So my lease for my apartment is up toward the end of this year, and now that I can work remote, I’m thinking of moving somewhere less expensive and finally buying a home. Can anyone with experience give me advice on the process or resources I can use? Not only am I a total noob, but I don’t talk to my family and my friends aren’t homeowners either, so I’m not sure where to start. Googling presents me with so much info that I’m a bit overwhelmed.

  •  MariaTacobellina   ( @MariaTacobellina@beehaw.org ) English
    25•1 year ago

    What country are you in? It might matter.

    Assuming you are in the US, the process is lengthy and there’s a lot of hurry up and wait, but it’s not too bad.

    • First you save up your down payment which can be as low as 3% of the purchase price (or even lower for some people, many vets pay 0% down). 20% or higher will get you a lower payment because you don’t have to buy insurance for the bank and may get you better rates.
    • Next pick a lender either by manually calling around to a bunch of banks and seeing what they offer or by going through a mortgage broker who gets paid by the bank for bringing them business. When you have picked your bank you want to get pre-approval for the amount of money you wish to borrow.
    • Contact a real estate agent who works for buyers. Recommendations from friends and family help a lot here. Broadly you want somebody with a lot of experience who helps a lot of people buy homes. You generally don’t want your cousin’s friend’s barber who’s starting up real estate as a side gig.
    • Your real estate agent helps guide you through the local market practices. You tour houses and if you find one you like your real estate agent helps put in the offer which will likely include a payment of earnest money which you will lose if you pull out of the contract.
    • If the offer is accepted you and your agent negotiate the purchase agreement with the seller including any contingencies such as passing a home inspection.
    • You sign a bunch of papers with the bank, nowadays probably on a website. The title company does their work including writing a title insurance policy. This stage takes about a month.
    • When everything is already you will sign the final papers and get the keys.
    • After a month or two your bank will inevitably package your mortgage into a bond which is sold to one of the hilariously evil and predatory mortgage-backed security companies that are still doing the same shit they were when they ruined the world economy 15 years ago.
    • Budget roughly 1-3% of the home’s value in savings per year to pay for maintenance and repairs.

    Edit, addendum: hire your own lawyer to review the contracts. This will cost about $1,000. If you don’t already have a lawyer you can contact your state bar association to find one that is relevant to your needs. Don’t buy a home as co-owner with a person to whom you are not married. If you must, you will need your lawyer again to draft up a full partnership agreement that describes how to divide the asset in the event of death, disinterest, disability, disloyalty, etc. You don’t want to be half owner of a house with your deceased girlfriend’s parents who want to sell it out from under you. Pick a number as your budget and stick to it. The temptation to get a house that is a little bit nicer will always be there. This is how stupid decisions are made.

    •  DrunkenWombat   ( @DrunkenWombat@beehaw.org ) English
      8•1 year ago

      This is a great overview. I’d like to stress how impactful and important your real estate agent can be. Finding the right one can make the process way less confusing and stressful. There are a lot of new terms and processes that you’re going to quickly learn about, and you want to be sure you have someone on your team to make that as smooth as possible, especially since not having all your ducks in a row can cost you a lot of money or have you lose out on getting an offer accepted. I’ve personally had good success with very experienced independent realtors that assist with sales and purchases of all types of residential properties from shacks to multi million dollar mansions.

    •  nick [he/him]   ( @thekerker@beehaw.org ) English
      7•1 year ago

      As someone who’s been through this 3 times, this all correct but I’ll add a few caveats:

      • If possible, go with a credit union over a bank. The interest rates may be a little higher, but you’ll have fewer fees to deal with and generally have better service since CUs tend to be local while banks are national entities and couldn’t give less of a shit about you. You’ll have to be a member of a CU, but you can just open a savings account with as little as $5. Some CUs will also pay special extraordinary dividends each year to account holders.
      • Get pre-approved for a home loan through your bank or CU and get the pre-approval for a little more than your budget. The pre-approval can help with negotiations and saves time on paperwork when your offer is actually accepted.
      • If you pay less than a 20% down payment your mortgage processor will require private mortgage insurance (PMI) which will be added to your escrow. Your monthly mortgage payment will be divided into principal and interest (PI) and taxes and insurance, so you won’t have to worry about paying your property taxes or home owners insurance each year: your bank or CU will pay that for you out of your escrow account.
      • You will need to pre-pay 1 year of your home owner’s insurance premium, so be prepared for that.

      Buying a home can be a daunting, overwhelming, and frustrating experience, especially if you’re looking at a quick closing timeframe. Just remember: your real estate agent is there to help you every step of the way and it’s in their best interest to have your best interest at heart. Rely on them and their guidance and it’ll make the whole experience less stressful.

      •  Admiral Patrick   ( @ptz@dubvee.org ) English
        2•1 year ago

        If you pay less than a 20% down payment your mortgage processor will require private mortgage insurance (PMI) which will be added to your escrow.

        Just FYI, OP: The fee for the PMI is usually based on the difference between 20% and what you put down. I wanted to save some money upfront for some upgrades, so the bank recalculated my fees with 15% vs 20% down. The PMI on a 15% down payment came out to $8/month for the first 12 months and dropped off after that.

        That saved me a few thousand upfront which I was able to use to pay for my landscaping and some other projects.

        Also, don’t be afraid to ask stupid questions to your mortgage broker :) They’re usually very helpful, and mine actually suggested that tip to me. It was also less than the extra interest I would have incurred if I’d increased the amount of my loan by that much.

        •  nick [he/him]   ( @thekerker@beehaw.org ) English
          1•1 year ago

          Just FYI, OP: The fee for the PMI is usually based on the difference between 20% and what you put down.

          Ahhh, that makes sense. I haven’t had to deal with PMI since I bought my first house in 2009, and all I could remember was something about 20% down. Thanks for clarification!

      •  lackthought   ( @lackthought@lemmy.sdf.org ) English
        4•1 year ago

        it may seem overwhelming, but if you find a good real estate agent they will help a lot

        I thought the home buying process was rather easy, anything important I needed to sign was digitally sent to me by my realtor and they also helped coordinate inspections, etc.