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Gen. Chat “Hey Responsible Adult types.” by Gnarly Sheen

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Gnarly Sheen 3 years ago on 03/13/11
Equipped: Menchi Loaf named "Tastes like Bri, and I don't mean the cheese"
I am in the market for a house. I have one picked out, but I have questions about mortgages, and I would like them explained in simple person terms. So, if you have some tips for a first time home buyer, then please give them.
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HeavyArmsDan 3 years ago on 03/13/11
Equipped: Pimp Hat named "Shady Hat (Charisma +1)"
How much of a percentage do you plan to put down? The more you put, the smaller your loan will be and help keep your mortgage at a manageable level.

The best advice I could give is to ALWAYS go with a fixed mortgage. You don't want to be surprised when you have, for example, a 5% interest rate jumping to 9% over the course of a 30yr. mortgage.
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Rexall 3 years ago on 03/13/11
Equipped: Totoro Plushie named "when i think of you...ooooh..."
I thought only with an ARM (Adjustable rate mortgage) would it jump from 5% to 9%. Otherwise, most people are tied to your standard 30 year 6-7% fixed mortgage. Or whatever the mortgage rate is nowadays.


Ideally, you should see a mortgage broker, or a mortgage banker, or a commercial banker and see if you even pre-qualify for a loan. This will let you know what type of mortgage you can go after.
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HeavyArmsDan 3 years ago on 03/13/11
Equipped: Pimp Hat named "Shady Hat (Charisma +1)"
Rexall said:
I thought only with an ARM (Adjustable rate mortgage) would it jump from 5% to 9%.


Doh, yeah left out the ARM part. But yes, talk to lots of mortgage lenders to see what kind of percentage rates they offer, don't be afraid to shop around. Keep in mind, you can go lower than what they initially offer you by buying down a point.

Basically, if they quote you 6% for a normal 30yr fixed loan, you could pay a small fee upfront to lower that rate by 1 percentage point. The price of buying down a point varies from lender to lender. Usually you won't see the savings until at least over a year or two, again, depending on the size of your loan.
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wumpscut242 3 years ago on 03/13/11
Equipped: JEDI DICK named "Obi-wan never told you, that just makes me harder"
Hah ARM. It's gonna cost and ARM and a LEG! Stupid joke.

Obvious Exits are: North, South, and Dennis
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Andrew 3 years ago on 03/13/11
Equipped: Eeeehhhhhh!!! named "Percussive maintenance"
I sell mortgages for a living. I'd be happy to try to answer any questions you have!

Moderator Tim Says:

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Kumba 3 years ago on 03/13/11
Equipped: Portable Campfire named "Flame Imperishable"
I still never understood the math behind my mortgage, and my banker even gave me a detailed breakdown of the math behind it. But I can tell you to get the house inspected very thoroughly. If it has termite damage, mold, or foundation damage, walk away. There should be a clause in your contract that allows you to walk if the inspection finds anything major like that.

I wound up with foundation damage, because the small crack the inspector found happened to be small during the summertime. It wasn't until winter came that it stretched itself out a bit, and highlighted additional design issues, such as improper water drainage. So now I'm looking at having a french drain installed later this year, and then harassing the first foundation company to fix the crack a second time, because it stretched itself out again this past winter.
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Nurse Chapel 3 years ago on 03/13/11
Equipped: Kiss from Dr. Girlfriend
Kumba said:
get the house inspected very thoroughly.


this! a good home inspection is INCREDIBLY important. if you really think you've found the house you want (especially if it's an older house) don't be afraid to get it inspected twice. it's costly, but better than finding out that something important was overlooked, which is not just expensive, it can be dangerous!

the house my parents own was sold to them in unbelievably poor condition because the home inspector knew the person trying to sell the home and lied about the condition of the property on his report. the plumbing was not up to code by any stretch of the imagination, and had been left to slowly leak into the walls and rot the supporting beams. the second floor of the house had been dangerously close to collapsing on us, and we had no clue until my mother decided to tear out a carpet and found moldy floorboards underneath!
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Grave 3 years ago on 03/14/11
Equipped: Bad Mother F*cker Wallet named "I ain't even gotta say it."
Just bought my first home last May so I can share a bit:

1 - Become good friends with your mortgage broker. The good ones will be able to sit you down and walk you through the entire process step by step. They should also be able to recommend real estate agents, real estate attorney's, the best bank for your loan and inspectors.

2 - Get pre-approved for a mortgage before you start looking at houses. It will show you how much you can actually spend on a house, when you finally find a house you like it is a good way to speed up the buying process and you can use it as leverage sometimes to negotiate the price down. Also dont underestimate the importance of a good credit score. Know yours and work to drive that sucker up. I went from 760 - 810 throughout my searching and went from a 6.5% fixed loan to 5%.

