[Ghoser777]

I'm finally at that stage in life where I want to own a residence. I've been saving up for three years after college, and now I want to get a condo considerably closer to work (I've been living with my parents at a considerable distance). But I've got some questions about what things I should do in what order, what questions I should ask, etc. I know many of you on the board have gone through this, so I'm hoping to glean a little from your experiences.

What I've done so far is figured out my target price range (175k-225k) and roughly how much I'm willing to put down (20k ish). I've gone on realtor.com and found a couple places that are close to my work and within my price range. I know I have to do the following, but I'm not sure in which order: get a mortgage (pre-approved?), get a realtor, go house seeing.

Should I go house seeing at first without getting a realtor, or should I get a realtor first? Should I get pre-approved for a mortgage before I do any of that? Does it matter? Also, does anyone have any good suggestions on what I should be looking for in a mortgage? I've read up a little about them and tried to understand the different terms (APR, rate, points, etc). The rates that citibank was offering seemed really bad (7-8%), so I guess I should look elsewhere - I did find some online through a financial search that had rates closer to 6.5%, but with varying points and APR's.

I don't need all the answers, just some suggestions or words or wisdom on buying my first condo would help.

[stevesnj]

Try to get the mortgage through your current bank, dont get an adjustable APR, if you can get a 15 year mortgage, find out the taxes for it before you get the mortgage. Hope you have a good credit score, at least 700 is good for a decent rate, if yours is lower than your rate will go up, and try to put as much down as you can, avoid doing a 100% motgage

[Ghoser777]

Yeah, I was definitely wanting a fixed rate loan. I never hear about 15 year mortgages... that would be a lot more each month but less overall I gather. I believe my credit score is pretty good, (freecreditreport.ocm said 773 I think), so hopefully that will help.

[Rumor]

If you belong to a credit union, use them to finance or try Ditech.

Try to get pre-approved for a mortgage first, then go look for a house. It'll be a bit easier when you know how much you can spend versus how much your willing to spend (ie you might be approved for more, which can help haggle)

[scaught]

773 is incredible as far as credit scores go.

number 1 advice = noone in the real estate game is your friend. sorry, but its true. don't sign anything, don't pay anyone anything, and don't be afraid to dump your realtor/mortgage person like a bad habit if they're not doing what they should be doing. they're going to get paid well at the end of this transaction and should be dabbing your ass lightly with rose petals the whole way.

that said, start looking for mortgages. shop around for a rate. you'll find the person who wants to work with you and makes you feel comfortable. let the rest of them rot in a shallow grave. stay away from adjustable rates. a 15 year is better than a 30 year. open a home equity account along with your regular mortgage to avoid paying Private Mortgage Insurance (if you're financing over 80% of the value of your house you have to pay that). think about how much per month you are going to be able to afford, and figure it out based on that (if you're looking into a condo, take into account association fees and whatnot).

like rumor says, being pre approved is advantageous. if you find a good deal and can MAKE that deal quickly, its a good thing.

[Nicko]

My only advice is to get a good impartial lawyer you can trust (ie, don't use the one the realtor suggests)
Secondly, when you find that perfect property, get a professional appraisal done. It’s worth the money, especially if they find problems.

[Cody Dawg]

First thing to do is to locate a good real estate attorney who also sells real estate and has a mortgage broker on staff or whom he works with.

That's the best thing you can do.

First of all, the mortgage broker can show you MLS listings or real estate under the license of the real estate attorney.

Second of all, the mortgage broker can get you a great loan.

Thirdly, when it comes time to buy the house the real estate attorney will go over the "deal" to make sure your interests are protected.

You are getting the services of an attorney for free at that point - he will be paid in the commission - so you protect yourself many times over.

It's what we did recently.

Happy house hunting!

P.S., One last thing? Our friend, a real estate attorney, says that condos and townhouses are the worst investments of all - even nationally. The only place they make sense, he says, is in New York City where they are called apartments.

He maintains that you are better off buying a cheaper house on property than a nicer condo or townhouse...he says that home real estate always appreciates whereas condos and townhouses tend to stagnate or appreciate more slowly.

