were to burn to the ground you'd have a total amount of $340K to cover the home rebuilding and re-buying your stuff inside.

A homeowner policy HO-B (or like with my company it's called an HO-542) covers against: wind, hail, fire, theft, lightning, tornado, and water damage.

The differences in the HO-A and the HO-Bs is strictly in the water damage area.

My policy, an HO-B, will not only pay for a sudden burst of water, say a toilet overflows or a pipes busts, but it will also pay for slow leaking water damage. Slow leaks are where the expense comes in. Say you've got a leak inbetween your walls that you didn't know about, or say you've got a pipe in your foundation that is leaking which is causing the house to shift. An HO-B policy will cover the cost of repairing the water damaged areas whether it is a slow leak or a sudden burst of water. An HO-A policy will only cover sudden water damaged areas. So if you've got a slow leak or a foundation leak then you're out of luck.

Freaking out yet??? LOL

JES: That makes total sense. Why do people get A instead of B? It seems natural that you'd want the slow-leaking coverage. Is it because people are stooopid? (Please say yes, and then give someone else that same answer next time they ask you that question.)

MO:
Ha! You're dead on. It's because they are extremely stoooooopid. An HO-A is less expensive than an HO-B, that's the basic difference why. But some people just don't care and some people really do not understand the differences. I've had people leave our office for a lessor policy and get mad at me when I try to explain the differences. They just don't want to feel stupid for making such a big mistake.

Most people don't realize how expensive it is to maintain a home and everything that goes along with it. Yes, your mortgage may only be $1000 a month but your taxes could be $5000 a year and your insurance could be up to $1300 a year. Then you have the expense of buying junk for the house, lawnmowers and weedeaters and whatnot, and filling the house with junk, and everything else that goes along with being a homeowner.

JES: All this freaks me out. Junk is so expensive. Thank goodness for craigslist (lawnmowers and weedeaters galore!).

MO:
I have furnished most of my house from Craigslist stuff. I ADORE Craigslist.

Well feel free to keep my email handy when you guys go to buy a house. I also have plenty of references for other stuff, like a realtor and handy men, and roofers, and inspectors, and blah blah blah. LOL Or if you have a question in the meantime while you're looking I'll be happy to help. I know how confusing it all is and how frustrating it is.

When you get closer to closing let me know and I'll be happy to run a quote for y'all too.

JES: Heee. This makes me excited to go buy a house RIGHT NOW.

I'll have to exercise reservation, though. Our apartment lease is up on March 31, so we're trying to buy instead of signing another lease. This Friday we're making our last payment on our credit card (squeeeeeee! out of credit card debt!) and then we'll focus on house expenses. Eeeek. We're totally unprepared for that.

What do you know about borrowing against life insurance? Is that a bad thing to do?

MO:
Don't borrow against it. Use it for when and if you really need it. Like a sweet vacation after you've just repainted your entire house. lol

Seriously though, it's not worth it. You have to pay interest on it (well most of the time you do) and that should be an emergency fund sort of thing. I'm assuming you're talking about the cash value in a life insurance policy, correct me if I'm wrong. In all honesty if you don't have at least 5% to put down then you should rent for another year and save it up. It's hard but worth it. Having a 100% mortgage is a total bummer. Plus factor in PMI, closing costs, realtor costs, appraisal fees, and inspection fees then you're S.O.L. But to be honest with you, when we bought our house we have the 5% to put down. Unfortunately there was a nasty little collection of about $2000 on my credit due to a past apartment that I broke a lease on. I ended up taking $2000 out of my IRA and dear Lord did I pay the price later. I had to pay real live TAXES on that money. The taxes alone were over $700! So it ended up costing me $2700. Not good. I think you have to pay taxes on a life insurance withdrawl as well. But an accountant would be better suited for that sort of thing.

Just to make you even more confused, whatever you do, when you buy a house don't ever buy Decreasing Mortgage Life Insurance. It's a Rip.Off. You'll get about 457 gazillion offers for life insurance in the mail after you close on the house. Toss them all.

JES: So if we bought a house for $250k, in your expert opinion (hee!), how much should we count on for all that stuff? (pmi (what is that? seriously - i'm THAT clueless), closing costs, realtor costs, appraisal fees, and inspection fees)

MO:
Ohhhhhhh man. A good PMI explaination can be found here:
http://en.wikipedia.org/wiki/Private_mortgage_insurance

As for everything else, well I hate to say it but it does vary. According to my husband, whom I just spoke to, with 100% financing (as in no downpayment and having just one mortgage) your overall closing costs could be around $5000.00. It can really vary though. Some mortgage companies will charge you "points", some will charge you extra (and totally unnecessary) fees for silly things like a courier. It all just depends on the company. Try to stick with a Credit Union. They usually charge less fees and will work with you. Stay away from the gimicky loan companies like Ditech and that "bless your heart" dude on TV. I hate him.

Before you go look for a home though, get yourselves pre-approved through your bank or through a mortgage company. It makes you look good when putting in an offer on a home and will give you a good idea of what you can purchase. Although they usually approve you for WAY more than you can actually afford.

