how much down for a first time buyer? (Cumming, Locust Grove: sale, real estate)

[Dirtaddshp]

im planning on moving the Cumming, Georgia. What percentage do i have to put down as a first time buyer? i have excellent credit.

[BobKovacs]

Depends on what the mortgage company wants, but most are looking for 10% down these days- especially with prices starting to fall- they don't want to end up owning a house thats worth less than what you owe if you default. The days of the "zero-down, interest-only, 125% LTV reverse upside-down mortgage" are gone.

Even without looking at the mortgage company's needs, having at least 10% down is still a good idea. What if you need to sell the house after a year for some reason, and you got in on a sero-down program? You've got no equity to even pay commissions, so you end up upside down on the deal (not a good place to be). At the same time, though, you want to avoid putting every dime you have into the down payment, since you want to have some emergency funds set aside, and you also need to consider closing costs above and beyond the DP, which usually run in the $3k range at a minimum.

[deja-zebbie]

Dirtadship?

Although this is not an answer to your downpayment question, if you are a first time home buyer, I'd like to suggest a few things that may help you in the long run.

1. Make sure you have a home inspection written into the contract (though I think it's already covered by law), i.e., have it written in in a clear statement that YOU need to be satisfied with the results of the home inspection. THEN have an inspection of the home by a -->CERTIFIED <---home inspector (cost around $300). I am suggesting this for both a new or older home. Ask to see samples of reports by the home inspector you select, they should cover EVERYTHING. You can ask for a copy of a completed report with the person's name and address blacked out (i.e., don't accept any excuses that the home inspector can't give you a copy of a completed report because of privacy). Home inspectors generally travel long distances for their inspections, so it's not necessary to get one in the area where you are buying, in fact, it might be better not too, since that person may have ties to the seller, etc. There is a great home inspector located in Locust Grove (just try the yellow pages) who saved us for several possible disasters. In fact, we lucked out with our home inspector (a friend did not and ended up selling his house because of electrical problems that his home inspector did NOT catch)...so you might want to ask to see samples from a couple of inspectors and compare them....reports are not universally thorough, it depends on the inspector. And, please don't be talked into saving money by having your agent do a home inspector, unless they are CERTIFIED in that field, they are NOT qualified (see this happen also).


2. If you're thinking of a home in an existing neighborhood (i.e., not a home in a new development), then I sure would spring for having it surveyed (forgot the other word for this). This is important because if there is something "wrong" (i.e., a neighbor's fence is over on your property line or any other strange thing) then you can have it fixed before buying (in fact, a reputable attorney will not close on a house that has such encumberances). Why is this important? If you ever want to SELL the house and it has any small problem like this, then it might be difficult to sell. You can call the city or county where you plan on buying and they can recommend a surveyer THEY use. Again, sometimes it is STUNNING what is uncovered.

3. Spring for an appraisal early in the game (before home inspection, before surveying...whish I could remember the other word for surveying)...and not by a bank appraiser or anyone connected with the sale of the house. Get a REAL apprasial early on before you proceed. Your house will (duh) be a MAJOR investment...you need to protect that investment with a good appraisal upfront, so you won't be tricked out of your hard earned money. Don't be swayed by the seller or agent (yours or theirs) flashing an appraisal or saying that the house was appraised for such and such. Appraisals are generally only realistically valid for 6 months.

4. In some cities/counties you can go down to City Hall or the county "headquarters" and see house information on their computers. If you're talking a previously owned house, you can often find out what the last owner paid for the house and this can give you an idea for neogotiating.

5. If you're serious about a previously owned house, ask the seller to provide you with the last years utility and property tax bills (city and county property tax). If you are considering a home in a new development, talk to neighbors and ask them about utilities and property taxes. This could help you out in figuring whether the house is really affordable. Always think that your utility bills might be larger. Sadly, in the past I've seen new neighbors purchase houses in the area where I used to live and then not be able to really afford them (and have to move) when they realized the amount of the utility bills (which can be substantial).

Hope the ideas above help.

All the best,
zebbie

[Dirtaddshp]

wow! good info thanks everyone!

[deja-zebbie]

Dirtaddshp?

There are a lot of fine people (and who are a lot more knowledgeable than I am) on this forum who, I feel certain, can offer you all kinds of tips about house buying...financing and things like that. You just have to ask as you head down the road to home ownership.

Bob Kovaks has a good idea about putting more money down to have more equity in case of sale (or even if you need the equity to add something to the house later). One thing you can also do to increase equity is to buy a slightly less expensive home than you can really afford and then make a SEPARATE payment to the PRINCIPLE every month. Even $50 a month over a period of time helps to reduce the principle...$100 a month would be a bigger help, etc.

If you have an attorney, or have friends who have a relationship with an attorney you can run your house purchase contract by that attorney (estimate $100-$200) to make sure there is nothing "fishy" in it....ditto with the actual financial documents for the loan. I suggest an attorney rather than an accountant for this. Attorneys in Georgia seem to be VERY familiar with real estate transactions. In some (or perhaps all??) parts of Georgia ATTORNEYS do the closing, perhaps that's why they are so knowledgeable. Attorneys doing house closings was something new to us when we moved to Georgia.

Buying that first home can be plenty scary (no matter how smart one is)...but I think almost anyone you know and, of course, people on this list, are very willing to help. Not all of us inheirited our homes you know (joke)..most of us have been in YOUR situation ourselves.



All the best,
zebbie