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I guess we're buying a house...
Topic Started: May 31 2009, 06:53 PM (83 Views)
rach679

We've been thinking a lot about our budget, and what we're going to do in October (buy, rent a house, rent an apartment, etc). We've pulled flyers, checked mls listings, checked new home communities online (some in person), checked rental agency listings online, checked apartment guide/finder online in all of our target areas and really buying is our best option. I mean we're already paying a mortgage payment - and we have a gifted down payment.

We're looking a new-construction house, built by KB Homes. This is the house/floor plan that we've fallen in love with. I love the open space - the "flex" space, the loft upstairs. The downstairs is VERY open. Upstairs is nice and homey feeling. Dh and I sat down in the model today and just sat there for almost 30 minutes just talking about our options LOL! We drove around the community - lots and lots of families. Zoned for a brand new school (and new middle and high school coming soon - by the time H enters those grades). The word from my local mom's site is that the principle of the elementary school has been getting out into the community and getting to know families - our pastor's wife said that the principle visited there grand opening of their neighborhood pool and just hung out with the families having fun. Seriously - that is the kinda principle I want who just gets out there and creates a sense of community. Its 5 minutes from my work, so I could pick Hailey up after school and bring her to work (if we have an afterschool program then) - or on my way home if we unitize the schools' after school program. Either way right now I pass the neighborhood on my way to work. Hailey could actually walk to school if she wanted to.

Our budget is actually really awesome looking. Remember a few weeks ago I was so uptight becuase DH and I hardly ever talk about our budget together? Well, we did sit down and we actually made some major changes. For the first time ever we've stuck to our budget last week. We didn't blow money on fast food or misc purchases. We coded purchases by bills paid online, cash-only purchases, check purchases (ie: tithe at church, or H's tuition). Most of all, what has been a significant help in our budget is Hailey's tuition is going down by $40 since she is moving up to the next classroom. I'm psyched to have that little bit extra going towards other more important stuff. We've updates our snowball debt payoff plan. And really the kicker for us...if we purchase a house with the tax credit for 8k we'll be debt free minus the house come 5/2010 (whenever we get our tax return back or whatever). Otherwise it will be 8/2010 at the very earliest to pay off the rest of our debt. Either way we will be done with our debt in 2010. So its not a huge deal, but its a nice incentive.

I'm getting really emotional about this decision, and still need to sleep on it. It just feels like a huge steeping stone for us. We've never had a place to call "home." I swore to DH, the next move we make is long-term. I'm teary eyed right now, because I am so desperate for a place to call home. A place to let Hailey run around outside and play, buy a swing set, meet neighbors and not feel bad because either we will move or they will move since after all you only sign a short-term lease. We can mow our own grass, or plant flowers, or grow vegetables and fruit. The silly things in life! My fondest memories growing up was gardening with my dad! LOL! I guess like mother like daughter, she is such a daddy's girl and so am I. Ok, DH is going to come in here and wonder why I'm sniffling LOL! I better stop!

I've driven by, we've toured this community I have lost count of how many times in the last 3 years since they began construction, I keep feeling the tug to go back. We were preapproved in August-ish for 122k fha loan w/ the 7500 tax credit from last year (2008). I am fairly certain we can get approved for 130sk fha loan w/ the 8000 tax credit with no problems. And the projected monthly payments (given our interest rate and other factors in the previous preapproval) we'd still be with in a comfortable monthly payment range. Espcially give the credit card debt would be gone.
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MissAngi
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Don't forget about property taxes! (If it is a really good area the taxes could be high) That is a significant payment as well. And with no construction do you have to purchase the lot too? ist he $135 just for the HOUSE or is it the house and lot too? Sometimes you need to pay extra for the lot. Also make sure you budget for emergencies and home repairs. Even new construction will have some things pop up! Especially with pets and children! I'd have at LEAST $1 or 2 thousand in the bank just for emergency repairs that you never touch!

Also that $8000 tax credit is not just something they hand to you. There are stipulations. here is a great website with Q&As. http://www.federalhousingtaxcredit.com/2009/faq.php Also its "up to $8000". ;-) That "up to" leaves a lot of doors open. LOL It also depends on your income level. If this is a new build the title would need to be transfered into your name before the end of the year. Will the house be built in time? These are questions you need to ask.

