where do I start? - First Home Purchase...

[whiskeytown]

Ok - here we go - I'm seriously considering leaving apt. living and going the home ownership route...

first off...where the [censored] do I start? - I know I don't want a house if possible - I'd rather do Condo or Loft - I have no kids or family (and can't plan on them for awhile) - and I don't feel like dealing with lawn mowing, chores, and all that crap -

I don't know how much a downpayment I need, or what my salary has to be - I heard plan 3 times your yearly salary for homebuying - that would be an ok home - 4 times I can get something pretty cool -

I currently have no down payment, but could probably scrape together 5K by December when my lease is up for renewal -

where the hell do I start? - Minneapolis residents esp. encouraged to apply.

RB

[MrMon]

The 3x rule no longer applies. Being a real estate agent, not in MN unfortunately, I'd suggest you start by contacting a lender. Let them tell you what the max home you can afford is. Understand where the number comes from and how you can change it. Don't use one of those online calculators except for rough estimates, actually talk to a lender to get some real data and a feel for how this works. And any lender that can't give you an answer in 60 minutes or less via phone probably isn't worth dealing with. (You probably want a 5 or 7 year ARM. At least use that to determine target price.)

Once you have a number, decide if you can live with the payments. Remember the tax benefits, this isn't the same as rent money. If it's too much, lower payment and target house price appropriately.

Now start educating yourself. Go to Sunday open houses, visit condo and loft developments. Go to different parts of your area, try different styles of house or condo. Just don't go look at things that you can't afford, you'll want them and it will make what you can afford look bad.

After looking for awhile, you should start to get a feel for what you like. Area, style, single level or two level, downtown or suburban, etc. Put down your ideal home, and see if it exists. It doesn't, trust me. Now you have to start to compromise, decide what's really important, what you have to have, what can be left out. Try to find that.

One final thing, never try to make a house fit your needs. It's a gut feel type of thing, you'll know it when you see it. If it doesn't scream "buy me", don't.

[smokingrobot]

before you apply, you might want to obtain yoru credit report and make sure its kosher (nothing on it that shouldnt be).

get together your W-2's or 1099's tax returns from last year and the year before.

get your bank statements together.

for a mortgage payment, take the price of the home you want to purchase, divide by 1,000 and multiply that nuber by 6.

that will be your principal and interest payment assuming a 6% rate.

add that number to your monthly expenditures (only the ones that show up on your credit report) and divide that number into your monthly income. make sure thats below 50%, if not, buy a lower priced home.

ex:

Purchase price 100,000
p&i = 600

monthly CC bills and auto loan = 400

monthly income = 4300

1000 / 4300 = 23%, < 50%. so its good.

thats called your debt ratio btw.

if you wanna know anything else, pm me. i can write more for you later, but im about to fall asleep.

[IHateKeithSmart]

Also, figure in the development/regime fees if its a condo. And homeowners insurance and property taxes for additional bills you'll have.

[whiskeytown]

I'll go thru it -

for what it's worth, I work in services for a very large financial institution that does lending for homes - I believe we get extra benefits that make it worth my while to go thru my company - but I shalt investigate -

will probably be a few months anyways - nowhere near a downpayment - not even close, really -

RB

[Broken Glass Can]

Be careful!

Once you enter the ranks of the propertied class, you will have an uncontrolable urge to vote Republican. [img]/images/graemlins/grin.gif[/img]

Welcome aboard.

[whiskeytown]

bumping (hey, I posted at 3am - gotta try to get it out there before going to bed)

RB

[djoyce003]

get copies of your credit reports, tax returns, bank statements, pay stubs, any assets you own, such as 401(k) statements.

I'd go the pre-approved route...which is different than pre-qualified. Pre-approved means that your financing is totally in place and all you need to do is find a house. I think it's 90 days from your pre-approved date so don't do it right away cuz it could take 90 days to find a place you like.

Pre-qualification for lending isn't the same and don't do that...do pre-approval. Your bid carries more weight when you are pre-approved as well because the seller knows that the sale can close much easier. Sellers don't want to accept a bid only to have financing fall through so sometimes you'll get the house even though your bid is lower than a competing buyer who isn't pre-approved.

[chesspain]

[ QUOTE ]
I don't know how much a downpayment I need, or what my salary has to be - I heard plan 3 times your yearly salary for homebuying - that would be an ok home - 4 times I can get something pretty cool -


[/ QUOTE ]

A reasonable rule of thumb is to spend no more than a 1/3 of your monthly gross income on housing (i.e. principle & interest for mortgage, property insurance, & property taxes). Although lenders may be willing to loan you so much money that you are spending 40%-50% of your monthly gross on housing, I prefer to be able to sleep at night. [img]/images/graemlins/smirk.gif[/img]

[PocketJokers72]

[ QUOTE ]
Ok - here we go - I'm seriously considering leaving apt. living and going the home ownership route...

[/ QUOTE ]

Having owned a few homes, I'll say this:

Don't but an old house!

Purchase a house/condo/townhouse that is less than 3 years old, or brand spanking new (my preference). The energy savings (esp. in a snowy state like yours) from the newer building technology (windows/insulation) is quite significant from a monthly cost perspective.