Shopping for our first house

So swmbo and I have pulled ourselves together enough after the big move to Maryland that we're shopping for our first house. It's been dorm rooms and apartments up until now so we're pretty excited.

The two main requirements: She wants a porch. I want a shop.

We just got pre-approved for a mortgage and we're starting to look at houses with our realtor this Sunday. 

I'm making this thread so you can follow along. I mean who doesn't like some house hunting entertainment, right? 

If you have any house shopping wisdom (which I'm sure you do), shout it out. I'm all ears.

1: Figure out your monthly budget with insurance, taxes, upkeep, etc. What we were approved for and what we can actually afford are completely different numbers. 

2: Location, location, location. Buy the best neighborhood that you can--people don't buy a kitchen and bedroom, they buy a school district or waterfront or special zoning. 

Figure at least $400 more per month than the mortgage tells you it will be for property tax, insurance, pmi, etc.  when you do the calculator it’s like “your $100k house will only be $380 a month!” Your payment will be closer to $800.  

Good luck! We've had some "interesting" experiences when house hunting here in WV. Kinda like buying a project car, only worse.

The economy seems to be wobbling and primed for a recession.  That means after 10 years of real estate growth there's a chance for a drop in prices.  Would you be better off renting for a year and seeing if RE prices will fall and you can get either a)more for your money or b) a lower buy in?

Even though you will be spending the most money you've ever spent, you still won't get exactly what you want. 

I've owned 3 houses and all were still a compromise.  I hope you can get both porch and shop. 

Great advice. We've been working with estimates that include property tax, insurance, pmi etc. Our loan officer is a good friend of mine so I'm pretty confident he's not going to screw me or sell me something I can't afford. We've been working with him on our budget.

Oh and interesting note: we qualified for some kind of loan where you can put less than 20% down but then buy out the PMI for like $6000 up front. Since it costs more up front it doesn't look like we can afford it, but I wish we could. I had never heard of that option.

And we are shopping in nicer areas, which makes it harder on our budget.

Adrian_Thompson said:

The economy seems to be wobbling and primed for a recession.  That means after 10 years of real estate growth there's a chance for a drop in prices.  Would you be better off renting for a year and seeing if RE prices will fall and you can get either a)more for your money or b) a lower buy in?

That's a very interesting thought. I hate to make life choices based on guesses about the future, and honestly the big factor driving this is SWMBO is desperate to get into her own house. If it was me alone, I would probably do exactly that. There really aren't many rentals around here for a decent price, though. (Eastern Shore of Maryland)

which area you shopping in and if near a city how far are you willing to commute?

I accepted a bit over an hour each way commute to work in DC to get a place with a shop.

The calculators and professionals will ALWAYS tell you that you can afford more house than you really should. Rough idea would be no more than 75% of what they tell you that you can afford.  They want you to buy the most house possible so they can make money off of you and you end up devoting all the money you earn to the house with nothing left for anything else.

FIND A GOOD HOME INSPECTOR (cant be said strongly enough)

Pay attention to taxes and INSURANCE.   Want a place with a fireplace?  extra ~$250/year!  We struggled with our place because it had an aboveground pool with no fence when we bought it. Ripping it out did more than save me time and money upkeeping the pool, it saved us LOTS on insurance and many carriers refused coverage because of it. 

Planning on kids at any point?  LOOK AT THE SCHOOLS.  it becomes important.

BoxheadTim said:

Good luck! We've had some "interesting" experiences when house hunting here in WV. Kinda like buying a project car, only worse.

Your words are inspiring! Haha I kid. I'm looking forward to it though.

Buy on the high side of the street/road, because water runs downhill.  You'll have enough maintenance issues.  You don't want to deal with water issues.

Apexcarver said:

which area you shopping in and if near a city how far are you willing to commute?

 

I accepted a bit over an hour each way commute to work in DC to get a place with a shop.

 

The calculators and professionals will ALWAYS tell you that you can afford more house than you really should. Rough idea would be no more than 75% of what they tell you that you can afford.  They want you to buy the most house possible so they can make money off of you and you end up devoting all the money you earn to the house with nothing left for anything else.

 

FIND A GOOD HOME INSPECTOR (cant be said strongly enough)

 

Pay attention to taxes and INSURANCE.   Want a place with a fireplace?  extra ~$250/year!  We struggled with our place because it had an aboveground pool with no fence when we bought it. Ripping it out did more than save me time and money upkeeping the pool, it saved us LOTS on insurance and many carriers refused coverage because of it. 

 

Planning on kids at any point?  LOOK AT THE SCHOOLS.  it becomes important.

 

 

1. Shopping on the Eastern Shore of MD. Kind of from Kent Island to Centreville. And I'm totally willing to commute an hour for a good job.

2. like I said, a good friend of mine is working on our budget with us, with all expenses in mind. But I hear where everyone who has said this is coming from and we'll keep this in mind.

3. Re: home inspectors. When it comes time for that, does the realtor find one or do I? If I do, I'll start looking around now.

4. Re: Schools. Yes, kids are in the future, which is part of the reason we're looking in the Centreville area. Great schools around there.

Existing houses are just like used cars. They all have some hidden issue the seller doesn't want you to know. You've got a lot of experience in used cars. Keep those same sceptic instincts about you while shopping houses. 