Good luck.

[tooki]

Originally Posted by Ghoser777

Yeah, I was definitely wanting a fixed rate loan. I never hear about 15 year mortgages... that would be a lot more each month but less overall I gather.

Actually, because a 30 year loan has so much interest (usually well over the amount of the principal!!!), and a 15 year one has FAR less time to accumulate interest, the difference in monthly payment is far, far less than you might expect. It's nowhere near twice the payment.

When it comes time for me to buy, I hope to be able to afford the payments on a 5, 10, or 15 year mortgage to avoid paying ridiculous interest.

tooki

[Cody Dawg]

Yes, you're right, tooki. What a great perspective.

[Gossamer]

My dad refinanced his mortgage from a 30 year to 15 year, and his payments are about $80 more per month.

[macroy]

Originally Posted by Cody Dawg

P.S., One last thing? Our friend, a real estate attorney, says that condos and townhouses are the worst investments of all - even nationally. The only place they make sense, he says, is in New York City where they are called apartments.

He maintains that you are better off buying a cheaper house on property than a nicer condo or townhouse...he says that home real estate always appreciates whereas condos and townhouses tend to stagnate or appreciate more slowly.

Good luck.

That's only true if you're looking at the same area. In otherwords, LOCATION is the overall indicator of how good your investment is. And even in the same area.. you will still have pockets of "good" vs bad. Real Estate is VERY localized - and I mean down to the neighborhood. Two neighborhood in the same zip code can still be going opposite ways..... Do your research.

From an investment stand point.. this may not be the best time as the market is in the begining part a downward trend. Again, RE is localized - so some have flattened.. some are still going up. But in general, its in an adjustment period. The good thing for you is that its now turning into a buyers market. So you are starting to have more power (as opposed to 12 months ago where non-contingent/no inspecting contracts would be the only type folks were accepting).

It never hurts to just look around.... the only problem is if you find the jewel you were looking for - and someone else is already in position to put in an offer. Check out open houses in the areas your looking at.. this will give you an idea of what prices will get you.

[Y3a]

BUYING A HOUSE??? HOME INSPECTION DO's and DON'T's...

DON'T use a home inspector to check your prospective house. they hurry thru and miss stuff.
if you have to buy a "slab house (house on concrete slab) hire a plumbing company to do a video inspection on the sewer line to avoid having to hammer up your slab to replace it. (I SHOULD HAVE DONE THIS...) Don't look at houses older than 10 years old. Don't buy a house with Quest flexible grey plumbing-IT LEAKS!. NO A/C units outside, Heat Pumps only. Gas for heat and hot water if you can. Don't buy in a flood plain, or at bottom of hills. get a general contractor to check out the structure and roof, and get an electrical contractor to look at the wiring, box etc. write down model numbers of everything inside (washer/dryer/dishwasher/phones/etc) and check those out online. look for repaired damage from bugs, fires, household disasters etc too.

[scaught]

no A/C units outside? whats the alternative?

[Gossamer]

Originally Posted by scaught

no A/C units outside? whats the alternative?

Heat pumps. Our school had them, I haven't heard of them used residentially, but then again I know nothing about building houses.

[Cody Dawg]

That's for VA, I suppose?



In Florida you want electricity - insurance is less (it was a question asked when we were quoted an insurance quote...for some reason gas is riskier here in Florida). And down here most air conditioners are only outside - they sit on concrete slabs outside the home.

Yes, buy a newer place.

When shopping this time around the very first question was:

1. "Is the home built in 2002 or newer?"

Second was:

2. "Is the home cinder block or cement (or CBS) construction?"

If the answer to either one of those two questions was "No" then the insurance company immediately said, "We're sorry, we cannnot offer a policy to you."

So many people here in Florida are having problems with insurance that it's unbelievable. People whose homes were built pre-2002 are having a hard time buying or selling because if you're buying you cannot get an insurance quote necessary for a mortgage and if you're selling your buyers cannot get an insurance quote necessary for a mortgage. They're stuck.

