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First time homebuying checklist
manwiththemachinegun
METAL GEAR?!Registered User regular
METAL GEAR?!Registered User regular
After renting for a number of years, I've toyed with the idea of buying a home... yeah, in this pandemic market its seeming like it's nearly a joke.
I have good credit, a median-ish salary for WA state, I'm wondering what the optimum path is to getting into some property without being completely ripped off.
I have good credit, a median-ish salary for WA state, I'm wondering what the optimum path is to getting into some property without being completely ripped off.
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The thing is, I'm not sure how much of these old "first time buyer" online advice articles are still relevant post-COVID.
But all of that is VERY market dependant. There's homes getting cash offers before they're even listed, no inspection.
So the articles are fine for general advice, but you really need someone who knows the area you're looking to buy in.
Do you want a house ready to move in, or are you willing to do since stuff yourself and maybe save on the initial price?
See what first time home buyers programs are available in Washington.
In terms of checklist. Getting an inspection by a reputable firm is important, the better firms can cost more money but having 50 pages of deficiencies gives you a strong hand during closing.
Talk to a few loan brokers and banks. It should only hit your credit once to have them all take a look. Loan Brokers are generally more responsive and Knowledgeable about loan programs, banks and credit unions can have better rates or different programs.
but you need to keep money to maintain your home. 15-20k minimum cash on hand or the ability to comfortably and quickly raise that much money to deal with incidentals is ideal
just recognize this is a rough market for buyers and you'll be paying top dollar no matter what
- A good realtor is vital. Find someone who will help you achieve your goals, not theirs. Our first realtor was from a large local group and tried pushing us into any house they could. I dumped them and worked with a woman who helped us find what we were specifically looking for and it was a vastly better experience.
- FHA loan was great for me as a way to get my foot in the door. I didn’t have much cash and only put down 3.5%. Yes, I had to pay PMI, which IIRC was around $300/mo on a $155,000 loan, but that can be removed later.
- 30 year mortgages are great to get into a house where you pay rent to yourself instead of a landlord. The real savings, though, is a 15 year mortgage. I initially took a 30 year, and then once my life had stabilized a bit I refinanced to 15 years. My house never skyrocketed in value like some other hot markets did, but a steady 3-4% yearly increase in value meant that between my payments and inflation, I built up enough equity to not need PMI on the refinance. I increased my monthly payment by $150 and am now on track to have my house paid off in 8 years.
- Inspections are important, but they don’t catch everything. I had to fix a number of small dumb things shortly after moving in. Which ties to my next thought:
- Things break and you’ll need to fix them. You don’t need to be a professional handyman to deal with most things that fail, but getting comfortable with basic tools and repairs will save you a ton of money over needing to call someone each time. In 9 years I’ve had the following:
- blocked sewer drain, called a plumber ($300)
- Water heater died, installed myself. ($800)
- Furnace main fan died, replaced myself. ($300)
- Furnace exhaust fan died, replaced myself. ($300)
- Furnace circuit board developed a bad terminal connection and had to be soldered. Fixed it myself for free, but that’s a bit more technical.
- Lots of assorted smaller stuff: bad light switches, dripping faucets, leaky shower head, etc. All fixable with a few trips to Home Depot and some googling.
Over 9 years that’s not too bad of an expense list. YouTube guides and appliance manuals are tremendously helpful in troubleshooting, and most stuff bolts in fairly easily if you just need to replace parts.
You can't give someone a pirate ship in one game, and then take it back in the next game. It's rude.
that is a highly speculative statement that nobody can prove. there are many factors related to home prices. its also regional. it might be more challenging to buy a house in Washington, than, say, Detroit...
you should buy a house when you are financially empowered to buy a house at the market rate with a high degree of confidence and not before
the traditional bar of a 20% down payment serves multiple purposes, and among those purposes is to means test the buyer to see if they are financially prepared to buy and maintain a property
you can buy a house with less, but you will be paying substantial penalties for doing so in the form of interest and private mortgage insurance
if you get in touch with a reputable buyers agent, they will quite readily assess your capacity to buy and they can also advise you on the market conditions locally
This is great advice.
Re: the regional, Washington state was absolutely on fire *before* Covid when it came to pricing on some bedroom community housing. Tacoma, outskirts of Seattle, and all the small towns in between got just hammered by buyers before 2019.
Go check out the place you want to buy during a heavy rain. Our house looked great. First rain it looked like a swimming pool in the back yard. We had to spend a small fortune improving drainage.
I had to replace the roof, but that was known when I purchased the home, and I saved for it. It's a world of difference to know, ok day 1 water heater. Within a year new roof. Within 3 years new Central AC condenser and coolant line.
That is the value of a good inspection. I knew what I needed to save, and when I needed to save it by. Makes it a lot more manageable. Even with a new roof costing 14k.
You probably wont be able to get the owner to fix anything in the current market because there is no reason too with everything so hot, so I suggest having enough to also do some quick reno if you have to. If you can get the inspection (we had to wave ours, but our realtor was a duo with a seasoned contractor who helped us spot major issues), focus as much as you can on big costly problems rather than small, fixable details.
We bought super cheap, but we had enough to rip out the carpet and paint everything before we moved in, which made a big difference! I am convinced we won our house because buyers were unable to look past the awful colors the previous owners had up, or the smelly dog carpet. But the house came back with excellent marks everywhere else, other than a pretty old AC unit. Foundation issues run rampant here, so this is a big fucking deal. We walked into some houses that were showing huge cracks or had sunken living rooms with a noticeable bump in the tile where it was shifting. You probably dont want to deal with that kind of thing, if you can avoid it.
FHA is good in that it allows those without the best credit scores to buy a home without 20% down, but you absolutely pay for it in the long run. Typically you'll be assessed a 5-7% (of purchase price) origination fee that is tacked on to the balance, as well as a monthly MIP (mortgage insurance premium, as opposed to a PMI with conventional). They are the exact same thing, except the FHA MIP payments are typically 3-4x+ more expensive. Typically MIP will be $300-400/mo whereas a PMI for the same loan amount will be $80-120/mo. Additionally, the MIP payment cannot be removed, even if you hit 80% LTV. You will need to refinance to remove it. Refinancing costs are typically 2-6% of the loan amount, so that's something you need to factor in to your overall long-term costs. Again still could be absolutely worth it, but just keep those costs in mind, because your loan officer will likely be a lot more opaque about the true longterm costs (they almost always just message and focus on out-of-pocket costs).