A Peek Into The Scrambled Mind Of A First-Time Home Buyer

Just about everyone who knows what they’re doing when it comes to buying a house has bought a home before and learned from their mistakes the first time around. First-time buyers are in a tough position, with banks, real estate agents and sellers looking to exploit their naivete.

Amber of Blonde & Balanced and her husband find themselves in such a position, and are overwhelmed as they nervously creep toward closing on their first home. She dumps her brain in a post titled “Sh*t First-Time Homebuyers Say,” and here are some of the areas in which she was confused:

* Closing costs can be higher than expected. When banks pre-approve your mortgage, they’re not always upfront with the fact that you may have to pay as much as $5,000 in closing costs to seal the deal. These charges are negotiable, even though loan officers make it seem as though they’re hidebound.

* Your mortgage payment isn’t the amount you’ll pay each month. Finance guys will sweet-talk you into low-sounding payments, but you can’t use that imaginary number for budgetary purposes. Home insurance and property taxes are piled into the monthly payment, potentially upping the figure by hundreds of dollars.

* That sense of urgency you feel is fake. Agents, sellers and loan officers want to see the sale completed, and they aren’t looking out for you. They’ll play games with you, manipulating your emotions in order to get you to seal the deal. There’s no need to hurry, and little to be gained by rushing in. In this market, the longer you wait, the lower the price you’ll be able to get.

Sh*t First-Time Homebuyers Say [Blonde & Balanced]

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  1. RandomMutterings says:

    Well, some closing costs CAN be negotiated. But some, like transfer taxes, recording fees, etc. cannot. The other shocker for most folks are the lender required title insurance policies and premiums.

    • caradrake says:

      I’ve heard some people say to negotiate for the seller to pay all closing costs. Does that mean all, or would the buyer still pay for the stuff you are mentioning?

      • Admiral_John says:

        When we bought our house the seller paid closing costs up to a certain amount (I want to say $5400, but I could be wrong), leaving us to pay anything above that amount. Due to a lender change in the middle of the process, we had no idea going into the closing what our out-of-pocket would be.

        As we signed the paperwork, the lender finally faxed over a copy of the HUD Settlement that indicated what our out-of-pocket was, and it was twenty-three cents. When I asked my agent (half joking, half serious) if I had to go buy a certified check for that amount, she pulled a quarter out of her pocket, tossed it on the table and said “here, I’ll pay it for you”. The settlement agent actually paper-clipped the quarter to our closing documents and sent them to the lender.

      • misterfweem says:

        It all comes down to negotiations between the buyer/seller. We just sold our house and agreed with the buyer that she would pay about half of the closing costs.

  2. obits3 says:

    “That sense of urgency you feel is fake”

    This! I wanted to close pretty fast because I wanted the house next to my friend (so we would be next door neighbors. I still got a pretty good deal (because it was on inventory), but I shouldn’t have been so set on that house. Had I been more patient, I could have done a better deal.

    • Geekybiker says:

      I don’t know. Even in this market the good deals, especially on nice properties sell quick. Last spring trying to buy a house we missed a house by waiting a day or two. Several times we ended up in multiple bid situations. The trick is in knowing when a house is a good deal.

      • MrEvil says:

        The thing is always be willing to walk away or you’re going to get taken. It doesn’t have to be anything unethical either. If a seller knows you’re needing something fast they pretty much have you in a half-nelson.

  3. chizu says:

    There so much more that a home buyer (especially a first time home buyer) should consider that she didn’t point out. I brooded a bit over this last week on Open Thread, but I’ll point them out there again.

    1.) Where do you want to be 5 years down the road? 10 years? 30 years?
    2.) How old is this house and the conditions of the appliances and roof, etc.? Do you need to replace them within the next 3-5 years? Is this budgeted into your final offer?
    3.) How much of the house do you plan on renovating? Is this cost budgeted into your final offer?
    4.) How much did property tax increase over the years on your property/in your neighbourhood?
    5.) Is this part of an HOA — what are their rules and regulations? Can you accept them?
    6.) Did you budget the regular maintenance of the property if you’re not part of an HOA that will maintain your property?
    7.) Who are you purchasing this house with? Can both party agree on the payment and budget on it?
    8.) How much is monthly utility? Water? Gas/oil, etc.?
    9.) What is the ACTUAL final cost of your monthly payment? (Mortgage + insurance + property tax + utility + water)

    Anything else I missed?

    • Velvet Jones says:

      You mentioned a big one. HOAs are pure evil. Avoid them like a plague. If you have to have one, read the fine print and know that the fees will likely go up.

      • chizu says:

        Unfortunately HOA is difficult to avoid in many places. But I now learn how evil they are — and how I need to find out all the rules next time. (The handbook was NOT given to us until we bought our place.)

