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Buying a condo?
Aumni
Registered User regular
Registered User regular
Ok guys, time for me to beg for your advice.
I'm saving up to buy a condo, I'm pretty close to where I need to be to start buying one (I think). I currently have $9k saved up and should have roughly 14k by the end of the year.
I live in Connecticut, and don't intend to move out of state so anywhere in those borders would be great.
What do I need to know? Should I get a real estate agent? Where are the best spots for listings? What kind of loan should I get?
I know the economy is in the right spot for buying real estate, so I think it would be a good investment.
Oh yeah, I currently live at home, like Anime/Video games/Speak Japanese and work with computers. Need to move out very soon or I will horrified at what I may become.
Thanks guys.
I'm saving up to buy a condo, I'm pretty close to where I need to be to start buying one (I think). I currently have $9k saved up and should have roughly 14k by the end of the year.
I live in Connecticut, and don't intend to move out of state so anywhere in those borders would be great.
What do I need to know? Should I get a real estate agent? Where are the best spots for listings? What kind of loan should I get?
I know the economy is in the right spot for buying real estate, so I think it would be a good investment.
Oh yeah, I currently live at home, like Anime/Video games/Speak Japanese and work with computers. Need to move out very soon or I will horrified at what I may become.
Thanks guys.
http://steamcommunity.com/id/aumni/ Battlenet: Aumni#1978 GW2: Aumni.1425 PSN: Aumnius
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Thanks for the reality check, I still am in the early stages really and it appears I'm much less ready than I need to be.
So first up!
1. Get a credit check!
2. Get a price range!
3. Learn more about mortgages!
4. PROFIT! (wait....)
5% down is generally the minimum. You definitely don't need to put down 50k as a first time home buyer.
It can't hurt to go talk to a real estate agent. They will be able to answer nearly all of your questions, and the bank can answer the rest.
I recommend getting a real estate agent anyway. As a buyer, you don't pay them, they get the commission (or half) of the house they end up selling you. Some people say it's not a good idea because the agent will always be trying to encourage you to spend more to increase their commission, but that's not what I've found.
Go talk to your bank and see what would be pre-approved for. With that number, go talk to a real estate agent and see what you can find in that price range.
Keep in mind that there are a lot of costs associated with both buying a house and keeping one up. Since you're thinking of a condo, consider the maintenance/condo fees along with everything else.
If you live at home now and don't have a lot of credit built up you're going to have a hell of a time getting a loan. The bigger the down payment, the better chance of not just a loan but a lower interest rate. Rule of thumb should be 20% down. Look at all the foreclosures for reasons why to not put down a very low down payment and hope the loan works out.
Figure out what areas you are interested in then start scoping out prices. Keep in mind other costs for good deals such as sewer/water/property taxes. Think about the long-term plan. Will you want to be in a condo in 5 years? 10 years?
Edit: If you can only put down 5% you probably can't afford the home and luckily now it's incredibly difficult to get a loan with that little down.
That said, when you total up your payment with the mortgage and taxes and association fees, you may actually find out that you could afford a house for the same price. Maybe not! But it's something to keep in mind as you look at places.
Instead of just getting a credit check, why not try to get prequalified at your bank? That will include a credit check, and then you'll know how much the bank would be willing to give you for a mortgage. You don't have to spend that much, but at least you'll have a ballpark figure. And the same person should be able to help you estimate what your monthly payments would be at different loan amounts, which can help you with budgeting.
I'll take a look at my credit score. I've paid off what college tuition I owe (i've completed 2.5 years, so using the money I have saved to finished school was another option.) I'm 1k away from paying off my car loan (only remaining expense), and I've used my credit card wisely. Also I've gotten good limits on store cards (all paid off), so if not good, at least moderate credit I hope.
Some very good advice already, thanks guys.
For example, a guy I work with went to buy a townhouse only to find out later that the corporation was in debt for about $2 million still for building a parking structure. That meant $9000 billed to each unit over the next several years. He ended up still buying it, but that's an example.
Chances are you credit score is not going to be the problem, it's your income. If you don't make a sizable amount each year, you likely won't get approved. $1000 total debt is basically nothing when you work out your debt to income ratio, but if you're $1000 away that will be gone by the time you want to buy anyway.
Going to the bank for a pre-approval is your next step here. You'll know right then and there if this is a pipe dream or if it's a reality. A credit check is useless since you know you're not borked in that department.
On the other hand, interest rates are rising.
The interest rate we got a couple months ago compared to what it is at today saved us about $200/mo on the mortgage payments.
