Real Estate Advice
 

So I'm buying my first home within the next few weeks. I've done a TON of research into the housing market (particularly mine), financing options, etc. But I've still got a few questions and, given the number of highly intelligent and successful people on this site, I'm looking for advice from some of my warpath brothers.

First, is there any sort of[I] generalized[/I] formula for determining whether a house is a "good buy" based the home's assessed value?

Second, to what extent are buyer's agents useful? I know that buyer's agents owe fiduciary duties to their principals, but do such duties actually compel the agent to do what is in the principal's best interests given that their commission is based on the home's purchase price?

Third, how many home inspectors do people typically retain? Is there any way to determine if a home inspector is qualified, other than asking friends? For example, do they have certifications that might indicate that certain inspectors are more qualified than others?

Fourth, what is a good percentage of your gross income to spend on mortgage payments (including escrow)? I know this percentage will vary based on the individual and his outstanding debt, but is there a range for the "conservative" buyer and the less risk-averse buyer?

Finally, what kind of "hidden costs" can I expect to incur? Obviously there is the down payment, loan origination fee, and inspection fees, but what other fees can I expect to pay?

Re: Real Estate Advice
 

I dont know alot of the stuff that you are asking, but I have read up on the best type of houses to buy. In the Article it stated that you do not want to buy a newer home and have the market dictate to you how much you should pay. It said "instead, purchase a home that is a little bit of a fixer upper", that way you can make improvements on the home and dramatically increase the value of it. The article was in Maxim a few months ago. The person making these statements was some Real Estate Tycoon.

Re: Real Estate Advice
 

[QUOTE=Sheriff Gonna Getcha;299948]So I'm buying my first home within the next few weeks. I've done a TON of research into the housing market (particularly mine), financing options, etc. But I've still got a few questions and, given the number of highly intelligent and successful people on this site, I'm looking for advice from some of my warpath brothers.

First, is there any sort of[I] generalized[/I] formula for determining whether a house is a "good buy" based the home's assessed value?

Second, to what extent are buyer's agents useful? I know that buyer's agents owe fiduciary duties to their principals, but do such duties actually compel the agent to do what is in the principal's best interests given that their commission is based on the home's purchase price?

Third, how many home inspectors do people typically retain? Is there any way to determine if a home inspector is qualified, other than asking friends? For example, do they have certifications that might indicate that certain inspectors are more qualified than others?

Fourth, what is a good percentage of your gross income to spend on mortgage payments (including escrow)? I know this percentage will vary based on the individual and his outstanding debt, but is there a range for the "conservative" buyer and the less risk-averse buyer?

Finally, what kind of "hidden costs" can I expect to incur? Obviously there is the down payment, loan origination fee, and inspection fees, but what other fees can I expect to pay?[/QUOTE]

I am not sure on the first 2 questions, but on the third question, when I bought my home 4 years ago, I needed to have it inpected by atleast 2 inspectors. One was a pest inspector, he just checked for termites mainly. The second inspector was a contractor. He basicly looked over my wireing, plumbing, and the foundation of the house. Unless the bank wants a certian type of inspection (e.g. pest controll) a contractor is pretty much all you need. As for being able to tell if one inspector is more quillified than another, I am sure that they may have certificates, but I am sure the certificates are pretty much the same no matter who has them. I would look to see which inspector has the most experinece or a fair amount of experinece.

And the only other hidden cost, or expected cost would be for a lawyer to research the deed to make sure that their is no lein or debts against the house. And depending on where you are buying(e.g. out in the woods or a place with alot of land) as the buyer you may need to pay to have it re-survayed.

Re: Real Estate Advice
 

Thanks guys for the advice. I appreciate it.

Re: Real Estate Advice
 

Hey, congrats on your first home purchase!:food-smil
With the line of work im in, termite and pest control, i deal with alot of real estate agents and do alot of termite and moisture inspections for real estate transactions. and being a homeowner myself, i can tell you its a great feeling being a homeowner.

Having said that there is no 'set' formula for determining a good buy based on assesment value. it all depends on the appraised value and comps in the surrounding area for similar homes. and remember its a buyers market right now.

Secondly, agents are a trying to get the sale done, and the good ones will do what ever they need too to look after your best interest. Yes they work on commision, but the difference between the asking price and the accepted offer/selling price is only going to be a few hundred dollars in or out of their pocket.

Third, YES!! get a certified home inspector. We have a couple around here who are highly regarded because they are very though. most of the stuff on a home inspecton reports are minor cosmetic things, but a good inspector might reveal something that needs to be addressed before you move in. check with several different agents and see who they would use if they were buying a house, but wouldnt want coming in if they were selling their house ;). as far as the termite and moisture inspection, its required in most states and the fee is on the sellers side, and by the way when you get your termite report findings and you have any questions, let me know, ill be more than happy to help anyway i can.