        • Cat says:

          This brings up a great point – if there is an HOA, get the rules, find out who is in charge, and speak to them as well as your future neighbors about it – BEFORE you make an offer.

        • scoutermac says:

          I read and understood my HOA rules. Problem is my HOA picks and chose which rules to follow. I followed one of the rules and was harassed for following the rule.

          • Nigerian prince looking for business partner says:

            What was the rule?

            • scoutermac says:

              We recently placed our condo on the market. The rules state that the real estate sign may not be placed in the window. It vaughly states that it may be placed in the “Shrubbery Bed” which is the flower bed in front. I was specifically told to place it in the window. When I pointed out that the Covenants & Restrictions prohibit me from placing the sign in the window the board and the management company was shocked and told me they did not know what was in the agreement. They then told me to ignore the rule and to place the sign in the window. The other problem is we are not allowed to park our vehicles on the street in front of our units over night. I moved my wife’s vehicle there for 10 minutes to move my vehicle and was it was tagged for over night parking. Yet the renters across the street park over night every night and no one seems to care. These are just a couple of the things that tick me off.

              • Nigerian prince looking for business partner says:

                That really sucks. Unfortunately, depending on what city you move to, you may very well experience the same inconsistent and contradictory enforcement of ordinances.

          • Velvet Jones says:

            That’s the biggest problem. No matter what the rules say, you have no idea how they’re going to be interpreted, or what they’ll be in the future. You may have a nice friendly board now, but a year from now they’re the board from hell. That is why I hate HOAs with a passion and those who pump them. HOA pumpers will always use the defense “You read and agree to the rules, so you can’t complain”. Yes, I read the rules that existed five years ago. What happens when you get a board that does what it wants and a community that could care less. You might show up and vote against the proposals, but if you’re the only one there along with the three board members who are suggesting the proposals, who do you think is going to win? This happens over and over again all around the country yet these evil little quasi-governments continue to thrive and grow even more powerful.

            • Nigerian prince looking for business partner says:

              Are there HOAs in Pittsburgh (judging by your avatar)? I lived there most of my life and had never heard of them until moving south.

              • Velvet Jones says:

                HOAs are popping up all over PA, Ohio, and even WV. Almost all new plans have them. The main reason is to cover legal exposure. Most new communities have some sort of drain water system, and a pond or two that goes with it. These need to be maintained and insured by the community. So at the minimum you’ll have an HOA that does nothing more than collect money to insure and maintain the stupid retention pond. But many builders will tack on a CC&Rs just to keep people in line while the neighborhood is still being built. They don’t want people building motorcross tracks in their back yard while trying to sell the remaining lots next door.

                • Nigerian prince looking for business partner says:

                  If a new development is in an unincorporated area, isn’t some kind of HOA (or other authority) required just to pay for road repairs and sewers?

                  I’ve always had a penchant for old houses and have never lived in the suburbs. To me, it just makes sense to give that authority over to the local government and pay taxes than to setup an arbitrary, private de facto government to implement these kinds of things.

                  • sponica says:

                    I live in an older suburb in the northeast, so anything built in the last 30 years is in an HOA neighborhood or condo assn….the town got to a point where they weren’t going to build (and plow) new roads/lay new sewer lines, etc because it would have meant raising property taxes on existing properties…so the only way to get anything resembling affordable housing in this town was for there to be HOAs or condos. the “perks” are that you don’t have to remove snow, maintain your lawn, or even haul your trash to the dump because someone will do it for you.

                    although I question the logic of an HOA going in on a street a quarter mile from the town dump…

                    • Nigerian prince looking for business partner says:

                      It’s pretty much the opposite here.

                      People explicitly don’t want to incorporate their developments because it would mean higher taxes. Some will actually contract out police and fire protection from the city but they explicitly don’t incorporate into town.

                    • sponica says:

                      town/city organization outside of where I live boggles my mind sometimes….

                      every town I’ve grown up in, if you live in the borders you’re a town resident and have to pay local property taxes. the only thing you might not have to pay for is sewer or water. we had a septic tank growing up, so we paid for the water to come in but not for the water to go out.

                      the condo where my mom lives doesn’t have a water bill, it’s easier for the condo assn to include the water/sewer fees in the condo fees…and for the few hundred a month, we get a lot (landscapers every week or every other week to mow the lawn or rake the leaves, snow removal, roof repairs, repainting, restaining the decks, trash pickup and water). our condo fee is higher than others but it saves us from special assessments the years they do major repairs because the leftover money every year is set aside for those

            • scoutermac says:

              Our problem seems to be two fold. One is the management company. They do not seem to care. They also listen to just one person on the board and that is it. I don’t know how that person became the rule maker…

      • Nigerian prince looking for business partner says:

        I’ve never lived anywhere with a HOA but are they really that much different than living in an incorporated area, with zoning, and local ordinances?

