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School me on buying a house

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Old 02-03-2016, 04:55 PM   #1
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Default School me on buying a house

As some of you are aware I moved to the midwest this past Fall and decided to rent right away. Well in order to get the relocation bonus from my company it's time to start looking for a house. Some "important" info:

-House has to be in Council Bluffs, IA
-I'm only looking to put down ~$8000, so I'll need to qualify for low down on a conventional mortgage and pay PMI for a while, credit is around 800.
-I need to close before August 31st so that I can snag a $10k bonus from my company for buying a house in Council Bluffs, IA
-Based on my back-end and front end ratios I'd like to stay under $150k
-Looking for as big of a garage as possible

So what I would like to hear:

1. I'm going to get pre approved soon, should I get 1 preapproval or shop around? Can I shop around rates without actually doing anything official?
2. Do I get a building inspection before I make an offer? Or can the offer be contingent upon one?
3. Anything specific in a house that I should avoid (sump pumps, type of roof, etc...)?
4. I'm a first time home buyer, are there any incentives I should make sure to not miss out on?
5. I'm probably a little in over my head, but not blowing $1k on rent every month is tempting and houses here seem to be cheap, am I making an enormous mistake?

I'm doing a lot of research online so I have some answers to these questions already, but I'm curious what my fellow tech'ers think.
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Old 02-03-2016, 05:59 PM   #2
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1. I'm going to get pre approved soon, should I get 1 preapproval or shop around? Can I shop around rates without actually doing anything official?
Yes. When we refinanced our last house we used Quicken Loans. They'll spam the **** out of you, but we found it was the easiest way to see what interest rates were out there.
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2. Do I get a building inspection before I make an offer? Or can the offer be contingent upon one?
Absolutely. Once the house is gone through you can negotiate with the sellers with what should be fixed or not. You will do this through your agent. You will have no personal contact with the sellers.
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3. Anything specific in a house that I should avoid (sump pumps, type of roof, etc...)?
This is where your inspector comes in. They can tell you how old the appliances are and what condition they are in as well as what other things like the roof, if there are leaks in the attic/roof damage, if there is evidence of water damage in a basement if it applies and if there are any signs of mold.
[quote]
4. I'm a first time home buyer, are there any incentives I should make sure to not miss out on?p/quote]
Quicken Loans will help with that. Not sure what's out there for first timers.
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5. I'm probably a little in over my head, but not blowing $1k on rent every month is tempting and houses here seem to be cheap, am I making an enormous mistake?
Are you going month to month or are you under contract? If month to month then you may come away unscathed, but if you are under contract then most likely they will want you to pay out your contract. They'll also most likely want 15 to 30 days notice before you move, and if you do not give them that kind of notice, they can penalize you. They are ******** and will try to get as much money out of you as possible.

Also, when looking at houses, look at the driveway, yard and sidewalks leading to the house. Check for cracks in the sidewalks and driveway. Check the elevation of the yard against the house to make sure there aren't any low points. The dirt up against the house should be the highest point in the yard to promote good drainage. If there are huge cracks or shifting in the driveway or sidewalk that is a good sign of moisture getting underneath, and could be threatening/breaching the foundation.
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Old 02-03-2016, 06:53 PM   #3
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150k around here gets you a cardboard box and a box cutter to design your own windows
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Old 02-03-2016, 06:57 PM   #4
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150k around here gets you a cardboard box and a box cutter to design your own windows
Gotta love the midwest. I bought a 2 story 2400sqft 3 bedroom 2.5 bath house for $123,000 in 2009.
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Old 02-03-2016, 07:14 PM   #5
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I would shop around with your local bank or credit union as well, it can't hurt to talk to their mortgage lendors.

As far as the home inspection goes, it makes no sense to get a home inspection before you make an offer. The sellers are under no obligation to do anything until the papers are signed. You'll make an offer, if it's accepted your mortgage company might send out their own inspector (mine did). After all, they don't want you to get a money pit because then you won't be able to pay them their mortgage and interest.
However, I would hire an independent inspector on your own to go through the house. It will cost you a few hundred bucks, but it's well worth it. It could save you thousands!

