Very OT: First time homebuying advice

I have bought two homes in the last two years. One was move-in ready and one was the exact opposite. I'm cheap because I'm poor, so I have done every ounce of work aside from some work that was done because of an insurance claim. Unless you have the funds to have someone else do the work, make sure you note the things you do not like in the home and try to do some quick research into how much it would cost to do it yourself. I never plan on purchasing a home that is half of what we have had to do to our new home. Sweat equity is nice and all, but I would never do it again.

Also, make sure you look at the neighborhood / direct neighbor's homes. If they are trashed / not cared for, don't buy it. Those can drastically drop your home's value and make it difficult to sell in the future. Neighbors are important.

Remember that as the buyer, you have most of the power.

Walking away is perfectly reasonable; we've walked away from 2 houses because of inspection issues.

My favorite question to ask a home inspector as he/she is giving me the final report is, "Would you let your son/daughter buy this house?"

The two I walked away from, the inspector either said "hell no" (first one) or paused and had an internal dialogue/debate.

If you're not 100% comfortable, walk away.

Oh, and it's ok to go up $20,000 in price if you really love the house at the next price point up. You don't want to spend the next 30 years thinking you'd give up an extra $100/month for the house you really wanted.

My advice: Don't do it!

Only half-kidding, but if you are committed to buying, definitely shop around for the best mortgage rate.  You should be checking with at least four mortgage companies for the best rate/terms. You can absolutely negotiate with a lender to try to get the best terms.

I am shocked at the stats I hear about people only checking with one mortgage company.

What you're approved for and what you can afford are different. Don't buy at the top of your budget. Your payment should be no more than 25% of your monthly take home pay. So you can save, and also have more room for activities. 

The sellers aren't your friends, if the inspector finds something wrong don't be afraid to negotiate price for that. 

Also said before, but put 20% down to avoid PMI. 

Wear a rubber. 

Apart from getting a good inspector, I would say scout out the neighborhood thoroughly, to the point of doing stalker-esque drive bys.  True story - my wife and I bought our house ten years ago not realizing that the house two doors down was a state owned assisted living facility for adults with extreme cerebral palsy.  Nothing against them personally, but on a sunny summer day when all the windows are open we can hear random screaming because the residents lack a lot of basic controls and inhibitors on social interaction.  In hindsight some clues should have been the large roundabout driveway that always had one of those short buses plus a wheelchair access ramp to the front door.  Also, there were always random different cars parked in the driveway (various aid workers).

Your town may have a publicly available property tax assessor roll where you can see what your potential neighbors are paying in property taxes.  This is useful if you want to grieve your taxes.

Do a thorough check of your local schools.  Our town has a weird gerrymandering thing going on with the elementary schools where one set of houses could be one school and the neighbors are another.

At the close make sure you get a good lawyer.  Our inspection (which we attended) went ok, but then at the subsequent walk through right before closing a few weeks later, we found out the current tenants (renters who were getting kicked out) trashed a couple walls and appliances plus a broken window to boot.  We itemized it all into a credit at the close.  people are a-holes

Purchasing a home sounds like hell. I'm glad that I will never have to do that.

All good advice.  The main things for me are.... what market are you buying in?  In a competitive market like Los Angeles where I am, sellers can sell broken down stuff and buyers will simply buy it because the competition is fierce and often times properties just get razed and rebuilt.  (Often competing with developers who only see the land and could care less about the house itself)

Also if you are going the loan route.  Get several banks or mortgage brokers trying to offer you a loan.  You already have all your financials in a big file just copy it and dump it on them.  They won't like that they aren't the only ones but IMO tough cookies.  You will potentially get widely different interest rates etc.  Offer up the best rate and terms fastest and the deal is theirs.  Do not just automatically get your mortgage through your usual bank or the bank that prequalified you.   You don't owe them anything.

We semi-recently bought (then sold) our place, and beyond having good inspections (which has been addressed above), what I've learned is get a budget you can afford without being stretched too far.  Your realtor, good or bad, will want you to spend as much as possible for any number of good and bad reasons; it's your job to know what you can afford comfortably.  That doesn't mean you can't stretch a bit for a great place (it seems like a lot of money but $15-$20k over the life of a mortgage isn't probably going to kill you), but stay as close as you can to what you can afford.  And for two-income families in particular, focus on a budget that can be sustained if you have a drop in income (such as a you or your partner no longer working/reduced income).  I've seen it a number of times here on the coast where people say "we can afford X because we both work" and then kids/health/life get in the way and they are knocked down and can't afford it anymore.

Anyway, good luck.

I've only bought one house and it was a new build. The most important thing I did was inspect houses under construction in the subdivisions I was interested in. You can see the quality of work and materials in a way you can't once the house is done. My own inspection wouldn't have been of much use, but I brought more knowledgeable friends and family along. There was a pretty big difference between some of the builders that wasn't reflected in the prices.

One other thing I learned was to be wary of living on a private road. It has added expenses with the possibility of major costs down the line.

