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Old 04-26-2013, 10:27 AM   #1
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Home Buying Advice

My lease for my apt/townhouse is up in late May. I'm looking into maybe purchase a house. I'm currently paying $1215 in rent for a 2br, 2ba and 1 car garage. I believe its a 1094sqft unit. The thing is I have really good/excellent credit but not very much cash to put down on a home. Should I be looking at used or new home? Is there Pros and Cons to buying used or new? Should O continue to rent and save up more money?
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Old 04-26-2013, 10:30 AM   #2
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The only think I can say about not having much of a downpayment is you could end up getting stuck paying PMI. Just extra cash out the door that doesn't go towards your principle.
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Old 04-26-2013, 10:31 AM   #3
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I don't know the housing market in Washington, but if you don't have a lot to put down, I would look into getting pre-approved for an FHA 3.5% down loan.

Once you know what you are approved for, and how much you know you can afford per month, that should give you the answer as to what you can afford (new vs used).

Generally, as a first home, I would recommend getting a smallish used home.

Good luck.
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Old 04-26-2013, 10:32 AM   #4
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Like Pugga said, with an FHA loan, you will need to pay PMI (Mortgage Insurance) for 5 years, but don't let that stop you from getting into your first house.

For me, FHA was my only option. No way was I gonna save 20%, or ~$70k.

Are you having kids? Think about school districts. Try to get into an area with a good school.

I would rather buy a small older house in a good area with good school, than a new house in an area that does not have a good reputable school.
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Old 04-26-2013, 10:34 AM   #5
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Dude is correct about PMI, but I didn't put 20% down on my house either. The only thing I could say to you is once you get pre-approved and start looking, you can have the seller pay closing costs. Because all that is up front money out of pocket. So when you make an offer, get them to pay for the inspection, closing costs, etc. and that will save you some coin... Good luck
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Old 04-26-2013, 10:37 AM   #6
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Put 5% down. Go conventional. Your rate will be slightly higher going conventional but your MI will be less. There are alot of restictions when you go FHA. MI will probably be between 100 and 200 a month depending on how expensive your house is. Remember a mortgage payment of around 1,200 a month has about 400 of principle. Which is just money in your pocket. I bought a house last year in march for 170,000. I put around 10,000 into the house after I bought it. I just refi'd and my appraisal came in at 270,000. I was able to get rid of my MI. I made 100,000 in a year. goodluck
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Old 04-26-2013, 10:39 AM   #7
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Quote:
Originally Posted by Pugga View Post
The only think I can say about not having much of a downpayment is you could end up getting stuck paying PMI. Just extra cash out the door that doesn't go towards your principle.
I bank with Navy Federal Credit Union and I was on their website and they are offering 100% financing. Zero down, zero PMI and fixed rate terms. I didnt read the fine print or anything but I feel like theres a catch somewhere in there.
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Old 04-26-2013, 10:39 AM   #8
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http://www.wshfc.org/buyers/

Most States offer nice benefits to anyone who is a first time home buyer. Run through the above website for Washington State or just google any state you are looking into. The best advice (what I am currently in the process of) is trying to find a house that needs some work, nothing major because some mortgage companies will require you to fix it BEFORE you move in. While you are living there, do as much as you can yourself to get it into better shape - basically you are building the value of the home so when it does come time to buy your next home, you can sell for much more than you put into it.

Also, make sure that if you do get pre-approved, you do not buy a home valued at the max the bank will give you - try to stay under their offer. We all need a rainy day fund and a new house will make you cash poor before you know it.
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Old 04-26-2013, 10:46 AM   #9
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Don't forget to check rates for insurance, if you are in a flood zone and the bank requires you to have flood insurance you can end up paying alot, house insurance can run from 75$ to 250$ a month depending on where the house is and the size/condition/type. Get your home insurance and auto together with the same company preferably.

Property taxes are public information, pick a few houses and look them up in your county tax assessor's property records. These records can also be used to verify sqare feet and improvements vs what the listing says.

I used to do home insurance for USAA and the little things add up quick like insurance and taxes etc. Don't be discouraged by the threat of PMI after all you're paying over $1200 right now and you don't own anything, who cares about paying a few hundred for PMI at least you will have equity vs. just renting.

and X2!!!!!! on all the hold house in good area vs new house in bad area!!!

houses can be fixed up, a bad neighborhood not so much.

If you find a place that has other improvements besides the house like a shed or a tractor or something valuable, use it as a bargaining chip, even if you don't want it, tell the sellers to throw it in and if they dont then use it to bring the price down. Thinking outside the box can save you big money.

Make sure you have a solid figure on square footage alot of people have a hard time on this one. 75% of listed properties are listed with incorrect sq. ft on the house and this can lead to problems on getting the appraisal to match what the seller wants. This can be bad if your bank wont loan you enough because the appraisal came back higher than the sellers price or the agreed price. Correct sq ft is measured by the outside perimeter of all living space (heated and cooled) attached to the house. If the garage is finished with a/c etc... it should be included in sq ft. If there is an attached garage unfinished, it should not be part of the sq ft. Alot of people make the mistake of measuring rooms and adding the numbers together this can leave out things like closets and dividing walls.
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Old 04-26-2013, 10:52 AM   #10
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Now is actually a good time to buy. Prices have fallen and should be low. They will be headed back up again shortly (next few years). Rates are also very low. As was said already, go with a conventional loan.

I'm already seeing a turn around in the housing market here in Iowa. Houses are selling fairly quickly. We are building a house and I found out that shortly after we signed all the papers, they raised prices 10% on the base price of the house. It didn't affect my purchase, but is definitely a sign that things are going up. It will how ever help me because it should make the value of my house go up.
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Old 04-26-2013, 10:53 AM   #11
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Quote:
Originally Posted by TRDsport253 View Post
I bank with Navy Federal Credit Union and I was on their website and they are offering 100% financing. Zero down, zero PMI and fixed rate terms. I didnt read the fine print or anything but I feel like theres a catch somewhere in there.
That's pretty awesome! Definitely read the fine print and find a good realtor. The only issue I can see with 100% financing is if you don't buy the house at a good price, you could easily end up upside down on the house if it loses value.
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Old 04-26-2013, 10:59 AM   #12
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If you bank with Navy Fed, I am guessing you may be eligible for USAA? Military experience in the family?

If you are eligible to join, they have a pretty decent program called "Home Circle" you should check out. I dont work for them anymore but they had some good stuff.
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