I think its awesome!!! and the house has a great floorplan!! That flex space could be your daycare!! Right in the front of the house when parents come in. :-)
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rach679

It does include a lot premium. Which I'm slightly torn about the cheepest lot is 1,500 which is a crapy lot IMO (two cul-de-sac are kind of back to back and about 4-5 of these houses you are looking right into the other house when built). The next lot we liked is 2,500 which is in the cul-de-sac, but its a smaller lot and smaller backyard. BUT I grew up in a cul-de-sac, and we never played in the backyard we played in the cul-de-sac or in neighbor's yards it really didn't matter. Of course times have changed, but the cul-de-sac has the least traffic so its safe to go say kick a ball, ride a bike, etc. Unlike a main road. THe rest of the lots are 3,500-4,500 and they are along main streets - or back into another house. The 2,500 lot backs into woods so really you have an extra couple feet of a yard space - we'd probably just fence in the yard though. The other lots seem a bit bigger - but no houses around her have a TON of yard space. Most lots are about 1/4 to 1/3 of an acre in any neighborhood (new or existing).

We have a savings account that is our emergency fund that has about 1500 in it. So I feel comfortable there. Of course ideally, 3-6 months would be better.

I looked at that website yesterday about the tax credit - we're eligible. From what I've been able to find we'd get the full 8k, the 10% of the tax value would be more then 8k. Property Taxes are another thing we'd have to add to our budget that we didn't think about. But I think w/ the FHA loan required for the tax credit they build in an escrow or something in rather account that goes to the property taxes. Trying to feel smart with all this lingo, LOL!

We asked them about the time frame for completion, they said their "year" ends in November and because of the tax credit they *WILL* have every single house that is started this month or in July done and closed by the end of November. So we just have to get our preapproval so we can go forth (we are not required a preapproval but I think our pre approval will be nice for us to know the max out value we could get a loan for).

Oh, I am so over the home-daycare thing! My house is totally mine! LOL! My ideal plan would to use the flex space as a den-ish area. Either that or a computer/study area. Not sure I'd like that right when you walk into the house though!

So we have to do a 2k deposit to start paperwork and get the ball rolling. Which goes towards closing costs/down payment. What I need to find out is the total amount of money we'd have to come up with in the mean time. We have two credit cards that are zero balance we planed to cancel - but I've heard that doing something like that (opening or closing accounts) can negatively affect your credit when applying for a home loan. DH opened up a new account w/ a zero interest balance transfer and he has been saying he needs to cancel that card he balance transferred from (We've paid off more on that card in the last 3 months since doing that, then we've paid off in the last year b/c of stupid bank fees and sky high interest rate).
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MissAngi
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Well I'd start by calling the county and finding out what the tax rate is in your area. Say you are looking to build a property that in the end will value around $145k. They should be able to tell you approx how much your taxes will be.

In Ohio taxes are due twice a year... Jan and July. (might be yearly for you.. not sure) For me its approx $1200 a half. ($2400 a year) Escrow means each month you pay your payment to the bank. Lets say $800. $600 goes towards the mortgage, but $200 goes into an escrow account (mini savings) until the next due date. By July or January, your $200 payments will eventually equal the full $1200.

So if you get your pre-approval for a loan for $145k (which will prob be what it is with closing costs, the house, the lot, etc) and your payments are $800. The tax payment is in ADDITION to that mortgage payment. They just tack it on. Rarely are there fees or anything involved. So now your payment is $1000. Then the mortgage company may also ask you to work in your homeowners insurance. Our first mortgage required it. So thats prob an additional $50 a month. So suddenly your $800 payment which you though you can afford is now $1050 a month. It adds up fast! ;-)

Did you find out if there are any HOA dues or anything? Something else to look into.


Also make sure you get that in writing that they complete it by Nov 1st. There are always delays! Union strikes, supply shortages, owner dies. I mean things happen! Get everything in writing!!! There was just a story on the news about a builder going out of business with this economy and couples building homes lost thousands of dollars. Make sure the builder you are working with has been around a while and isnt in any trouble. Do some investigation! ;-)


Closing accounts DOES negatively effect your credit. Does he have a lot of cards open? If he has 10 cards open... closing one might not look bad. But if he only has 3 cards closing one will look bad!! Those open cards with zero balance will also lower his debt to credit ratio which looks good to a bank. (as long as he doesnt have TOO much credit open) If you have too much credit open then your credit to income ratio is too high. You have to find that fine balance.

Have you guys pulled your free credit report this year? This is a MUST before applying for loans!!! Know your credit before walking in!!! annualcreditreport.com is where you need to go. Its completely free. You can pay an additional $7.95 for your credit score if you want. (There are three agencies... I usually buy ONE credit score from Equifax (they seem to have the most information)) The websites will also give you tips on canceling cards, when is the right time to make moves, etc. I HIGHLY recommend you doing that now! That way if you need to dispute anything, you can get that going.
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rach679

Our credit report is excellent - I guess we have the perfect debt to credit ratio! LOL! We've always been in the "excellent" area.
The builder is KB Homes. Like most places what I can google its a mix of positive and negative feedback (As with any company that's been around). I asked on my local mom's site about this community (and local KB Home's since most of the people filter around the area). All have positive feed back locally. So ya know.