I was really fortunate buying my house.  It was a brand new renovation, so not much to worry about.  Long story short, I became good friends with the guy who did the renovation and sold me the house.  He has fixed a few small things for me for free five years after I bought the house.  He now lives down the street and comes over to help me with maintenance and whatever else needs to be done.

Make sure all copies of your lending documentation is clear and within the required time frames (i.e. paystubs, bank statements, W2’s)

Have your realtor negotiate a 1 year home warranty with the seller as part of your closing agreement.  They usually will cost around $300 and a seller will usually go for it no problem, particularly if the house is older and doesn't have a ton of updates.  I got one on my first home purchase and it paid for a new air conditioning system when the original broke down within 6 months.

Depending on your circumstances, try to be flexible about location. I currently live in Dexter, which was only recently discovered by Ann Arborites. The home values here have sky rocketed and are way over priced, thanks to the fact that everyone in Ann Arbor suddenly wants to move out here. There are houses bigger and newer than mine just a few miles up the road in Pinckney that are easily $150k less.

Either way, make sure you look corner to corner in whichever community you're moving to to find the best deal possible. 

1. A swimming pool may seem nice, but don't do it. You won't use it as much as you think you will, and there is a lot of upkeep required.

2. The first time you go to your new house after the closing, even if you're not moving in right away, take toilet paper, hand soap, and towels. You won't regret it.

Make sure the roof, the foundation and the heating/cooling are tip top before buying (which ties into inspection).  Also, it is worth it to have a critter company do their own inspection.  We were taken advantage of by our realtor, so make sure you find a realtor who represents you solely.  

I say all this from personal experience.  We got caught between a rock and a hard place in both getting our house and having to refi recently to pay for a new roof etc.  

My answer is don't buy, not right now, wait 7-10 months, let this bubble fully deflate, have your credit airtight because they'll tighten lending by then for sure. You'll save a ton of money buying when blood is in the streets. We bought at the end of 2008 and thought "wow, we made a great deal", then it dropped in value another 30% before turning around slowly until about 2012 when it finally came up to what we paid for it. Lessen learned, let the blood bath go full on before buying and maybe even buy a foreclosure you can get at a great deal. Guy behind me bought that little house for 30k at the depths of the great recession, he sold it for 200 to a developer who tore it down and build a $800 new house. 

I would agree with not buying all the house the bank says you can afford.  House rich and cash poor is no fun.  I would also look for a realtor who frequently works with first time buyers and likes walking them through that.  (My mom was a realtor and that was her specialty.)  The sheer number of details involved is staggering and a good realtor can really earn her commission.

If you live in the Midwest, ask for a radon test, and if results warrant, insist the sellers install a mitigation system before closing.

You won't see it, smell it, feel it, or hear it. 

You'll just die from it.

Lending is predatory by nature.  Be careful about buying more than you can realistically afford, and then work on paying off the debt as much as you can in the first few years.  The more extra payment in the beginning, the less interest overall.

I have bought 3 different homes and a lot of the advice in this thread is really good.

I have to emphasize that your future home's location is a critical factor to consider. You can fix up almost any house and make it look great, but you can't change its location and you can't change the school district. It is ABSOLUTELY worth it to buy a house that isn't as nice, but is in a great neighborhood with great schools. You can fix that house up and it will pay you back when you sell it. Your home will be the most expensive thing you have ever bought and it should be a good investment. You will eventually sell this investment and you always want to be thinking about what will make it the most attractive to the most people when that day comes. You can renovate your entire house, but there's nothing you can do to make its location better.

When we were buying our first real house, we came down to 2 homes in the same town. One home was larger, had a bigger yard, and was in much better repair than the other one, but it was not in as nice of a neighborhood. The other house was in a far superior location but needed a lot of work. We went with the house in the better neighborhood, did all the repairs that were needed, and it was totally the right decision. When it came time to sell it, we sold it in a day and for more money than we listed it. 

Absolutely take into account the school system for your future home, even if you don't have kids or don't plan on utilizing public schools. Our family sends the kids to Catholic school, but we still chose to buy our latest home in a good school district because we know it will make it attractive to many more people when it comes time to resell it.

Be aware of stuff around any homes you are interested in that will make it unattractive to future buyers when you go to resell it. Things like massive power lines, train tracks really close by, or being on a major road will make your home unattractive to many future buyers.

Like everyone else has said, take the time to find and pay for a top-notch home inspector. When interviewing them, ask about potential Home Inspector's work backgrounds. What did they do before home inspections? A lot of excellent inspectors have backgrounds in building and renovating homes and their experience helps them know what to look for.

Good luck!

Agree with being there with the inspector. I’ll also emphasize buying a home you can afford and not letting emotions push you into a unaffordable situation. That’s the lesson from 2007. 

Lastly, the mortgage process is slow and complicated so you and your wife have to be on it when asked for documents etc. don’t put off your responses because that will slow it down. Get them what they need that day. In other words, If it’s something you can control then be Johnny in the spot.