Where to even start as a first time home buyer?
October 12, 2015 3:03 PM   Subscribe

My partner and I are saving for a down payment for our first home. As an obsessive planner I am starting to educate myself on everything I may need to know to make this happen.

1. What should I be researching/thinking about? One of the reasons I'm keen to start educating myself is, I think we should know what we're aiming for. Where we want to buy is going to affect the budget we'll be looking at, which will affect the down payment we're saving. I'm trying to learn about property taxes. I want to learn about lawyers costs/realtor costs/closing costs. I know there is a lot I'm going to need to know to determine the amount of money we'll need. I'm from England and I'm familiar with how things work there, but not here in the US. My boyfriend is as clueless as me so we're really starting from scratch here.
We're saving to buy a run down house, we want to totally renovate the home ourselves. We're going to need to have money set aside should we need to install all new heating/plumbing/electricity/roof. General expenses involved in making a house livable. I grew up with parents who renovated all our houses so I'm no stranger to it but once again, all my experience was in England.

2. Any suggestion for blogs about renovating houses? I'm a big fan of Manhattan Nest. Anything similar to that.

3. And just in case anyone can offer any insight on location. We both work in NYC. Me in Chelsea, him in Gowanus BK. We'd like to be within 1.5 hours of Chelsea via public transportation. He drives and is ok with a commute from that kind of distance. We'd love for the budget to be within $300k, hopefully doable for a fixer upper. Taxes no more than $13k. We'd like a garden/garage. Prefer not to be in a built up area. We have a car so we're able to go anywhere to scout.
posted by shesbenevolent to Home & Garden (20 answers total) 34 users marked this as a favorite
Response by poster: ETA: Any information/suggestions not relevant to my specific questions also welcome! Lay it on me.
posted by shesbenevolent at 3:07 PM on October 12, 2015

Buy Home Buying for Dummies. That's not a subtle insult -- it was extremely helpful for us, Americans who had lived in a house before (well, one of us.)
posted by chesty_a_arthur at 3:18 PM on October 12, 2015 [5 favorites]

I asked this question a while back and got some great answers. And I actually just started reading this book and like it so far--seems very comprehensive: 100 Questions Every First-Time Home Buyer Should Ask: With Answers from Top Brokers from Around the Country
posted by lovableiago at 3:23 PM on October 12, 2015 [2 favorites]

If you haven't already, pull your credit now and start fixing the little dipshit stuff you never knew about. Old cable bills or student loan paperwork screwups or whatever. Fixing that stuff dragged my credit down to an extent, briefly, for whatever combination of reasons.
posted by ftm at 3:26 PM on October 12, 2015 [5 favorites]

You might find lurking on the forums at Bigger Pockets interesting -- they are focused on small real estate investors, but many of them buy single-family properties of the kind you'll be looking at. They tell what goes wrong with fixer-uppers and flips and transactions of all kinds. You will find many cautionary tales, many with dollar amounts attached.

There aren't a lot of posts on the topic, but the Frugalwoods bought in a hot market and have tips you may find useful.
posted by pie ninja at 3:57 PM on October 12, 2015 [1 favorite]

IMHO, if you don't lose a few bids first, you over-bid.
posted by flimflam at 4:12 PM on October 12, 2015

I'll echo Home Buying For Dummies. A helpful book. If nothing else, it showed me that there is a progression to buying a home and that there are things you have to do first, so go do them. Then, you can stop worrying about those things and go do the next things.

Get your credit in line.

I used a mortgage broker for both my house purchases. The cost was the same, but having him around ensured that the paperwork was done by a professional rather than a procrastinating doofus (i.e. me).