Secondly, the wood frame houses (at least down here) just suck and suck bad. The heat and humidity down here just rot the houses away. I grew up in a 100+ year old farmhouse built of wood (oak) and it was tight as a drum.

But the houses built nowadays are built out of treated softer woods (pine) and they just don't compare to the older homes. That's why contemporary cement homes are much better...they're going to be around for a while...or at least longer than their wood frame counterparts.

[Rumor]

Insurance in Florida right now is ****ed.

Choose your own insurance company, quotes are easy to do over the phone with some basic information: year built, how many sq ft, how old the utilities are, buildings that are not attached to the house.

Never, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, ever, buy mortgage life insurance. If that is a concern, you would be much better off buying a level term policy.

[memento]

Originally Posted by Y3a

BUYING A HOUSE??? HOME INSPECTION DO's and DON'T's...

DON'T use a home inspector to check your prospective house. they hurry thru and miss stuff.
if you have to buy a "slab house (house on concrete slab) hire a plumbing company to do a video inspection on the sewer line to avoid having to hammer up your slab to replace it. (I SHOULD HAVE DONE THIS...) Don't look at houses older than 10 years old. Don't buy a house with Quest flexible grey plumbing-IT LEAKS!. NO A/C units outside, Heat Pumps only. Gas for heat and hot water if you can. Don't buy in a flood plain, or at bottom of hills. get a general contractor to check out the structure and roof, and get an electrical contractor to look at the wiring, box etc. write down model numbers of everything inside (washer/dryer/dishwasher/phones/etc) and check those out online. look for repaired damage from bugs, fires, household disasters etc too.

There a lot of info in this thread that's good. It would help to know where you are looking for a home. That has a big impact on what to look for.

Especially the comments from scaught. I've bought and sold several. Even had an ARM that worked greatly in my favor. I was lucky to have an agent who was a friend of mine. My first lawyer was TERRIBLE.

I don't agree with some things Y3a has here though. First, it's not always an option to hire a plumber, GC, electrical and a civil engineer to inspect a house - they all cost much more. I think more correctly, you at a minimum need to hire a home inspector. If possible go for the pros. I don't agree with not buying a house over 10 years old. Know the house you're going to buy and know the state of it's equipment. There are caveats to newer houses as well. No AC outside? I don't get it. Nobody should have central air? Heat pumps are only ok sometimes and depending on their design.

But most importantly, learn before jumping. This is hundreds of thousands of dollars, not buying a car.

[macroy]

Originally Posted by Cody Dawg

That's for VA, I suppose?



In Florida you want electricity - insurance is less (it was a question asked when we were quoted an insurance quote...for some reason gas is riskier here in Florida). And down here most air conditioners are only outside - they sit on concrete slabs outside the home.

Yes, buy a newer place.

When shopping this time around the very first question was:

1. "Is the home built in 2002 or newer?"

Second was:

2. "Is the home cinder block or cement (or CBS) construction?"

If the answer to either one of those two questions was "No" then the insurance company immediately said, "We're sorry, we cannnot offer a policy to you."

So many people here in Florida are having problems with insurance that it's unbelievable. People whose homes were built pre-2002 are having a hard time buying or selling because if you're buying you cannot get an insurance quote necessary for a mortgage and if you're selling your buyers cannot get an insurance quote necessary for a mortgage. They're stuck.

Secondly, the wood frame houses (at least down here) just suck and suck bad. The heat and humidity down here just rot the houses away. I grew up in a 100+ year old farmhouse built of wood (oak) and it was tight as a drum.

But the houses built nowadays are built out of treated softer woods (pine) and they just don't compare to the older homes. That's why contemporary cement homes are much better...they're going to be around for a while...or at least longer than their wood frame counterparts.

Gas is preferred for colder climates (I think) as its more efficient and cheaper. Personally, I like gas from a cooking perspective. Gas burners make better food ... IMHO. As for outside A/C's... You can have them in the attic as well.. especially if you have multi zone HVAC systems. But you would still have one outside I believe (at least we still have one outside) for the ground floor zone.