If the home inspector finds anything (or you even just change your mind) you'll be under absolutely no legal obligation to purchase the house. Them finding anything could also give you leverage to renogotiate the price or have them add money on the backend for renovations and repairs.

One other thing is get a realtor. They know all the tricks to get you the best deal (sellers paying closing costs and such) and have much better vision to know what house is worth what price.

Lastly, don't settle on the first house you like, keep shopping around. I would find a house that works and make an offer, but then keep looking as you wait to hear back from the seller and negotiate back and forth. Then I would still keep looking for the entire time it takes to get things in order. Sometimes people need a few months to move out before you can finalize and take possession. Like I said, you can back out anytime, for any reason, before you sign the papers and take the keys.

*edit*

For incentives I believe there is still a first time home buyer tax credit, there is also a homestead tax credit (tax credit for your actual home, not for say a vacation home)
On that note, be sure to check the property taxes on the house you're considering. A mile down the road could be 3 times as much taxes based on imaginary lines! Also do some research to see if there are big construction projects in the area. A well developed area might have higher taxes to begin with, but a developing area could be cheap for a year until they hike up the tax rate to pay for the new mall or some ****.

Last edited by justin455; 02-03-2016 at 07:26 PM.
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Old 02-03-2016, 07:29 PM   #6
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Thanks for all the info so far, Justin and SS_RRR definitely some things in there I hadn't thought of. After the 16th when e-trade finally gets me my tax stuff I'll probably go get preapproved and start talking to a realtor, just want to be 100% sure I don't owe the IRS a bajillion dollars or something. Here's hoping 5 months is enough time I guess.

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150k around here gets you a cardboard box and a box cutter to design your own windows
I know what you mean, I moved here from SoCal and hadn't really ever thought of buying before, but it's so friggin affordable. I figure if I move, the best case scenario is that I can rent it out.
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Old 02-03-2016, 07:38 PM   #7
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Yeah as justin said don't get an inpector until after you find the house you want and make the offer. Make the offer contengent on what the inspector finds and negotiate once you get the report. Sorry. Jumped the gun there...
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Old 02-03-2016, 07:41 PM   #8
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Yeah as justin said don't get an inpector until after you find the house you want and make the offer. Make the offer contengent on what the inspector finds and negotiate once you get the report. Sorry. Jumped the gun there...
No worries, that's what I figured, but I sort of wanted to make sure it was commonplace so I don't look like a jabroni. Obviously though if I am able to spot something that is horribly wrong or out of place on my own that would be a nice first line of defense.
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Old 02-03-2016, 08:40 PM   #9
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No worries, that's what I figured, but I sort of wanted to make sure it was commonplace so I don't look like a jabroni. Obviously though if I am able to spot something that is horribly wrong or out of place on my own that would be a nice first line of defense.
I would say a mortgage transaction not being contingent upon passing a home inspection is very very rare in this day and age. It wouldn't hurt to do your own research as well so you know things to look for during your showings.
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Old 02-03-2016, 11:50 PM   #10
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Personally I would never buy a house without having a real estate attorney review the contract before I signed. Not everyone does this, but it's well worth it imo to make sure you are protected and have not overlooked anything that could be a huge mistake.
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Old 02-04-2016, 08:09 AM   #11
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as was previously mentioned, an inspector is definitely a big deal. we spent a little extra to make sure we found a great local inspector who had great reviews and references. he drove an hour to see our house, and we spent a good 4 hours with him on a hot summer day inspecting every inch of the house. he wrote up a fantastic document with pictures and recommendations that helped us negotiate with the sellers to get a lot of things fixed.
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Old 02-04-2016, 08:50 AM   #12
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as was previously mentioned, an inspector is definitely a big deal. we spent a little extra to make sure we found a great local inspector who had great reviews and references. he drove an hour to see our house, and we spent a good 4 hours with him on a hot summer day inspecting every inch of the house. he wrote up a fantastic document with pictures and recommendations that helped us negotiate with the sellers to get a lot of things fixed.
^^^^That's the way to do it. You have to be really careful these days due to all the dirt-bags out there that flip houses. Never buy a house that is being flipped!!! These guys hide so many problems. Get a good inspector and you will be amazed how many issues they can find even on houses less then 10 years old. Real estate agents are snakes as well. They only care about their commission.
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Old 02-04-2016, 11:53 AM   #13
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subscribed! Good info in here! I am also looking to buy my first house here soon and this has been very helpful, hoping to pull the trigger here in the spring-summer time frame.
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Old 02-04-2016, 03:28 PM   #14
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subscribed! Good info in here! I am also looking to buy my first house here soon and this has been very helpful, hoping to pull the trigger here in the spring-summer time frame.
It's a pretty weird feeling. I'm a little worried it won't be a good investment since I'm still semi-young, but I guess I'll have to wait and see!
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Old 02-04-2016, 03:48 PM   #15
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I'm in the same boat as well. As many have said inspection is the most important part.