        We specifically chose to live in an incorporated city because we didn’t want to risk living out in the county and having a neighbor turn his property into a hog farm or junkyard.

        • Doubting thomas says:

          The differences can be huge. Most incorporated areas wont try to foreclose on your house and make you life a living hell because you have an American flag bumper sticker on your car, or because your fence is painted a 1/2 shade different and wasn’t on the approved colors list.

          • Nigerian prince looking for business partner says:

            That sounds pretty typical for some cities, especially when living in a designated historic district. I have a good friend who had to sell off his family home because the lowest bid he got for a new roof, which was compliant for neighborhood standards, was pushing $100,000.

            I doubt his experience was the norm but are all HOAs that terrible? Why don’t you vote the incumbents out and rewrite the charter? Are 51% of occupants usually happy with the rules?

            • Arcaeris says:

              As a person living under the iron grip of an HOA, yes, it’s that bad. And 51% don’t necessarily agree, it’s more like: 20% are young people who cannot stand this kind of BS, 40% are old retirees who love to try to control people, and the other 40% are absentee landlords who do not give a shit about what the HOA costs or problems are because they just charge the tenants.

              Even if you do get on the board, you spend (in my complex) 5 hours every Tuesday listening to a bunch of old crazy asses yell about how the mexican gardeners are stealing from them (they’re not) or gave them a funny look or whatever. And if you don’t have all 5 people in agreement, nothing changes.

              • Nigerian prince looking for business partner says:

                To be honest, that doesn’t sound much different than living in a city, with inconsistent code/ordinance enforcement. We definitely get our share of crazies at council meetings.

            • Mrs. w/1 child says:

              In HOA’s it isn’t one house, one vote. Votes are determined by percentage of ownership which is set in stone by the developer. So a guy in the 18th floor with a one bedroom, gets more of a vote than the guy on the 4th floor with the same square footage. 2 bedrooms have more % of ownership than one bedrooms, and so on.

              Matters are then complicated more by Master Associations over multiple associations, committees, etc.

              I professionally managed high end highrise condos for many years. Trust an insider when I tell you to run screaming from an HOA.

          • adamstew says:

            I specifically got on the board of my neighborhood’s HOA to prevent that type of thing from happening. My main things are: Mow your lawn, maintain your property, and don’t paint your house neon pink. Those are really the only type of rules that I vote for…things you should be doing anyway.

            When it comes election time at the HOA, if I have any opposition, that is the platform I run on… a low key HOA that isn’t going to forclose on your house because the flowers you planted aren’t the specific shade of red that is allowed or because the house numbers on your mailbox are in silver lettering instead of gold.

        • Powerlurker says:

          Municipal governments are typically held to much higher standards of due process and frequently have to grandfather in existing nonconforming uses if they change the regulations.

      • tbax929 says:

        There is nothing wrong with HOAs, and I prefer to live in a community that has one. The problem is people don’t bother to read their CCR’s and then act surprised when there are things they can’t do.

        Most of my neighbors are fine, but there’s one guy a few homes down from me who is horrible. The HOA has been a big help in getting him to follow the rules.

        Personally, I’ve never had a problem with HOA. That’s probably because I pay my dues on time and follow the CCRs.

        • scoutermac says:

          Then there is my HOA that told me they did not even know what was written in the Covenants & Restrictions and not to follow them.

        • Velvet Jones says:

          So you’re CC&Rs are set in stone and never change, ever? Must be nice. You probably also have a board that is caring and compassionate to. I’m glad you live in a perfect world. In reality, HOAs will change or make up rules on the fly and then attack people with them. Of course HOA pumpers like you pretend these problems don’t exist, probably because people like you are usually the ones causing the problems in the first place.

        • Sarahlara says:

          We had a problem not long ago with a very bad, scary neighbor. The police were well aware and sympathetic but he wouldn’t answer the door to them (which turns out, is pretty effective. They won’t break down a door for something short of a dire emergency.) We are owners, but he rented.

          Our HOA met with the police several times over the matter, began fining him, sent letters to his landlord, and finally got him evicted. I’m extremely grateful. Who cares if the HOA told me to take down my flower boxes last year? Ultimately, they were there for me.

          • who? says:

            I was able to do the same thing in a similar situation by dealing directly with the police and the landlord. No HOA needed.

          • bluline says:

            Refusing to answer the door for the police is effective because there is no law that says you must. As it should be, I might add.

      • kc2idf says:

        This! An HOA, for me, is one of two instant, irrevocable deal-killers. The other one is electric heat.

