Woot! I'm planning on buying a house!

[Evil Queen]

I've always rented, never bought before so I don't know what order this whole mess is supposed to go in.

I recently moved to New Mexico. The SO and I will be here for at least 3 years so we figured, for [in]sanities sake, I would buy a house.

I've already seen it. I'm planning on seeing it again so I can take pictures of the property and send them to my dad, the SO, and the friend that I am currently staying with. (I forgot my camera last time)

So, what do I do next. Do I hit the bank up for a loan now? Or should I have done that before I considered looking for a place?

That place I want to buy is BIG but CHEAP. I already have the 10% down that is generally requested. (It's $108,900) I'm thinking of seeing if the owners would go lower.

If I qualify for a loan that's too big (say, for example the bank does give me a loan for the full amount) can I use the rest for repairs? I've already calculated the price of the mortgage as "rent" and if we want to, there's a spare room we can rent out (it has 4 bedrooms).

So, is the next step go to the bank? Or go back to the Realtor?

[Girly]

So, is the next step go to the bank? Or go back to the Realtor?

You go to the bank and get prequalified. Hopefully you will be qualified for more than you will need to purchase the house.

You will have a ton of costs that you won't expect to have when you purchase a home. Closing costs, lawyer fees, paying for the inspection, etc. DH and I had to pay a couple thousand dollars when we closed on our house. So don't forget about those. The person that is helping you with your mortgage can give you estimates on those costs.

Putting less than 20% down will mean you have to pay PMI insurance, or get a second loan to avoid that. Again, talk to your loan officer, and they will be able to help you with that.

You can either go through a mortgage broker, who will shop around at different banks for different rates, or you can do it yourself. Don't get too attached to a specific bank though, and don't be surprised if you go through a broker and they get you financing through Company A, and by the time the closing comes, Company B has bought the mortgage already.

[Evil Queen]

What the heck is PMI?

[ArcticChicken]

I'm pretty sure my Mom's Realtor walked her through it.

[Girly]

What the heck is PMI?

Private Mortgage Insurance. Here's the wiki about it.

By the way, I forgot to say in my first post... Congratulations!!!! How exciting

[smileyeagle1021]

Oh, one thing no one has mentioned... be sure to remember when considering how much you can afford each month in payments to consider how much you have to pay for taxes and insurance... make you you can afford the full PITI... that's the trap most people fall into.

[bookworm]

If I qualify for a loan that's too big (say, for example the bank does give me a loan for the full amount) can I use the rest for repairs? I've already calculated the price of the mortgage as "rent" and if we want to, there's a spare room we can rent out (it has 4 bedrooms).

Unfortunately, they won't let you do that. When I bought my house, I was approved for $30,000. more than the cost of the house. I wanted to use $5,000-10,000 to do some repairs/remodel, but the loan officer said they weren't allowed to do that.

Of course, it was just a couple months later that the housing market started to crash, so I was pretty happy I didn't get the extra money.

[draftermatt]

Unfortunately, they won't let you do that. When I bought my house, I was approved for $30,000. more than the cost of the house. I wanted to use $5,000-10,000 to do some repairs/remodel, but the loan officer said they weren't allowed to do that.

Correct, they won't allow you to finance more than what you're paying for the home.

However, if you refinance I believe you can get more if you have enough equity in the home.

[Primer]

That place I want to buy is BIG but CHEAP. I already have the 10% down that is generally requested. (It's $108,900) I'm thinking of seeing if the owners would go lower.

WHY is it so cheap???

That is about the amount I financed for my house (after putting down about $20K). My current payments are about $1100. Can you afford that? (just for real-life comparison purposes)

Congrats and good luck!!

[Caveat Emptor]

Is the house an "as is" sale? Make sure to get a home inspection done. If it is "as is", the sellers won't do much if anything about any problems, but you can still walk away if you do find too many issues or those that would cost more to fix than you would want to pay.

[Eric the Grey]

So, what do I do next. Do I hit the bank up for a loan now? Or should I have done that before I considered looking for a place?