The company I work for has an office in Council Bluffs, saw you are in IT as well. Wouldn't happen to be an agriculture company would it?
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Old 02-04-2016, 07:26 PM   #16
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I'm in the same boat as well. As many have said inspection is the most important part.

The company I work for has an office in Council Bluffs, saw you are in IT as well. Wouldn't happen to be an agriculture company would it?
It's not! It's a tech company, I won't mention a name because well, privacy or whatever. I'm still shocked at how many companies are making their way into this area.
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Old 02-04-2016, 09:53 PM   #17
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I'm not going to touch on most of the other questions because people will cover that. Stay away from septic tanks, houses with polybutyline piping, and stucco. (although this is a personal preference). You may also want to stay away from homes with aluminum wiring as well (although I don't have a problem with it) because it will shoot your insurance up if you want to make sure its covered. Just get something with a newer roof and HVAC system to avoid big costs right away. Also you would be amazed how much things add up such as a fence, pull-out stairs for the attic, or gutters.
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Old 02-05-2016, 08:53 AM   #18
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Another note - don't think that the seller throwing in any kind of "home warranty" is a good deal. We had one for the first year of home ownership, and whenever we needed them to fix something it was a huge pain in the *** to get done. Not worth it to me. And from what I've heard, it's a similar story for all of the home warranty companies.
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Old 02-05-2016, 09:34 AM   #19
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I'm not going to touch on most of the other questions because people will cover that. Stay away from septic tanks, houses with polybutyline piping, and stucco. (although this is a personal preference). You may also want to stay away from homes with aluminum wiring as well (although I don't have a problem with it) because it will shoot your insurance up if you want to make sure its covered. Just get something with a newer roof and HVAC system to avoid big costs right away. Also you would be amazed how much things add up such as a fence, pull-out stairs for the attic, or gutters.
This is definitely some of the real person advice I was looking for, my dad had mentioned aluminum wiring possibly being an issue, but nothing about polybutyline piping so I'll have to do some reading on that. I fully expect lots of stupid expenses adding up.

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Another note - don't think that the seller throwing in any kind of "home warranty" is a good deal. We had one for the first year of home ownership, and whenever we needed them to fix something it was a huge pain in the *** to get done. Not worth it to me. And from what I've heard, it's a similar story for all of the home warranty companies.
That's sort of what I would expect, it sort of seems like an "extended warranty" on a car, you might get stuff fixed but it will never be a pleasant experience.
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Old 02-05-2016, 11:05 AM   #20
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Originally Posted by Count of Monte Crlo View Post
I'm not going to touch on most of the other questions because people will cover that. Stay away from septic tanks, houses with polybutyline piping, and stucco. (although this is a personal preference). You may also want to stay away from homes with aluminum wiring as well (although I don't have a problem with it) because it will shoot your insurance up if you want to make sure its covered. Just get something with a newer roof and HVAC system to avoid big costs right away. Also you would be amazed how much things add up such as a fence, pull-out stairs for the attic, or gutters.

Septic tank might be unavoidable depending on his part of the country. Some areas run sewer lines all over the place, other parts of the country the sewer line stops at the city limits. Really if you have the right type of soil, septic systems are very reliable and trouble free.

Also look for moisture in the basement. That can cost you big $$$$ if you have water leaking through the block/concrete or if something is wrong with the sump pump system. You have to dig out the soil in front of the house and fix whatever the problem is.
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