First time home buyer Vol. Help me!

[katiejade4]

So I'm looking to buying my first home within the next 8 months - 1 year. 
I need someone to break it down to me. What should I be expecting $$$ wise? What kind of taxes do I need to worry about (school, property, ect.) that I don't currently pay as a renter? I have no idea how any of this works and I want to at least know what I'm talking about when talking to a realtor. 

Please help!

Thanks!

 

[crcballer55]

If you don't know any of that, I suggest you wait until you do.  Owning a home isn't as simple as just the APR on your loan and the price you pay.  You need to take into consideration the age of the home, if there are HOA's, what you can and can't do to the property without permission, etc.  Owning a home is a pretty big responsibility and one that can easily cost you tens or hundreds of thousands in extra costs over the lifetime of the purchase if you are not well educated up front.

I suggest you pose this question on Trulia.com and ask the experts directly.

 

[richyung412]

Sell your body on the jersey shore work one of them corners and wave your terrible towel
- @SM_412

 

[slicknick951]

Originally Posted by crcballer55

If you don't know any of that, I suggest you wait until you do.  Owning a home isn't as simple as just the APR on your loan and the price you pay.  You need to take into consideration the age of the home, if there are HOA's, what you can and can't do to the property without permission, etc.  Owning a home is a pretty big responsibility and one that can easily cost you tens or hundreds of thousands in extra costs over the lifetime of the purchase if you are not well educated up front.

I suggest you pose this question on Trulia.com and ask the experts directly.

she said 8 months to a year i think that's why she is asking i am sure there are plenty of people on here that own a home so why not ask people who have first hand experience. 

 

[megatron]

Originally Posted by Slicknick951

Originally Posted by crcballer55

If you don't know any of that, I suggest you wait until you do.  Owning a home isn't as simple as just the APR on your loan and the price you pay.  You need to take into consideration the age of the home, if there are HOA's, what you can and can't do to the property without permission, etc.  Owning a home is a pretty big responsibility and one that can easily cost you tens or hundreds of thousands in extra costs over the lifetime of the purchase if you are not well educated up front.

I suggest you pose this question on Trulia.com and ask the experts directly.

he said 8 months to a year i think that's why he is asking i am sure there are plenty of people on here that own a home so why not ask people who have first hand experience. 

It's a female asking the question.

 

[slicknick951]

Originally Posted by megatron

Originally Posted by Slicknick951

Originally Posted by crcballer55

If you don't know any of that, I suggest you wait until you do.  Owning a home isn't as simple as just the APR on your loan and the price you pay.  You need to take into consideration the age of the home, if there are HOA's, what you can and can't do to the property without permission, etc.  Owning a home is a pretty big responsibility and one that can easily cost you tens or hundreds of thousands in extra costs over the lifetime of the purchase if you are not well educated up front.

I suggest you pose this question on Trulia.com and ask the experts directly.

she said 8 months to a year i think that's why she is asking i am sure there are plenty of people on here that own a home so why not ask people who have first hand experience. 

It's a female asking the question.

i stand corrected 

 

[dbailey86]

where are you located

 

[katiejade4]

^ Central New Jersey

 

[smokey13]

Originally Posted by KatieJade4

So I'm looking to buying my first home within the next 8 months - 1 year. 
I need someone to break it down to me. What should I be expecting $$$ wise? What kind of taxes do I need to worry about (school, property, ect.) that I don't currently pay as a renter? I have no idea how any of this works and I want to at least know what I'm talking about when talking to a realtor. 

Please help!

Thanks!

My mortgage is $320K and we pay $1800/month.  It's actually $1670 but we pay a little extra.  The only tax we have to pay is property tax and insurance.  We pay around $600 a month for insurance and property tax.  We put aside money every month for property tax so we don't have to worry about coming up a large sum at the end of the year.  We pay $100 for HOA.  That's a total of $2500/month.  We also put aside $500/month into a ER fund.  I think the rule of thumb is to have 6-8 months of your expenses.  We also budget $300 for utilities(cable, water, electricity/gas, and garbage). 