That place I want to buy is BIG but CHEAP. I already have the 10% down that is generally requested. (It's $108,900) I'm thinking of seeing if the owners would go lower.

If I qualify for a loan that's too big (say, for example the bank does give me a loan for the full amount) can I use the rest for repairs? I've already calculated the price of the mortgage as "rent" and if we want to, there's a spare room we can rent out (it has 4 bedrooms).

So, is the next step go to the bank? Or go back to the Realtor?

First, When you find a loan, don't just settle for pre-qualifying. Get pre-approved, which means the money is guaranteed.

Next, find a realtor. Don't wait until the loan paperwork is done, do it right away. I would suggest finding one who is NOT the one selling the place. You want someone who is working for YOU, not the seller. There is no guarantee that the realtor would play favorites, but you never know. You'll want to see the inside of the place before you make an offer.

As others have said, you should make certain to have the house inspected. Your realtor will be able to help you find one. You may also want to have the house appraised.

Be prepared for closing costs, as well as down payments. You may need more cash on hand for all of this. You pay for the inspection and closing costs most of the time. You'll also probably need earnest money for when you make an offer on the property.

Good luck.


Eric the Grey

[Sliceanddice]

the price doesnt surprise me to much in my area i can find at least 500 houses in this town the next 5 towns and the capital for 108k or less.
south west not cali has low house prices right now

[protege]

Whatever you do, get the place inspected. Keep in mind that some states (Pennsylvania is one) do not regulate home inspectors. Here, any idiot with a pickup and some tools can claim to be a "home inspector." Ask around to see who is reputable. Also keep in mind that the inspection can be expensive--mine ran $400

Not cheap, but after they found that my furnace was crap (cracked heat exchanger--big $$$ to replace), and that several outlets were wired incorrectly, I felt that it was money well spent. I had the seller replace the furnace, otherwise I'd have walked away. Also replaced later (under the home warranty), were some of the electrical outlets, and part of the porch roof.

I should mention, that unless the place is what you *really* want and can afford, don't be afraid to walk away. Also, don't settle for a dump--you can easily spend more than the place is worth just making it livable--and you'd probably never get that back if you had to sell it.

[BookstoreEscapee]

Too bad you're not in Arizona...I know someone who's looking to sell...

[taxguykarl]

You can find a reliable home inspector here

Here's a useful guide
Also find a lawyer for the closing. This costs less than you may think and will prevent you from being screwed over later.

Regarding the mortgage:
It is a loan and to get a loan, it is often said, you have to prove you don't need the money. Compile your tax returns, bank statements, pay slips, investment account statements, auto loan (or title) documents, credit card statements, other loan statements and what ever other financial documents you have. You will need these before closing time. We (Mrs. TGK and I) literally faxed those to our lender as they arrived.

TAX IMPLICATIONS:
Chances are you and the SO, will find it well worth you while to itemize on your next return. As mortgages payments are usually more than 90% interest the first few years, that alone will make Schedule A your new best friend.

Regarding the move there:
The first order of business in moving is to lighten the load. The most rewarding way is to donate whatever you don't plan to take with you to a charity. Don't just clean, empty your closets. Here's a value guide

Make sure that you:
1) log what you give, to what organization and when
2) keep each donation load UNDER $5,000 per organization per day (per the guide)
3) always get a tax receipt NEVER use a drop box

If your move to NM was work-related AND over 50 miles from your old digs, record you moving expenses (yes even if you are buying the house after the move to NM). See Publication 521 and Form 3903

Regarding the Mortgage:
Keep your copies of the closing documents. Some of those nickel-and-dime fees are, in fact, deductible points--they are not always noted on the 1098. PMI is dedcutible. Property tax also is not always reported on the 1098, so keep a copy of the bill and payment receipt.

Here's what the IRS has to say about the First-Time Homebuyer Credit http://www.irs.gov/newsroom/article/...206293,00.html

BOTTOM LINE:
Keep the documents and show them to your friendly tax preparer. If you're in the Chicago area between January 15th and April 15th, get a hold of me.

Welcome to the wonderful world of homeownership.