3 - Dont by back points. You are better off putting that money towards the downpayment.

4 - Dont get tied down to one real estate agent. With the web and sites like MLS you will have almost the same amount of access to houses and information as they will. Be proactive and dont be afraid to speak your mind. You are spending a lot of money here and you want someone who will work with you not just someone looking for a sale. I went through 3 different agents over 10 months.

5 - Sit down and be honest about your budget, your goals and what you are willing to sacrifice to own a home. Also expect to spend a large percentage of your income on maintenance and unexpected issues.

6 - Get your home inspected twice by two different inspectors.This may seem overkill but I have found that some inspectors are only good at modern homes while some are good at older homes and the other 75% are worthless. Unless you are handy and know how a house should work, the more opinions the better. Dont be afraid to bring in who you need to make you feel better about your decision. I bought an 1880's colonial and brought in a structural engineer specializing in antique houses to make sure everything was up to par. The extra $400 was worth it.

7 - Dont finance your closing costs.

8 - Pay as much down as you can but make sure you have enough to help furnish and start an emergency house fund.

9 - Make a list of your dream house features. Now throw away everything except what is mandatory. Look for that house.

10 - Watch as much DIY, HGTV, This Old House, Holmes on Holmes, Read books on home improvement, etc.. Just try to be as educated as you can about owning a home, what can go wrong and how you could fix it.

11 - Be patient. If you cant find something you want, just wait. Dont settle. I looked at 110 houses over 10 months until I found the one right for me.

12 - Dont get into bidding wars. Set your price and walk away if it gets too high.

Those are some of the main points. Good Luck!

Moderator Slade xTekno Says:

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Kumba 3 years ago on 03/14/11
Equipped: Portable Campfire named "Flame Imperishable"
Also, as a first-time homebuyer, you can look into the terms of an FHA-backed loan. In that case, you only have to pay 3.5% of the price as downpayment. But you get an annual mortgage premium tacked on top (paid out of escrow, along with hazard insurance).
http://www.hud.gov/offices/hsg/sfh/ins/sfh203b.cfm

Also check to see if you're in a flood-prone area and whether you'll be required to purchase flood insurance:
http://www.msc.fema.gov/
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Bunnyko 3 years ago on 03/14/11
Equipped: Rope Of Infinite Bondage named "Yes, master."
i cant say much about mortgages (as i'm sure it was all explained to me in the beginning, but once i understood, or gave up trying to understand i forgot all about it), but as far as buying a house i would like to second the getting a second inspector. we only got one, and he missed some stuff that now we have to deal with.

also dont back down. our house had been unoccupied for a year when we were looking at it, and i said i wanted everything turned on to make sure it worked. they complained about it, but did it anyway and found that the air conditioning compressor was busted. they replaced it. that could've been costly and something we would have had to replace immediately, but since i insisted it was fixed before.

i had a good real estate agent. Since my bf and i were both working full time jobs at different hours, it was hard for us to schedule a day to go out and look at houses. after the first round out with us she offered to go look at some without us since she got the feel for what we wanted. that helped weed out the ones that needed immediate DIY help. (given her down side was that she had no sense of direction, and frequently got lost. bring a gps.) So, having multiple ones isnt necessary, but we got ours from a friends recommendation.

remain open. one of my must have requirements was a fireplace. the house we have doesn't have one. but we got a firepit for the back yard instead. we knew this was the house for us because we couldn't stop talking about it when we got home from seeing it.

overall the entire process was really, really stressful for me and i dont look forward to selling the house/re-buying a new one in a few years.
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RogueSamus 3 years ago on 03/14/11
Equipped: Most Amazing Thing Ever!!!! named "Henry Rollins"
Having bought and sold a house, here's what I can add:

- Echoing Grave. DON'T SETTLE! Get what you want.

- Look at the neighbors. We didn't look closely enough and we had the trashiest trash looking in our windows for 8 years. We ended up spending almost a grand on a 10' tall "fuck-you fence" to sell the house!

- Keep an eye on real estate tax activity in your township/whatever. Ours doubled over the 8 years we owned our house and that was a serious dent in the budget, ouch. No one told us to watch for that kinda thing!

- Inspect the shit out of everything a million times, its worth the cost!!! TERMITES SUCK
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Killian 3 years ago on 03/14/11
Equipped: Spike Spiegel's Gun (Jericho 94) named "Big Bang"
I'm loving this thread because I watch the shit out of HGTV and cannot WAIT to stop throwing money away every month and buy a house.
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domminess 3 years ago on 03/14/11
Equipped: Box of Crayons named "I FREAKING LOVE COLORING"
I'll be buying my first house sometime this fall, so this thread is a fantastic resource! Keep the advice coming guys!
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FluffyGreenMan 3 years ago on 03/16/11
Equipped: Rope Of Infinite Bondage
My second TA job was teaching the business-track college algebra courses. All about the amortization tables.

