psucunningham asked:
I’m a recent college grad (2 years out) with a pretty great job. I live in NJ and never really considered purchasing a home… at least not for a few years. Over the holidays, I realized that I qualify for a VA loan… which would mean that I could get a home loan with no down payment, and not have to pay PMI… so now purchasing is a viable option (especially with the rent prices in NJ/Philly).
I’m a recent college grad (2 years out) with a pretty great job. I live in NJ and never really considered purchasing a home… at least not for a few years. Over the holidays, I realized that I qualify for a VA loan… which would mean that I could get a home loan with no down payment, and not have to pay PMI… so now purchasing is a viable option (especially with the rent prices in NJ/Philly).
So… as a guy who has done nothing but rent… I have no idea what else to consider before applying for a loan. What other additional costs are associated with home ownership? I’m used to a rent check going out the door every month, and that’s it. I know I’d have to consider all repairs and such… but what else?
Property taxes? Clueless. Do you pay them all in one lump sum each year? Are they calculated based on your area/home value..?
I’m a financial analyst… so anyone who can give me a heads-up on the overall financial impact, I’d be able to follow along.
Boston homes for sale
src50 Says:
March 30th, 2009 at 8:54 pmVisit src50
Document Shredding
Go to Amazon.com - there are a number of excellent books on home buying for first timers. Educate yourself first - that’s the best thing you can do.
golferwhoworks Says:
April 2nd, 2009 at 3:18 amVisit golferwhoworks
Commercial Real Estate San Diego
good question as yes you are now the captain of the ship. You taxes and insurance are based on the value of the home and the local taxing office and they are included in your monthly mortgage payment just by 1/12 each month. Now as for repairs and the unexpected life just happens so do your self a favor and set up an emergency fund of not less than 6 months living expenses and if you ever have to tap into it then do so and then replace it so you always have that cushion to fall back on as I said life happens so when the fridge blows up buy a new one pay cash and replace it asap. This is how you don’t become the next foreclosure in America
Good luck and congratulations to home ownership now get prequalified by a local mortgage professional then get a realtor that you trust and go house shopping as rates are pretty good right now
estielmo Says:
April 3rd, 2009 at 6:46 amVisit estielmo
Baltimore MD Homes realtors
And don’t forget there is a total change of mindset. It’s not only the financials. Some people aren’t built to own, they are born-renters. I know some people who know their limitations with being adverse to all the details necessary that they wouldn’t own on a bet.
I know Habitat for Humanity conducts home ownership classes. Even if you don’t use their program, maybe you can attend their classes.
ranger_co_1_75 Says:
April 6th, 2009 at 2:55 amVisit ranger_co_1_75
cosmetic dentist San Francisco
Home Owners insurance plus special Insurance such as Flood insurance if you live in an area prone to flooding, earthquake or hurricane insurance for those areas.
Utilities such as sewer, water, garbage, gas, electric. Special assessments such as user fees for parks and fire and police. Historical society assessments, Transportation District assessment, Street assessments for improvements to streets in your neighborhood, check with your county and city to get a list of all assessments that will be levied against your home.
In my state, special assessments are billed each month directly to you, not rolled into one yearly payment.
The method of assessing property taxes and collecting is set by each state. So you would need to check with the property tax collection agency in your state.
In my state, property taxes are based on the value of the house in 1993, plus 3 % increase compounded each year since, or if the house was built after 1993, the cost of the house plus 3 % increase compounded each year. Current drops in the value of real estate aren’t factored in.
Your state will be different from mine.
glenn Says:
April 7th, 2009 at 3:43 amVisit glenn
Carmel Valley Real Estate
The deal about VA and PMI is sort of true….but most veterans do pay a “funding fee” that is about the same cost as PMI and is for a similar purpose. I believe disabled veterans do not pay this fee.
There are hundreds of things to consider. But when you ask older couples about owning a home they almost always say that owning a home was the best financial decision they ever made.
There are a lot of websites that address this but I think they are normally flawed in one way or another.
I have been a Realtor for 30 years and find most people fall into groups. Some only want a brand new house- if they can’t afford that then they “settle” for one as new as they can afford. Some people wouldn’t want a new house as a gift- they only want an established neighborhood that is often decades old, and they will pay whatever it takes. My brother has a house built in the 1950’s and have bought a lot of furniture and fixtures from the 50’s to make it look like a “step back in time”
My opinion is don’t concentrate on the house to much- but concentrate on the neighborhood. It will return more on your investment than any other feature of the house. Of course get a home inspection done (and be there so you can talk with the inspector). Visit City Hall and ask them about future roads and parks and such in the area and how they will affect the house you are buying.