After you've chosen a house and have started going through the process of buying it you'll be given what's called a "Good Faith Estimate". That will give you a run down of what you'll end up paying at closing. It can also vary though and is mostly just a document to show you how you will be totally hosed in the end. lol

No matter what, you will make a mistake in this whole process. Mike and I did ALOT of research and there are still some things that we would have done differently (like not taking that stupid money out of my IRA). It's all about experience and I think we'll be better the next time around.

Here's some more resources that I trust:

http://www.daveramsey.com/etc/realestatecenter/

http://www.fool.com/homecenter/homecenter.htm

JES: Ooooh! I hate that "bless your heart" HMS guy, too. Ug. He's so annoying.

Question: you said to stick with a credit union, then said to get pre-approved through a bank or mortgage company. Is it just me, or do those statements cancel each other out? Which should I try to do? And what's a typical interest rate right now? Like 5-6%, right?

I'm beginning to think we should hire a realtor or agent or someone who knows all this stuff. There's no way I'll be able to remember it.

MO:
I forgot to throw in the credit union when I told you to get pre-approved. Sorry! I don't want to confuse you. lol I'm sure it's confusing enough already! We did our mortgages through our credit union, which is also where Mike works. But if you have an established account with a bank you may want to use them at first to get pre-approved. If you don't like their terms you can always back out and go through another company later. Just be careful when getting pre-approved. Each time you go to a different establishment to get approved they record a "hit" on your credit report. And that can be a negative on your credit. So one or two is okay, but no more than that.

You definitely want to hire a realtor, the sooner the better! Like today! Our realtor is an absolute dream and I love her dearly. Plus she's also our dog-sitter! Her name is Cathy Hahn and you can contact her at 214-264-4246 or 972-596-9100. She worked with us for almost three years to find the perfect house. She has a buttload of patience and is very knowledgeable. Just tell her that you know [names removed to protect the innocent] and that Delighla says hello. She'll know exactly who you're talking about. :o) She is just fantastic.

One thing I did think of when Mike and I were looking at houses. Cathy had asked us what we were looking for in a home. I told her, "No homes older than myself (24 at the time) and no homes where people had died in them". The look on her face was priceless. I was totally serious though. lol

JES: Hee. "No homes where people had died in them." How in the world would she know that??

We have two realtor friends in mind already, but if neither of them are able to take us on then I'll happily call Cathy. Thanks for the rec!

Also, question: what about those places like lowermybills.com, where you fill out the information once and it produces a ton of loans where lending companies "fight" over you? Is that bad for your credit?

MO:
I'm not sure how those companies work, but it makes me wonder if every single one of them hit your credit to get you approved. That would worry me some.

About your friends that are realtors. I was listening to Dave Ramsey yesterday and a caller had called in about realtors and selling their home. Dave was saying that hiring a "friend" to buy or sell a home is one of the biggest most costly mistakes a person can make. Because you're bringing an emotional aspect into a business aspect. Yes, your friend will look after you, but are you going to be able to say no to this friend and make sure they are being unbiased about a home? Will you be able to walk away from a house if that means that your friend won't get the commission? It's a sad fact, but I don't think I would be able to do that. Cathy became our friend after we finished the home buying process. We were strictly business partners while in the process and that made it easier to tell her that I didn't like certain homes and what I wasn't willing to do, like I refused to look at homes that she was the seller's agent on. Mike and I had that problem when we lived in Missouri and we totally got hosed. The agent was only thinking about the double commision she was getting and not about our best interests. Money makes people do crazy things, like mess over their friends. No matter who you hire, just make sure they can be totally on your side.

I had always heard that there was a law that stated a homeowner must disclose if a person had died in a home. That it was an actual law! But then heard later (after buying our house) that it's only a law in certain states and that it only needs to be disclosed if an actual crime occured and someone was murdered. Still though, houses that people have died in creep me out.

JES: Hm. That's a good point that I hadn't considered. I'll have to ask Roger about that.

Also, Dave Ramsey? I've heard of him but have never heard him. On what station (and when?) were you listening to him?

MO:
Dave Ramsey is AWESOME. And he'll school you on anything you need to know. [In Dallas:] He's on 570AM KLIF from I think 2PM to 4PM, and on XM Radio Channel 165 from 4:00 to 7:00. He's not only a genius when it comes to money but it's also a good Christian man. I've been listening to him for about 4 months or so now and he's really encouraged me to make some changes to my financial life so that I can live better later. Like he says, he'll teach you how to live like no one else so that later you can live like no one else.

Like I've said before, buying a house can be emotional but you're better off keeping your emotions out of it as much as possible. It's a house, it's an investment, and it's your money. So you've just got to be careful.

Most of what I'm hearing here is really good advice. Learn a lot and get centered...when the right property comes up, it takes all that knowledge and preparation to enable you to pull the trigger and make it yours. You'll still have ways to get out if something awful turns up, but make the process a huge learning course to that you don't miss out on a great place that touches your heart simply because you haven't earned the confidence to act. Your brain, and your agent, should be protecting you, but its your passions that will make your new home really joyful. You've got too many cool interests and options to settle for four walls. Good luck.