Buying my first house

[TiggeRia]

I could certainly use some pixie dust. I am in the process of buying my first home and finding the whole prospect rather terrifying. I'm 28 and have lived with my parents my entire life...I've just rented the bottom floor of their home since I graduated college--I've lived in this house since I was 3. Plus, my parents are my best friends and I'm not finding the idea of leaving them very easy. Granted, my new home will only be about 15 minutes away, but still...I know I have to leave eventually and now is the time to buy homes and I'm getting a very good deal on what I'm buying. It's just scary and I know it will be a big lifestyle change and I'm not very good with change. Not to mention trying to understand all the real estate and mortgage jargon...so confusing! Anyway, if anyone has some pixie dust to spare...send it my way. Thanks for listening!

[PAYROLL PRINCESS]

Congrats on your new home! It is a very scary and exciting time. I had a great mortgage agent who let me know when and what I needed to do. And when I went to the closing I was so happy leaving with the key in my hand. And then I realized how much money I owed!! LOL But it was so worth it. Enjoy your new home.

[DizneyRox]

You think buying is bad, wait till you have to sell!

[beksy]

Congratulations! I'm sure everything will work out fine for you and once this confusing part is over and you've settled in you will be happy with your decision. I'm close to my parents (at least my mom and on some days my dad) too so I can understand your feelings. My mom and my little sister who still lives with them are my best friends and when I moved out in August I wasn't sure how it would go (I'm four hours away) but once I got settled I loved it! I'd like to be closer (your 15 minutes sounds great) but I don't know that I could live with them again unless I absolutely had to...after a month at Christmas I was glad to get home! Besides, now really is a great time to buy if you can afford it. :congrats: :party2::wishes: :pixie: :pixie:

[RedSoxFan]

Congrats on buying your first house. Very exciting.

[dnickels]

Congrats on your first house!

And as a public service announcement: PLEASE, PLEASE, PLEASE make sure that you understand everything you're signing, how your mortgage works and all it's terms and possible permutations!!! Don't be one of these people who didn't realize the payment on their adjustable rate mortgage could go up.

[DizneyRox]

Don't be one of these people who didn't realize the payment on their adjustable rate mortgage could go up.
Why? What's the big deal? :D

[diz_girl]

First, :congrats:.

Second, here's my:twocents: (I hope it doesn't scare you):

A - Try to get a down payment of AT LEAST 20%. If you have a down-payment of less than 20%, your lender will require that you take out PMI, which is Private Mortgage Insurance. PMI plays an important role in the mortgage industry by protecting a lender against loss if a borrower defaults on a loan, as it is generally considered that people with less than 20% down payment are at greater risk of default. Basically, you're paying insurance that benefits your lender. The better thing to do is to have a minimum down payment of 20% and the money that you would have spent on PMI is money saved.

B - Take out a fixed-rate loan, preferably a 15-year loan, if you can swing it. This is because with a 30-year loan you will pay down your principal more slowly over the life of the loan, as well as paying more interest. Plus, 15-year loans normally have a lower interest rate, costing you less in the long-run. For example, 5 1/2 years ago we took out a $210K loan for 15 years at 5 1/8% per year. A 30-year mortgage would have been 5 5/8% for an annual interest rate. Our payments are $465 more with the 15-year mortgage than if we had went with the 30-year mortgage. However, our loan balance (principal) is now $151K, which is $41K lower than it would be if we had the 30 year mortgage (which would be at $192K). It took us only 1 1/2 years to start paying more principal than interest with our mortgage payments, but if we had a 30-year mortgage it would have taken over 17 years to reach that point. Also, over the life of the loan we will pay only $92K in interest for the 15-year loan, which is a lot better than the $225K in interest that we would have paid over 30 years. Some people make a big deal about the interest that you pay on a home being tax-deductible. Don't listen to them. You'd be paying a dollar in interest to save a quarter in taxes, which means that you'd still be out seventy-five cents.

C - PITI - Principal, Interest, Taxes, and Insurance. The Principal and Interest are your mortgage payment, the Taxes are your property taxes and Insurance is the cost to insure your home. You don't want your monthly PITI number to be more than 25% of your income. If it can be 20%, you're looking good. If it is more than 25%, then the home may not be affordable, hence the current housing and credit crisis, since the cost to own a home is more than just PITI. You have to pay money to maintain, furnish and possibly improve your home, in addition to your normal living expenses.

D - Have an emergency fund of 3 to 6 months of living expenses, in case of an interruption in income (due to layoff, illness, etc.). There is another thread on Intercot that asks if you have a sufficient evergency fund. I don't yet, but I'm working toward that goal, as my savings were depleted due to taking a maternity leave.

E - Be debt free - It is much harder to live on your own and pay all of your other bills if you are saddled with credit card, student loan and other consumer debt.

I hope that this helps. Good luck!

[PlutoLVT]

I admire your courage. I'm 33 and have lived in the same house with my parents and brother (30) since I was 2. I've sometimes thought about buying a house but I'm afraid I don't make enough money to afford it on my own. My parents don't charge me anything. I only pay for my own car and a trip to WDW once a year. I save every dollar I can to live off of when my parents are gone and I can no longer work due to my Rheumatoid Arthritis.