Fourth, the percentage that lenders are looking at has narrowed alot recently, do to it being a buyers market and all the forclosers, sorry but i dont know what that percentage range is right at the moment. but my motto is dont bite off more than you can chew comfortably right now. lots and lots of people get more house than they can afford with these 2,3,5 year arms or interest only loans and when that 2,3 or 5 years comes up they cant afford the payment. get what you can afford comfortably right now, and if you make more money 2-3 years later you can sell and get more house, or add a nice pool or addition or whatever.

Lastly, your closing attorney or title/mortagage company can give you every fee your gonna pay, itemized. this is something you need to really shop around on. alot of these companys charge alot of bogus fees. get total itemized quotes from several companies and compare. hope that was somewhat helpfull, and again congrats on your purchase. oh yeah, unless its a new or newer house get a home warranty, about 200-300 for a year to cover major repairs of appliances, hvac, electrical and so on. sometimes the sellers offer it or will if it means they have a deal or not. good luck.

Re: Real Estate Advice
 

[QUOTE=SkinEmAll;299981]

Secondly, agents are a trying to get the sale done, and the good ones will do what ever they need too to look after your best interest. Yes they work on commision, but the difference between the asking price and the accepted offer/selling price is only going to be a few hundred dollars in or out of their pocket. [/quote]

I've been a home owner since I was 22, I will tell you, agents are just sales people out for THEIR best interest. They will act like you are their best interest...don't be fooled. Go in confident, and offer low. Meaning...let's say the house is on the market for 200k, offer 180k. You never know who is desperate to get out. If they don't like it, they will make a counteroffer, or you make a counteroffer. My first house was a HUD repo, and they wanted 79k for it...I offered 53k and they took it without negotiating. I fixed up every room and redid the kitchen myself and I sold it for 110k 7 years later.

[quote]Fourth, the percentage that lenders are looking at has narrowed alot recently, do to it being a buyers market and all the forclosers, sorry but i dont know what that percentage range is right at the moment. but my motto is dont bite off more than you can chew comfortably right now. lots and lots of people get more house than they can afford with these 2,3,5 year arms or interest only loans and when that 2,3 or 5 years comes up they cant afford the payment. get what you can afford comfortably right now, and if you make more money 2-3 years later you can sell and get more house, or add a nice pool or addition or whatever.[/quote]

That is great advice. Beware of ARM loans...I hate them, and never recommend them. Take the fixed rate, and if the market offers a great interest rate in the future, refinance. I went from 9.25% to 5.99% after I refinanced. ARM loans will kill you if you aren't paying attention and preparing for a hike.
A $400,000 loan at 7.5% interest over 30 years is $2,796.86 a month.
A $400,000 loan at 8.0% interest over 30 years will add $138.20 a month to your mortgage. Don't think that .5% matters? Think again.

[quote]Lastly, your closing attorney or title/mortagage company can give you every fee your gonna pay, itemized. this is something you need to really shop around on. alot of these companys charge alot of bogus fees. get total itemized quotes from several companies and compare. hope that was somewhat helpfull, and again congrats on your purchase. oh yeah, unless its a new or newer house get a home warranty, about 200-300 for a year to cover major repairs of appliances, hvac, electrical and so on. sometimes the sellers offer it or will if it means they have a deal or not. good luck.[/QUOTE]

One thing you need to look out for is PMI insurance. AKA Mortgage Insurance. I never have gotten a straight answer for what this is really all about...but it's the companies way of getting as much money from you as possible before you can't afford the payment anymore. (assuming they will need to foreclose on you) You can avoid PMI insurance by putting a down payment down that will make your loan to value under 80%. PMI insurance can cost you anywhere from $50 to $200 a month extra, and it's calculated right into the mortgage so you forget it's there. It's a scam if you ask me, but most everyone does it, so it's impossible to avoid it.

Congrats on the new home...I assume you are already approved for a certain amount at this point? If not, you need to find a lender that will give you a figure of how much they will lend you with how much you make. They have specific calculators that will calculate your debt to income ratio and then figure how much you can afford from there.
Nothing sucks more than looking at a house that you KNOW you want, then the financing takes MONTHS and then they tell you you don't make enough, or whatever. Get approved first!

Re: Real Estate Advice
 

1. A house is a good buy if a) you can afford it, b) it has what you are looking for in a house, c) it has no problems, d) in a decent neighborhood, e) you don't anticipate moving in the next 5 years. Basically, if it meets your standards and all your questions have been resolved.

2. Agents are completely useless POS when it comes to everything except helping you do the paperwork. Here in Seattle area the seller pays the cost of both agents so I hire one and I didn't have to pay her. There are good ones out there though who know of homes not listed on MLS. If you already have home in mind then you have room to negotiate with an agent. If you have to pay them then negotiate a discount. If your cost is 3% of the home value tell them you'll pay them 1.5%.

