2 Year Plan

[SAM135iAM]

Hello all,

Are there any realtors, bankers, or people with experience in buying a house?

If so, I could use some food for thought from others more educated than I in this matter. I am working on a two year plan at the moment. In this two year plan I would like to be purchasing a house at the end of the two years. I have been researching on line and with all the information that the internet can provide I feel very disconnected from what could be any real opinions and ideas of fact. It's just an information overload.

Thanks in advance.

[Wakka]

Im in the process of buying right now so i will lend you what knowledge i can.

Start saving, clear your debt (if any) make your credit look as good as possible, when you are ready to start shopping call some banks / loan offices and get pre qualified for what you want. Then once you have that get a realtor, and start shopping.

Its not too stressful until you actually start making offers on places.

[JLed79]

Originally Posted by Wakka

Im in the process of buying right now so i will lend you what knowledge i can.

Start saving, clear your debt (if any) make your credit look as good as possible, when you are ready to start shopping call some banks / loan offices and get pre qualified for what you want. Then once you have that get a realtor, and start shopping.

Its not too stressful until you actually start making offers on places.

+1. I wouldn't even go looking at places without a letter of intent from a bank, or at least a pre-aproval. Know your budget and stick with it. There are some sweet deals out there right now, and will be for the forseeable future, but being house poor is not a fun way to live. I would also recommend coming in 10-15k under budget on your final price anyway. In my experience I usually end up putting around that into the house after I close. Even if you don't plan on any renovations, there are always unexpected expenses that arise.

[KingOfJericho]

Go with a mortgage broker. They have a significantly wider array of products than any bank will.

[SAM135iAM]

Originally Posted by Wakka

Im in the process of buying right now so i will lend you what knowledge i can.

Start saving, clear your debt (if any) make your credit look as good as possible, when you are ready to start shopping call some banks / loan offices and get pre qualified for what you want. Then once you have that get a realtor, and start shopping.

Its not too stressful until you actually start making offers on places.

Thanks man! I really appreciate the info. Good luck with your purchase. Yeah, just having graduated college last summer I have some pretty big school loans that need to be paid back!

[KingOfJericho]

Originally Posted by SAM135iAM

Thanks man! I really appreciate the info. Good luck with your purchase. Yeah, just having graduated college last summer I have some pretty big school loans that need to be paid back!

That type of debt doesn't weigh as heavily on your credit score as revolving debt (credit cards) and it's typically at a very low interest rate so don't let paying your college off delay your home purchase.

[Wakka]

I was one of the lucky few people that grew up with wealthy parents. I came out of college debt free. Car paid off, school loans paid off, job waiting for me upon graduation. Graduated about a year and a half ago, and saved like crazy.

[Zeros and ones]

before you even go out and buy a house. A golden rule of thumb is this:

do not spend more than 28-30% of your income on a home mortgage.

Based on that you can now decide what you can afford and the types of area that you can live in.

Other things you need to take into account with owning a home
1) property tax
2) insurance (flood, earthquake, fires, etc depending where you live in USA)
3) HAO fees (if this is applicable)
4) water/power
5) gas
6) misc things like: (crap my main water pipe broke, crap the pipes are clogged, oh sh*t this sprinkler need to be fixed again, crap.. I need to pick the weeds again, etc. I can go on and on)

I put those in order of importance. Of course do not forget your other expenses that you have during the month like, car insurance, gas for the car, cell phone, food, clothing, etc

btw, two years is quite the goal and I wish you much luck to reach it. be smart, find out what is costs you to live per month and see what is left over. See what money you can re-used (ex: if you rent a place and it costs you $500, you can re-alocate that money to pay part of your mortgage for the home.) This way you know how you stand with your finance while at the same time making sure you do not put yourself in a hole you can not get out of.

[MP0WER]

Talk to a CPA and find out what the income cap is to having your school loan payments be tax deductible. I think it's $150k per year....what ever it is once you exceed it no more tax break on the school loans.

[kevinbahnz]

Originally Posted by Wakka

Im in the process of buying right now so i will lend you what knowledge i can.

Start saving, clear your debt (if any) make your credit look as good as possible, when you are ready to start shopping call some banks / loan offices and get pre qualified for what you want. Then once you have that get a realtor, and start shopping.

Its not too stressful until you actually start making offers on places.

good advice. and dont apply for any other credit or loans. show some money in the bank accounts, no big deposits and don't tell them you have a lot of cash when applying for loan.

[SAM135iAM]

Originally Posted by Zeros and ones

before you even go out and buy a house. A golden rule of thumb is this:

do not spend more than 28-30% of your income on a home mortgage.

Based on that you can now decide what you can afford and the types of area that you can live in.

