Advice for first-time homebuyer?

[pendo]

Hello everyone, I've been a lurker on this board to keep updated on what's going on in Tulsa. I finally decided to join because I was looking for words of wisdom anyone could offer.

I graduated from OU two years ago and took a job in Tulsa. I wasn't from here originally but have loved living here the past two years and I am now seriously considering buying my first house.

Anything anyone could offer on the whole process would be great, it's all going to be new to me. Recommendations for lenders, buyers agent, etc? Not exactly sure where I want to buy, either midtown or south Tulsa. I guess it will depend on how much I can get pre-approved for and how much houses cost (I'm really clueless on prices right now, I haven't started looking at how much things cost yet.)

TIA!

[Cats Cats Cats]

1) Unlike previous years you are going to need $$$ down.
2) You can get average mortgage information at a site like http://www.bankrate.com/mortgage.aspx
3) Everybody charges different charges for this and that.  A lower % rate is sometimes covered by the fact they charge several thousand extra in closing costs.  JUST LOOK AT THE APR .  They give you these required standard forms and 1) will charge you $100 for a smile fee and another won't charge you $100 but they will charge you $50 for a paper fee, $50 for a frown fee, and $50 for a splenda upcharge fee.  Now they make them sound more official but either way the APR is what you are really paying over the life of the loan with fees included.
4) Don't get a variable interest rate or a balloon payment or any of that junk
5) You can get a realtor but if you don't you might be able to get a break on the price of the house by a few % being that you won't have a realtor taking a cut of the fee.

[dioscorides]

as far as what houses are selling for, check http://www.zillow.com .  you can see houses for sale and if you click on the house itself, you can see what it sold for in the past.  that way, if you find a house in a certain neighborhood, you can see what the houses around it have been selling for.

[Cats Cats Cats]

Zillow shows the last sold price.  Just remember that the "zillow estimate" is generally a lot higher than the going price for the house.  Zillow is an excellent source to find out what a place sold for.


Oh one more tip, depending on the age of the house and how long the owners have lived there the "last years property tax" figure means absolutely nothing.  There is a set rate the property tax can increase each year.  UNTIL it changes owners and jumps up to current value.

[Conan71]

This is all fresh on my mind as I just closed on a house three weeks ago.

Pretty much in line with what the other's said except that the only way you will get a break for not using a realtor is if the house you finally settle on is for sale by owner (FSBO).  If it's listed with with a company, they are already signed on for paying a 6 to 7% commission.  If you use a buyer's agent, they will split that commission with the selling agent.  It doesn't cost you a penny more.

First things first- get approved for your mortgage.  Expect to be required to have 3 to 5% down (yes there are still 3 to 5% down loans out there), possibly as much as 10%.  If you can come up with 20% down that will help you avoid paying PMI.  That's insurance that only protects the lender's interests if you default, and can be about $100 to $200 a month depending on your price range.  Shop local banks or credit unions first.  Keep in mind, every entity who gets involved in your transaction is going to have their hand out.  Mortgage brokers don't make you the loan, they collect fees for shopping your loan around.

You can "buy down your rate" with points.  Don't do that.  It's strictly a profit center for the lender or originator.  If you are so inclined, save that money and pay it toward principal with your first payment.  What that does is lower your overall interest paid as the interest is calculated on the outstanding balance.  It's an automatic investment in your equity while also cutting your overall interest paid.  Without pulling out an amortization chart, off the top of my head, I believe even $1000 addtional toward your principal on the first payment will wind up saving you $5000 to $6000 in interest over the life of the loan.  There's a lot of argument as to whether or not you'd be better off investing that money or paying down some extra principal up front.  Read up on it and draw your own conclusions.

Being your first time around, I'd highly recommend you work with a buyer's agent.  Give your agent your parameters, area, purchase price, etc.  They will also be able to handle the paperwork, meet inspectors at the property, a whole multitude of things.  I've sold one house and bought one house as FSBO's and resolved to work with realtors from that point on.  You can literally make a home purchase a full time job for a few weeks if you are not careful.  Realtors earn their money.