3. You are entitled to ask an inspector for reference. Also, when they are inspecting the home make sure you are there. Don't use an inspector referred to you by your agent. They will tag team your ass. Look for one yourself. I bough a new house so I hired one inspector. She was a nice old lady who crawled into every little possible places. Your inspector should do the same. Also ask them questions about the area they are looking at. Ask them the impact of weather when inspecting the exterior. Ask them about the ventilation of the house, heater, and air-conditioner. These guys get paid no matter what so if they are experienced one is probably good enough but then again it doesn't hurt to have another set of eyes look at the house.

4. Lenders see anyone whose debt to income ratio is lower than 30% as less likely to default. Ideally, you don't want to be living paycheck to paycheck after you purchase a home. If you do all the math you should be able to figure out what works for you. If you are pouring all your income into the house and have no savings left or money for fun activities it is time to rethink the purchase. In any case, it would be wise to take care of your debt before purchasing a house.

5. Avoid anyone that's talking to you about closing costs and other bullshit. I paid no closing costs. And the only fees I paid was $500 to an intermediary (can't remember what they are called) company to hold my down payment and facilitate the purchase transaction and about $200 in misc stuff such as paper work. Also, make sure to get your financing taken care of before shopping. I would recommend going to Bank of America and see what they offer. They are really straight up and they don't have hidden costs. Whatever you do go through a reputable bank.

ps. ARM is not all bad it is just that it allows stupid people who can't afford a home to purchase the said home. From an investment stand point you can't beat an ARM's interest rates. Also, if you intend to sell your house within 5 years, an ARM is a lot less costly than a fixed mortgage.

Re: Real Estate Advice
 

You guys are friggin awesome.

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There is world of difference in INSPECTORS. Interview more than 1, or perhaps pay for more than one to be done?
You want the biggest, pickiest asshole in the state. They will want and suggest "their guy" who will the slimiest, loser that can be be bought.
That is how it was with my first house and I fought problems for several years after that should have been caught.
valuable lesson learned

Re: Real Estate Advice
 

Do not allow your agent (if you have one ) line up for the home inspector. The reason I'm saying this is because the Realtor wants to close on the home and if they use a picky inspector it will only delay or void the deal. Find one of your own that is working for your interest and not the realtors. I'm in the insurance business and I have seen too many times when the inspector from the realtor let way too much stuff slide. Insurance Co. may do a quick inspection of a home and I have had several policies rejected due to roofs, siding, and other stuff that the inspector did not list. One that comes to mind is a closing that my inspector rejected due to an old roof with curled shingles. The buyer said that could not be the case as the inspector listed that the roof was only around five years old. I went to check out the roof and it was in bad shape with a few shingles broken off lying in the gutters. Now there was about a 10x10 section that was about five years old but the rest of the home's shingles had no life left. I think that the termite inspection is manditory for most loans but are only around $150.00.

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One other thing if you have any questions about home insurance I'd be more than happy to answere any questions you may have. If your buying the home in Virginia I be glade to give you a quote on a homeowners policy.

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My suggestion would be for home inspectors. Is find one that is willing to come back and go through the final walk through with you. I learned this kind of the hard way. During my final inspection they were racing me through the house trying to cover stuff up with jargon and quick lips. I put on the brakes right there and asked to reschedule. It actually screwed up my closing date, but I didn't care. At the time I was a first time home buyer so basically I just chilled in my apartment another week. My sellers on the other hand got all screwed up the change. Oh well that is what you get for being sneaky!

When we went back for the second walkthrough come to find out they put in the wrong sprinkler heads, cost them another $1k to fix it. I am glad I didn't let them bully me.

ENJOY BEING A FIRST TIME HOMEOWNER! It is a great place to be. Next time you will be both seller and buyer that is when the fun really starts!

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I can hit you with the financial advice piece, that falls into my area of expertise. Experts generally say your mortgage payment (including escrow for taxes and insurance) shouldn't go higher than 35% of your NET income. My wife and I got married when we were 24 and bought a house right afterwards. At the time, the payment represented 34% of our income. At that level, we were able to save for retirement, pay bills and student loans comfortably, and take the occasional trip. We didn't have children at the time, which should be taken into account. (But I don't think you have kids yet, do you, SGG?) After 3 years, our income has risen, so now we're supporting a young'n and are comfortable with the size of the mortgage payment.

We had a buyer's agent, all she really did was keep an eye out for properties coming fresh onto the market. She also provided info about the whole process, which was good for us as first time buyers not knowing squat. Buyers' agents only make like 1% commission from the sale, so their incentive is to not spend too much time with you, because they could be putting their efforts into selling a house which gets them 5 or 6% commission. So they'll tend to urge you to bid higher on a house you like, just to increase the chances of pushing a deal through. The key for you is to set a price YOU are comfortable paying for the house, and offer that amount, regardless of what your buyer agent says. If the sellers don't like the offer, so be it, but at least you didn't pay more than you were comfortable.