So, altogether we pay $3300 a month. 

As far as what crcballer said.  I wouldn't worried about that until you start looking at homes.  Those issues will be covered by your RE agent and inspections.  Don't be cheap about getting the home inspection.  I would even get 2 or 3 home inspections so nothing gets missed.  This will give you a good idea of what things will need to be replaced in the coming years or what needs to be fixed by the seller before the sale is complete. 

One more thing.  Start watching some HGTV. 

 

[jbnsoul]

My fiance and I currently in escrow, and the replies thus far haven't given you any information that I would've found useful when I was in your shoes.  Ideally, you want to put down at least 10% of the house value, so this could be anywhere between $30-$50K that you'll have to spend upfront.  This downpayment doesn't include "closing costs" which will add up to about $15K (sometimes these are waived based on incentives).  My estimates are based on southern California homes that are up to $500K.  So plan on dropping $55K at least right away for your downpayment and closing costs.
First, take your monthly income and subtract any debt obligations you have for the month such as a car payment, student loan, personal loan, average credit card payment.  These will all factor into how much of a mortgage payment you can afford per month.  This will also give a "back of the envelope" calculation and show you if you'll qualify for a good home loan.  Ideally, you want a 30-year fixed rate if you're conservative type.  Let's say you make $3,000/month and your average credit card balance is $200/month, you technically have $2,800 for a mortgage payment on paper.  Again, you should make adjustments on what you can really afford based on food, gas, electricity, savings and any other expenses.

Second, google "mortgage calculuator" and work backwards to how much of a home loan you can afford.  You can do this many different ways, but the easiest way is to just start with a total number say $450K as the amount you're borrowing, and $50K as the downpayment and 4% interest rate if you have excellent credit.  That will give you the monthly payment and then you can adjust the above numbers when you compare it to what you can afford in the first step above.

Finally, once you determine everything you find what you can afford, you get a real estate agent and let them know your situation, they should help you out with finding your house, a mortgage broker, any other questions along the way.

Hope that helps a little...

you should decide what kind of home you want (ie single family residence, townhoouse, condo).  Once you do that, start looking at homes for sale that meet your criteria

 

[jbnsoul]

Also, one more thing I forgot to mention, but alluded to in my 1st response.  The debt to income ratio is key to determining if you get approved for the loan.  If your monthly debt obligation (loan payments, cc payment, car payments) is anywhere below 45% of your monthly gross income (income before taxes), you're pretty much good as long as the mortgage payment puts you at about 55-60% at the highest of your monthly gross income.

 

[what up]

My property tax is divided in two installments, one is due Nov 1 and the other Feb 2.

There is a tax-rate breakdown which depends on the value the county assessor's office puts on your property. (You could have gotten a great deal on your house and paid X amount of dollars while the county thinks your house is worth Y. You can file to have your property reassess but you'll need to submit evidence of properties similar to yours that were sold/bought around the same time).

I'm being charged a county-wide tax, a tax for the unified school district and community colleges, rapid transit, regional parks.

There are also special assessments based on the city I live in. I'll list a few.

Mosquito Abatement
Paramedic/Paramedic Supplement
School District
Flood Benefit
Public Transportation
Park Safety
Other %!$%

Some of them are repeats from the previous list and I don't really have a clear explanation as to why I'm getting taxed twice. My state is broke, what can I say?

All in all, I was taxed 1.1281% of the value the county thinks my condo is worth. The total is split in half based on the two installments.

Hope that helps. If you have any more question, I'll try my best to answer them. I'm new to this myself, still trying to figure a lot of this stuff out.

 

[katiejade4]

You guys are a huge help! And I'm learning little by little. I think I'm going to figure out how much I can spend on a mortgage and all that stuff and then just go and talk to a realtor about my budget and the taxes in the area that I'm interested in.