They have a spreadsheet with estimated payments and includes the escrow, insurance, etc fees assumes a FHA 30 year fixed at 5.5% (our pre approval last time was that), putting 3% towards closing, and 3.5% towards down payment. They did not factor in lot premiums or HOA. The HOA is $221 a year. That is reasonable for the area, and quite typical. The lot DH wants though is 4,500. Its not the cul-de-sac lot I prefer, but it is at a corner (Dead end now -- might connect to the elementary school in the future. Mature trees in the back, and the acreage is more - there is a decent amount of side yard and you can tell the backyard has more space then the other lot. So I guess only time will tell on that one.
Dh has a site somewhere that you can look up the property taxes, so I'll have him do that sometime here soon. I will make sure to get it in writing signed, that it will be done by 11/1/09 in order to get that tax credit. Oh, we have 4 credit cards. I have one and it has zero balance. DH has 3, 1 with zero balance, one with 3k balance and one with 6k balance (those are rough guesses), and our car has about 7500 left. Actually there might be less on the one. But limit for DH's cards is all about 9k. Mine limit is 1500 unless they've raised it IDK. They sent me a new card but I"ve never activated it.
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rach679

Oh - we got step one of the pre approval process done. We went by the sales office, did our credit report and mini-application. The sales lady's jaw literally dropped said "oh my gosh" I was expecting something bad. She said you guys will have no problem getting pre approved - your credit is perfect and the best I've seen in a long time. Isn't that dandy! I spoke to the guy at our bank (And how the builder goes through) -- we just need to get together all of our paperwork (Bank statements, w-2, pay checks, etc). He said, once he gets the mini-application and the other information it will only take about 20 minutes to get a pre approval done. Then we can go ahead and get the contract to start construction.

We did check out another neighborhood but the prices are well above our range, They start at 140 - the cheapest is actually 145k and I really don't like that floor plan. I think 145k+ is getting out of our comfort zone.
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MissAngi
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Yeah if your credit at the moment is "perfect"... dont do ANYTHING till you close that loan!!! LOL Once youre settled then you can cancel cards. Canceling cards only effects you for a little while. Just dont make any big moves before you close on this loan.

Glad everything looks good. You might be able to get an even lower interest rate if your credit is super good. Also make sure you get a 30 year FIXED mortgage!!!! I know the adjustable rates will tempt you with a REALLY low payment... but the economy is really shakey right now. Do NOT risk it!!!
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MissAngi
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BTW -- I am REALLY excited for you guys!!!!!!!!!!!!!!!!!!!!!!!!!! I think you'll FINALLY be happy in a new home!!!
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rach679

Oh yea - no way in HELL will we do a adjustable rate or similar. We're getting the standard 30 year fixed rate! lOL. Lower rater or not! I do not want to risk a foreclosure b/c the interest sky rockets unexpectedly.
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rach679

I posted this on my local mom's site:
Quote:
 
When you buy a new home from a builder, should you request that they pay closing costs? I was talking to my dad (Who just bought a house from a builder) and said they paid closing costs, paid whatever to lower a point, and the first month of his mortgage - so we should get the same kind of deal or walk away.

Another thing he said, was the fee to draw up a contract/start construction should be non-existent - they should not be charging for that, and its a scam - they don't use the money towards the total down payment amount that they said the fee is for (its a 2k fee w/ KB Homes). Every builder I've ever heard of does some type of fee prior to begin construction as a measure of earnest money or whatever showing that you are serious about buying the house.

I'm just clueless, DH and I both are. And we're just starting this whole ordeal and already am getting worn thin about it.

HELP ME NOT GO CRAZY!
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MissAngi
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I've never built. So I dont have experience on what is right or wrong. I did look up a few websites with valuable information!!! It seems to be the closing costs is one of those negotiable things. And often you have to go with the builders lender. (not always though) But they arent going to offer if you dont ask.

http://www.monogramofpasco.com/SellerPaidClosing

http://www.housebuyingtips.com/newhomebuying.htm

http://www.trulia.com/voices/Home_Buying/Are_the_closing_costs_usually_paid_by_the_new_home-42680

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rach679

Ok here is what gets me, the first web site says:
Quote:
 
Remember - When you ask the seller to pay a portion or all of your closing costs, in essence you are financing the closing costs. This is because the seller's contribution is typically offset by a higher purchase price. And it is this higher purchase price that is financed with your mortgage loan


So basically, the base house is 136k, the lot premium is 4,500 max, we're already at 140,500. Not to mention adding a potty downstairs - and DH wants the bay w/ peninsula at the great room. I imagine between those two we'll be at $145k at least! We're pre-qualified for 160k (which apparently there is a difference there too - the guy that deals with this stuff is out of town til next week so we wont have an official pre-approval til next week when he is back in town - and we will be on vacation!) Anyways, this is turning into a huge PITB. But the closing costs I'd almost rather pay then have to finance that to have the builder/seller pay that. Although I know its more money up front, long term the interest would more then likely be more. :sigh: We can get about $2,700 together for closing (Granted that is consider taking a break on paying extra on the credit cards, then assume my dad can still gift us the remaining amount to equal 3% and 3.5%. My aunt also has a savings account for me - but it is based off the stock markets and well those have tanked. It was up to about $800 a year ago.