It's generally a good idea not to go with the home inspector that comes recommended by the agents (either buying or selling). Those inspectors have relationships with the agents. All agents want to do is push transactions through quickly; if the inspector is willing to downplay problems with the house, it increases the chances that the transaction will go through. And if the inspector does this for the agent, the agent will feed the inspector more business. This is not always the case, some of these inspectors are reputable. But it's best to find a guy who comes well recommended from friends to do the inspection, and tell your agent to go to hell with whoever they're suggesting.

A few things when you're looking at a house:

- If the house has smells of dampness/must anywhere, DO NOT BUY under any circumstances. Where there is a damp/musty smell, there is ALWAYS mold damage. At age 24, I made this mistake. Last year we discovered rampant mold damage and had to replace all the plywood and 2x4 framing around the side of the house.

- Try to look for houses that are landscaped in such a way to grade water away from the side of the house. It reduces the chances of a flooded basement. Have your inspector look hard for evidence of previous basement flooding. Having a wet basement is a major inconvenience.

- While you're looking for the house, don't be afraid to turn on all the faucets, showers, lightswitches, and flush the toilets. You are familiar with your own pet peeves regarding a house; those little things may not seem like a big deal during the buying process, but over time they'll bother you big time. If you really hate weak flushing toilets for example, or low water pressure in your shower, check for it.

Long post, sorry. Good luck.

Re: Real Estate Advice
 

In terms of costs for closing, generally, you can expect to pay an additional 6 - 10% of the homes cost in closing fees including transfer taxes and recording fees.

Also, as to PMI, if you are forced to purchase it (and you won't if you are making 20% downpayment) - be sure to get the Tax-Advantage PMI which rolls the PMI into the mortgage loan and allows you to deduct the PMI payments as mortgage interest on your taxes. It costs roughly the same and, in all ways, is similar to the PMI.

How much you can afford is truly up to you. Here is a site with various mortgage calculators that helps you see just what you pay on various types of loans: [url=http://www.mortgages-loans-calculators.com/]Mortgage calculators and loan calculators[/url]

Your escrow is going to include your real estate taxes and, generally, your homeowner's insurance. The taxes can be found on various places on the web. As for the insurance, you simply need to talk to an agent and ask for a rough quote (get the absolute highest deductibles you can - homeowner's insurance is not to replace the busted front gate, it's to replace the house after it burns down). Once you find the totals, simply divide by 12 and get the monthly addition to your mortgage and interest payment.

Also, once you have a perspective house in mind, you can ask the seller to provide you a copy of the utility bills for the last year. He/she doesn't have to give them to you or may not have them, but, as they are interested in making a sale, they may provide them to you. That way you can get a rough estimate as to what your monthly utility expenses will be and budget accordingly.

Saden, you said you paid NO closing costs? I would love to see the HUD1 on that one.

BTW - if you are looking for a house in Baltimore, I have one going up for sale this week. Lovely neighborhood with a Skins fan right across the street. Act now and I won't have to engage an agent and will discount the price. :)

Re: Real Estate Advice
 

I bought my 2nd house last October, and naturally, these guys are dead on.

Look at what houses are selling for in the areas you are looking to buy in, use mortgage calculators to see what it will cost, and compare it to how much you can afford each month. When I bought my townhouse, my mortgage almost tripled over what I was paying on my condo, however from the sale of the condo, I was able to pay off a lot of debt and my expenses now are basically the same as they were before.

I am fortunate to know several agents, and happen to use a very close friend of the family that sincerely had my best interest in hand. She made sure that every angle was covered in terms of Comps, what we could afford, etc. and was not pushy at all. Just be aware of what you want in a house, and only make compromises for your sake, not theirs.

Call a few Home Inspectors and ask for their references. The guy we had inspect the townhouse was very thorough, and explained to me every single detail about various things in the house, from how to adjust the temperature on my gas stove to how to change from the gas furnace to the AC unit to whether my type of sprinkler heads were on recall. If you have questions, do not hesitate to ask.

Definitely shop around for the best rates, and be wary of the fees and such that lenders have to obtain those rates. If you can, get a fixed rate with no points. However, if you the ARM rates are low enough, go for it, but be ready to refinance down the road. But be aware that your rate could very well be higher when you Refi. I refinanced my condo to pay off some debt and use some of that money to fix up the condo in order to put it on the market. My rate went from 5.125 to 6.75! However, I moved several months later and it really didn't affect me because mortgage payment didn't go much much.

There are also many first time buyer programs that you can take advantage of. Look into these as well.

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I will probably echo a lot of what has been said but may have some other things to add.

First off I am 28 and live in my third primary home. I also several real estate investments properties and I am constantly traversing the real estate market in search for more. Basically I have been where you are enough to have some good insight into the more subjective aspects or your questions.

[QUOTE]
First, is there any sort of[I] generalized[/I] formula for determining whether a house is a "good buy" based the home's assessed value?
[/quote]
These projected values almost always means little to nothing. There are two different types of projected values of a house.