    • BennieHannah says:

      Get a thorough home inspection, and if the property looks remodeled, ask the sellers to provide information about who did the work. If they did it themselves, are they willing to warranty it? I know that during the flipping heyday (and even now, with all the how-to shows on the teevee), there were plenty of folks who fancied themselves handymen and women when they were anything but.

      Regarding HOA’s below — they are really hard to avoid these days. A lot of municipalities require any subdivision that owns any common property to have an HOA to provide insurance and pay taxes on those properties. Although it’s only the HOA horror stories that make headlines, most HOA’s float along without much controversy. Ours has a drunken potluck/annual meeting/election at our commonly held waterfront park, and then for $300 a year per house we get our flowerbeds and the dock taken care of as well as the taxes and insurance. If you’re afraid of your neighbors making your life miserable (and they can do that with or without an HOA) then you’re better off moving to a rural environment. I have friends who are happier when they can’t see their neighbors! But I like living in a community setting.

  4. Velvet Jones says:

    It’s amazing that people are ignorant of things like insurance, and worse, taxes. My property taxes are $12k a year, up $2000 from the when we purchased the house seven years ago. That’s a lot more than a few hundred a month. Add another $600 a year in insurance. I’ve seen people burned by this in my own plan. About a half dozen have moved within a year because they said they couldn’t afford it. They only looked at the monthly payment on the loan and nothing else when making the purchase. Besides taxes, you have gas, water, electric, etc. All those little things that add up. If you are purchasing a home at the top of your budget you are asking for big trouble. Take whatever you think is your max is and cut it in half. That will leave plenty of room for normal bills and unexpected problems in the future.

    • chizu says:

      Property tax hurts. We definitely looked over the TOTAL amount. It’s kind of… Depressing to notice how our property tax is almost 1/3 of our monthly payment. But it’s something you NEED to realise, because it would make or break the deal really quickly.

    • katarzyna says:

      12 K a year? Where do you live?

      • backbroken says:

        12k is about the low end for a neighborhood with a decent school in PA.
        All of my out of state friends can’t believe how cheap the houses are in Pittsburgh. However, I am paying the same monthly payment when you factor in the taxes. I’d rather that cash go into my equity.

        • Nigerian prince looking for business partner says:

          Ouch. I’m paying about ~ $900/year in property taxes on our house and another $400/year in personal property taxes for the stuff we own.

        • Velvet Jones says:

          Yep. PA might have cheap houses, especially on the western side, but you still pay. Even the horrible school districts have high taxes, at least relative to the home prices. New York is even worse. Your house will cost twice as much and the taxes will also be double. I never understand how people afford those $800k houses on Long Island. The taxes will also be $30k a year.

          • Chris says:

            I think you’re a little bit off. I only looked at one completely random house that is being sold for $759k on Long Island: 15 Sylvia St, Glen Head, NY, 11545. It’s close to your $800k example.

            According to the county, this household only paid $3,886 in property tax for 2011. That’s a far cry from the $30 you quoted. Do you know anyone who really pays that much?

            I found another on Scudders St in the same town – they’re asking for more than $1,000,000 but their 2011 taxes are $4,420. That’s an effective rate of only 0.44%.

            Compared to west Houston, that’s nothing. A 3%+ rate boils down to an effective 2.6% or so after homestead exemptions. Therefore a house that is being sold for $170,000 will be paying the same $4,420 in property taxes!

            Of course the assessed value is typically lower than asking price, but I find that’s the case everywhere.

            Search for the property on zillow.com to find the “for sale” price and http://www.nassaucountyny.gov/mynassauproperty/main.jsp to find the tax rate.

            Does anyone know if there are additional property taxes on top of the nassaucountyny.gov taxes?

            • audacian says:

              That doesn’t include school tax. I live in upstate NY and own a house appraised at about $171k and pay $3300 in local/school tax.

            • Velvet Jones says:

              Yes, you’re leaving out school taxes and likely local. The LI example I used was my co-worker. I don’t think his house is assessed at $800k, more like $600k. Where I live you have three property taxes: Local, County, and School. Local is the lowest, at least for me, followed by county, and the big one is school. My school taxes alone are $9K. Add on top of that all a 1% local wage tax. Oh the fun.

          • backbroken says:

            The beauty of the system in Pittsburgh (Allegheny County) is that for years (and I mean decades) houses would go without a reassessment. Typically an assessment would only be called if the house was sold. So you had grandma and grandpa who had been living in the same house since 1958 paying taxes on an assessed value of $35,000. Meanwhile if the comparable house right next door sells, it would be reassessed at or near the selling price. So some people were paying $500/yr in property taxes while others in basically the same exact house were paying $5,000/yr. Great system ain’t it!?