Its one of those things I'm bitter about - and need to really pray long and hard about. I can not count the amount of money relatives have used to help my flipping mother only to screw up again and again and again. I mean at least 10k or MORE easily since the time I was 14 (8 years). Of course nobody is obligated to help us or anything - but I know my grandfather who helped every one of his kids, and his wife's daughter purchase a house - he'd NEVER help us. And he's the main one who has enabled my mother financially. Along with my dad. And I know my dad is willing to help us, but its just like all these "conditions" I'm just about to call it quits. I don't want to "hire" Realtor b/c then the prices would probably raise even more to paid the person. I dobut you can get a buyer's agent for free! I'm sure they have some type of fee...urg!
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MissAngi
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No you CAN rachel... BUYER agents ARE free!!!!! Only seller agents make money (off hte sale of the house) So if you dont have a realtor... get one and have them help you!!!

If you borrow money (or get a gift) from anyone... there will be "conditions" and "strings attached". Thats just how it is! Whether its a lecture from grandpa or 25 pages of "fine print" from a bank. Unless its YOUR money there will always be something attached. So just learn to deal with it! ;-)

If you are pre-approved for 160 you have enough wiggle room. Closing costs arent THAT much. So relax... take it one step at a time. Dont get too emotionally involved. Make sure to take your time, read everything, take paperwork home to study it. Ask for expert opinions from people not emotionally involved. Make this an enjoyable experience!
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rach679

Oh yea, there are always strings attached - so Thats why I'm praying about it. I don't want to feel this bitterness, and really its not even logical! LOL!

I totally didn't think a buyers agent is free...Hmmmm...I know a few local momma's I'll have to get in touch with.
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MissAngi
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Yeah we didnt know either!! When we were house hunting one realtor that was working on behalf of the seller told us! She said buyers rarely ask for help because they think it costs money. The realtor will help you for free when you are buying... build a relationship with you... and then when you go to sell you naturally go to them. She helped us out A LOT when we were buying.
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rach679

So - we're changing our minds a ton!

We were going through the list really picky of what is included standard in the house. No fridge, no Microwave. Those are two big out of pocket expenses (the fridge in particular). I am certain the cable or phone company can install additional cable outlets at a better price then the builder can but they only include one - and downstairs. The plan was to keep the computer upstairs, and our internet is cable - requires a cable outlet. So We kind of scratched that idea.

I think we're going to go ahead and get a buyers agent - or interview a couple and then find an existing home in the school zone and location that we want. We know the school zone, be close to the interstate/freeway's, etc. So it should just come down to the MLS listings and touring houses. I'm betting we'd maybe even be able to find a foreclosed or pre-foreclosure house better this way. Just wondering if it is too soon to start looking for an existing house. Our apt requires a 60 day (2 month) notice which would put us at August 1 giving a notice.
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rach679

Maybe we'll find a better deal that way? I don't know. It seems like the costs keep adding up and adding up on new construction. We were reading the find print - and there is a deposit of an undisclosed amount for the options. I'm really bummed but whatever. We'll figure it out by October right?
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MissAngi
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Forclosed homes almost always need work. If you can't afford a fridge and microwave... you prob arent ready for a fixer-uper. I would stick to a regular house. Plus the loans for forclosed houses can get a little complicated.

It usually costs about $40 per jack for the cable company to install extras. Not sure what the builder charges.

Dont get yourself dead set on a new house. I'm sure there are plenty of older homes that will fit your budget. Its a buyers market out there right now!!! Poeple arent able to sell theri homes so the prices have really dropped!! If you find a house thats been on the market a year, they are more willing to negotiate price!
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rach679

Oh, no I don't want a fixer up-er. There are a lot of houses from my understanding in great condition, foreclosing, due to bad loans, job loss, etc.

I'm certainly not set on a new home construction!!! I'm slightly set in a school zone though. We're not going to make any decisions or persue anything further until we get back from vacation on the 18th.
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MissAngi
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Well usually the GOOD foreclosure homes are sucked up by people who know what they are doing when it comes to foreclosure sales. Very rarely does someone with no experience buying foreclosed get a really good one on their first try. There seriously are people who buy foreclosed homes as a business. Just to flip them and make quick money. Its more of a pipe dream for the regular joe home buyer... going to find that gem for cheap. Yaknow?
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