When you decide to start looking seriously, get pre-approved for a mortgage. Many buyers won't even look at someone who is not pre-approved.
posted by It's Never Lurgi at 4:30 PM on October 12, 2015 [2 favorites]

Start going to all kinds of open houses. It helps to see a ton of places, learn what you get for the money and start figuring out what's important to you. The more places you go look at the more you'll refine your search and educate yourself on how far your money goes in which neighborhood. With time you'll be able to spot a good deal when you see it.
posted by Kangaroo at 4:33 PM on October 12, 2015 [4 favorites]

When my husband and I started to consider buying our first home, we went to some classes provided by our state's Housing Finance Corporation that helped us feel less out of our depth. A quick search tells me that New Jersey has one too. They offer some homebuying programs which may (or may not) be beneficial to your circumstances. And while I don't immediately see them offering any trainings, they do have a First-Time Homebuyer's guide as a free download that is worth a look.
posted by rhapsodie at 4:50 PM on October 12, 2015 [2 favorites]

It isnt clear from your questions whether or not youre looking inside or outside the city/brooklyn itself (the reference to within 1.5 hrs/drivable threw me off). Regardless - some basic basic info that you should know at the very beginning - as buyers you should be able to find a realtor/real estate broker willing to represent you for no cost (to you). this is enabled by a system by which the seller pays their broker/realtor a fee which that realtor shares with your representative. in general the fee runs about 6% of the sale price and is usually split down the middle by the realtors though thats all potentially subject to negotiations (between brokers - you'd not even need to know its going on).

I say this because your first step should really be talking to a broker - its in your interest to find someone who you like and want to work with, and its in their interest to size you up because your budget determines their potential commission and your seriousness and timeline will dictate how much interest they might show.

A competent and experienced broker can walk you through the process of what to expect, from closing costs, attorneys fees, coop board approvals and inspections etc. basically they do all the heavy lifting and paperwork wrangling, and as the buyer it doesnt even cost you anything. its pretty great.
posted by Exceptional_Hubris at 5:02 PM on October 12, 2015 [2 favorites]

Response by poster: So far great help!

- My partner has excellent credit. Mine wasn't great but I've been obsessively improving it and I'm hoping to have a much better score by the time we are ready.

Exceptional_Hubris I had a feeling my commute information was totally unhelpful.
I'm happy to commute 1.5 hours on public transport. My partner drives. From what I've researched, the places that are a 1.5 hour commute for me via public transport, tend to be around an hour drive for him to his office. Hope that clarifies.
We are open to location. I've mostly been looking north of the Bronx: Mt Vernon, New Rochelle, Yonkers, Hartsdale, Scarsdale. I have no idea if our budget would work west of Queens into Long Island. We'd rather not be within the five boroughs. We'd like to be out of the city. We're open to NJ, we love it here right now, but the property taxes may be too much for us. Being outside the city is the key, open to state/town/neighborhood.
posted by shesbenevolent at 5:32 PM on October 12, 2015

We're saving to buy a run down house, we want to totally renovate the home ourselves. We're going to need to have money set aside should we need to install all new heating/plumbing/electricity/roof.

There can be very different loan issues for a serious fixer upper than for a normal turn-key house, particularly if the house needs more than just cosmetic work (which is what many people mean by fixer upper). Build in an expectation of needing more time, more inspections, and possibly more costs, because many banks will see this as a higher risk proposition than a regular house purchase.
posted by Dip Flash at 5:34 PM on October 12, 2015 [2 favorites]

Fix your credit was the big piece of advice I got. We also bargained for the closing costs. For your future budget ask if there's any information on what the monthly bills are: water, heat, electric, garbage, etc. Find out what the age of the heating/air, roof, major appliances are. Someone told me the average lifespan of appliances was 15 years. They were right, lol. You might want to figure out your budget for your yard care is too while you're at it. Then you can to figure out if you're going to need a mower, leaf blower, snow blower, weed eater, or pay someone else to do it.
posted by PJMoore at 6:16 PM on October 12, 2015 [3 favorites]

When you are ready, see if you can find a buyer's agent who represents buyers ONLY. Spotless credit. Don't fall in love with the first one or two places you see. Don't fall in love with any of them.
posted by vrakatar at 6:24 PM on October 12, 2015 [2 favorites]

