Quote:
Originally Posted by AllBlackBimmer
OK, I am 26, and just got a new job promotion. Looking to buy my first house in the next 6-12 months 
I have already lived in apartments, etc, but alays rented.
Questions:
What are the steps I need to take in buying a house?
What are some "inside tips" or information to know of?
How should I go about picking a real estate agent? (There has to be some agents on here that can chime in!)
How do I go about knowing what I can afford?
How do I go about estimating monthly bills, etc.
Any other info would be helpful. This is the start of a new life |
I work in the financial services industry (currently a VP of Operations/Regulatory Compliance for a major American bank), but I've done everything from Personal Banker to Underwriting in college. Here's some tips:
Get pre-qualified. Have a Loan Officer review your income, your credit, and your downpayment. This will tell you what you can be approved for and how much you can afford.
Insider tips: If you plan to stay in the home for awhile, pay the points (if your lender offers it) to get the lowest rate. It'll pay for itself if you're going to be in the home for awhile.
You can shop around, but honestly, rates are pretty comparable across the board. 30 years for best credit profile are around 3.3-3.5%. Look at where you currently bank - they may have promotions for existing customers - in addition, most banks give extra perks when you hold a mortgage with them.
15 year mortgages and their rates seem attractive, but I always suggest to go with a 30 year and if you wish to turn it into a 15 year by paying extra to principle, you definitely can. Then, in the event of financial issues, you have a default lower payment to manage, vs. a higher default payment.
Research the neighborhood. Look at crime report websites, etc. Drive around here and there day and night. It'll give you a feel for the area.
In terms of what can be afforded... a lot of people think just Principle and Interest, when lenders also factor in Taxes and Insurance (PI vs. PITI). So that'll come into play with DTI calculations.
Generally, lenders (for a conventional, conforming mortgage) prefer you to spend no more than 33-36% of your gross income on PITI, and no more than 45% or so on total debts. FHA mortgages can go up to 45% for PITI, and 55% for total debts - but, these metrics also depend on the originating bank.
Hope this helps with some insight. If you have more questions, feel free to ask. Aside from it being in my career field, I just purchased a home earlier this year, so I know it both from a lender's perspective and a homebuyer's perspective.
