Buying a house


Well-Known Member
Currently, I just started the mortgage application to see what the bank will offer, looking for any advice. I am a qualified veteran also and plan to start the paperwork for a VA loan also. I'm currently residing in central Ohio and although its not the Florida that I love, its a nice area here. Things are reasonably priced and taxes aren't too bad. I'm looking to get something under 50k (you can get a lot more for 50k here than say NY or Cali) that's not to much of a fixer upper although i'm not afraid to get my hand dirty and do a little painting or shingling or whatever else is required. Once I get settled I'm also looking to rent out at least one maybe two of the bedrooms also and have someone else help with the mortgage, between my brother thinking about coming out here, plus my aviation, and military contacts I can find a decent tenant. Longer term I'd like to purchase another property for my own and duplicate the process again.

Anyways, I just wanted to ask for any advice, comments, etc and things others may have learned going about the same thing that have more life experience than I do. I.E. interest rates (have good but not perfect credit), subleasing, how much to pay for a home inspection, insurance, if I can save some of the loan money for repairs just in case... etc

Thx! :D
I just got my COE from the VA and got financing on a house here in Naples, FL. It's easy to do what you need to do if you go to a bank and get pre-approved for a certain amount. I've gone through PNC Bank (you might be familiar with them). There's a few options I've looked into with foreclosure houses and even short sales is if it falls under a future home path loan which would allow a little extra loan to fix up the house... just depends on the house.

One of the things I've learned since I've been looking at places, I've found that a house that is currently occupied is going to be in much MUCH better condition, especially here in FL. My VA homeloan approval only requires me to pay for the closing cost but I was able to get 100% financing. Also the home inspection cost was only $260.00 for me since I got a veteran/reserve discount from a really good home inspector here in Collier County.
I was able to get 100% financing through a rural development loan through the USDA. Between that and the seller taking care of closing costs, I think our financial commitment to buying the house was the $500 deposit when we made our offer and a couple hundred dollars for the home inspection.

I really don't have any pointers because somehow the whole process of buying a house went extremely smooth for us. Literaly not a single thing went wrong. We looked at 5 houses, made an offer on one that day, it was accepted the next morning, waited the 60 days required by the loan (for processing), closed on the house a little over a year ago. Was so simple we honestly felt like we were getting scammed and we were just waiting for the other shoe to drop.

The only advice I have is look at as many houses as you can. We had our hearts set on one we found online. We met our realtor for breakfast before heading out to look at that house and others. While we were eating he got a phone call saying that house was under contract. Luckily he had some others lined up for us. Looking at them on paper and online, none of them really did anything for us. When we saw them in person it was a different story. We liked the first four, but within 5 minutes of standing in the 5th one, we knew this would be our house. Even afterwards, we went back to the listing to look at the pictures and thought "meh." Just didn't do it justice.
The big thing is finding a broker who is not a guy who tries to be pushy and a bank that he has worked with for a long time. It's quite a painless process when you find the right combination and like Screaming said.. it can be so easy and smooth you'll feel like you've been scammed considering all the horror stories in the past. If you have proof of income, a veteran, and good credit, the banks definitely want to sell the inventory they have to the right people within reason.
I would look at a credit union, as opposed to the larger mortgage banks. They are generally cheaper, they move faster on paperwork, and tend to keep loans on their own books.

My mortgage application dragged on for months with the Realtor's recommended broker, we we able to get it done in less than a month with a local credit union. Another member here just used the same credit union after his pre-approved big bank mortgage fell through.

I would not use a mortgage broker. You'll pay more in interest (you get a higher rate, and they get a kickback from the bank)
Ohio=great bang for the buck. Fine choice.

When looking at bank rates, ask for the APR (annual percentage rate). Banks advertise "competitive" loan rates on the phone and on websites, but you need to know the APR, as this will include the closing costs, too (something not factored into these advertised rates). And these closing costs can range from $1000-$6000 which obviously sway the advertised rate.

For example, Bank A could have a 2.5% advertised mortgage rate but with high closing costs, the APR is really 3.1%. Bank B may advertise a 2.7% mortgage rate, but with lower closing costs factored in, the APR is really 2.9%. Bank B is better in this case, even though the advertised rate appears higher.