Condos and townhouses can be much harder to sell than a single family home. If you do decide to buy one don't expect to be able to sell on any kind of quick time-frame even if the market picks back up.
but definately go through a realtor. they know the tricks, they know how to bargain, know what to look for. esp as a first time buyer.
also, know that there is an 8k firsttime buyer credit going on now, plus a bunch of other programs that you may qualify for as a first time buyer. these are things that your realtor will know.
i bought a condo in new haven for 99k. so, 14k down, plus 8k in obama bucks gets you like 24% down. your payments would be like $600 a month? which is about half or less of the rent around here. but those costs will fluctuate depending on where you are looking. fairfield county? 250k easy. west hartford? 200k and up.
other things to note, condos usually have condo fees. things for parking, maintenance, grounds things like that. so factor those costs in, as well as taxes (usually paid into an escrow account as part of your monthly bills).
and yeah, condos can be hard to move. mostly you end up needing either someone just like you, or a retired person, or yuppies. but, you can usually rent them out for income later (assuming that you buy in a place that people actually want/can afford to live in). PM me with any CT centric questions, and i can try to answer.
To the OP: do you have any kind of credit history?
That's not how the First Time Buyer Credit works. He would get the money when he filed his taxes, so while he would get it back it wouldn't be part of his down payment unless he found $7500 somewhere and the paid that back using the credit. Also, it's a credit so depending on his income he could either see the taxes he owes decreased or a refund. He should not look at that credit as part of his down payment because it won't be.
Yeah. I'm 25 and I've been pretty good with car loans/cards/tuition and the like.
The bank will appraise your home as part of the final approval, and if they're worried about the risk of lending you more than the house is worth, they won't lend.
When you get a pre-approval, your rate is locked in (usually for 90 days). So, for example, if you went today and were pre-approved for $250,000 at a closed interest rate of 5% locked in for 5 years, you'd have that rate until October 31st, and your downpayment has nothing to do with that as long as it's above the minimum.
You can go in before closing and change your down payment to 50%, but you're still going to have an interest rate of 5%. You can change your 15% downpayment to the minimum 5%, and as long as the bank was OK with that for your pre-approval, there should be no problem.
Mind you, I'm in Canada. The banks may work differently here, but from my standpoint it seems we're getting the better end of the stick.
Perhaps the "interest rate" and some sort of variable fee is added in where you live, which would explain the confusion.
Here, if your downpayment is less than 25%, the CMHC charges you a certain percentage as a premium, which is mandatory. This rate will change (from 2% to maybe %4) depending on how much you put down (5%, 10%, or 15%). Is that somehow charged and handled directly by the banks in the US?
That's the only thing that changes with your downpayment here, aside from the monthly payments obviously. Generally, unless you're selling a current home to buy another one, you won't have 25% as a downpayment. (Would have been over 60k for us).
http://www.youtube.com/watch?v=ztCrH4ZwySc
Sorry. First thing I thought of.
My credit score average was 746. The total I payed at closing was $10,443.44. An FHA loan with 3.5% down payment. House cost $173,000. The principle on my loan is $168,xxx. My interest rate is 4.875%. My mortgage payment is $1206.
I immediately found 2 roomates(before I even closed on the house) through craigslist and roomates.com. My roomates pay me $530-$550 a month each. At the end of the month I pay between 500 and 600 in bills.
FHA loans will minimize that PMI you have to pay(out of my $1200 mortgage, PMI makes up $70). You don't need 50k to buy your first house. If you have awesome credit, a stable job(I only had mine for 8 months, but it is a government job so I won't be laid off due to downsizing), and enough money to cover that 3.5% you can easily buy a condo. Just be aware of condo fees.
Also, a friend of mine bought his house using the VHDA First time buyer loan deal. He payed hardly anything at closing and pays a little bit more on his mortgage than I do for his $180,000 home.
Talk to lenders, get pre-approved. Find a buyers agent. Start looking. I started the process in February and like I said bought my house April 30th, but I was pretty damn lucky IMO. You don't have to wait till you get all of your money to start looking, you can make the closing date 2 months, 3 months down the road if you have to.
Good luck man!
I found that everyone want to give me advice, and I worried to remember all of these details. The thing is the stuff people were telling me they learned from their own realtors and lawyers and bankers. The real estate agency, lawyer, and bank you choose will tell you everything you need to know and be up to date with the current laws and market.
I paid 20% by taking a short term loan against some of my guaranteed investments certificates just to get a lower rate, but depending on your local banks and laws, you could probably get away with as low as 5%.
I made the decision to buy when I realized that paying rent was basically throwing money away. By paying a mortgage, I'm investing in my future.