I found a house that I really, really like and it's super cheap for some reason so I have an appointment to go look at it tomorrow just to take a look and talk to the realtor, so wish me luck!

 

[tmay407]

You'll need to talk to a lender to get a better idea of the upfront costs (down payment, closing costs, etc.) as those can vary on a case-by-case basis. It'll also be important for you to get pre-approved by a lender (as opposed to using one of those online calculators for a pre-qualification) as you begin to select a Realtor and start looking at houses.

Down Payment: It's possible for first-time buyers to get a zero-down loan, but I'd have a down payment set aside in the amount of 3.5%-5% of the purchase price just to be safe. Having enough money set aside for a down payment can also sometimes help you secure a better rate on your mortgage.

Closing Costs: Your lender will give you a good faith estimate of what your closing costs will be when you submit your offer. These costs include things like title insurance, loan origination, discount points, tax escrows, etc. This is something that can be negotiated with the seller as far as who pays these costs. It's becoming a lot more common for buyers to roll the closing costs into the loan by offering a slightly higher amount for the house in return for the seller paying the closing costs. If you're looking at foreclosures, you can also often negotiate with the bank to get some or all of these costs covered. Some lenders may even allow you to finance the closing costs. I'd say to have around 4%-5% of the purchase price set aside for these costs.

Taxes: You should be able to go to your county's appraisal district website and find out what taxes you'll be responsible for. I'm not really sure about NJ tax rates compared to TX tax rates (though I'd imagine NJ rates are higher), but I'd say to plan on anywhere from 2%-4% of the property's appraised value as an annual tax amount.

If you can, try to get a loan where your payment will cover principle, interest, taxes, and insurance. This will make it easier to budget your expenses on taxes and insurance as they'll be a part of your monthly payment (as opposed to Smokey13's case, where he saves money throughout the year for his payment).

I work as a Realtor in the DFW area, so I should have some resources available that I can send to you if you're interested.

 

[timcity2000]

getting pre-approval for a loan is a good first step... with that in hand, you'll have a good idea of what you can afford.

 

[monopolyman630]

So me and my fiance are looking for a townhome this year in Cali. How much do you guys put aside for food, entertainment, leisure activities, gas, etc. a month?

 

[tmay407]

It's really just a matter of what works for you, MonopolyMan. I personally like something along the lines of the 50/30/20 budget model (50% of after-tax income for "needs," 30% for "wants," 20% for savings and debt), though this model obviously isn't reasonable for everyone. You can get a lot of great budgeting ideas from doing a Google search for things like "personal budget breakdown." Also, look into using resources like mint.com to help keep track of your budget.

 

[crcballer55]

Originally Posted by Slicknick951

Originally Posted by crcballer55

If you don't know any of that, I suggest you wait until you do.  Owning a home isn't as simple as just the APR on your loan and the price you pay.  You need to take into consideration the age of the home, if there are HOA's, what you can and can't do to the property without permission, etc.  Owning a home is a pretty big responsibility and one that can easily cost you tens or hundreds of thousands in extra costs over the lifetime of the purchase if you are not well educated up front.

I suggest you pose this question on Trulia.com and ask the experts directly.

she said 8 months to a year i think that's why she is asking i am sure there are plenty of people on here that own a home so why not ask people who have first hand experience. 

I'm not intending to discourage her completely.  I own a home myself and made many mistakes along the way because we moved too quickly.  I don't think prices will fluctuate too much in the next year or two and neither will interest rates so there's no need to rush.  As long as you're patient and willing to look at a lot of homes and get a steal you'll be in good shape.  Some of the best deals can be had on foreclosures and short sales and you'll make the most money on the purchase.