Unless you are thinking you might have some significant life changes like marriage or children in the next few years, buy something small and manageable.  Home ownership the first time is an eye-opener.  If you think you might have an expanding family in the next few years buy something that would be sized for that now.  The RE market is a little uncertain right now.  If Tulsa's economy takes a serious nose-dive, you might have trouble selling your smaller house to up-size in two or three years. 

Don't forget to take advantage of the gov't tax credit for first time homebuyers either.  Best of luck, I'm sure others will offer sound advice.

[buckeye]

You'll see a lot of houses that you don't want before you find one that you do.  Be prepared to see a lot of junk and/or unworkable floorplans.  Take your time and you'll find something you really like that's still within your budget.

The house -will- cost you money in repairs, updating, etc. and more than you think.  Plan on it.

Hire an inspector to check over a house before you commit to buying it.

I've had very good success with McGraw, Davis & Stewart realtors.  Call the Harvard office and ask for Crystal Cates.

My mortgage is through a local bank and I've been happy with them.  Every bank you can think of will stuff all kinds of poppycock charges and fees into your loan, it's the way it goes...

Get a totally conventional, no-gimmick loan.  Down payment as big as you can manage.  Put extra money into the principal every month.  Don't fool with "points". 

You will feel like you're signing your life away and drowning in a see of unreadable paperwork at the closing.

[colemanking]

I'm a broker in Tulsa and have been in the business for 10 years.  There are still products available for 100% financing.  These do have income limitations and the credit score does need to be above 620.  This is on an FHA loan.  FHA allows your debt service to go up to 41% but I tell all of my first time home buyers to try to stay below 35%.  You will be amazed at what owning a home costs you and you do not want to be house poor.
Also, I would use your own real estate agent.  If you do find a home that is listed by an agent and use that same agent, they are still going to be working for the seller to get the highest amount as possible for the sell.  Realtor's commission is based on the sell of the home so the higher the sale, the more they make.  
One last thing, when comparing rates, please look at the APR as well, this shows how much the fees will be.  Also ask your loan representative if there will be any discount points.  Discount points do not show up in the APR and can skew that number down.

[Mike 01Hawk]

Go to your bank/credit union and request all the Home Buyer Guide pamphlets.

You'll be amazed at how all the 'little stuff' adds up.  It's truly a circus IMO. Some of their fees are just "re-donk-u-lus"... but I guess that's what ya gotta pay to play this game.

We just closed a FSBO contract w/ the seller last night.  We're giddy, but have A LOT of stuff to do before closing.

Check out http://www.knoxinspections.com/priceguide.html for an inspection guide.

[dioscorides]

when we decided to buy a house a few years back, we bought Home Buying for Dummies.  we knew absolutely nothing about buying a house.  the book was very informative.  it helped us a lot. we've even loaned it to friends and relatives when they started looking for houses as well.

[pendo]

Good stuff everyone, thanks for the input!

[cannon_fodder]

1)  Owning a home is work.  When you rent or live in an apartment, little things don't bother you.  When you own it, you have to fix it.  The good news is you can fix it as you see fit, repaint, renovate, whatever you want.  The bad news is, it is all up to you.

Really, don't underestimate the amount of work just owning a home creates, let along the amount of work you can create for yourself by owning a home!

2) I have been treated very well by BOK Mortgage.  Their rates are currently as low as 4.8%. 

Clearly that rate is with 20+% down and good credit.  But I'll assume you know the basics on financing a home.  If you don't, don't be afraid to admit you do not and ask questions or seek help.

Since you hold a degree and are asking questions here, you probably don't need a buyers agent.  Just don't rush, use reputable people, and take your time.  Realtors, buyers agents, etc. can be helpful - but they cost money that would otherwise go towards your home (IMHO).

