First Time Buying A Home - Any Tips? (1 Viewer)

[Anthony Martino]

Just got pre-approved for the USDA Rural Housing loan program, this is our first time buying. Anyone else use the USDA Rural Housing loan or any home-buying tips in general for a first-timer?

We're looking in Pasco County FL, most likely Odessa or Land o' Lakes

 

[12thMan]

We used it to buy our house during the recession, best move we have ever made in our life imo. We feel incredibly fortunate that during the worst recession of our times and the second worst ever my wife (who was my girlfriend at the time) and I were able to buy a house and start a small business (also got that 8k credit for buying a house during that time, so lucky). I may be biased because of how well it worked out for us, but that USDA loan is great, no PMI is an insane perk by itself.

The only thing I can offer is to double any time frame they give you in your head and be prepared for delays. It very well may be different for you, but when we were going through he process the normal bs and delays of getting a mortgage seemed double working with the USDA. We put in our notice on our rental when we were supposed to close , lucky we had a landlord that let us go month to month for two months.

 

[DJ Mack]

My father in law was a real estate agent for 20 years before changing jobs, though he will still do buys and sells for family and friends on the side. His two pieces of advice that served us well each time we went through the process:

1. In real estate everything is negotiable. No really, everything. I once got a lawn tractor and a gun safe for $350 total just because the seller didn't want to pay to ship them cross country.

2. Never be afraid to walk away. Real estate, particularly for sellers is an emotional affair for many people. If someone is asking $20,000 more than you are willing to offer because the house has sentimental value to them don't be quick to throw money at it out of fear that you'll never find the "perfect" house again.

On that second point that's where having an agent representing you can be a huge advantage. When one party is being silly it's a lot better for the agents to work that out than for the buyer to approach the seller directly. When a seller is emotionally invested you can wind up with a situation where the buyer wants to buy the house, the buyer's agent wants the buyer to buy the house. The seller's agent wants the house to be sold but the seller is getting cold feet.

Although the seller's agent is duty bound to represent the best interests of their client they can in a way advocate for the buyer by trying to convince their client (the seller) to take a fair deal because they're not emotionally invested in the outcome. Yes it might be worth $20k more to them because their grandma was born in that living room but that's not the reality of the market. However, it's far better for the seller's agent to have that talk than for the buyer to do it which would likely be perceived as insulting.

Having said all that, go back to point two. If a deal can't be made then walk away. You will find a place to live.

Lastly, get a quality home inspection but don't expect it to reveal every single thing that could go wrong. They don't call it Ho-MOAN-ership for nothing.

 

[johnnycnote]

Total expenses will be greater than you thought they might be. Expect that:

• Stuff breaks
• Taxes go up
• Insurance goes up
• Maintenance costs never go away
• And that eventually you'll need to add a room for your chips

Good luck!

 

[Trihonda]

Wow, DJ hit on all the points that I was going to make. My wife is a real estate broker, and we have flipped houses in the past.

I really like DJs point number two, and he explained it thoroughly. However, about home inspections, Don't underestimate their value, as it will reveal things that you had no idea about.

A good home inspection not only gives you information on what is wrong, but also provides education on your normal Home upkeep and maintenance. For a first time home owner, this is worth it's weight in gold. Where are the air filters? Where do you add softener salt? Where is your fuse box, and how do you reset them? Is there any termite damage? How do I prevent damage from pests? am I like did you get eaten by an alligator?

 

[gopherblue]

Do not skimp on insurance.

 

[Ben]

Don't get ripped off on title/closing services - most people don't know jack about it, go wherever they're "recommended" and pay whatever they're told to pay. Ugh.

The rate for your actual title insurance policy premium is fixed for all insurers and is based on the sale price and county where the property is located - find out what it is for your county and make sure they don't "inflate" it (this is illegal, so not LIKELY to see, but still good to know in advance what you'll pay.)

$400 is a fair closing fee for a populated county, maybe $500 for a sparse outer county - that would include "document prep," "courier fees," "title search fee," and any other miscellaneous fees, if listed separately from the general closing fee. It does not include mortgage and transfer tax and recording fees, which are also fixed based on the amounts. I've seen people get charged $1500 for this. Don't just take the realtor's or sellers' recommendations - call around and check prices. FL is a state where title is basically an automated process and the quality of the work you receive won't vary much from one company to the next. MAKE SURE that you receive and have a chance to review your settlement statement BEFORE going to closing, so there aren't any surprises (it's now required by law to be provided 3 days in advance of closing, but in practice many will still try to skate on this doing everything at the last possible minute, although it has gotten better...)

Edit: the above paragraph applies specifically to the state of FL, with which I have some degree of familiarity. Fair closing fees (and quality of services) can vary widely in other areas of the country, for a number of reasons.

 

[Anthony Martino]

Thanks for all the great advice!