            And everyone around Pittsburgh wonders why the young people always seem to move away.

        • Nigerian prince looking for business partner says:

          When I was looking to buy a house in Pittsburgh, it seemed like taxes weren’t too bad in the city. It was city neighborhoods, which weren’t part of Pittsburgh that were absolutely terrible.

          Wilkinsburg definitely comes to mind.

      • chizu says:

        12k sounds pretty normal for a house in New Jersey. I’m paying a bit over 7k on a townhouse. My coworker is paying about that much for his standalone house (2 apartment house).

  5. sir_eccles says:

    Sorry but if your mortgage broker isn’t telling you what your full monthly payment is going to be including taxes etc, you should find a different broker.

    • scoutermac says:

      True. Mine actually went down from what they originally said. My mortgage broker estimated high.

    • crispyduck13 says:

      This. My broker always made sure to add the exact taxes for the home (easy to find) and a generous estimate of home insurance and mortgage insurance/fees for whatever style loan we looked into.

      I can’t believe someone could buy a house these days and not know ahead of time what the actual monthly payment would be. In fact the number should be on your closing documents and the actual mortgage contract that you have in your hands at least a week before closing. You’d have to be willfully ignorant to not know.

  6. momtimestwo says:

    We used a Buyers Agent and had a great experience.

    • Robofish says:

      We’ve got one too and so far there have been zero suprises. Even our bank has been super uprfont about the loan / closing fees / taxes etc.

  7. Nobby says:

    Drive through the ENTIRE neighborhood and look at the condition of the other properties. We failed to do this when we bought our first home and wound up living across the street from the neigborhood car, couch and appliance collector. His hole collection was permanently on display in the front yard. We were so enamoured with the house we wanted that we totally overlooked it. Don’t be stupid like us.

    • Nobby says:

      and his “whole” collection too.

      • NeverLetMeDown says:

        Ah, bummer. For a moment, I had an image of a yard pockmarked with all different shapes and depths of holes (“now that’s a beautiful hexagonal 2.5 footer there!”).

    • dullard says:

      If you had an HOA it’s likely you would not have the problem of the car, couch and appliance collector. A good HOA can be effective in keeping the area a good place to live and still allow residents enough wiggle room to be comfortable. A potential buyer needs to investigate the HOA before purchase which includes a look at the financial condition of the HOA as well as other financial aspects of the area including how many foreclosures and short sales are in the development, etc.

      • Nigerian prince looking for business partner says:

        It’s the same thing for living in an incorporated area, with ordinances and zoning.

    • JiminyChristmas says:

      I would add a suggestion to yours: Drive through the neighborhood at night, a weekend night if you can swing it. This is an especially valuable exercise if you are buying a house in a “transitional” neighborhood.

      Where I grew up, you knew when you were in a bad neighborhood because it looked bad. Where I live now there are several areas that look halfway-respectable in the daylight but where there are people out on the corner selling drugs at night.

    • Froggmann says:

      Hey it’s better than the a-hole that lives across the street from the house I live in. His front yard is immaculate yet he threatens to throw bricks at my car if I have to park in front of his house. On one occasion he brandished a shotgun. The house next to his is the neighborhood “Party house” every 2 weekends the kids have a party that eats up all the parking on the street, except for the a-holes house.

      So I park on my lawn. Then get hassled by the city.

      I can’t wait to move.

  8. tungstencoil says:

    Most closing costs can indeed be negotiated. Here’s a hint for anyone buying a brand-new house with incentives, since the incentives are generally tied to using the builders “preferred” lender:

    Shop around anyway. Get some different quotes, then compare interest rates AND closing costs. Tell the “preferred” mortgage person that the [insert incentive] isn’t worth the different in closing costs and interest rates.

    They’ll make it sound like they can’t budge, but THEY WILL. They make commission off your loan, and would rather make a smaller commission than lose it.

    We saved 1% on our APR and almost $5K in closing costs they wanted to charge us for a $10K incentive.

    The best part? We have a VA loan, and conveniently “forgot” to mention he was military disabled while negotiating. The mortgage person (who was a real “See You Next Tuesday”) had one of the VA fees at the max, and was counting on that. Come time to ink the deal, we were like, “Oh, wow, you can’t charge us that… disabled vet’s have those fees waived”. The look on her face, as it sunk, was priceless.

    I find the “preferred lenders” of builders to be predatory… hiking interest rates and closing costs under the guise of being helpful. Nope, I don’t feel bad at all.