3) Plan on there being expenses you never dreamed of. 

Do you have enough furniture to fill a house?   What random appliance, lamps, light bulbs, trash cans or whatever else will you need?  When you own a home you'll need random tools, ladders, etc. for minor repairs and gutter cleaning.

All these things take a few dollars.  A little here, a little there.  Throw in some new carpet in this room.  A new window here.  Just make sure you plan on there being some additional expenses.

4) Inspections:  pick a real bastard for an inspector.  Someone who will point out all the little things.  You can choose to ignore them, but will at least be aware.

Don't be afraid to negotiate the price down based on what the inspector says.  "It will cost me $2,200 to fix XY & Z, we had agreed on $100K, so $98K seems fair considering . . ."  Or whatever.  At least get them to consider it.

Also - how much work do you want to do?  If you want to do major renovation you can save money by buying a house that NEEDS work to be done.  If you hate renovating or fixing up things and would have to pay someone to do everything, stay the hell away from older homes unless they were just renovated.

5) SHOP!  Shop around and don't be a hurry.  It is a good time to buy, but prices in Tulsa are not bargain basement fire sales - so take your time.  Check out the houses, watch the prices, zillow nearby recent sales. 

If you like it a bit snoop around it a little.  Go look in the windows, the backyard, drive around the neighborhood.  Did the neighbors see you out and about and look at you suspiciously?  Did they say something?  Knock on someones door and ask about the neighborhood.   Drive by the neighborhood several times at different times of the day.  See what it is like:  all commuters but busy at night?  Old people?  Kids?  Do neighbors seem to associate with each other (is that good, bad?).

What can you walk or ride your bike to from there?  Can you get some milk or a 6 pack on a bike or will you have to drive?  Is their a neighborhood pub?  Better check it out!

6)  In my unbiased opinion, midtown is the place to be.  I LOVE being close enough to everything that the drive to get there is not a consideration.  My friends in BA or out near 91st always seem to miss out on TU games, Drillers games, the race track, or just going out for a happy hour beer because it's a 20+ minute drive each way.

7) Keep asking questions!

Good luck.  The Ranch Acres area is mighty nice.   

[ARGUS]

Realtors dont take a "cut" they earn it as Conan said. Hire a Realtor...they are your guide and advocate. Hire a realtor that knows the market that you are shopping. ( I know this; I am proud and happy to be a Realtor!)

[Chicken Little]

Zillow shows the last sold price.  Just remember that the "zillow estimate" is generally a lot higher than the going price for the house.  Zillow is an excellent source to find out what a place sold for.

Affirmed.  Had an appraisal a month ago and it was about 8% lower than Zillow estimate.  It's still a useful tool, but I wouldn't rely on Zillow only.

Colemanking offers good advice...don't buy "too much" house.  If you start out house poor, you could get overwhelmed by the littlest issue.  And all houses have issues. 

[BierGarten]

I have heard many people say that Zestimates are higher than what the market actually supports.  Regardless of whether that is true, I still think the best way to go about zeroing in on the "market value" of a given house is to take as many comp sales as you can find on Zillow (as close in time as possible to the current date, as close to the house in question as possible and somewhat as reasonably sized square footage wise as the house in question).  Add up all sales prices of all of the comps and divide by the square footage of all the comps then multiply by the square footage of the house in question. 

Did the comps you used vary widely w/r/t sales price per square foot?  Were they reasonably consistent?  You may want to give or take a little from the resulting value from the calculation above depending on the condition of the house in question.

For what it is worth, I have found that after going through this process on a number of homes, it appears to me that Zestimates are pretty accurate.

[ARGUS]

Zillow=7-9% inaccurate by their own admissions. Market conditions change daily.
Why rely upon a source that is non-local. Use it as a guide yes; but do not place too much credence in it. Hire a red-blooded local to guide you through the woods!
Go Tulsa!