Thursday, April 03, 2008

Looking for input

Hey all, I'm looking for any advice or suggestions. I am thinking about buying a house since the market conditions are almost perfect-being that I don't have to sell one. There are several houses on the market that are extremely well priced and it seems crazy to miss out on them. One new listing in particular caught my eye-built in 1900, rather small @940 sq. ft, average lot @ 10,000 sq. ft or so, needs a lot of work (most of which I know a guy that can do), best of all it's priced at 67,500. A few hangups are involved- I don't know yet if any liens are attached to the property, not sure of the extent of work needed as haven't viewed the property. Mostly though, there is the issue of getting the 70k from the bank. How difficult is it to get financing? What discounts etc. are there for first time homebuyers? Any tips you can offer would be appreciated, at least it'll give everyone something to post, thereby increasing volume on the blog
First things that will have to be addressed is income. My new job is going OK, but I starting on a program that gives raises 3x annually for the first 3 years until I will have reached top pay for the position. Inside of two months I'm doing twice as much work as the guy on first shift-to the point where they've actually pulled him out and he's helping others in the shop. That should deserve a raise right? The boss actually told me the other day that I'm the best guy other than himself they've ever hired for the position I'm in. Sounds encouraging right? Now I have to just screw up the courage to ask him for a $6 per hour raise, which is about what I need to get into a house and pay all the other bills (that's also equivalent to top pay). Wish me luck. Looking forward to hearing any comments. #9

9 comments:

Kuoppala's & in-laws said...

Hey #9
So you and Missi must of talked this over some more. You are right, it is a great time to buy as long as you don't have to sell as part of a contingent offer. Where did you find this fixer-upper?? If I know you as well as I think I do, can't imagine anything stopping you from asking your boss for a raise. The worst thing he can say is no and besides it seems like you have your ducks in a row as far as justifying the request. Good luck to ya! You and Missi will have fun fixing up a home and then you will have a place to plant all of your flowers and anywhere you want (smiles)...inside joke! haha
Hope to see you guys this weekend!
Farmington Jo

Kuoppala's & in-laws said...

I know here, there is a first time homebuyer program. I have someone checking to see if they know where the first time home buyer program is down there. Here's a place to start: Scott/Carver/Dakota Community Action Partnership (651-322-3500) and ask if they have a first time homebuyer program or how you find one. If I hear of where it is down there, I will post another comment. You could also call Dakota county and ask them too. I hope I'm right in assuming you are in Dakota County.
Heather

Kuoppala's & in-laws said...

I don't know anything about first time homebuyer programs in MN or anywhere else, but go for it! See what the money people say. Today's market is certainly a buyers one ... not a sellers (I can attest to that) market. You know that values at some point will go up. Having your own walls and dirt are amazing things. Am missng "owning" where I can grumble about everything that hasn't been done yet, but can putter around and change things as I want to. I'm not much help here, but good luck to you!
-a

Kuoppala's & in-laws said...

Missi still isn't really excited about the idea of buying a house, but I'm pretty good at convincing her about ideas that I think are good-unfortunately, sometimes about ones that aren't so good. Oh well, take the good with the bad.
The house I mentioned was on Ziprealty.com in Farmington. See you Saturday #9

Kuoppala's & in-laws said...

