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Any suggestions for first time home buyers?

My husband and I are serious about buying our first home in 2008. We have had some credit problems in the past (when we were in our late teens-early 20's) but we have fixed all but 2 of them; together these 2 debts total approx $15k but we are paying them down gradually. Unfortunately, we don't have too much money for a down payment but we're still saving. We'd like to get pre-approved before we do any "hard-core house shopping". Ideally, we'd like a "fixer-upper" but nothing too major.

Where's the best place to start looking for pre-approvals?

Are there things that we should look for when applying for a pre-approval? Things to avoid?

Any general suggestions/warnings/ideas/experiences, etc. that you can offer?

Thanks!

Update:

Thanks everyone! All great answers and a lot of info I had no idea about! Hopefully we can find the best deal for us!!

Unfortunately Sadeeq, I know for sure that it is impossible in my area to rent a home/apt/condo, etc for 1/3 of the price of a mortgage... average monthly rental in my area is between $1000-1400mo, depending on amenities.

5 Answers

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  • 1 decade ago
    Favorite Answer

    I have lots of suggestions...I have purchased 3 homes so far and every time I learn something new. It seems you are on the right track trying to pay off old debts, that looks good on paper when you get ready to get pre-approved. If you or your husband were part in the military or children of military personell, USAA is great for mortgages, banking, car/home insurance, investments, etc.

    If not try to go through banks that belong to Lending Tree, where several banks compete to do business with YOU. They are going to try to offer you the best type of loan. Whatever you do, PLEASE get a fixed rate loan. Most of the people that have lost their homes in the last 3 yrs were on an adjustable rate loan. Read on the difference...so you are informed when you begin dealing with banks. The better informed the better equipped you are. Do not be affraid of 30 yr mortgages. It doesn't mean that you will be in the home for 30 yrs, but interest rates tend to be lower, thus making monthly payments easier, especially if you are getting a fixer upper.

    When it comes to buying the house, have an inspector do a threrral inspection. Interview these inspectors to make sure that they have extensive experience and training. The cheapest inspection will cost you MOST later. When the inspector goes through the house you and your husband should go with him while he conducts his inspection. He should be able to provide you with a written report within two weeks after inspection. Also check with the Better Bus Bureau to make sure this inspector or company does not have any complaints. So far I have had two great inspectors in my last two purchases, they came from a friend who had recently purchased her home and was very satisfied with the work done. Pilar to Post is a great company, check if they have it in your state.

    Although a house might be for sale and there is an asking price, it doesn't mean that you have to pay that price. NEGOTIATE!!! Especially after the inspection, based on what the inspector finds, you are able to negotiate the price down for repairs or ask for repairs. Find our from your realtor how long has the house been on sale. The longer the house sits the more ammunition you can use to drive the price down toward your advantage.

    Because the slump in the housing market, this is the BEST time to purchase a home, it is a buyers market!!! Educate yourselves on home buying, there are lots of information out there. Talk to each other and agree on what you want and don't want. Buying a home is stressful, so is moving, but if you and your husband communicate, you will make the right choices. Also check on first time home buyers programs in your state/city. There are great programs in different states.

    Make sure that whatever home you decide that you move in to at least a 50% larger space what you currently have. You do not want to run out of space within a few months after moving. Ask owners for the disclosure, this is a document that states lead paint, termite infestation, etc. Also ask if the house have had a fire in recent years, when was the fire place was cleaned last, choose a home with cuircut breaker system, that the HVAC and water heater are less than 7 yrs old. The HVAC could be as old as 10, but the water heater should not, because they last about 10 yrs on average. The water heater should be 40 gal or more. Also make sure that there are no cracks on the foundation as this is a very costly expense to repair and after all you are going to sell your home eventually, but you want to make a profit.

    Sorry, lots of info!!! Please read, take time to be informed and educated, that is most important that having a good credit report or anything else. A home is the most expensisve purchase you will make in your life, therefore make it a smart one.

    Should you want to further reach me, please e-mail me at zari_sanchez@yahoo.com.

    Good luck, BEST wishes.

  • Anonymous
    1 decade ago

    There are 2 things to consider and not give up when purchasing a home. You can fool yourself into thinking these don't matter, but they will come back and BITE you.

    1. Being able to afford the house. I highly recommend NOT spending more then 25% of your GROSS income (before taxes on the total mortgage payment). And use a 30 year fixed rate program.

    2. Buying a house in a bad area. The quality of schools is very important. Many parents will live in a smaller house and commute and even spend more money for a house in a GREAT school district.

    You may feel that you will only live in the house for a set number of years and then move up, etc. I promise you, life has a way to surprise you and change your plans.

    I recommend buying a house you can afford TODAY. Not what you may be earning in a year, etc. Plus if you are a young couple and you have a child, do you want to be FORCED back to work, just for the house. Been there and the answer is NO. It's not fair to you, the wife or the KID.

    Set up a savings plan of at least 10% and SAVE, SAVE, SAVE. Don't be house poor. I also promise that the house you love today, will be just a house in a few years. But if you save, you will have a lot of money in the bank. And peace of mind. There is nothing better then being able to pay all your bills each month in full AND HAVE MONEY left over.

  • 1 decade ago

    First, get your credit scores above 680 in order to get any type of favorable loan rate. Second, don’t rush into buying a house in 2008 instead like I said above get your scores up and pay down any and all debts you have. Also this should go without saying, but just incase “DO NOT TAKE ON ANY OTHER DEBT”. Home prices are going to continue to go down in 2008 and you can still rent for about 1/3 of what a mortgage, taxes and insurance for a similar home would cost you. With what you save from renting pay off your debt and raise your score and save the rest. In the next couple of years prices will be more realistic unless everyone gets paid double of what there income is now (is that realistic?).

  • 1 decade ago

    Congrats. I just purchased a condo three weeks ago so i just went through the whole process (it's a rollercoaster ride). You should definitely speak with a mortgage banker/broker before you start so you can get an idea about how much you can afford/what they will lend you. I used Countrywide and it worked out in my favor. They are very conservative with their appraised values (they are under alot of scrutiny) which helped me negotiate a lower price on my condo. Read the fine print on all documemts and remember the rate anyone quotes you is not real until they check your credit and give you good faith estimate then you will receive a committment letter and then the mortgage @ closing. Make sure the rate is the same on all these documents. If not walk away or tell them to fix it!

    Source(s): Experience - Real Estate Appraiser and 1st time homebuyer
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  • Anonymous
    1 decade ago

    Hello, How much do you have to spend on a home. I sell many homes going into foeclosure. These people need to get out of there house. What area are you looking to move to. We mainly work in the NYC / New Jersey area.

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