  9. vorpalette says:

    My SO and I are going through this, too, but we’re definitely taking our time. Our realtor is awesome, thankfully, very upfront about things, etc. A lot of the information about taxes and whatnot can easily be found online (zillow.com, for one), and many, many calculators give you places in which to factor in costs like HOA fees, taxes, insurance, etc. (some will even estimate those for you). Thankfully, the property taxes (and housing costs) in our city are pretty low.

  10. Nigerian prince looking for business partner says:

    When we bought our first home (~7 years ago), our biggest surprise was how bad the rates were on VA Loans and how many strings were attached to them, especially when buying an older house.

  11. Derigiberble says:

    “WHO ISN‚ÄôT LYING TO ME?!”

    The inspector that you paid who is now giving you a list of (hopefully minor) things that you should be concerned about is not lying to you.

    Counterpoint: The inspector who said “everything is just fine!” and is on a friendly first-name basis with either Agent in the transaction is lying to you.

    • Fubish says: I don't know anything about it, but it seems to me... says:

      Wrongo! That inspector may indeed be lying to you or just ignoring or overlooking some things. We’ve been through this more than once and found some pretty nasty oversights on the inspector’s part. I think the only way to deal with a home inspection is to look at EVERYTHING yourself and be diligent in questioning everything you see no matter how minor it is. We’ve found some minor things (an inspector thought were too insignificant to deal with) that actually were symptoms of much larger problems. You really have to be a bastard about it. It’s your money and houses ain’t cheap.

  12. aleck says:

    I’ve seen this blog before and the advise is often misleading at best or even wrong.

    “Closing costs are negotiable” some are and some are not. Plus, they are not technically “negotiable”. You can find a better title insurance offer, for example, but you can’t drive a hard bargain and refuse to pay recording fees.

    Closing costs are also clearly spelled out in GFE (Good Faith Estimate) for any mortgage.

    “That sense of urgency you feel is fake”. Again, this depends. Generally there is plenty of time to complete the process. However, the mortgage rate lock expires after a certain period. You may lose a bid on a house that you really liked. Sometimes it pays to make a quick decision.

    Seriously, why would you take advise from a blog by someone who clearly has no experience in the matter. If I had all the time in the world, the blog would probably have an appeal as study of human nature. But there are much better resources written by experts for the first time home buyer.

  13. beachmouse says:

    Because I live in Florida, I’ve come to see it as perfectly normal that I pay twice as much in homeowner’s insurance every year as I do in property taxes. Given that large numbers of large-scale disasters in Not Florida over the past year and the general sleaziness of the reinsurance market, if you live in Missouri or north Alabama or North Dakota, you may soon be joining us in a world where any annual increase in homeonwer’s insurance costs is under 30% is seen as a reasonable price increase.

    • Velvet Jones says:

      Not just Florida. I think the Dallas Metro area has the highest insurance rates in the US. Still, you can at least get insurance there. The big gotcha in Florida is the house itself. If you own a wood frame house built house along the coast you might not even be able to get any insurance for it.

  14. thedarkerside.to says:

    “Your mortgage payment isn’t the amount you’ll pay each month.”

    THIS needs to be mass produced on clue-by-fours and handed out in elementary school so that it sticks by the time the little tykes get ready to take the plunge.

    It puzzles me how people go through life without knowing / accepting this, but I know quite a few people who purely take their mortgage payments as their “monthly cost” and do a 1:1 comparison to my rent to tell me I am throwing money away. *sigh*.

    While we’re at it, it would also be helpful to remind people that they pay INTEREST on that mortgage and as such they didn’t buy it for $X that they got the mortgage for, but $X + interest.

    It still shocks me that so many people don’t seem to be able to understand that.

    • Awesome McAwesomeness says:

      That is my biggest pet peeve. Someone will sell a house they have owned for 10 years for a “$30,000″ profit, totally forgetting that they paid a lot of interest during that time, which more than wipes out that so called profit. They also forget to figure in the countless seemingly minor updates and repairs.

      Selling a house you bought for a $100,000 list price after 30 years for $200,000 didn’t net you a penny. With interest you paid right at about $200,000, plus all the money you funneled into it. At most, you broke even over 30 years, but probably not unless you sold in one of those insane states during the bubble.

  15. libwitch says:

    “That sense of urgency you feel is fake.” That is going to depend entirely on the individual market. Some areas it really is a buyers market. Others area (like mine, where there was never a big housing bubble anyway AND thanks to both lee and irene there both a lack of non-flooded homes and a lot of flooded out buyers), the sense of urgency is very real.

    I was fortunate to have gotten a home right before the floods hit, and even then we had 7 other bidders on the one property ended up getting. And that wasn’t the first.

  16. axiomatic says:

    The worst thing about first time home buying. JARGON.

    Everyone is using a bunch of acronyms all the time that first time buyers have no clue about. It’s inexcusable as far as I am concerned.

