How do you buy a house?

[The One and Only Mo]

Just curious. How does somebody buy a house and get a mortgage and all that stuff?

[Aces High]

It's not hard, first step is to  go on bankrate.com and look for the banks in your area with the lowest interest rates.  Then plug in some numbers in their mortage calculator, and see what type of payments you can afford.   You should probably choose thirty year fixed payments, because interest rates are at an all time low, and you're a young buyer.  Now is a great time to buy a house, if you're in the market for one.   I found a great interest rate with that website.  There's no charge, they just list the banks and mortgage companies in your area.  You can even print out the amortization schedule on the website

[Dr. Dan]

You may have to shop around with a bunch mortgage bankers (ie. Chase Bank) to find out what they are willing to qualify you for.  They would probably need your income information for the past couple of years and your credit report. Based on that, they let you know what you are safely qualified for.  The broker would need to know the taxes on the house and of course what it costs.

Ideally, you want to get the best rate on the best terms that you can handle.

I'm right now going through that process, but haven't found  a house yet.  So I know I'm prequalified for a certain amount.

[Dr. Dan]

It's not hard, first step is to  go on bankrate.com and look for the banks in your area with the lowest interest rates.  Then plug in some numbers in their mortage calculator, and see what type of payments you can afford.   You should probably choose thirty year fixed payments, because interest rates are at an all time low, and you're a young buyer.  Now is a great time to buy a house, if you're in the market for one.   I found a great interest rate with that website.  There's no charge, they just list the banks and mortgage companies in your area.  You can even print out the amortization schedule on the website

I think the 30 year fixed rate is the worst thing to do, in my opinion.  You never end up owning any of the house and all you are doing is paying more interest and less principle.  In my opinion, when possible and affordable, better to do a 15 year fixed.

[Aces High]

I think the 30 year fixed rate is the worst thing to do, in my opinion.  You never end up owning any of the house and all you are doing is paying more interest and less principle.  In my opinion, when possible and affordable, better to do a 15 year fixed.

That's about the dumbest thing I've heard yet.  Dan, if you can't afford a 15 year fixed plan, then you'd be a fool not to take advantage of the 30 year fixed plan. Especially if your ready to buy.   When I first got my mortgage, 12 years ago,I signed up for the 30 year mortgage, fixed payments, as I couldn't possibly make the payments on the 15 year plan, at that time.    A few years ago,when my income increased,  I was able to refinance and  went with the 15 year fixed plan.   Either way, the interest rates are at record lows.  I saved a couple of Hundred thousand dollars by locking in on record low interest rates.

[The One and Only Mo]

Thanks. I can assure you that I am far from any of that. Truth is, I would like to buy a condo before a house. What do you all think about condos?

[Dr. Dan]

That's about the dumbest thing I've heard yet.  Dan, if you can't afford a 15 year fixed plan, then you'd be a fool not to take advantage of the 30 year fixed plan. Especially if your ready to buy.   When I first got my mortgage, 12 years ago,I signed up for the 30 year mortgage, fixed payments, as I couldn't possibly make the payments on the 15 year plan, at that time.    A few years ago,when my income increased,  I was able to refinance and  went with the 15 year fixed plan.   Either way, the interest rates are at record lows.  I saved a couple of Hundred thousand dollars by locking in on record low interest rates.

If a 15 year fixed is not affordable, then yes, you do a 30 year fixed.   But be aware that for a good portion of those 30 years you are only paying the bank interest and hardly anything on principle.  That means that you really don't own that house..the bank does.  On a 15 year fixed, each year, you have paid much more principle on that home and therefore own more of it.

But yes, you do have a point, with interests rates super duper low, those interests rates aren't going to break the bank...But for a 30 year fixed, those rates are higher than a 15 year fixed rate.

The important thing is that you have to be able to afford to make those payments...if you had a choice, go with the 15 year fixed over the 30 year fixed as long as you can afford it. You pay the bank less money and you end up owning more of your house.  That, to me, isn't so dumb.

[Dr. Dan]

Thanks. I can assure you that I am far from any of that. Truth is, I would like to buy a condo before a house. What do you all think about condos?

It depends on the number of bedrooms and if you are married and having kids or a large family.  Condos are great since there isn't much maintenance involved compared to a house.  However, depending on where you live, the house can give more room than a condo.  If you are a single guy and know you will sell or rent that condo, it's a better thing to purchase before getting a home.