Funny folks are talking about newer houses.. I do like newer ones from a style stand point (higher ceilings, open floor plan, etc..). But I always thought the build quality was better in older homes? While there may be more repairs in terms of roofs and exterior (paint, etc.), the frame was better quality?

[Gossamer]

I would venture to guess that certain houses were built after certain codes and regulations were put into place regarding quality, but somebody will have to back me up on that one.

[Cody Dawg]

In my house the roof is tethered at the four corners and in the middle with iron tethers that go through the home and through the concrete foundation 10 feet into the ground so that the roof will stay on in up to 160mph hurricane winds. It's the best built home I've ever been in with thick 1-inch hurricane proof glass windows and other similar features.

As far as air conditioners go, you would be hard pressed to put one in the attic here in Florida. Attics here can approach 130f in the summer and also the air conditioners dispel water continuously from the moisture that they are pulling out of the house. Our house that we're in uses two huge 5-feet tall Trane air conditioners, also, one for the first floor and one for the second floor. They have a drain field around them for the water that they are pulling out of the house.

There are a lot of features about this new home that I love. Continuous carbon monoxide and smoke monitoring in every single room and there is even a radon gas sensor. The doors are even fireproof and the walls are some kind of cement compound that prevents fires from spreading from room to room instead of just simple drywall.

I would like to say that a lot of this is per the builder, but in fact is part of new codes. (The builder chooses to tether the roof to the foundation, however; that isn't part of the code here.)

[Y3a]

A/C is old style tech. Heat pumps look just like A/C units outside but can heat as well down to about 35 degrees outside. I HAD a house inspector professional look my prospective house over, they are walking disclaimers. So to BE SURE use construction specialists instead. One house builder/repair guy, one electrical guy, and a plumber with camera. This will save you THOUSANDS on possible repairs. The house warranties are lousy. I live in Northern VA, so we DO get winter here. Summer too! (it's 85 right now in DC) FLA has different problems like flooding, bugs and hurricanes. I'd want a house of brick with a metal roof there!.

[Cody Dawg]

Well, we have a house of brick...and the roof has cement barrel tiles so maybe our house would pass muster with you.



I agree about having different inspectors. We had the bank inspect it, the county come out and inspect it (they do it here for $25) and a separate building inspector. The home has a 20-year warranty on it - whatever that means - and five years on appliances, cabinets, etc.

I'm not sure how much a "home warranty" is worth, though...I think that you just buy something solid.

Termite inspections, also, cannot be stressed enough...learned that once the hard way.

[memento]

You imply that a heat pump is "new tech" as compared to an AC? It's the same thing, only run in reverse. The technology is based on the change in temperature of a gas that increases or decreases in pressure via a compressor. PV=nRT. niehter is all that efficient. If you want efficiency, then you need to go with a geothermal unit that uses ground temperature as it's heat transfer medium rather than ambient air.

For the record, I have a heat pump/central air unit on my house as well as an oil fired furnace. Split - oil for the main floor - central air/heat pump for top 2 floors. The compressor for the heat pump and central air is a single unit. There is literally no difference between the 2. The heat pump was original and I bought the house knowing it's status. When we replaced it, I did a cost/benefit analysis of switching to another (more efficient) source of heat but since I'd have had to run new ductwork, it was a 10+ year payback.

Don't know about any "home warranty" unless you're talking about having one built.

[Eug Wanker]

Originally Posted by Cody Dawg

P.S., One last thing? Our friend, a real estate attorney, says that condos and townhouses are the worst investments of all - even nationally. The only place they make sense, he says, is in New York City where they are called apartments.

He maintains that you are better off buying a cheaper house on property than a nicer condo or townhouse...he says that home real estate always appreciates whereas condos and townhouses tend to stagnate or appreciate more slowly.

That seems like misleading advice. The market is driven by various factors, not the least of which is location. He did say New York City, but a condo or townhome can often be a good investment in many large cities in the US.