Also remember to factor in your home owners dues with your mortgage, because you might get a mortgage at the upper end of your price spectrum and have HOA dues that shoot you past that.
pleasepaypreacher.net
This is in general true, with some caveats. In areas where the amount you would pay monthly to rent are much lower than the amount you would pay on a mortgage (for the same place), you could come out worse financially by buying. Here is a link to illustrate the point:
http://www.nytimes.com/2007/04/10/business/2007_BUYRENT_GRAPHIC.html
My friends mother is a real estate agent in the area, I'll call him up and see if I can't talk to her.
This will probably be half a year before I'm ready to start seriously looking (actually have the 15+k), but the advice from her couldn't help.
Indeed, she'll be able to give you tips on how to improve your credit score and start the search for you (keeping eyes on certain properties watching sales that sort of thing). Home buying is not like car shopping, the more time you give the agent, the better deals you can usually find.
pleasepaypreacher.net
Oh I agree that it can cost more to pay a mortgage. I'm currently baying four times as much per month after condo fees as I used to. The difference is a portion of that money is going towards something that I own and can sell to make on a down payment on a larger house in the future or something.
Now technically, I could be investing that money elsewhere, but nothing else gives you as much return on your investment as real estate, even in this economy. I definitely don't have the self discipline to do that anyway.
My mortgage is $900 + $150 maintenance fees + $200 property tax for a grand total of 1250, and the maintenance fees include water/sewage.
It made sense for me to purchase. The new place is gorgeous in a commuter's heaven as far as location, and that's what my future is likely going to look like. The current place I'm renting is 60 years old, everything is falling apart, the neighbours who have moved in over the recent years are fucking disgusting, filthy, trashy douches, and the property manager is a bitch who will never return calls. We had a leak from the outside hose that flooded our basement guest room (some douche neighbour kid left it on all weekend while we were out of town) and it took a month of calling before she sent someone to even look at it.
Yeah. Renting is a pain in the ass. Purchasing is the way to go if you can afford it, even if only to avoid dealing with that type of shit.
One thing, if you're planning on buying then selling fairly soon down the road, you might have to reconsider.
Let's say you buy a home now for $200,000. You put down $20,000 for a mortgage of $180,000. You find a fixed rate of 5% locked in for 5 years and amortized over 25 years, and you are paying monthly. Your monthly payments will be $1,046.89. In 5 years, you will still have $159,313.44 left on your principal. You've paid $62,813.40 in payments, but you've paid off a little over $20,000 from the principal. If you sell in 5 years, you'll loose money after closing costs, land transfer tax (on your new home), and the Realtor's cut. You'll barely have anything left over for a down payment on your new home.
Look into these scenarios to see if you're truly ready to buy. Is your current job secure? What would happen if you lost it next year?
pleasepaypreacher.net
It's to own, I don't intend on selling for quite some. And I think I could get a friend as a roommate to help with monthly payments.
I don't agree with this at all.
In the short term most real estate markets are going down right now. I'm not saying it will be that way forever, but it's definately true for the greater western washington area where I have direct experience.
I'd recommend against getting a roommate to help pay your mortgage. If only because you don't want to rely on someone elses income to make a key payment for your household unless you are married in a committed relationship.
pleasepaypreacher.net
But hey, what do I know?
(The Zombie Apocolypse fearing investor always does well in a bear market)
Well I wouldn't say 'help' so much as 'give me breathing room to save'. I don't intend on relying on this income factor to get some sort of affordable mortgage payments based on it.
EDIT: I intend on zombie-protecting any property I may end up investing in. I will also hand out fliers to the other owners of the building to encourage them too.
Making minimum mortage payments is a terrible strategy, unless you actually WANT to pay it off in 35 years, and have a huge sum of that money be interest payments.
Doubling my payments reduced my 35 year amortization to a 10 year one (Which means 10 of those years would have been interest payments), and im going to be putting extra money down on the anniversary date.
ALWAYS try to overpay your mortage payments by any amount you have extra, this is ESPECIALLY important with how low interest rates are these days. Every dollar you can pay off at 4% means when you get a new mortage setup in 5 years, you dont have to pay the typical 6-7% on it.
It really depends on where you're at in life, if you want to just move out and have your own place, make minimum payments, and be happy.
If you want to own your home and upgrade and become an investor in real estate, you have to have more discipline in what you put into it.
Hold up new mortgage? No way in fuck should anyone be taking an ARM especially not after the recent fucking meltdown.
pleasepaypreacher.net
But...The Olympics! We get screwed no matter what happens.
Start looking now, look at new construction, look at older buildings, get an idea of what your market has available. We moved from an apartment to a condo, and have been very happy.