Longer mortgage term means more and more of your payments go towards interest instead of principle. It also means that the payment necessary to knock down the loan is more sensitive to changes in interest rates if you have an adjustable rate. Taking out a 30 year adjustable rate mortgage always seemed to me like painting a giant "FUCK ME" sign on your back. For 30 year mortgages in general, the vast majority of the cost over the life of the loan is interest. The payments on a similar 15-20 year mortgage are probably not going to be that terribly much higher than on a 30 year mortgage.

If you're worried about the event that interest rates drop - they're actually pretty low right now - or your credit improves, you can usually refinance your fixed-rate mortgage to a lower rate.

Also, this should seem like a no-brainer, but make sure you can get ahead of the game by getting ahead of payments, should your income increase. Make absolutely sure that the bank is doing their end of the accounting right and that you're actually paying off the principal early, not just sending them early interest payments.

Accordingly, avoid penalties for prepayment like the plague. However pessimistic you're feeling now, it may well be that your income will increase in the future relative to the loan payment value. Remember, paying off loans is a lot like investing - and the interest on negative balances is usually higher than the interest on positive balances.

The only advice I could add that hasn't been mentioned is not firsthand, but one my parents emphasized heavily: If the house smells, don't buy. You can assume that the smell is not something that can be gotten rid of. They also told me to never, ever buy in a floodplain, although Kumba has already mentioned something about flood insurance.
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Peabody 3 years ago on 03/17/11
Equipped: Embarassing Yaoi Fanfiction by Peabody
Protip:

GO SEE YOUR VA COUNSELOR. You are qualified for a VA guaranteed loan, no closing costs, an engineering inspection, etc through the VA program. USE IT.
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domminess 3 years ago on 07/18/11
Equipped: Box of Crayons named "I FREAKING LOVE COLORING"
I'm bumping this because in like three months I'm going to be purchasing my first home here in Raleigh! I am super excited about it, but I'm also kind of throwing up in my mouth at the idea. There are a lot of pros and cons, and while the pros heavily outweigh the cons for me at this point in my life, it is still a big investment and commitment!

So can those of you who have purchased homes tell me a bit more about the looking process? Like how long did you look, how early did you start, how you "auditioned" your realtors, and that kind of stuff? My parents are going to come up and help me with it, but it's ultimately my call, and having only bought and sold cars I feel a bit out of my element and overwhelmed!
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cleversmartass 3 years ago on 07/18/11
Equipped: Kick In The Nads named "PWNing nads, one nad at a time"
I strongly recommend looking at your neighborhood and how your neighbor's maintain their home. I also like to do a car test by checking out the neighbors' cars to judge the financial success/lack there of for the area. If I see a bunch of crappy cars, I'm not interested.

My bf and I looked at tons and tons of homes before finally closing on the one we ended up with. Before you put an offer down for a home make sure to check out what the other houses in the area are selling for. I think we forgot that part because we had a really horrible experience with one house and we just wanted to be through with looking.

You really need endurance when shopping for homes.
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liquid nia 3 years ago on 07/18/11
Equipped: Handcuffs named "Shackles and Champagne!"
My piece of advice...bring measuring tape. When I was looking at homes, I always was thinking about what I already owned and if it would FIT. I kept a list of the dimensions of my big items (tv, bed, couch, dining room table, etc.) and then measured when I got there to get an idea. It definitely helps to get a mental picture of the place with YOUR belongings in it.

Also, look into the taxes for the town. Did they recently pass a levy? Will taxes be going up next year? How many schools are in your town? Do you work in the same town you live in? What kind of major businesses are located in your town? We had a levy pass the year before and our taxes had gone up ~$800.

Finally- insurance. Look into insurance estimates. You will need to factor that cost in, because good house insurance is a MUST. My neighbor had his electrical go out, water lines blew and his sump-pump stopped working when he was away on business for like...two months. He had 2 ft of standing water and his insurance covered everything. I, myself, found that moving to a residential area lowered my car insurance significantly.
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dingo17 3 years ago on 07/18/11
Equipped: Devo Hat named "Drill boar hat. +18 stamina/damage"
Grave's advice is absolutely on the spot, same with clever's and liquid's. Above all, do your due diligence in your process because that will more often than not prevent you from being ripped off.

That said, also have contingency plans in place should things go sour, all of which begin with rock-solid recordkeeping of phone calls, emails, meetings and written correspondence.

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