Assessed value=the value assigned by the local government for tax purposes. It is almost always signicantly lower than the real market price since reassessments are done on a yearly or bi-yearly basis using an inexact comparable type system on old figures. Never pay attention to this assessed value beyond what it will do in terms of taxes for the property. It has no bearing on what the house is really worth.

Appraised value=this is a much closer figure to actual value as it done by an independent evaluator. Banks use it to make sure they property they are going to finance is actually worth what the buyers have offered. If a appraisal comes in lower than the offer price then usually the offer price is contractually reduced to the appraisal price. These appraisers are more accurate because they use a stronger model for comps and have much more recent data. The value though is very often skewed though because the data they use can be as old as 6 months and if the appraisal is set up by the selling agent then the buyers need to be wary. Basically I don't trust the appraisal for one reason alone. Most appraisers see the purchase contract before they appraise and almost always the appraisal comes in pretty darn close to the offer price. It is amazing how that works! Finding an appraiser who wont just finagle a way to justify a price is hard. Most know if they start under cutting offers then agents won't use them anymore.
[QUOTE]
Second, to what extent are buyer's agents useful? I know that buyer's agents owe fiduciary duties to their principals, but do such duties actually compel the agent to do what is in the principal's best interests given that their commission is based on the home's purchase price?
[/QUOTE]
I find buying agents to have a few good uses.
First, they know the market inherently if they are any good.
Second, they know properties much better. You'll waste a little less time with worthless properties if you have an agent who can weed them out
Third, they take care of paper work and most offer a safety net in that they are on the hook for some stuff if the deal goes wrong. If you are your own agent then you better know what you are doing otherwise there are lots of little things that you need to have done as buyers to make this deal go smoothly.

I alwasy use a buying agent. They cost nothing and do work for you. I don't know why anyone wouldn't.
[QUOTE]
Third, how many home inspectors do people typically retain? Is there any way to determine if a home inspector is qualified, other than asking friends? For example, do they have certifications that might indicate that certain inspectors are more qualified than others?
[/QUOTE]
[url=http://www.nachi.org/]Home Inspector - The National Association of Certified Home Inspectors[/url]
[url=http://www.ashi.org/]Home Inspector at American Society of Home Inspectors: American Society Of Home Inspectors, ASHI, ASHI Home Inspection, ASHI Inspector[/url]

Both orgs have a find a home inspector deal on their sites. Get a certified one for sure. You need more than a contractor. You need someone trained to know what to look for. The inspection, depending on property size, should take an hour or more. It should look like they are being uber picky. If it is a property older than 2 or 3 years you should end up with a list. Most of the list will be cosmetic but there still should be a list. If there isn't one then either the property is magically perfect or the inspector didn't do a thorugh job. You can guess which I'd assume.
[QUOTE]
Fourth, what is a good percentage of your gross income to spend on mortgage payments (including escrow)? I know this percentage will vary based on the individual and his outstanding debt, but is there a range for the "conservative" buyer and the less risk-averse buyer?
[/QUOTE]

Figure out what you can afford in payment and that will point you toward what to do. Payment is the biggest key. I like to have my payment as big as I can afford. That means I have put less equity down meaning I will make a higher percentage on my equity when I sell. I still try and always put down at least 20% to avoid the aforementioned PMI. I avoid anything but fixed mortages. ARMs just make no sense to me.

[QUOTE]
Finally, what kind of "hidden costs" can I expect to incur? Obviously there is the down payment, loan origination fee, and inspection fees, but what other fees can I expect to pay?[/QUOTE]
Any title company should be able to give you the exact charges they are going to charge you. If they cannot then don't use them. The only thing variable on the HUD sheet should be, taxes, escrow, inspection fees and so forth. Do a Google on what things should be on the HUD in your state. If there any 'other' fees that don't make sense then go somewhere else. Title companies will put administrative fees on there that shouldn't be there.

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More pieces of advice from a first time homeowner:

1) When having your home inspected try to get the years that the furnace/heat pump, roof, hot water heater, carpet and other big ticket repair items were last upgraded. To echo, don't use a home inspected referred by your realtor or lender. Make sure you are with the inspector during the walk-thru and take a notebook even though he'll provide you with a completed form.

2) Don't get caught up in the "max you can afford" game that realtors tend to push you into. My wife and I make a comfortable living and could have afforded another 75k and still be under the 35% rule but after a while you're just getting a big house with bigger maintenance needs. Better to use that extra money to pay off the mortgage quicker.

3) If you have time, taking a real estate class really pays off if you have very little knowledge (like me). That $300 investment could save you a few thousand. I took the class and even went on to take the national and state realtor's exams. I learned a ton in that class (mainly I didn't want to be a realtor).

4) Review the tax assessed records of the area that you're thinking about buying a home. There's a big difference in tax assessed value and realtor's appraised value.

5) If you don't understand something...STOP! You're paying the realtor to help you not screw you. If you don't feel right about someting thenkeep in mind that there are always going to be homes for sale. There's no shortage nor will there ever be in the near future.