 

[SixSpeedFury]

Good thing this thread was made, following with interest since the wife and I are looking into purchasing a house.

 

[Lars]

Wow, DJ hit on all the points that I was going to make. My wife is a real estate broker, and we have flipped houses in the past.

I really like DJs point number two, and he explained it thoroughly. However, about home inspections, Don't underestimate their value, as it will reveal things that you had no idea about.

A good home inspection not only gives you information on what is wrong, but also provides education on your normal Home upkeep and maintenance. For a first time home owner, this is worth it's weight in gold. Where are the air filters? Where do you add softener salt? Where is your fuse box, and how do you reset them? Is there any termite damage? How do I prevent damage from pests? am I like did you get eaten by an alligator?

I was going to say this as well. I am a master electrician and have been very impressed at what some home inspectors are able to identify as problems. Some of them are extremely thorough. I have also been hired to inspect the electrical systems on homes. When I bought the house I am in I had a building contractor look over the house and give me his opinion on the structure and to guide me on cost of any necessary repairs. It may cost a bit more but you could also hire a plumber, electrician, hvac contractor, and general building contractors to take a look once you have decided on a home and feel that it is worth the investment. This could save you money or help you negotiate price.

A strange story about home inspections. My neighbor at my previous house (now rental house) listed his home and found a buyer online who committed to purchase the home. The buyer decided to have a home inspection done. The inspector made an appointment and when he showed up at the house one of the family children let him in. As he was taking pictures of the home he entered one of the bedrooms and found two people passed out. He took pictures of the room and spoke to the people but they were completely out. He told the buyers that they should consider having the house swab tested for chemicals. The results came back showing meth and heroine residues. They of course backed out of the deal.

 

[Rhodeman77]

I have bought and sold several homes, some by owner and some with an agent. Our current home we purchased with the aid of an agent and am very happy we did.

Finding the right agent isn't easy though. Most will try to up sell you so they make more commission or try to get you to buy the first house you show any interest in. But a good agent will really work with you to find the right house at your price point. Like DJ Mack said the most important job they serve is negotiating with the listing agent to help the seller realize your offer should be accepted and why. Our agent was very good at knowing what issues the house had and approximate cost to repair/replace which was very valuable in the negotiations.

 

[Anthony Martino]

We used it to buy our house during the recession, best move we have ever made in our life imo. We feel incredibly fortunate that during the worst recession of our times and the second worst ever my wife (who was my girlfriend at the time) and I were able to buy a house and start a small business (also got that 8k credit for buying a house during that time, so lucky). I may be biased because of how well it worked out for us, but that USDA loan is great, no PMI is an insane perk by itself.

The only thing I can offer is to double any time frame they give you in your head and be prepared for delays. It very well may be different for you, but when we were going through he process the normal bs and delays of getting a mortgage seemed double working with the USDA. We put in our notice on our rental when we were supposed to close , lucky we had a landlord that let us go month to month for two months.

Did you have any issues with locating a home that met the criteria required by the USDA for the home to qualify? Any potential hiccups I should be prepared for?

 

[Señor Tony]

Here is some basic but invaluable (it was for me and my partner anyway) advice that I received before buying my first house from relatives and friends. Note: some may not translate for USA property market or the USDA loan scheme.

Mortgage stress is real and I have seen it destroy more marriages than I care to count. The stress and worry about making payments when something bad happens is absolutely NOT worth the extra square footage, pool, double garage, extra bedroom, luxury appliances etc that pushed you to spend more on your home that you could really afford.

1. You should view your primary residence as an asset, not an investment

2. If you are buying with a partner, have each of you go into separate rooms and make a list of needs and wants in your new home without discussing with each other first. Come together and compare lists to see where you are at.

3. Receiving a loan approval for $XXX,XXX does NOT automatically signal that you can actually afford to buy a house for said amount

4. Overall land and house size is far less important than the quality of the available living space

5. Utilities, insurance, upkeep, taxes, rates all increase greatly with house and/or land size. Remember, your primary residence is an asset not an investment so don't go buying extra house and land that you won't use as your will have to pay for the maintenance and you aren't buying for the potential capital gains of this extra space.

6. If you haven't already, make a detailed budget for your household. Use excel if you are good at it or use a program/website like MINT or YNAB. This would be my number one tip.

7. Interest rates can and will go up.

Good luck and keep us posted!

 

[Anthony Martino]

Thanks Tony. My wife and I have no children or plans for them, just a couple of cats, so we don't intend to purchase more home than we need (2 bed / 2 bath is ideal, although for future resale 3 bed is better)

While we received an approval for an amount I'm looking to spend as little as possible, no worries there. Our interest rate will be fixed with this loan fortunately.