Steve D Says:
April 10th, 2009 at 11:24 amVisit Steve D
Vancouver WA Real Estate
Okay…with just some minor exceptions, everyone above me has answered you questions quite well…heed their advice.
Now to add, special assessments - before buying, check to see if the house is city water and sewer or well/septic. If the house is well/septic, check with the local water/sewer authority to see if there are plans to extend the water/sewer to your street - if so, prepare yourself for a big assessment plus hookup costs (figure at least 5 figures). If there are no plans to extend, you need to ask about the age of the well/septic and talk to some of the neighbors about any septic problems they might have had.
Financials - expect that your mortgage payment will increase each year until you have it paid off - mortgage companies refigure the payment based on increases in insurance costs (which you must carry until the loan is paid) and property taxes (like any other tax, property taxes rarely decrease).
Buying the house - no money down does NOT mean nothing out of pocket. Expect that you will need about 3 - 4% of the cost of the home for closing costs unless the VA allows you to roll the closing costs into the mortgage (which puts you immediately under water). These costs include an appraisal cost, various paperwork processing fees and recordation fees.
Homeowners insurance - you will need this even before you sit down at closing, so this is an upfront out-of-pocket expense (most title companies and lenders will not allow you to close without having a copy of the declarations page of a paid-for insurance policy.
Buying the house - get pre-approved for the loan (not pre-qualified) before even starting to look. This will speed the process and tell you how much loan you can get and consequently how much house you can afford. Once you are pre-approved, sit down with an amortization/payment calculator and figure out what the principal and interest payments would be on the max loan, then add in an estimate for the taxes and insurance (a real estate agent can help with these). That is your estimated monthly payment for the most expensive house you can buy. Ask yourself - can I afford this (as a financial analyst, it’s time to put that finance/economics degree to work on your own behalf
If you can’t afford it comfortably, figure out what you can afford and go back to the calculator and plug in different house prices until you come up with something you are comfortable with.
There are a ton more questions to ask and be answered - such as, when do I get the house I love inspected, how do I make an offer, what should I offer? Check out this site for lots more info:
PlNk pEaRlS Says:
April 13th, 2009 at 4:50 amVisit PlNk pEaRlS
Carmel Valley Real Estate
Hey! We’re in the same boat right now (first house, husband graduated, I graduate in Dec ‘09). Obviously owning is usually better b/c you get money back later instead of throwing it down the drain like renting. You can make your payments in several different ways. My advice would be to calculate mortgage, property tax, and home owners insurance into one monthly payment called “escaro”. When you meet with a mortgage broker to get pre-qualified, they’ll calculate your debt to income ratio & tell you what you can afford. We were shocked to find out the house we wanted (mortgage, home owners insurance, and taxes) was $25 cheaper a month than our apartment & renters insurance! You can look on the national *** offender registry and check for crime occurrences to see what area you want to live in. It’s best to buy the ugliest fixer-upper in a great neighborhood than to buy a beautiful house in a bad part of town. These are the things your broker will need to see to pre-qualify you:
-3 years of w-2’s and taxes (even from odd jobs during college)
-2 recent pay stubs
-2 months of bank statements & a print out from the bank (stamped, signed and dated) saying that you have at least 1% of the value of the house in your account (even if you do it on payday is ok)
-Student loan documents
-And they check your credit report. If you have a credit score of at least 600, you should be fine
If you pay full price for the house or close to full price, you can usually get the seller to pay closing costs. Always offer less than they’re asking though.
bandyemmie Says:
April 15th, 2009 at 4:51 pmVisit bandyemmie
San Jose Costa Rica Private Investigator
Things to consider when owning a home.
Utlities (Water, Sewar, Heating, Garbage Removal)
Home Maintence, Internal and External
Things you can add to your mortgage by an Escrow Account.
Property Taxes, City county, school, municipal you can pay 1/12 of that every month and then your Mortgage Company will pay those out for you and let you know if you need to pay more or less once a year when they do an escrow analysis of your account.
I have been a Home Owner since the age of 19 years old. I have been working for a large Mortgage Company for the last 8 years doing Foreclosures.
When you are applying for a loan they go off your Gross Income, but you should purchase the home based on your NET pay. And as a rule of thumb keep at least 6 months income in savings for a rainy day.
$.45 of every dollar I earn goes to my home for repair, upkeep and payments and utlities and furniture and taxes.