6) Sometimes it's okay to just go with your heart. We drove around one Sunday looking at dozens of homes that were available in our preferred price range that the realtor put together for us. It turned out that I saw a little listing in the Sunday paper with a house in our price range with the right number of BR's and sq ft. We drove over to it and immediately wanted it. It was the only house we walked thru. My home inspector was also a life long family friend and we caught a few things but nothing major. I set a price that was in between the tax assessed value and their asking price (~30K difference) and we bought it.

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Someone stated that the inspector pointed stuff out to him and thats important note. GO WITH THE HOME INSPECTOR WHEN THEY DO THE INSPECTION. Check water preasure my running the shower and flushing the toilet at the same time. In my house if you are taking a shower and somone flushes the toilet I would never know but I have been in some house where you will get hit with a spike in water temp.

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Sorry to use his thread for my own question, but I talked about PMI insurance earlier and realized that my new house is under 80% LTV. I owe around 75k and the house is now worth roughly 110K (I know it probably makes you guys sick to know that housing costs are so low out here, but remember this place sucks)...I'm still paying PMI. How do I get rid of this? I have yet to do this in my homeowner experiences. Any advice?

ps- I have a very good friend that does appraisals if this helps.

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[QUOTE=jsarno;300697]Sorry to use his thread for my own question, but I talked about PMI insurance earlier and realized that my new house is under 80% LTV. I owe around 75k and the house is now worth roughly 110K (I know it probably makes you guys sick to know that housing costs are so low out here, but remember this place sucks)...I'm still paying PMI. How do I get rid of this? I have yet to do this in my homeowner experiences. Any advice?

ps- I have a very good friend that does appraisals if this helps.[/QUOTE]

You'll need to refi and depending on your current rate it may not be worth it.

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[QUOTE=FRPLG;300711]You'll need to refi and depending on your current rate it may not be worth it.[/QUOTE]

There is no other way out of it? So I'll be throwing that money away forever?

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I'd reccommend going with a title company over a lawyer. I look at it this way, all a title company does is real estate all day. A lawyer does real estate, divorces, personal injury, etc. Going to a lawyer is like going to a general practioner to get brain surgery.

Just my $.02.

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[QUOTE]Saden, you said you paid NO closing costs? I would love to see the HUD1 on that one.[/QUOTE]

He may not have had to pay any closing costs if he wrote into the contract that the seller would pay his closing costs for him.

Re: Real Estate Advice
 

[quote=FRPLG;300711]You'll need to refi and depending on your current rate it may not be worth it.[/quote]

You may be right, but I was under the impression that PMI is cancelled after reaching 22% of LTV. If that's not the case, then I thought you could request in writing to have PMI cancelled once sufficient proof (ie, appraisal) is provided. I had never heard of having to refinance, but then again it's not something I keep up to date on.

Re: Real Estate Advice
 

[QUOTE=724Skinsfan;300734]You may be right, but I was under the impression that PMI is cancelled after reaching 22% of LTV. If that's not the case, then I thought you could request in writing to have PMI cancelled once sufficient proof (ie, appraisal) is provided. I had never heard of having to refinance, but then again it's not something I keep up to date on.[/QUOTE]

Partially correct. I assumed you meant based on an increased market appraisal.

The HPA of 98 mandates that PMI is cancelled immediately upon reaching 22% equity based on original purchase price.

After some research I realized I was wrong. With the super low rates most people have been refinancing to create higher equity, cancel PMI and reduce rates and payments. Now with rates leveling out it is probably not in your best interest to refi so you can request PMI be cancelled once you reach 20%equity or if you provide sufficient evidence that you now have 20% equity due to market value increase. I have never heard of someone doing this but I don't think it is terribly uncommon. Just lately it has been because of market conditions. Usually there will be some type of wait time involved before PMI can be cancelled. I guess 2 years is the norm. That is wait time from loan origination.

Re: Real Estate Advice
 

[quote=Schneed10;300107]

Buyers' agents only make like 1% commission from the sale, so their incentive is to not spend too much time with you, because they could be putting their efforts into selling a house which gets them 5 or 6% commission. So they'll tend to urge you to bid higher on a house you like, just to increase the chances of pushing a deal through.

It's generally a good idea not to go with the home inspector that comes recommended by the agents (either buying or selling). Those inspectors have relationships with the agents. All agents want to do is push transactions through quickly; if the inspector is willing to downplay problems with the house, it increases the chances that the transaction will go through. And if the inspector does this for the agent, the agent will feed the inspector more business. [quote]


gotta say thats some pretty wild speculation on your part...

Buyer's agent's have alot at stake, and make more than 1% on a transaction. You SHOULD always interview agents before you sign up with anyone... you can tell who is in the business for the long haul and who's out to make a quick buck. A professioal realtor will want your transaction to go as smoothly as possible and advise you as correctly as possible to meet your needs, because if you don't get referrals in the real estate business you will die...