Furthermore, in many large cities it's virtually impossible to get a detached home without spending considerably more money than what it would take for a nice condo or townhome, unless you're will to move very far away from the more desirable areas. So, even if the advice were correct, it doesn't help the first time buyer, because s/he may not have the funds/credit to afford it. (In fact, even though I wouldn't be a first time buyer, if I moved to New York I still wouldn't be able to afford a detached home in any area I'd want to live.)

BTW, locally here in Toronto, the average detached home price has jumped about 40% in the last few years. OTOH, in certain areas, condo and townhome prices have jumped about the same in the same period.

Why haven't condo/townhome prices stagnated? I suspect it's for the same reason I mentioned earlier. If a $600000 home jumps 40%, that's now $840000. OTOH a condo might have jumped from $215000 to $300000. $300000 is a lot more accessible to the general population than $840000 (or even $600000).

P.S. Gas stoves do indeed rock.

[Cody Dawg]

I guess condos are okay.

With the zero lot lines in place in many areas with single family homes sometimes a home is just barely more than a townhome it seems.

But, I'd rather own a home on a piece of property...but then I have children.

[Eug Wanker]

Originally Posted by Cody Dawg

I guess condos are okay.

With the zero lot lines in place in many areas with single family homes sometimes a home is just barely more than a townhome it seems.

But, I'd rather own a home on a piece of property...but then I have children.

I agree completely, but in many areas, not just New York City, it's not that easy for a lot of purchasers.

P.S. We just got a "condo" for my mom. She's coming from a 2-storey house in a location where the prices are uber cheap to a bigger city (although nowhere near as big as Toronto) where a similar home would a lot more.

The interesting thing is this "condo" is a detached home, just one a small yard, similar to a townhouse. She does have to pay some monthly fees, but this way she doesn't have to mow the lawn or shovel the snow, but she still gets a detached home. If she had been younger though, we would not have advised getting a condo. (She's over 70.)

[Y3a]

A/C units were around for homes in the late 1950's and early 1960's. Heat pumps started to be used in the mid 1970's for homes.

I have a home warranty from HMS, which is a warranty on plumbing, electrical, appliances and basic stuff. I've used it 2 times for the 1988 era A/C unit which had a leak in the inside the duct part in the air circulatorlast year, and earlier this year the outside fan gave up. They won't cover the hole in the sewer line under the kitchen.....

[itai195]

Originally Posted by Ghoser777

Yeah, I was definitely wanting a fixed rate loan. I never hear about 15 year mortgages... that would be a lot more each month but less overall I gather. I believe my credit score is pretty good, (freecreditreport.ocm said 773 I think), so hopefully that will help.

Well the type of mortgage you get should depend on your goals. If you don't plan to stay in the home for more than 3, 5, 7, or 10 years then it generally makes more sense to get an ARM than a FRM. You pay more interest with an FRM for the privilege of having the rate fixed for 30 years, so if you will only stay in a home for a few years it makes more sense to get a lower rate ARM and thus pay less interest while you're in the house. After that, there's the fun issue of paying points (fees) to lower the interest rate on your mortgage. There's a good website that covers all these issues: www.mtgprofessor.com. Personally, my family has a mortgage broker who we trust, and that might be the best way to go if you know someone. Shopping for a mortgage is just brutal -- the rates change everyday and lenders can lie to you until they're blue in the face to win your business. As someone else said, nobody in the real estate business is your friend. I'd recommend doing a lot of research, or finding a trustworthy broker who will do it for you, and get what you feel is the overall best deal you can find. Like scaught said, you'll probably want a home equity loan or line of credit to cover the difference between your down payment and 80% of the purchase price. Also be aware that mortgages tend to have fees, lots of them, so be ready for that. Finally, when figuring out what you can afford to pay monthly, include property taxes in your budgeting as well as HOA fees if you buy a condo.

