Boy, that mortgage calculator is depressing. At this rate, I'll barely be able to afford a shed.

Thanks for this informative post!

Great links!

Since my husband and I just bought our first house and you mentioned "additional costs"... people should consider purchasing a home warrenty even if it's not included with the home, especially if it's a slightly older house. We paid for half of the cost of one, and after only two months in the house our furnace blower fan motor broke - we'll be paying a deducible of $85 instead of over $850. Well worth the cost even if we don't use it again the rest of the year!

First time buyers!
Don't think you need a house equal to or better than your parent's house. They probably started out small, and so should you.

Newly married? Do you really NEED a house with 4 bedrooms and whirlpool tubs?

Find out what the bank thinks you can afford and cut that by 10% for the maximum listing price of houses you'll look for.

My husband and I started with a 2 br condo, went to a 3 br townhouse, a 4 br home, then a large 4 br home, (and managed to stay in our preferred neighborhood!) now back to a small empty-nest place. We never had a minute's trouble making a payment, and had money to "live" on.

i've had all of 2 weeks to search for my first home.

failed engagement = slight rush to buy. luckily i found a great real estate agent and my parents have a lot of experience in real estate.

my advice to first time buyers is find someone you trust to give you advice- don't assume your agent is going to try to get you into the bigger house faster because of more commission. My agent actually advised me against the first place I fell in love with because it wasn't a great value....and my parents were a wealth of knowledge about putting in offers.

I've been haggling for a condo I really want for 3 days now...we're on our 3rd round of signing back offers.

What kills me is the property taxes. In my area, my escrow payment would be more than my mortgage payment, and that is what is keeping me renting a room. :(

@pepsin-
Good luck with your condo offers. It's a buyer's market.

Yes, good luck, pepsin! :)

Yup - save money for closing costs. Even if the seller is "including closing costs", there are still impounds for the first couple of months of homeowner's insurance, property taxes, etc. Look up "Good Faith Estimate" online and get an example. Also ask for one from your mortgage pro. Budget at least 2-3% of the cost of the house for closing costs, even if the seller is including closing costs.

BTW, Redfin rocks for looking for homes. Found ours from one of our email alerts. They come in at 6 am-ish, so you can pass by the place on your way to work and possibly do a showing on your lunch break! Hate Trulia, definitely not as user friendly as Redfin.

I recommend realtor.com as well as trulia...the sites are set up similarly but realtor.com generally has a little more information about the properties, whereas I think trulia does slightly better with maps and photos.

thanks everyone...just in- I got the place.

It was crazy amounts of haggling. In the end the seller went down 5K- and I like the comparables...one really weird thing- the seller is Sri Lankan- and has a crazy superstition that the offer has to come in with a $xxx,700 attached to it.

mls.ca is the choice in canada for real estate...but kijiji and comfree.com has great ones as well...though- if you're not working with an agent- you don't have the advantage of looking at the comparables for the area. which is key in figuring out if you're getting a good value.

You bought a house? In this market? Do you not read the news?

What a waste - You'll be underwater within a year...

i live in London, Ontario- some of the lowest housing prices in Canada- for the last 2 years the market has been either stable or rising.

we're not completely insulated. but given that about 55% of our population is aging baby-boomers- a condo IS actually a good investment out there.

Congratulations! Numerology is ancient, and remains valued by many people. I've read about odd conditions in real estate transactions similar to the seller's. My disbelief in numerology wouldn't have been a deal-breaker if I were you, either, since obliging him in that way seems harmless.

bepsf, Wouldn't it be OK to buy if you were to buy outright, without a mortgage, even in this bad economy? Around here, the house price bubble burst years ago, and house prices are quite low.

@bepsf- as long as you buy a house within your means, and look at it as a residence rather than a financial asset, pepsin should be fine. and she/he could be making a smart decision- housing prices have dropped, and interest rates are at an all-time low.

I absolutely agree with romeoandjewels. We just bought a house in Berkeley, and found that Trulia is just not as user friendly as Redfin, and actually updates its databases later. I'd get an alert from Redfin one day with a new house on the market, and a day later, Trulia would list the house. However, Trulia often has the pictures of the house up first, so it's good to cross reference.

We bought our house through Redfin entirely, and had a great experience with it. Their business model is really revolutionary - they give the buyer half of their commission. So we ended up just applying that money directly to our closing costs - truly fantastic!

And homes here are at a historic low, bepsf, and with a very low interest rate already locked in, getting under water in what is STILL a sellers market in Berkeley (I saw a house listed two weeks ago for 500k that went for 750k, and was off the market in about 1.5 days), seems rather unlikely... Even for that home that sold for 750k. Not saying that is the case for all housing markets in the US, but it would be jumping to all sorts of conclusions to prognosticate that buying a home anywhere in the US today would be an ill informed decision.

^exactly. my mortgage payments + condo fees + property taxes + hydro is STILL cheaper than renting in a university town.

For a first time buyer- I did a lot of research into budgeting house expenses- and figured out that as long as I'm spending less than 27% of my take home pay- I can afford it.

I think a lot of first time home-buyers don't realize that just because they technically can afford a higher mortgage- they shouldn't.

Also, you may qualify for some kind of down-payment assistance. I work for a non-profit and that's one of the things we do. In our area, there is City, County and Federal dpa available. You may want to check with your statement housing department or HUD (Mich is MSHDA).

I second (or third) that Redfin is awesome! It should be the homepage of everyone shopping for a house! I must have logged days on there when we were house-hunting.

For San Diego area, Trulia is horribly inaccurate. They list homes that are not actually for sale and miss ones that are. Redfin more accurately captures what is in the MLS. It could vary by location.

Ok disclaimer - I'm a realtor and just happen to be buying my own home right now. Pulling your own credit score is VASTLY different than when your lender pulls it. They use a different company (depending on your lender) and pull a "mortgage loan score" where as you and I pull a personal consumer score - mine was over 30 higher than what Transunion reported and 50 points higher than what Equifax reported - just so you know.

Also don't be shy about getting in your car and driving the neighborhood after 5pm and on weekends - things can look very different when everyone is home for one and google maps only takes you so far.

As another professional in this industry - I would suggest also looking at ARM-loan products. Many people get scared when they see the word "adjustable" but if you know all the terms they can be extremely affordable and make much more sense than financing a home for 30 years that you aren't going to stay in for 30 years. I love the 5 & 7 yr ARM products.
Plan on a minimum of 3% for closing costs, I find in some states where the lenders charge more fees & require more escrow the closing costs can be as high as 6% of the purchase price.
Work with a Realtor that is only representing you - don't think you're saving any money by purchasing from the listing agent. Their fee is already set by the seller and they are bound by contract to represent the seller's interests first. If you're not the Realtor type, at the very least hire a real estate attorney. It's a huge investment, it's worth the money to have someone looking out for you!
Finally - most people are pre-approved for more than they want to spend. My suggestion is to figure out a monthly payment you want to stay around and ask for pre-approval & price ranges based on that, taking into account not only principle & interest payments but also taxes & insurance costs for the area.
Good luck everyone!

I refinanced to a 15-year mortgage from a 30-year mortage that had been the best I could get in 1989.