That's one fight the government did right for us...making banks disclose APR's.
Closing on a house in early July here. My advice is don't feel pressure to buy until you are ABSOLUTELY ready. By that I mean several things. First obviously you MUST be financially ready with the cash reserves to make it happen. Being house poor is not smart and having just enough money to finalize the deal means you probably don't have enough. There are closing costs and you need a cash reserve for the inevitable after you move in. Problems are not a question of if but when. Second, if it's your first time purchasing, I'd use a realtor. You'll find varying opinions here but as a buyer you really have little to lose and furthermore, the discount you MAY receive when purchasing a house solo at your price point is not very significant. Third, when negotiating, understand your market area and research comparable sales in the last year. Compare price per square foot to determine your offering price. Be aggressive and don't overpay. Lastly, don't become emotionally attached to a property before you close and always be willing to walk away. You'll drive a better bargain and come out ahead if you do. Patience is key.

If it were me I'd continue to rent if I had any reservations about not being in a financial position to buy. For me, my wife and I have been rewarded by NOT purchasing over the past almost 9 years of marriage. If you have cash in hand (20% down) and nothing to sell, YOU have the upper hand in negotiations and I wouldn't give it up until the timing was right. Yes interest rates are going up but they aren't going up THAT fast and they're still historically low and will continue to be. Don't buy the BS pushed by many that you MUST buy now! A house is not as much of an investment as the Realtor's Association would lead you to believe.

Decide I need these things in place (whatever they are but for me it would be cash in hand exceeding merely a 20% downpayment and knowledge of the area I was purchasing) before I pull the trigger. Don't budge from that.
Look at Pentagon Federal Credit Union:

They can't advertise the fact that they will pick up the closing cost and appraisal fees for their 5/5 ARM, but that is the case. The fact you are a veteran will help ensure you get approval with them.
I used National Bank of Kansas City for a recent VA refinance. My closing agent said "That's the best deal I've seen here!"
Thx for the info, I read through and am taking all of it into consideration. I'll update you guys as it goes along...
Lots of good advice above!

Particularly if it's your first house, think through your list of 'wants.' The easier one is # of bedrooms, baths, etc. The harder one is to work towards agreement on the less-tangible emotional wants. Lifestyle, entertaining, indoor space vs outdoor space, sunlight vs shade, and how these things will work for your life together. Think through just how much you will be willing to do (yourself or through contractors) and how good you are at imagining how it will look when you've done the improvements. (A couple is never equally good at this. We're both pretty good at spacial imagining, but she'll try to put ten feet of furniture in a five foot space. She's much better at colors than I am, but we use different vocabulary, so can't decide without using color swatches, occasionally trying mixed sample colors.)

Make sure you're willing to make love in every room. This theorem needs testing.
Oh, one other item I didn't think of before. Typically, you have to pay for PMI (Private Mortgage Insurance) if you put less than 20% down. I think (but I'm not sure) that isn't the case if you get a VA loan.

However, if you do end up getting PMI, keep watching for the time when you cross the line into having 20% equity in the property. At that point you can have the PMI dropped and stop paying for it. But, if you don't take action, the lending company won't do it for you automatically or even say anything about it to you.
Oh, one other item I didn't think of before. Typically, you have to pay for PMI (Private Mortgage Insurance) if you put less than 20% down. I think (but I'm not sure) that isn't the case if you get a VA loan.

However, if you do end up getting PMI, keep watching for the time when you cross the line into having 20% equity in the property. At that point you can have the PMI dropped and stop paying for it. But, if you don't take action, the lending company won't do it for you automatically or even say anything about it to you.