    I’m on house #5 now so its no longer a big deal but being the ass that I am when I bought house #5 I made the salesman explain every bit of jargon he used so my daughter could learn from the experience. At one point the salesman said he was tiring of having to explain it all and I promptly replied; “I can go buy another house.” He fell in line quickly. ;-)

  17. BigDragon says:

    I was a first-time home buyer in 2009. The entire process disgusted me. The loan officer repeatedly made mistakes, everything in my price range was a short sale and took forever to get an answer on, nobody seemed to be able to value things correctly, every property had issues, rates and closing costs were higher than they should have been, hidden fees were tacked on everywhere, people got upset when I actually read through paperwork, agents wanted their commission plus ridiculous add-on fees, and so on.

    I ultimately went with a builder. It was the path of least resistance. It will be a long time before I move. Agents and banks were a complete pain to work with. I dread having to become a second-time home buyer, but I hope that second time I work with a builder and get precisely what I want rather than buying a model.

    • webweazel says:

      Our loan officer at our first house buy was a complete and blithering idiot. Up to the final two weeks before closing, we called her EVERY DAY to see if she needed any other info from us so there were no last minute surprises–no, no, everything is fine she reassured us. Okay. THREE days before, all of a sudden she calls us in a panic because she needs this and that and the other thing STAT! Um, hello? We could have given you that stuff last week! Okay, burned our asses getting the info to her. Set. Two days before- all set. The DAY before, uh-oh! She’s not ready! The closing might have to be postponed! We told her that if SHE postpones because SHE is not ready, it is not OUR problem and that if there are any lawyer fees or any other fees for the delay, they are on HER not US. We actually told her that we would not be financially responsible for her incompetence. She was furiously FAXING over the paperwork while we were sitting at the closing table. Idiot.

  18. emyaeak says:

    We bought our first home last year. My husband was our realtor, and we still had surprises! Mostly relating to two things, which I’ll mention just as a forewarning to others:

    1) During escrow, my car died and needed to be replaced. We spoke to our mortgage broker, and he told us not to take out a car loan and/or get our credit run. Made sense, so we decided to pay cash for the car. Big mistake. The underwriter had a huge problem with $17k suddenly leaving our bank account, even though we still had plenty left over for both the down payment/closing costs, and more. We had to jump through several hoops verifying that the money was used to pay for a car. We weren’t told that would be an issue, as we were careful not to change our income to debt ratio or have it affect our credit score negatively. Take away lesson: large purchases during escrow (and prior to escrow) should be avoided whether it is cash or credit. Maintain status quo and don’t give them anything to be nervous about.

    2) My husband was showing proof of assets with a savings account we never bothered to put my name on after getting married. Since the mortgage was in my name only, we had to sign letters stating that my husband was gifting me a certain amount to purchase my house. (We’re married, so we assumed what’s mine is his and vice versa. Apparently not so!) The underwriter still wouldn’t accept this, and said we had to put my name on the account before he would loan us the money. And the bank did not make it easy (since it was a money market account with a high minimum balance), and we had to sign an affidavit and snail mail it to them, where it took them 2-3 weeks to process, pushing us outside of our original close date and making the seller turn ugly and started threatening to cancel escrow (it was a short sale, he wouldn’t have gotten any money no matter who bought it). All of this could have been avoided if we had moved the deposit amount from “his” account to “ours” 3-4 months prior to closing. Not something our mortgage broker mentioned to us.

    • thedarkerside.to says:

      I am sure the field of Real Estate is littered with people that shouldn’t be in it (much like the tech industry was during and after .bomb), but at the same time: You cannot expect your broker to know every little in and out about you specifically. That’s mostly aimed at the second one, the first one I think they should at least been have aware off, unless the underwriter is just generally annoying like this.

    • RobinB says:

      I’m an underwriter and yours was wrong on both counts. You did NOT need to be added to the bank account and it doesn’t matter if you take money out of your own account. What they look for is someone adding large deposits, which could signal the borrowing of the down payment.

  19. cdoc says:

    I’m a first time home buyer. Here is what is going through my head at almost every house see:

    “Why are these people asking so much money for this house?”
    “Why would anyone buy a house that needs this much work?”

    I’m so frustrated with what they want to charge for houses that I’ve all but completely given up finding a great house. And if I can’t get a great house, I’m going to get the least expensive house that meets my basic needs.

  20. Oranges w/ Cheese says:

    “Home insurance and property taxes are piled into the monthly payment, potentially upping the figure by hundreds of dollars.”

    ONLY if you get a loan with an escrow account. Given the hassle I’m having with my bank not notifying me about changes to the payments for my escrow account I REALLY wish I hadn’t gotten one.

  21. Misha says:

    BUNNY.