In the same vein, all Realtors are used car salesmen. The jacket may just be gold rather than plaid. 

In reply to John Welsh :

Great advice. Thank you! I think I'll repeat that word for word to swmbo.

Congratulations!! Hope you find what you're looking for. 

Don't let your Realtor recommend or choose the home inspector. 

Like above, this is akin to letting the seller's mechanic do the pre-purchase inspection. 

John Welsh said:

Existing houses are just like used cars. They all have some hidden issue the seller doesn't want you to know. You've got a lot of experience in used cars. Keep those same sceptic instincts about you while shopping houses. 

In the same vein, all Realtors are used car salesmen. The jacket may just be gold rather than plaid. 

So much this.  They may claim to represent your interests, but their only goal is to make the deal go through.

Your realtor will be happy to arrange for a home inspection.  The inspector will be someone who will likely overlook or minimize the importance of various issues. 

Research and find you own home inspector.  Ask people you know for a reference.  The "inspector" can also be a trusted contractor or someone else with broad knowledge of the building trades.

What John said, but worse.  The degree of dishonesty which is standard in Real Estate makes craigslist ads look like they're written by the pope- we went to SO MANY places which had normal ads, normal looking pictures, and when we saw them in person nearly everything was absolutely berkeleyed.

I've bought a lot of used cars- the level of misrepresentation that's considered normal by Realtors is a whole order of magnitude greater.

Ed Higginbotham said:

If you have any house shopping wisdom (which I'm sure you do), shout it out. I'm all ears.

Don't do it.

Patrick said:

Figure at least $400 more per month than the mortgage tells you it will be for property tax, insurance, pmi, etc.  when you do the calculator it’s like “your $100k house will only be $380 a month!” Your payment will be closer to $800.  

 

+ another $400 for upkeep if you can't DIY the berkeley out of everything.  If you can, it will be a full time job.

Tom Suddard said:

Congratulations!! Hope you find what you're looking for. 

Thanks Tom!

Two time home buyer here.

My biggest piece of advice:  friend or not, do NOT rely on just one realtor to find you houses. Our first realtor was a pal of my father. Our criteria was single family home with a garage. Not easy to find in our price range but they did exist. This guy showed us almost everything but what we wanted. I soon figured out all he was showing us were homes HE had listed so he would get the bigger commission. Fired him. Both times my wife found our homes by looking at real estate ads (pre-internet). Now with Zillow and Realtor.com you can quickly find and eliminate a lot of contenders no matter who they are listed with.

Do NOT buy more house than you can afford or need.

Do NOT buy a 100 year old house, particularly if it is a fixer-upper. If you do, you will have to decide which you prefer:  fixing up cars or fixing up houses. Our first house was 100-ish years old. Cool little house but always needed something painted, fixed or updated. Our current house was only 8 years old when we bought it, 90% vinyl exterior and all modern systems. I still had to replace the HVAC system in it less than 10 years later...along with a well tank, well, pump, water heater and water softener spaced out every year or so.

Never buy a home in a low-lying area. Basements make lousy swimming pools. BTDT.

Most folks stay in their first home around 5 years, as we did. Food for thought.

I'd rather have a low mortgage payment I can pay off much faster than a bigger house/mortgage I won't have paid off until I'm collecting Medicare.

I know we're all big on DIY, but I would definitely suggest to get your own realtor, especially if you're buying in an area that you're not intimately familiar with from a real estate perspective. You do want the insights a good realtor can provide.

Best way to find one is to get a few referrals from friends and acquaintances and then interview them like you would anybody who's supposed to work for you. Usually you can filter out the ones who want to sell you something rather than help you fairly quickly.

Our agent here was invaluable helping us find the right property and advising which ones we didn't even need to bother with.

BoxheadTim said:

I know we're all big on DIY, but I would definitely suggest to get your own realtor, especially if you're buying in an area that you're not intimately familiar with from a real estate perspective. You do want the insights a good realtor can provide.

Best way to find one is to get a few referrals from friends and acquaintances and then interview them like you would anybody who's supposed to work for you. Usually you can filter out the ones who want to sell you something rather than help you fairly quickly.

Our agent here was invaluable helping us find the right property and advising which ones we didn't even need to bother with.

Yes, we have a buyer's agent already chosen. We had interviews with three agents and chose her. She also has 24 years experience in the area and had tons of good reviews online. She's not a friend of mine or anything and I'll be sure to keep a skeptic eye open. 

I grew up in this area, but just moved back after 9 years abroad so she certainly knows more than me about the area from a real estate perspective.

For home inspector, you want to find it yourself. Feel free to ask for references for one from your realtor, but do your research into them. You want the deal killer. 

Another thought I had--I would recommend not using any friends/family for this stuff. Mortgage guy is probably fine, but realtor and lawyer you probably want someone you don't know. 

My anecdote: Friends of ours bought a house in the city. They used their sister as their realtor, and their friend as their lawyer. 4 months after the purchase, the city comes after them for work performed without permits--before they owned the house. It worked out in the end as they found the PO and the contractor, who was still shockingly in business, and they got the guy to pay, but they were close to having to sue both their sister and their friend.