Buying Your First House HOWTO

As you all have been reading Lauren and I purchased a new condo in Seattle, WA. Before buying the condo, my biggest purchase was a $8,000 car so this was a new one for both of us. I did most of the foot work and I have a few things I’d like to pass on to everyone out there.

  1. Do NOT sign anything with a realtor. If you do and you find something on your own you have to write up the agreement through them.
  2. I went out with three agents to look at houses. This was a great idea, I think. Unless a good friend of yours is an agent and you truly trust this person, then I’d recommend doing the same.
  3. If you don’t plan on keeping the house for very long (less than 5 years) then I’d recommend what they call an ARM loan. This basically means you only pay the interest on the loan (which is usually a few hundred less than a normal loan). With this type of loan you are assuming the value of the property will appreciate, also known as positive equity.
  4. You’ll need at least 5% down if you are a first time buyer. Most places offer “No Documenation” loans. All you need to qualify for a loan like this is the down payment and a good credit score.
  5. Do NOT get an out-of-state lender. We did and we almost lost the condo because of it. It’s always better to have someone in the area.
  6. We bought through ZipRealty.com. We had a real agent, who went above and beyond, and they gave us 20% of their commission back as a rebate (about $1,000).
  7. You always hear “No Poinst at Closing!” But, what does that actually mean? That’s what you pay up front for your loan. We paid points for the “No Doc” loan, the property being a condo, etc. This is figured by adding up the “points” (ie. 1.0 + .25 + .10, etc.) and taking the resulting percentage and adding it to the loan amount (ie. $100,000 * .0135 = $1,350 in closing costs). You’ll need to figure your points into what you pay down. If you put 5% down on the above example you’d actually need to come to closing with $1,350 plus the $5,000 down payment.

Hope this helps someone out there. It was a true learning experience for sure. The positive side of buying our condo is that an offer was made after we bought it for about $6,000 more than we paid for it. This means we have an instant positive equity of $6,000 + down payment on the condo.

Owning property rules.

3 thoughts on “Buying Your First House HOWTO

  1. It is not necessarily true that you need at least 5% down. To buy property in the United States, out of these 3 things, any 2 will usually do:

    1) A stable job, with stable income and a W2 (documentation).

    2) Money down

    3) Good credit

    Jeremy

  2. Why exactly is an out of state lender a bad thing? We are going through Costco to buy a Condo and they work with Lending Tree and Lending Tree referred us to 4 different companies, all of which are outside washington state. can you elaborate? thanks..

  3. I feel like I’m in the same boat as you & Lauren and would LOVE to talk to you or email…but I can’t figure out how to get ahold of you…..

    Rilla
    (rillab@juno.com, 206-525-0275)

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