The inspector/agent relationship conspiracy theory is pretty bogus too.... It would take one phone call to get an inspector's license jerked if it was found that he overlooks something on a transaction on purpose... or that he consistantly misses things. Walk with your inspector no matter what they say and look over his report. Make sure it is thourough.

If you're in northern VA, WV, or MD I can give you a guy who is amazing. Also, buyer's agents are more useful if you're not sure about title research and things like that. You can get into a world of hurt if someone who knows the biz is set against you and you don't have someone representing your interests... knowledge is key in transactions consisting of HUNDREDS OF THOUSANDS OF DOLLARS OF YOUR MONEY!!!

Re: Real Estate Advice
 

[QUOTE=canthetuna;300741]knowledge is key in transactions consisting of HUNDREDS OF THOUSANDS OF DOLLARS OF YOUR MONEY!!![/QUOTE]

Absolutely. One agent said to me once when we were about to sign a contract, and I always remember this, "Ok so this is going to be a 1/4 million dollar deal."

He did so to make sure the impact of the amount of money was understood.

Re: Real Estate Advice
 

This is all great info. I'm in a similar boat as SGG, but about six months off from actually buying a house. I've done a ton of research, but it seems like the best info comes from unbiased people that've been through the process.

This thread could be helpful to a lot of people around here, since the majority of us are 20 something's. I don't know if it's worthy of a sticky, but it should at least be archived so it doesn't get buried.

Re: Real Estate Advice
 

Most of the top tips have been covered and I emphasize, STAY AWAY FROM ARMs!!!!!

One home inspection is fine, but make sure the inspector is not a contractor who could potentially make money off of doing the repairs. An inspection company that ONLY does inspections will be the most honest and fair since they have no chance of doing repairs and cashing in on them.

Re: Real Estate Advice
 

[QUOTE=Buster;301197]Most of the top tips have been covered and I emphasize, STAY AWAY FROM ARMs!!!!!

One home inspection is fine, but make sure the inspector is not a contractor who could potentially make money off of doing the repairs. An inspection company that ONLY does inspections will be the most honest and fair since they have no chance of doing repairs and cashing in on them.[/QUOTE]

Yeah. If you are a current home owner and have an ARM I apologize in advance but in my opinion you have made a very bad move. ARMs are hideous creations by banks to be able to offer more loans for more money to less qualified people. To do so they have to offset all of their increased risk somehow so that should clue you into how bad ARMs really are compared to standard loans. Right now all the people who jumped into an ARM 4 and 5 years ago are starting to really realize what kind of problems they can cause. Avoid them at any cost. If you have to hold off on buying a house or have to buy less house then do so. But don't jump into an ARM so you can qualify to buy a $500,000 house. Buy a $250,000 house wait 2 years and sell for profit(hopefully) then take your increased equity and move up. It is the safer and less expensive way of doing it over the long haul. And when it comes to primary housing you are ALWAYS talking about the long haul.

Re: Real Estate Advice
 

[quote=FRPLG;301220]Yeah. If you are a current home owner and have an ARM I apologize in advance but in my opinion you have made a very bad move. ARMs are hideous creations by banks to be able to offer more loans for more money to less qualified people. To do so they have to offset all of their increased risk somehow so that should clue you into how bad ARMs really are compared to standard loans. Right now all the people who jumped into an ARM 4 and 5 years ago are starting to really realize what kind of problems they can cause. Avoid them at any cost. If you have to hold off on buying a house or have to buy less house then do so. But don't jump into an ARM so you can qualify to buy a $500,000 house. Buy a $250,000 house wait 2 years and sell for profit(hopefully) then take your increased equity and move up. It is the safer and less expensive way of doing it over the long haul. And when it comes to primary housing you are ALWAYS talking about the long haul.[/quote]

Concurred. ARMs are a contributing factor in all the subprime mortgage lending problems that are all over the news right now.

Adjustable or balooning rates put your cash flow at risk, big time. If something goes financially wrong in your life, the last thing you would choose to part with is your home. But by using an ARM or a baloon, you're exposing yourself to the risk that the FIRST thing to go in a crisis will be your house.

The potential of taking a bath is significant. Take the fixed rate; you'll know exactly what you need to pay each month. And it ensures that you won't buy a house you can't afford.

Re: Real Estate Advice
 

I just wanted to clear up one thing since I am a real estate agent.

As far as agent commissions go, the listing agent and the buyer's agent will typically split the commission 50/50. In cases where you have a sympathetic listing agent, or when the agent is related to the homeowner, you may find that one side of the transaction will forego a percentage or two in order to help the deal get closed. Otherwise, on a 6% listing, 3 will go to the buyer's agent, and 3 will go to the listing agent in most cases.

Now, the other thing to consider is that the field of real estate is highly regionalized -- so what may be true here in southeastern Virginia may not be true in Philly, Seattle or Wisconsin. That's why it's hard for anyone to give advice unless they reside in and work in the area you're in, SGG. Good luck.