It's generally recommended that you start shopping for a mortgage and determine what type of mortgage you want before you shop for a home. This is probably more important in hot markets where sellers aren't going to wait for you while you figure out your financing. Note there is a difference between pre-approval and pre-qualification for a mortgage. Anyone can get a pre-qualification and thus it's pretty meaningless. What you want is a pre-approval, and you can get that right away from any lender. Your pre-approval does not need to be from the lender you ultimately use.

Personally I don't see the attraction to 15 year FRMs. One can view mortgage payments as a long-term investment paying whatever your interest rate is (after the tax break, of course) for the period of your loan. That's just my personal opinion, but some people are simply more comfortable paying off their mortgage faster, it's ultimately all up to your personal comfort level.

BTW, I have to strongly disagree with the advice not to hire a home inspector. If you hire a good one, whom your realtor might recommend, they will spend several hours at your home, talk to you about everything they find, and produce a thorough report with photos for you to keep. It's a good investment. You'll want a thorough termite inspection as well, though sellers sometimes have a pretty recent one they provide to you. On other hand, you can drive yourself crazy hiring armies of plumbers and contractors, and spending thousands of dollars, in an attempt to find every little problem. No home is perfect, some people just refuse to get over that reality. Also, there isn't anything generally wrong with an older home (though 10 years certainly is not old). You just have to know what you're buying into. If you're buying a condo, it's not too hard to ask neighbors what their experience has been like. Also, it's a good idea to hire an expert to evaluate the HOA documents so you know what you're getting into on that front as well...

[Ghoser777]

So... right now I'm getting a little frustrated. I'm trying to hit all the different information websites on real estate and mortgages. One website I found pretty helpful was Mortgage Calculator which broke down all my payment info. For a $200,000 loan with 10% down and a rate of 6.5%, I could really see why a 15 year mortgage would be better than a 30 year! The 15 year was closer to 280,000 in total payments, paying $1500 ish a month, while the 30 year would cost me over 400,000 in total payments, paying $1100 ish a month. So now I'm definitely thinking 15 year...

Next, I go through my bank citibank to see what they are offering. One of the "better" offers is 6.5% with a total closing cost of $4,500 ish. My total monthly payments would be $1750 ish (about $200 more than I was expecting), not counting other costs like mortgage insurance (as I can only put down 10%) around $100 in property taxes around $275, bringing up the total monthly payments to over $2100. Yikes...

And just to see what would happen, I went to a website that calculated affordability: http://www.locallender.info/consumer...calculator.asp

I entered my info (I make roughly $50,000 a year, pay under $1000 in debt (but I put in $1000 to be safe), can put around $25000 toward closing the loan, 15 year mortgage, 6.5% loan), and the website tells me that I can afford a loan no greater than $70,000 ... WTF?

Now the only caveat to the above is since I teach, I can make some money over the summer doing summer school or other odd jobs... but even if I bump myself to $60,000, my max loan is 100,000 ish. If I go up to 30 year I can't even get to $150,000. What the hell?

Any thoughts?

[itai195]

Talk to some loan officers at your bank and other lenders (e.g. WaMu, Countrywide, BofA, etc). The online calculators vary as to the formulas they use to determine what you can/can't afford. Some use more conservative, traditional debt-to-income and total housing cost-to-income ratios that many lenders are looser on nowadays. I had calculators telling me I could afford as little as $300k up to as much as $700k. Since you're looking at loans around $1500/mo, not too far from half your gross income after debt payments, I imagine the calculators are being more conservative than many loan officers would be. One advantage of the slowing real estate market is that loan officers are getting more desperate to win your business.

Also you may have an easier time getting approved for the 30yr FRM, and you can always make the 15yr payments on it (just pay additional principal each month). The only difference is you'd have a slightly higher interest rate.

Lastly, for most people it's preferable to get a HELOC or HEL, essentially a 2nd mortgage, to cover the 10% down payment gap rather than pay PMI. A big reason is that PMI is not tax deductible at all, but interest on your 2nd mortgage probably will be. This is a pretty standard financing deal nowadays but most online calculators don't model it. So basically, most online calculators are pretty worthless in my experience.

[macroy]

itai195.. good call.