  22. reybo says:

    As a retired real estate broker who recently watched while his daughter bought her first house in another state, I can say with 100% assurance that this is the most ignorant bunk on home buying I’ve ever read.

    Yes, banks are guilty of every evil they are accused of, and then some. Yes, people who live on fees try to stick to them. Yes, ridiculous gov paperwork (brought on partly at CU’s urging) makes everyone’s job longer and harder while doing nothing at all for the consumer.

    But as for attributing evil intentions to every person involved in the transaction except the buyer, no way. That’s untrue, insulting, and a terrible dis-service to readers.

    If you take her seriously, if you don’t realize that Blonde & Balanced is writing out of ignorance because that’s an easy road to getting published today, you risk turning everyone you deal with into an enemy, and lose the house you choose to someone else because you have become “Oh … those people. AARCH.”

  23. pythonspam says:

    ” Your mortgage payment isn’t the amount you’ll pay each month”

    Also, if you are going in with a down payment of less than 20%, Lenders mortgage insurance (LMI), also known as private mortgage insurance (PMI) in the US is generally required.
    Rates are also a function of creditworthiness and equity just like your mortgage.

    • kosmo @ The Soap Boxers says:

      We got a piggyback mortgage (80-10). The extra interest on the 2nd mortgage (rate differential between the two mortgages) was much less than PMI would have been.

  24. Starfury says:

    Watch a few episodes of Holme’s Inspection…It’s amazing what kind of EXPENSIVE flaws can be hidden by paint and drywall.

  25. trimetrov says:

    I cannot stress this enough: GO LOCAL with your mortgage! Just because some mortgage broker can find you a loan with First West Northwest Bank of the Yukon at .05% less, we decided we wanted our loan to be with a local bank. Our loan officer knew the area, knew the neighborhood, knew the same people as us. Customer service was top-notch, and our loan will never be sold or transferred, and never any “oops” or “surprise” moments!

    Did we get the absolute rock-bottom available interest rate? No – but we are now refinancing less than a year after buying the home, and the bank is picking up most of the closing costs on that. Best decision we made while buying our first home.

    • RobinB says:

      I agree!! Go local –small community banks know what they’re doing, many don’t pay commission to loan officers, and you can almost always get a live person to answer the phone.

  26. who? says:

    Doesn’t federal law say that the lender has to give you a written breakdown of the closing costs at the time you’re applying for the loan? I know that I’ve always gotten one, and my impression was that it was required by law.

  27. RobinB says:

    Under the new regulations, first time homebuyers are provided a Good Faith Estimate of closing costs that are nearly set in stone. There can be little variance at closing or the lender will be refunding the difference.

    • libwitch says:

      except the bank, during the process can send you revised GFE every. single. week. And will.

      • RobinB says:

        Sorry you went through that! We only do revised GFE’s if there has been a major change in circumstances (which is rare at our bank.)

  28. nearly_blind says:

    1) Use a realestate broker as your personal agent (has broker’s license) not a sale’s agent. It is scary how easy it is to get a realestate sales license in most states. I know, I have one (to make it easier to buy investment properties for myself only). It scary how clueless many “agents” I’ve encountered are.
    2) Just because you are preapproved to borrow/buy (via your bank, mortgage broker or realtor analysis) doesn’t mean you should spend that much. Remember that amount is the amount that is at the limit you can afford. Why do something that puts you on the edge of a cliff.

    • RobinB says:

      Great advice! Realtors are notorious for encouraging buyers to spend the max –when they may be much more comfortable at a lower monthly payment. They also don’t always show the best deals–I have a friend right now looking at a condo a Realtor “friend” recommended– at a $60,000 higher sales price than a short sale I found in the same complex.

  29. owtytrof says:

    Wow, this is the exact opposite of what we’re experiencing right now as first-time homebuyers. Our real estate and mortgage brokers have made this process like a dream. We got pre-approved in September, were given a bottom-line amount we’d need at closing if we decided to max out our budget(what we could afford, not the max we could get financed), and met with a real estate broker who patiently waited as we finished saving before even trying to show us properties. We chose one relatively quickly, of our own accord, and both our realtor and mortgage broker have taken every opportunity to save us money, cutting their own commissions in the process.

    It’s like any service – if you don’t feel like you’re getting value, find a better provider.

  30. Awesome McAwesomeness says:

    I second the not rushing things. Also, don’t get emotionally attached to any one home and invest yourself into it to the point where you freak out and have a break down if you “lose” it. There are plenty of great houses to fall in love with. I promise.

  31. dush says:

    - Have enough downpayment that you aren’t required to have mortgage insurance.
    - Pay your own property tax so that as you save up for it all year you get interest on it sitting in your own savings account.