 

[BiGGyT]

Be prepared for everything breaking and have $4000 in the bank to buy whatever just broke. Nothing like replacing your sewer or water line. Everything wears out, so have a replacement schedule. I get to spend $5k on the chimney this year if I want a fire. Why? Because it is 40 years old. Roof next. Then windows. Then carpet. And then and then and then.

But, I own it because I paid extra principal and refinanced to a 15 year as soon as I could. So like others said don't get too much house or be house poor. Payment should not be over 30-40% of net pay. 25% is better, you might get a vacation every 3 years.

Good luck, don't rush.

 

[Anthony Martino]

Thanks. Yeah, not planning on buying for the max we qualified for. Also, the area we're moving to is starting to grow. Right now it qualifies for the USDA Rural program, but everything around it doesn't due to population. It's only a matter of time before this area explodes as well, it's already happening. Since I work in Odessa it's an ideal location for my commute, will wind up cheaper than the rent we're paying in Tampa and the homes should go up in value within the next 5 years I expect as well given the construction of housing in the area, going to be booming, so want to get in now.

 

[DJ Mack]

However, about home inspections, Don't underestimate their value, as it will reveal things that you had no idea about.

Thanks. Yes, I definitely don't want to undersell the value of home inspections. They provide an invaluable service and absolutely should be performed. The ones who educate as they go are great especially for first timers. But the realty of anything mechanical, of which homes definitely are, is that things break. Just because a home inspection comes back great doesn't mean something major isn't going to fail next month.

Perfect example - I've got a two year old $600 Whirlpool dishwasher. A month ago it started leaking water about an hour into the cycle. I check all the usual spots and they're fine. I pull the door and there's no signs of moisture around the detergent dispenser. The tub looks structurally sound. Finally I give up and call a repair guy. Everything looks great and he can't figure it out. Finally after going back and forth with the factory technicians the factory says most likely what is happening is the tub seams which are a combination of press fit and spot welds are expanding as the unit heats up and one or more of the joints is starting to leak. It's a rare problem but they have seen it before. Without completely disassembling the dishwasher and externally heating the tub to operating temperature in a lab you'll never find it for sure.

Would a home inspection catch that two months ago? Fat chance. As a new homeowner with water on my floor would I be tempted to blame the inspector? Yeah, most likely.

When problems are found it all goes back to my first point. Everything is negotiable. Another example. In our basement a previous owner had semi finished one room. Whomever did the job must have been in a real hurry because the polarity was reversed on some outlets in a daisy chain. From the unfinished portion of the basement we could see that the wiring pulls were all to spec so no concerns there. The seller said no problem I'll go through and fix them all. We said no, no thanks - you're not an electrician. How about you just knock $500 off and we can hire somebody later if we want. Deal. Did I hire an electrician to fix the problem? Kind of. I did the work myself and an electrician friend of mine checked my work for a six pack of beer the next time he was over.

 

[Ben]

Did you have any issues with locating a home that met the criteria required by the USDA for the home to qualify? Any potential hiccups I should be prepared for?

The only qualifications I know of are:

1) under a certain price threshold for the area (something like $270k here; probably similar there.)
2) In an "approved" area (must check the property address on their website - it's pretty random. Plenty of stuff approved that shouldn't be, and plenty that should be that isn't...)

Otherwise, just prepare for double the red tape as compared to a standard purchase.

 

[SixSpeedFury]

Finding the right agent isn't easy though. Most will try to up sell you so they make more commission or try to get you to buy the first house you show any interest in. But a good agent will really work with you to find the right house at your price point.

What do you recommend looking for in an agent? The wife and I have mostly been searching the interwebz (hotpads, trulia, etc.) We want to be able to at least move in 5-6 months.

 

[Rhodeman77]

What do you recommend looking for in an agent? The wife and I have mostly been searching the interwebz (hotpads, trulia, etc.) We want to be able to at least move in 5-6 months.

Word of mouth is a good way to start. Ask friends/family, Facebook for anyone that had a good experience with an agent buying a house.

Then once you have a list of a few people give them a call or email. If they don't get back to you with in a few hours don't bother trying again. A good agent is on top of getting back right away.

When you do meet with one, have a list of features you must have, and would like to have, your price point and desired areas to live.

Then ask them to email you a list of the properties they can find within that criteria. If the list is all over your price point or without the features you want move on to the next one. As a buyer you don't have to sign a contact with an agent. The only obligation you have to them is if they take you into a home, they then are legally your agent for that home if you make an offer.

When you do see a house with an agent, ask them lots of questions and not just the house. They should know about the neighborhood, schools system, taxes, untilites, HOA, etc. If they aren't doing their homework for you then they aren't earing their money. Anyone can get on Zillow and search a house.

They should also be pulling the comps for houses around that house to know if it is in line.

Here are some of the things our realtor was able to negotiate for us:

Removal of 3 treees that were too close to the house foundation

Replace master bedroom bathtub, it had small cracks in it. It was reglazed but done poorly. The new tub was almost $2,000 without labor!

