When To Buy A Home And How To Avoid Screwing It Up

Are you hitting that stage in life where you’re thinking of becoming a homeowner? Morningstar has published two home buying articles that together offer some good, concise advice to the prospective buyer, especially if you’re a first-timer.

“8 Signs You Should Not Buy a House” may be a tough list to absorb if you’ve been turning a blind eye to immediate financial issues like credit card debt and savings accounts, but following this advice will put you in a much safer position for a new home. Once you’ve made sure it’s the right time to buy, “8 Home Buying Blunders” has some tips that should help protect you from unanticipated problems at closing or after you’ve moved in.

“8 Signs You Should Not Buy a House” [Morningstar]
“8 Home Buying Blunders” [Morningstar]
(Photo: Smath.)


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  1. Trulymadlyme says:

    Hm. The ratio thing is interesting. Considering that a nice two bedroom/two bath w/parking runs roughly 1800 in places like Bucktown and Lakeview in Chicago, it seems as though the market pricing ratio 425,000/21600= 19 percent. Does this actually mean pricing is actually in line? I actually suspect it’s not pricing keeping people from buying so much as it is fears of unemployment.

  2. Magspie says:

    They should add “be willing to back out if your mortgage guy changes the terms at the last minute”. Seems obvious but when you’re young and excited you can get seriously screwed.

  3. Cameraman says:

    Our current five year plan ends with “buy a house”. I don’t know where we will be living in five years from now- it depends where I find work- but my wife and I have resolved not to look for houses until we have all our credit cards paid off and we can put 25% down.

  4. JGKojak says:

    When interest rates are low, you put as little down as you can– 5% usually works. That’s why they have PMI.

    And I hate the snobs who like to pretend buying a house is complicated- its not any more complicated than buying a car. You shop around, find what you need (location, location, location) and make an offer. How freakin’ hard is that.

    • hills says:

      @JGKojak: I wish it were that easy! Seriously not a snob, but I’ve got the location, location, location picked out…. but can’t seem to seal the deal (outbid twice in the past 2 months)… It’s not that easy for everyone – I envy you! I’m looking for a house where I can stay put for maybe 20 years, so I think it’s a lot more complicated than buying a car!

  5. nnj says:

    IMO, I would first wait for prices to drop a lot more. Unfortunately we have become the “what’s my monthly payment” nation so the actual price of the house seems to matter very little to some.

  6. TheWacoKid says:

    I truly believe that FREEDOM is one of the most undervalued assets a person can have. Freedom to pick up and move to a new place if you want, freedom to change careers (i.e. perhaps take a major pay cut) if you discover that you actually hate what you are doing for a living, etc. And most of the time, renting (not buying) is more conducive to freedom than buying. So before buying a home, do some real soul-searching on how much you value freedom/flexibility because buying a home can seriously limit it.

    And I say this as a guy who bought a too-big (at the time) home before the boom, and lucked (timing-wise) into a 4.125% 15-year mortgage.

    • Scuba Steve says:

      @DGberg: Perhaps, but most places around where I live require a year lease with a 4 month penalty if you break it.

      Freedom indeed.

    • Jon Mason says:

      @DGberg: I look at it from the other point of view. Owning my home will (once it is paid off) give me freedom from:

      -Having to work a job you don’t like just to keep a roof over your head
      -Leases/tenancy agreements
      -Unscrupulous landlords
      -Rent increases

    • starrytrekchic says:

      @DGberg: For me, freedom would come with buying the house. Wouldn’t have to live under anyone else’s rules (landlord, roommates, family), I’d be able to decorate it how I please, arrange it how I please, put in a garden and fence the yard for the cat, etc.

      I find apartments very restrictive.

  7. sonneillon says:

    How much do houses cost in Candy land?

  8. AllanG54 says:

    And don’t forget…houses are great bargaining chips in a divorce. Been there, done that.

  9. sprocket79 says:

    Haha! I know that house! You can see the edge of it from the 101 in San Francisco! I’ve never seen it from the front, though.

  10. Mr. Bill says:

    I’m almost 40 and haven’t bought a house. We have lived in a duplex for 12 years since it was new. Landlord had only raised our rent once by $40/month. We are allowed to paint the walls, we have a garage and front and backyards. We have had the money for quite awhile, but don’t need anything bigger than what we have. And it keeps up from accumilating so much junk.

  11. craptastico says:

    on a semi related note, i’m looking to refinance my mortgage. right now it’s through wells fargo, my credit is good and i have 80 LTV, anyone know of a good place to look? anyone try lendingtree or any of the internet banks?

    • vorpal_hamster says:

      I have Wells Fargo and I did their “3-step refi”. You pay a tiny bit higher APR, but you don’t need an appraisal and there are no closing costs. The only catch is you can’t do cash out. They mailed the packet of papers to me, I signed them and took them to the branch to be notarized. No muss, no fuss. I dropped my rate from 5.875 to 5.325. It doesn’t sound like much, but it cost me nothing to do it.

      My main thing was to get rid of my PMI and escrow and realize the amount I had paid the loan down because I only put 8% originally. I needed to shrink my monthly payments in advance of losing my job and going back to school.

      Rent around here is about $750 for a decent 1/1 apartment. I think I come out ahead even after accounting for the higher costs of running a Victorian. I had kind of planned to die here in 50 years or so, but I never thought I would find someone that might change my mind about marrying again. Damn him.

  12. Starphantom12 says:

    I close on the 10th… spent a couple hours with my loan officer today to review the papers she’s sending to the underwriter tomorrow (email fee, right, that’s $75 you aren’t getting from me). Found an error in the numbers- $1,000 in builder credit that I wasn’t supposed to get, but did. Um. My builder might just let it slide at this point, which would be amazing. If not, we’ll go back to the numbers I budgeted for.

    This is a boring story. For the sake of stats: I’m 23, single, and I’m getting a ridiculously good deal between builder incentives and the tax credit. Also working with a realtor and getting insurance through USAA which is, as they say, TEH CHEAP ($18/mo if the quote is correct).