Go play. Go to open houses. Imagine yourself living there for 30 years. See how it feels and figure out why. This is on the opposite side of the practical, financial stuff. When I was looking for my house, the most important aspect was the quality of light. The direction the house faced. How the sun hit me when I was having my morning coffee, what I saw when the sun set. You can't explain it to an agent, but being in touch with the emotional, sensual side of what you want to live in can really help you stay happy for many years to come.
posted by Vaike at 7:20 PM on October 12, 2015 [2 favorites]

Because of "stuff" that happened when I bought my 1st house, one of the biggest things that put me at ease when I bought my second house was going to the city's planning office. We asked what was planned in the area (and told them why). The guy was super nice and just gave us a great 10 minute overview of highways/malls/stuff being built in the next decade. (Your tax dollars at work!) It was nice know where the noise would come from and that a highway wouldn't pop up in our back yard.
posted by Spumante at 11:51 PM on October 12, 2015 [5 favorites]

Make sure you can find tax returns from the last few years.
posted by 4ster at 9:10 AM on October 13, 2015 [1 favorite]

You'll need to have much more money up front if you're planning to buy a place that needs major work before moving in, since the mortgage can't cover any of the repairs. I assume you're aware of all this, but just in case. If you buy a place for $300K that's in reasonably good shape, 20% down+fees (lawyer, home inspection, appraisal, land survey, etc)+movers+misc might mean mean you'd need $70K to move in. If you buy a place for $250K that needs $50K of work to get it livable, the downpayment/fees/etc drop by $10K but you're still spending $110K up front. Maybe even more than that in case the work's more expensive than planned, since a poorly-maintained house is likely to have problems you won't know about until you start opening up the walls.

There are a lot of reasons not to do what you're proposing, basically. It'll also be harder to get a mortgage for a house that needs major repairs, and you might be paying both rent and mortgage if the house isn't livable for awhile.

I also work in Chelsea and I'm mostly done buying my first house. I spent a lot of time planning work on a fixer-upper before that sale fell through, I'm now buying a place that needs much less immediate work and I'm happy with that decision.

If you like Manhattan Nest you'll probably like Door Sixteen.
posted by ethand at 1:02 PM on October 13, 2015

Response by poster: Thank you everyone for your advice. It gives me a great basis to google for more information. lovableiago your link was so helpful! Thank you.

ethand I appreciate your advice but a house doesn't need $50k spent on it to be livable. As long as it has a good roof and electricity it's more than suitable to live in. As I said I'm no stranger to fixer uppers. I've lived in houses without heat/hot water several times. I've lived amongst rubble and walls with water running down them. Living in a wreck is not something that concerns me. I have never lived in house that didn't start out that way and I have no interest in doing it now. It's fine if it's not for you, but it is for me.
posted by shesbenevolent at 6:25 AM on October 14, 2015

You don't mention your familiarity with mortgages. There are some very recent changes that you may want to familiarise yourself with, so you can assert your rights as a home-buyer.

The Consumer Financial Protection Bureau (CFPB) has implemented a new initiative called "Know Before You Owe". The new rules went into effect October 3, 2015. The most critical changes involve loan estimates and closing documents — the paperwork you receive at the beginning and the end of the mortgage application process.

Before the change, homebuyers received a “HUD-1 Settlement Statement” at closing, when they were already busy signing dozens of forms and unlikely to spot errors. Borrowers were also presented with a separate Truth In Lending Act (TILA) disclosure.

Both the HUD-1 and the TILA disclosure are being replaced by a single “Closing Disclosure” form. Banks, title companies or anyone else preparing for a closing will now be required to provide documents to consumers 72 hours (3 business days) before closing, giving you more time to review.

The CFPB website has a handy easy-to-read interactive sample Closing Disclosure here.
posted by cynical pinnacle at 9:03 AM on October 14, 2015 [2 favorites]

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