I do not recommend useing the first time home buyer program unless you need to. What it is is a government insured loan throw the bank at a good intrest rate. There are things you need to consider though with it, You have to pay 1 to 2 points more than the intrest rate until you pay off 20 percent of the loan. It does not matter if the property goes up20 percent. You have to pay down the 20. say if they are asking 100,000 for the house FHA (federal housing adminastration) loan you can borrow 98,000 thousand. If the intrest rate is 6% you would pay 8% until you have paid your loan down to 80,000. If the property value goes up to 120,000 it don't matter unless you are able to get a new loan at that time but to refi your home will typicaly cost about 8 to 10 thousand bucks, so you do not want to do that is at all possable. If you are intrested in it anyway you would have to find out if they would finace the house, they are kind of picky on fixer uppers. The only good thing about the loan is all you need to have is 2 percent down to close your loan. A conventantional loan you need to have 20 % down. My opinion is to hold off on buying untill you can save up your 20% down money because in the long run it is way cheaper. We are talking many thousands cheaper. The market is not going to pick up real soon so there are going to be more deals out there that might even be better. Right know in washington they are in the works to make a plan for a home owner to buy a repo home and you could get up to 7 grand off on taxes. It aint a done deal yet that I know of but that would be worth waiting for as you save up your 20%
If you want to know how much you will end up payibg on the intrest on a FHA home go to almost any realator web site and they have morgage calcalaters you could figure it out with. Hope this helped and if it did not than I hope at least I give you somthing to do while you read this. Like so how many spelling errors there are.
Later Frans

Kuoppala's & in-laws said...

Frans' info isn't entirely correct. A First-Time Homebuyer program is an approx 8 hour class that walks you thru the basics of buying a home and the basics of what you need to save etc for repairs and whatnot. (i'd strongly recommend taking the class together as a couple.)

In the class they will tell you about what banks in the area have govt and/or private funds to help you make the house more affordable to you at present. Frans' point might be correct about FHA loans. Not all the programs are FHA. For example, some big businesses in the inner city of mpls are trying to eliminate blight and promote home ownership and will pay $5,000 to buy down the price of the house.

I went thru the program but my house did not qualify for an FHA loan. My bank required proof that i'd gone thru the program in order to move my downpayment to the back end of my loan (with a slight increase in interest rate - a quarter percent, i believe). MN has the highest home ownership rate in the country partly because it has other types of first-time homebuyer funds - including very low-interst loans to buy fixer-uppers. (The class will walk you thru the pros and cons of these state programs too.)

Best of all, the classes are free. All the research shows that people who go thru the classes do not get their properties foreclosed on; and obviously way too many people who don't go thru the classes and have tight budgets are getting foreclosed on.

Heather was right in her recommendations. If you don't have luck with the places she suggested, give me a call and i'll find it for you. Many banks also offer the same first-time homebuyer program that the community action programs do.

Good luck!
e.

Kuoppala's & in-laws said...

I stand corrected by the way. I have not read all of liz's comment yet when I relized that I did not say that there may be first time home buyer programs up there that I know nothing about. I guess I was thinking a lot faster than I can type. I was talking about the FHA loan only because that is all they have here for a first time home buyer program that I know of.
sorry if I mudded the waters at all with any one but I still think that you need to look at all your options first real good because there is not a big hurry to jump into home onwership with the way the market is. There will be good deals out there for a long time.
Frans

Kuoppala's & in-laws said...

Thanks to all for the input. Yes, Heather we are in fact in Dakota County. I've gotten a little more info on the property we're considering-it's bank owned (which means that there won't be any liens attached to the property and also means that I don't have to feel guilty stealing it from them. Buying it from a private owner would make me feel a little guilty as the price is so low-banks should know better and I don't feel bad for them. I'm free to low ball offer). Frans- thanks for your input(albeit hard to read with all the typos, jk). I suspect you are correct in that it'll take a while for the housing market to get back to where it was, but on the other hand if we were to wait a while and the market starts to turn around, then the option of low ball offers would become limited. Right now people suspect that they might have to hold onto their houses for a long time so are more willing to accept lower offers that will change. Also, waiting a while would be OK except we're looking to stay close to the Farmington area and deals like this are going to be harder to find if restricted to a relatively small area. We are going to take it a step at a time and see where it all leads. I contacted a mortgage broker today and started the ball rolling there. I set up an appointment for Wednesday to view the house, so I can see if it's even worth pursuing. If all looks acceptable will set up second appointment for Saturday so Missi can see it. Catch you all later. #9

Kuoppala's & in-laws said...

good luck and have fun with it. I think it is a lot of fun getting deals done. Hope you enjoy the process even if it does fall through some how.
Frans