Just keep in mind that HELOCs are based on the prime.. so that rate can rise and fall on a monthly basis. And the rate is typically based on the amount you have out at the time. Thus a 200K HELOC can range from prime - 0.5% to prime + 0.75% depending how much of that total you have out.

I know there are areas that provide some assistance for public servants (teachers, Police, fire etc..)... try looking into those. I know they range from discounts on houses, to discounts on loans... Do you belong to a CU? If so, check the rates there too, they can be pretty competitive sometimes.

[residentEvil]

Yes, I took an 80/20 loan instead of 100% with PMI. Both loans are tax deductible. The 80% loan has a real low interest rate, the 20% one is higher. The 80% is variable (fixed for 3 years on a 30 year loan) and the 20% is a fixed 15 year loan.

Made the most sense for me and got me into the house with no money down. Then when the 3 years is up, I'll refianance.

[mac128k-1984]

I think the first step is to talk with the bank and get pre-approved. This will provide you with a letter stating that your (initially) qualified and can afford the house/condo and second it provides you with a target cost of a house and monthly mortage payments.

I'd not waste your time on various websites that provide mortgage calculators. Dealing with a banker first will give you everything you need.

As for a house vs. condo, I've owned both and here's my take on it.
Condo's are usually more affordable but you do have the monthly fee that never goes down. If you find a condo that you like ask for the finanical reports, and also ask how many special assessments have occured over the years. Try to see if there's a trend.

Condo life can be a good thing but you need to find a place where the rules suit you, and the assocation is strong. Ask a neighbor (of a condo your interested in) about the assocation and how the place is run.

As for a house, this is an ideal situation, but only if you can afford it. The last thing you want to be is house poor. Biting off more then you can chew now will really cause issues for you down the road.

Bottom line, get what you can afford from a banker - avoid risky loan packages such as interest only, ballon and even adjustable rate mortgages. At some point your going need to pay the principal and you may not be able to afford the higher payment when it comes due. The ballon payment is just crazy. The adjustable rate mortages look good on paper when the rates are goining down, but they're going up now and there's no guarantee you can afford the higher payments when it gets bumped in a few years.

People are losing there homes now because of that, so do your homework and be conservative.

[medicineman]

Just some things to keep in mind.

A realtor works for the seller, not the buyer.

Some lending institutions allow twice monthly payments which will greatly cut total interest costs.

Whether a condo or townhouse, check their rules and regulations. Make sure it's something you are comfortable with. The people there are more than neighbors. They are co-owners of the property.

Good luck.

[itai195]

Not to nag on this point, but there's no problem with a 3/1, 5/1, 7/1, or 10/1 adjustable rate mortgage if you only plan to have the loan for 3, 5, 7, or 10 years. While you have the loan you'll get a lower interest rate than you would on a 30yr fixed rate loan. Not sure how the rates compare to 15yr loans these days though.

[medicineman]

Just to clear up my comment on 'twice monthly' payments.... You will pay 1/2 your monthly mortgage every 2 weeks. And if you allow automatic debit from your account, the institution usually gives 1/4 to 1/2% cut in interest rates. In effect you are making one month's payment extra each year.

[Ghoser777]

Okay, so here's an update on my situation. I'm currently in the progress of getting pre-approved for a mortgage, and I was going the 80-10-10 route Today I found out from the mortgage person I'm working with that the max they're approved to give me is 150,000, which is a lot lower than I though (I was thinking 175,000). It seems the main problem was my student loans, the graduate part of which I'm not in repayment yet as I'm still in school.

I've got about $25,000 in grad school loans right now, and about $30,000 in savings. I didn't ask my mortgage person at the time, but would it make more sense to pay off those loans and get an 80-20 with nothing down instead? It would seem like I'm just transferring debt around, but if it makes them happy... That wouldn't really take care of all my student loans - I still have about 10,000 in under grad loans that I'm paying off. And I'll probably need more grad school loans in the future... but that won't be till after I get my mortgage, so I guess that's okay.

Whew... money is complicated business.