I used to work in evictions for a large bank, so I have seen many horror stories of people who have gone into their purchase thinking they were being taken care of with good terms only to find out to the contrary later on.  That is my main cause of concern with young people purchasing real estate.  Many lenders are only out to make a quick buck on the person rather than doing what is in their best interest.  In many cases they will push them into an ARM with the teaser rates.  DO NOT get an ARM.  Especially now with rates at historical lows.  The chances of them going lower after the ARM adjusts in 5 years is almost nonexistent.

My best piece of advice is to get a realtor who will be sure to educate you through the process.  If you don't understand something, be sure to ask.  Try to interview at least 2-3 realtors to make sure that they are a good fit and ask how many homes they have sold in the past year.  A good one should be selling at least one per month.  Ideally, it will be at least 1.5-2/mo.

Make sure you also put down at least 20% to avoid PMI (private mortgage insurance).  It's basically insurance you pay the lender in case YOU foreclose on the property.

 

[smokey13]

Originally Posted by tmay407


If you can, try to get a loan where your payment will cover principle, interest, taxes, and insurance. This will make it easier to budget your expenses on taxes and insurance as they'll be a part of your monthly payment (as opposed to Smokey13's case, where he saves money throughout the year for his payment).

I work as a Realtor in the DFW area, so I should have some resources available that I can send to you if you're interested.

Not sure if you're talking getting a loan that will take care of all those things for a year or for the entire 30 years(I'm guessing 30 years) but it doesn't make sense to me to do that for 2 reasons.  Of course you're the expert as you're a realtor.


1.  If she gets a loan that covers tax and insurance for the life of the loan,  she'll have to pay interest on that amount over 30 years. 
2.  If you can't handle budgeting something simple like taxes and insurance maybe you're not ready to own a house.

 

[crcballer55]

Originally Posted by Smokey13

Originally Posted by tmay407


If you can, try to get a loan where your payment will cover principle, interest, taxes, and insurance. This will make it easier to budget your expenses on taxes and insurance as they'll be a part of your monthly payment (as opposed to Smokey13's case, where he saves money throughout the year for his payment).

I work as a Realtor in the DFW area, so I should have some resources available that I can send to you if you're interested.

Not sure if you're talking getting a loan that will take care of all those things for a year or for the entire 30 years(I'm guessing 30 years) but it doesn't make sense to me to do that for 2 reasons.  Of course you're the expert as you're a realtor.


1.  If she gets a loan that covers tax and insurance for the life of the loan,  she'll have to pay interest on that amount over 30 years. 
2.  If you can't handle budgeting something simple like taxes and insurance maybe you're not ready to own a house.

It sounds like it's saying that impounds should be included with the payment rather than having to set them aside and then having it come up semi-annually.  That's what most lenders will require if you take out an FHA loan.

 

[reduce523]

Once you get through the financials. Pleas make sure you truly investigate the neighborhood go on a weekend on a weekday at night during the day.

 

[smokey13]

Originally Posted by crcballer55

Originally Posted by Smokey13

Originally Posted by tmay407


If you can, try to get a loan where your payment will cover principle, interest, taxes, and insurance. This will make it easier to budget your expenses on taxes and insurance as they'll be a part of your monthly payment (as opposed to Smokey13's case, where he saves money throughout the year for his payment).

I work as a Realtor in the DFW area, so I should have some resources available that I can send to you if you're interested.

Not sure if you're talking getting a loan that will take care of all those things for a year or for the entire 30 years(I'm guessing 30 years) but it doesn't make sense to me to do that for 2 reasons.  Of course you're the expert as you're a realtor.


1.  If she gets a loan that covers tax and insurance for the life of the loan,  she'll have to pay interest on that amount over 30 years. 
2.  If you can't handle budgeting something simple like taxes and insurance maybe you're not ready to own a house.

It sounds like it's saying that impounds should be included with the payment rather than having to set them aside and then having it come up semi-annually.  That's what most lenders will require if you take out an FHA loan.

Got it.  That makes sense.