Other things you need to take into account with owning a home
1) property tax
2) insurance (flood, earthquake, fires, etc depending where you live in USA)
3) HAO fees (if this is applicable)
4) water/power
5) gas
6) misc things like: (crap my main water pipe broke, crap the pipes are clogged, oh sh*t this sprinkler need to be fixed again, crap.. I need to pick the weeds again, etc. I can go on and on)

I put those in order of importance. Of course do not forget your other expenses that you have during the month like, car insurance, gas for the car, cell phone, food, clothing, etc

btw, two years is quite the goal and I wish you much luck to reach it. be smart, find out what is costs you to live per month and see what is left over. See what money you can re-used (ex: if you rent a place and it costs you $500, you can re-alocate that money to pay part of your mortgage for the home.) This way you know how you stand with your finance while at the same time making sure you do not put yourself in a hole you can not get out of.

Excellent information! Thank you sir!

[KingOfJericho]

Originally Posted by MP0WER

Talk to a CPA and find out what the income cap is to having your school loan payments be tax deductible. I think it's $150k per year....what ever it is once you exceed it no more tax break on the school loans.

It's WAY less than that and only the interest is tax deductible.

Income Limitations and Phase-outs

The deduction is also limited by your income. If your modified adjusted gross income is under $60,000 (or $125,000 for married couples filing a joint return), then you can deduct up to $2,500 in student loan interest.
If your income is over $60,000 but under $75,000 ($125,000 to $155,000 for married people filing jointly), then your deduction for student loan interest will be prorated.

If your income is over $75,000 ($155,000 MFJ), then your student loan interest is not deductible at all.

[ENGINE er]

I own a company that buys distressed real estate in Texas. My advice is to find something with some margin. Dont go buy a new house, they are difficult to sell the first few years while the area is being built up. So if something happens you will be taking a hair cut because you are competing with the not yet completed custom home down the street that people can make exactly how they want.

older houses are not nearly as scary as some people make it out to be. These are also the people that buy a new car every time they pay off the old one. beware, its an expensive habit to get into and houses are easy to fix.

Take advantage of homesteps, homepath, hudhomestore sales. Also, use a 203k loan to renovate the house you move in to.

take care of the bad debt, get aggressive with saving and see if you can find a house closer to 20% of you monthly income. Its easily done if you follow what i said above. Im 3 years out of school and my mortgage, taxes and insurance add up to about 15% of take home. More money each month to blow on car parts (or if you are like me...save/reinvest)

[williakz]

Excellent advice in line with my experience of over 30 years. You, sir, are destined for success. Welcome to the club!

[MediaArtist]

If you're financing, look for a loan officer who can close. Read reviews, make sure this person doesn't have a history of moving like a snail and going over deadlines. I've seen friends lose homes due to slow poke loan officers who don't get your file into underwriting until 1 week before the closing date.

[MiddleAgedAl]

Originally Posted by JLed79

being house poor is not a fun way to live.

I get what you are saying with this term, and I agree, but I think it's a bad term that hides what is really happening. If you are "house poor", and have no money left for living, then that really means you bought too much house for your income in the first place.

Dont borrow all the amount they are willing to lend you (whoever "they" turn out to be). Seriously consider buying less house before you consider taking every last penny they will lend you. Expensive, unpredictable stuff happens.

Some people think, gee, if these experienced financial professionals, who do this all day long, are willing to approve me for this huge sum, then I guess it's perfectly fine to use every last drop of it. Since they want their money back, they wouldnt risk lending me a dangerous amount, right? WRONG.

Figure out what you can afford, factoring in buffers for hits big expenses or temporary job loss, etc. You cant afford a place if buying it means spending every last dime on mortgage, leaving nothing for emergencies. If you dont want a place that small/old, then work on the "income" side of things, but dont just leverage yourself to keep up with the Joneses, unless you are keen to foreclose with the Joneses too, when the first sign of financial turbulence hits (spouse loses job, etc etc)

[Sam335ix]

Mortgage broker? LOL I am a mortgage banker and you need to cut out the middle guy and go straight to the source of the money. Also, rates may hike up quickly by next year and prices of homes have already gone up so if you can buy now then make it happen. Keep your dti (debt to income ratios) below 40 percent to still enjoy your life and not be cash poor. Stay the f away from condos, the condo fees are not worth it and rather cutting the grass and take the trash to the curb. Pm me if you need further advice.

[SAM135iAM]

Wow! Thank you all for the wonderful insight! It is very much appreciated.

[passing]

buy a multi family so your tenants can pay your mortgage for you.

[f30nynj]

Is there any home buying forums that anyone recommends? I'd like to interact and learn about the communities well before jumping on to one.

[SAM135iAM]

Originally Posted by f30nynj

Is there any home buying forums that anyone recommends? I'd like to interact and learn about the communities well before jumping on to one.

Good question!

[Dkhan23]

Have some $$$ in the bank