Furnace & A/C cleaned

Exterminator spraying the property

I guess the bottom line is talk to them a lot and if they aren't doing what you ask and fighting for you then look for another agent.

 

[Anthony Martino]

Anyone familiar with special grants or loans for first-time home buyers that are permitted while receiving a no money down USDA Rural Housing loan at the same time? My lender said there is a special program with up to a $15,000 down payment assistance grant that goes away once you've lived in the home for at least 5 years and doesn't need to be paid back, but said that wouldn't be applicable under the USDA program.

I've pinged my contact at the USDA Rural Housing program plus my realtor as well, but figured I'd check the folks here for input as well, thanks!

 

[Chicken Rob]

I know it looks like you're doing the usda loan, but have you considered the fha first time home buyers program. If you can afford 3% down, it may give you more options on where you can buy.

 

[Dr Lecterr]

Don't let the realtor provide a recommendation for a home inspection. Your realtor does not want to give you a recommendation for a fantastic home inspector because she wants to sell you that property without any hiccups.

Find your own home inspector and Be sure they are licensed and insured.

 

[Anthony Martino]

I know it looks like you're doing the usda loan, but have you considered the fha first time home buyers program. If you can afford 3% down, it may give you more options on where you can buy.

I work in Odessa and Odessa and Land o' Lakes are both eligible under the USDA program.

We actually just found a place that I could bike or even walk to work from that we're considering.

Thank you to Dr Lecterr for the info on the home inspector, I'll start doing some research

 

[k9dr]

If you are on septic instead of sewer, make sure to get the septic tank inspected - it is a major expense to repair or replace.

 

[Anthony Martino]

If you are on septic instead of sewer, make sure to get the septic tank inspected - it is a major expense to repair or replace.

Yes, my boss mentioned you can get the seller to escrow funds for major repairs like septic, roof, a/c, etc.

 

[Jeff]

Wow, DJ hit on all the points that I was going to make. My wife is a real estate broker, and we have flipped houses in the past.

I really like DJs point number two, and he explained it thoroughly. However, about home inspections, Don't underestimate their value, as it will reveal things that you had no idea about.

A good home inspection not only gives you information on what is wrong, but also provides education on your normal Home upkeep and maintenance. For a first time home owner, this is worth it's weight in gold. Where are the air filters? Where do you add softener salt? Where is your fuse box, and how do you reset them? Is there any termite damage? How do I prevent damage from pests? am I like did you get eaten by an alligator?

All good advice. My wife and I just walked away from a house we REALLY wanted because the inspection showed a lot of expensive work that needed to be done that wasn't apparent to us. Our (ex)agent had recommended an "as-is" offer, which I fortunately didn't do. This, in hindsight, was something close to malpractice. If we had made the as-is offer would be closing on the house next Monday and would own the sellers problems.

I am taking the longer view on it...either they'll sell the house to some other person at the price they want (unlikely) or it will still be available after sitting on the market for a while longer, in which case they might reconsider our offer.

The inspection also helped us better understand the long term expenses of the home...maintenance, upkeep, etc. I have no experience with well and septic, for example.

 

[Ben]

If you are on septic instead of sewer, make sure to get the septic tank inspected - it is a major expense to repair or replace.

Get it inspected, but keep in mind that septic systems are the ultimate example of "if it ain't broke, don't fix it." Home buyers considering buying a home on a septic system for the first time pretty much universally go apeshit about it, asking sellers to do this, that, and the other thing to the septic system, and that can be detrimental. Most septic systems function very, very well and tinkering with a properly-functioning septic tank can cause damage. Get it checked but unless the inspector identifies specific issues with it, don't make it a big issue.

 

[lnlver]

Your homeowners insurance company may have access to databases for claims at that address. You can find out if there have been roof leaks, water and sewer back-ups, etc.

FYI, the amount of insurance you will need to carry is the cost to reconstruct it to the same quality, materials, etc. It has nothing to do with what you paid for it.

 

[Anthony Martino]

Well, we found a place we really liked that's within walking distance to my work! But hit a snag. It's a pre-existing manufactured/mobile home, and our lender is telling us the USDA doesn't finance those.

I called the USDA directly, and they do, but only if it's brand new AND built by one of their approved vendors.

So then I asked our lender about the Florida Bond program (up to 15K assistance for down payment, etc. that is forgiven at 20% over 5 years) with an FHA that requires 3.5% down and was told the Florida Bond program doesn't work with mobile homes either.

So my lender is saying our ONLY option is the FHA with 3.5% down. I've got our realtor checking with lenders she knows to see if there are any other options available to us as first-time home buyers. We can still make it work with the 3.5% down, but don't want to pass up any other programs or grants that may be available.