[angryChineseKahanist]

Just curious. How does somebody buy a house and get a mortgage and all that stuff?

with money!!!!!!
you will find it very hard to get a loan now. even though housing prices are half the price.
you may have to sign up your parents to back up your loan.

Its not hard. Start with a realtor.  Then find a bank like 'bank of america' or something. Then you need a real estate lawyer to close the deal. Always have a lawyer. That's the most important part.

[angryChineseKahanist]

Speaking of fixed rate.
Do not finance your home with an A.R.M. loan.
You can, however, pay your down payment with an ARM loan.

[muman613]

with money!!!!!!
you will find it very hard to get a loan now. even though housing prices are half the price.
you may have to sign up your parents to back up your loan.

Its not hard. Start with a realtor.  Then find a bank like 'bank of america' or something. Then you need a real estate lawyer to close the deal. Always have a lawyer. That's the most important part.

Brilliant answers... I was going to say WITH MONEY myself, but you beat me to it...

When I bought my house almost 15 years ago the market was down and I got a good deal on the house. At the time we had a lot of money to put down on the house, but I got the 30 year mortgage and am still paying it off (after 2 refi's)...

I don't know what the market is like now... Im just happy I have a house which is still in pretty good shape..

[The One and Only Mo]

with money!!!!!!
you will find it very hard to get a loan now. even though housing prices are half the price.
you may have to sign up your parents to back up your loan.

Its not hard. Start with a realtor.  Then find a bank like 'bank of america' or something. Then you need a real estate lawyer to close the deal. Always have a lawyer. That's the most important part.

A realtor and a lawyer are expen$ive, no?

[cjd]

If a 15 year fixed is not affordable, then yes, you do a 30 year fixed.   But be aware that for a good portion of those 30 years you are only paying the bank interest and hardly anything on principle.  That means that you really don't own that house..the bank does.  On a 15 year fixed, each year, you have paid much more principle on that home and therefore own more of it.

But yes, you do have a point, with interests rates super duper low, those interests rates aren't going to break the bank...But for a 30 year fixed, those rates are higher than a 15 year fixed rate.

The important thing is that you have to be able to afford to make those payments...if you had a choice, go with the 15 year fixed over the 30 year fixed as long as you can afford it. You pay the bank less money and you end up owning more of your house.  That, to me, isn't so dumb.

Interest rates are quite low now and in all honesty I don't see the term being the big factor it was when the interest rates were much higher... If a 30 year fixed rate get people in the door its always possible with most conventional mortgages to prepay each month and get done with the mortgage sooner... The biggest problem today is that the banks are not lending unless people put down a large deposit and the property they are buying is worth the selling price... When I bought my homes I bought into the tail end of the sellers private and bank mortgages which were assumable... This actually saved me closing costs and going through all the red tape... Interest rates back then were between 8 and 10 % which sound high today but in all honesty looking back the deal allowed me to pay off the homes in 10 years... The sad part of the picture is 20 years later my property tax alone has gone up so much I now pay more for the taxes than I payed on the mortgages and tax combined back in1989. 

[cjd]

A realtor and a lawyer are expen$ive, no?

The seller pays the real estate fee's however the cost is factored into the selling price... Lawyers closing fees are reasonable in most cases... Real estate fees although lower than in the past are one of the worst ripoffs in the world.

[The One and Only Mo]

Why do you need a lawyer?

[angryChineseKahanist]

Why do you need a lawyer?

whooaa? vhy do you need a lawyer?
even if you skip out on the realtor (which you can if you know what you are doing) you don't skip out on the lawyer!!
You get a box of 14x8 sheets of papers to fill out - very small fonts.

[cjd]

whooaa? vhy do you need a lawyer?
even if you skip out on the realtor (which you can if you know what you are doing) you don't skip out on the lawyer!!
You get a box of 14x8 sheets of papers to fill out - very small fonts.

True, the lawyer is a must... There is a great deal of background work that needs to be done like title searches and being sure the property is up to code compliance... In many cases if people are getting financing the banks or now days mortgage company do some of this but the buyer should have his own lawyer to oversee everything...When buying a house the lawyers fee is money well spent.

[angryChineseKahanist]

Yes.
If anything happens, you have the lawyer to blame.