Re: Real Estate Advice
 

Thanks again everyone. I typically don't rely on advice from strangers, but the relative uniformity of the advice I'm getting indicates that you guys have provided me with some useful advice and information.

Re: Real Estate Advice
 

[QUOTE=Sheriff Gonna Getcha;301273]Thanks again everyone. I typically don't rely on advice from strangers, but the relative uniformity of the advice I'm getting indicates that you guys have provided me with some useful advice and information.[/QUOTE]

No problem man. Taking advice from "strangers", and using advice to become more informed are two different things. Even if you take a path we are suggesting you don't, at least you are aware now.
Plus, we're all Skins fans...we wouldn't steer a fellow fan in the wrong path...a cowboys fan though...well ;)

Re: Real Estate Advice
 

[QUOTE=jsarno;301289]No problem man. Taking advice from "strangers", and using advice to become more informed are two different things. Even if you take a path we are suggesting you don't, at least you are aware now.
Plus, we're all Skins fans...we wouldn't steer a fellow fan in the wrong path...a cowboys fan though...well ;)[/QUOTE]

Yeah the only place I know of in the country where ARMs are good is in Dallas. Otherwise stay away from them.

Re: Real Estate Advice
 

[quote=jsarno;300697]Sorry to use his thread for my own question, but I talked about PMI insurance earlier and realized that my new house is under 80% LTV. I owe around 75k and the house is now worth roughly 110K (I know it probably makes you guys sick to know that housing costs are so low out here, but remember this place sucks)...I'm still paying PMI. How do I get rid of this? I have yet to do this in my homeowner experiences. Any advice?

ps- I have a very good friend that does appraisals if this helps.[/quote]I'm
with Wells Fargo (not a job my mortgage Co) and there is 3 different ways to have PMI removed from your loan. The 20% rule is from the purchase or appraised amount at the time of purchase.Then if you make a big enough improvement like a garage, addition etc.. if it increasees the value enough. Stuff like upgrading a bathroom painting do not count. Then there is another way which I cant think of but just call your mortgage co and they should send you the papper work and if you qualify they have to remove your PMI.

Re: Real Estate Advice
 

[QUOTE=firstdown;301316]I'm
with Wells Fargo (not a job my mortgage Co) and there is 3 different ways to have PMI removed from your loan. The 20% rule is from the purchase or appraised amount at the time of purchase.Then if you make a big enough improvement like a garage, addition etc.. if it increasees the value enough. Stuff like upgrading a bathroom painting do not count. Then there is another way which I cant think of but just call your mortgage co and they should send you the papper work and if you qualify they have to remove your PMI.[/QUOTE]

Well, I put in a hot tub, and built a new deck as well as put in new electrical service and redid the kitchen with granite tile tops and new sink with new plumbing.
Not only that, but the market has jumped considerably out here. A house that was 100k 3 years ago, is now worth 150-167k. It's quite a jump.

Re: Real Estate Advice
 

Does anyone have any info on those quicken loans? Are they are worth it or is it some scam that puts a crap load of money in their pockets.

Re: Real Estate Advice
 

[quote=angryssg;301387]Does anyone have any info on those quicken loans? Are they are worth it or is it some scam that puts a crap load of money in their pockets.[/quote]


I'm not sure about quicken, so I'm not going to lump them into this category, because I think theyre a bit different, but alot of online loan sites are just lead sources for anyone who signs up for them. You can get stuck with any crackhead idiot if you're not careful... and its a sure fire way to get sued when you show up to closing and there's no money to bring to the table....

And since there aren't rules as to where a mortgage officer can generate loans, youll likely get stuck with someone far away form you, and there's a huge lack of accountability when there's no possible way for you to directly make contact with the person.

My wife has clients who refused to go through her in-house lender because they thought it was some conspiracy to make money and they were being smart consumers and shopped online to get a better rate... turns out all they got is lied to and sued for specific performance...

Theyre filing suit against the lender, but it won't matter... Their lives are temporarily all screwed up..

They lost a huge escrow check and the house they wanted because the negotiations got nasty before all this and the sellers are done messing with them and are now refusing to sell their house.

The best advice, I think, is to join a Credit Union. I'd be using mine, but I qualified for a VHDA loan... all you virginians should look into it. If you qualify it may be a nice way to go....

Re: Real Estate Advice
 

[quote=jsarno;301382]Well, I put in a hot tub, and built a new deck as well as put in new electrical service and redid the kitchen with granite tile tops and new sink with new plumbing.
Not only that, but the market has jumped considerably out here. A house that was 100k 3 years ago, is now worth 150-167k. It's quite a jump.[/quote]

I'm excited. I close this week on my new house and were spending 280k. Our appraisal came back at 370...

I know its a weak market here, but its nice to know Im starting out with a little bit of equity, according to all comps and data...