Thanks, I had a talk with my dad about this and after he explained to me the purpose of PMI I was pretty disgusted with it, luckily I'm eligible for a VA loan which makes it unnecessary.
My wife and I had the same experience as EMU when we bought our house 2 years ago. We looked at maybe 20 houses in total. One day we were with our realtor looking over a house and when we were leaving, noticed the bigger, nicer house next door was also for sale. Looked it up and found that it was listed too high for our price range but on the very low end for what the house was worth and also a short sale. We weren't in any hurry so the short sale was fine by us and we made an offer $15K lower than its list with the occupants paying the closing costs. We were blown away when the bank accepted. 4 months later we were in the house and with insurance, taxes and mortgage, it's cheaper than our apartment was. It all went VERY smoothly. I had heard so many horror stories about buying houses. I went so easily that I wish I would have done it sooner! The cherry on top is that in just two years, the value of the house has already increased by 55% of what we paid and is still going up. Having said all of that, my advice would be to look soon and don't be afraid of short sales. Rates are already going up and home prices (at least in my area) are rising.
DO NOT DO NOT DO NOT get an adjustable rate mortgage. Period. End of story.
Unless the interest is at 20% and falling. Right now the rates are ridiculously low and only inching up right now so a fixed rate would be the only way to go. In most areas housing prices are starting to finally stabalize and even rise.

My wife and I are currently buying a short sale and the process isn't really that bad. It's the waiting for something's that sucks. As a real estate broker in Washington state we've been noticing banks wanting to get out of the houses quicker and usually accept some low offers.

Also if you are going to use the VA loan make sure not to screw it up and lose your certificate of eligibility if you want to buy another house down the line with a VA loan.
DO NOT DO NOT DO NOT get an adjustable rate mortgage. Period. End of story.

I love the "well, if you only plan on being in the house for five years..."

Oh yeah, lots of folks move up the house food chain while they're unemployed, have a child or anything else that may happen between closing and that period before your rates balloon!
HVY, I'm also in Columbus. However, being from New England, I would NEVER buy a house here. Excuse me for being Mr. Negative, but Columbus is one of the saddest and most depressing places I've ever lived. I stay for cheap in a crashpad house, but I have 0 desire to have any ties, even a year lease on an apartment.

Make sure you consider the location when purchasing a house. I'm not sure who you work for but ask yourself these I really want to be tied down and live here? Would I feel comfortable commuting from this location? Would I be better of saving my money (investing, saving, whatever you like) and just finding a cheaper place to rent? Married? Single? Kids? Future plans with any of the previous 3?

I know Columbus is super cheap, but how about resale value? How is the market now?

Me personally? I'm getting out as soon as I can. Unfortunately, our trips are very good in CMH otherwise I'd be in ORD or LGA in a heartbeat. Unfortunately, both of those cities would 3-4x my current rent with no rise, if not a loss in pay.

Just giving you another angle to consider. I'm all for seeing how much you can afford, seeing how much you can borrow from the back, etc. Make sure this is the right choice for YOU.
1. Look at several houses. Its easy to exclude houses after just seeing them online, but by seeing them in person you are able to pick up on facets of homes (layout, upkeep, neighborhood) that you can use to compare and contrast with other houses.

2. Home inspection. My inspector was recommended by my realtor. He knew less about houses than I did; but he did catch things I would have missed. Inspectors catch issues that the seller's agent likely already knows will have to be fixed. So 2 rotted windows in my house got replaced, with cheap vinyl replacements and a firewall was put in between home and attached garage; previous homeowner did this and workmanship was terrible. Also the inspector made a big deal of the cheap deck 3' off the ground and said deck should be lag-bolted to ledger board on house. This would have done jack didly and I didn't want any more holes in the house. Finally, he caught a prevalent seal down failure on the roof shingles and I was able to negotiate a little off the house price, but not near as much as I wanted. I felt this was an issue the sellers were unaware of.

3. Home warranty. I don't know what to make of this. To me, it seemed like it gave my realtor a purpose to negotiate something. It got thrown in the first counter offer from the seller and the seller covered it. I would have rather had the $400 deducted from the final price.

4. The bank. I used a lender recommend by my realtor. Probably not the best decision I've made, but no problems have arisen from it. I received a very reasonable rate and the loan processing went very quick. In fact a pre-approval I had from a large bank was not sufficient for the property price, so this other lender was able to approve me for the property within 24 hours from when I decided to submit an offer.

5. Negotiating. My seller's agent wouldn't budge and deep down I didn't want to walk from the sale. This wasn't good.

While not a complete summary of my experience, these points all struck me as being important. Some in good ways, others, quite the opposite in that I should have been more proactive. btw, these are from closing on a house in October.