questionshow do i get the best deal when i buy my first…

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I just bought my home a month ago. The market was down so we got an amazing price. We only got 1/4 Acre because we wanted to be closer to work. We don't have kids yet and decided to use this as a starter home. We're making improvements and trying to increase the value. My wife is working on her PhD and we might have to move when she finishes. For this reason we bought something large enough for now and we'll move later. Buying a larger home than you need can be dangerous because you'll spend more on space you don't use including utilities and maintenance, but if you'll be there a while it may be worth it.

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As far as getting a "good deal" that is completely up to you. You decide what you want in the home and set a top price and don't go over it. Don't be afraid to walk away if something doesn't feel right. If you really are on a budget don't get caught up in extras. You can always change things later like adding granite counter tops or fixing a bathroom. This will also increase the home value so when you do sell you'll get the best price. Internet sites like Zillow and Trulia are poor resources for actual home buying. Their home estimates are usually way off mark. Find a good realtor (exclusive buyers agent!!!) and use their site. Don't be afraid to go see everything to narrow down what you like and need. If you have the luxury of taking it slow (I didn't) then do it. Ask for closing costs or for the refridgerator to save some cash as well. Don't spend every dollar you have on the downpayment because being house poor is not a good thing.

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A good mortgage can save you a lot of money as well. If you're going to be there short term you may not want to spend the money to get into a fixed rate, since we're only going to be in this home about 5 years we did an ARM with a great interest rate and even if it goes up the maximum we still won't make up the difference we saved by avoiding the fixed rate fees. Check out all the First Time Home Buyers programs you can because most drop certain origination fees. Make sure to get an estimate for your closing costs before your due diligence date, this can be simiilar to "sticker shock" of car buying. Remember that your realtor is there to help and they know the market. Do your research and find a good one (again EXCLUSIVE BUYERS AGENT) if you disagree about something they suggest don't be afraid to say so and ask questions. Don't let anyone pressure you to pay more than you can afford, this is YOUR home you have to live there and you have to make the payments.

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1. STAY AWAY from Amerisave!! Legally all these companies need to disclose all their fees, schedules, give you in writing if they will not be able to close within the originally agreed to amount of time and so on. Amerisave does none of this but because they have moles in the gov't, they get away with it, and tack on thousands in extra fees.
2. good credit scores can go leagues beyond actual income and debt, so if your scores are a little low, wait a few years to get them up, THEN buy, but stick within your budget, and realize there is always a few thousand needed for down payments, fees, and so on. Some can be rolled into the mortgage but not all.
3. find a trusted inspection agent and pay them yourself. Do not trust inspectors sent from the mortgage company or the seller as many times they leave out a LOT of stuff that you do not find until months or years later.
4. Have an elevation survey done yourself (cost usually runs $200-500) and find out the current elevation and floodplain.

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Oh, and being military you should be able to do pretty well at a military credit union. They won't care about scores so much and the fees and programs will probably be pretty good.

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I'm not sure if a military-affiliated credit union will be a better deal for you than any other credit union, but generally any credit union at all will be better (and far more ethical and financially sound) than any for-profit bank. Because credit unions are actually owned by their members, their focus is on helping their members manage their financial lives well; credit unions don't have to worry about making money for stockholders.

For information about the advantages of credit unions vs. banks, check here: http://blog.equifax.com/credit/nine-things-to-know-about-banking-at-credit-unions/

To find the credit unions near you, check here: http://www.creditunion.coop/

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My current mortgage is with Navy Federal Credit Union. We're considering a re-fi and are looking at both NFCU and the large "civilian" credit union for which I worked for many years until I retired in March. My husband still works there. Both of these credit unions offer very comparable terms and require similar credit-worthiness, and we're still sorting out which one would be best for us.

NFCU (which you can join regardless of which branch you serve in) is currently offering first-time buyers low rates and no required PMI, which can be a huge savings. My advice is to check out a couple of credit unions before you talk to any bank.

Try not to let all this make you crazy! It is survivable!

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just to ad to what @magic cave said - in order for the credit union to not require PMI they have to keep your loan as a portfolio loan and never sell it. Thats a good thing, especially since no PMI saved me over $150/mo!

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One general rule of thumb if you think you might want to sell within 5 years of buying: buy the cheapest house in the most expensive neighbourhood you can afford. In other words; give yourself the most possible upside you can. This is doubly true if you are going to do any work to the house, you don't want to add costs to a house that is already expensive for a given neighbourhood. Research what improvements have what paybacks: kitchens and bathrooms are usually the top of the list, though depending on the house adding an extra bedroom and / or doing an attic or basement conversion can yield big returns.

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My response isn't about "the deal" as much as it's about "the house"...

After the first one (I though I'd only be there 5 years, but it turns out when making your life in startup companies, you find yourself scrambling a bit -- my fixed 20 years-left mortgage is 4.2%), I've learned a few things (ymmv on these, but):

1. A low rate doesn't keep your payments low when the housing bubble inflated -- since my property went from 100k -> 250k, insurance and taxes tacked on a good bit :(

2. [In the south] -- I've learned I really would've liked bottom-access (crawl space or basement) -- would've made rewiring the house for Ethernet/Gas much easier!

(cont'd)

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3. What I said about basements applies to attics as well -- since I had access to all of the attics (2 different levels between garage and house), it was possible to run Cat5 and install ceiling fans.

4. There's a world of difference with an on-demand hot water heater, and a world of difference between gas stoves and electrics (natgas... I don't know about propane).

5. The thing that drives value in my 'hood is schools (even if you don't have kids!). Unfortunately, they're not as good for my house as they used to be, so my price hasn't kept up with inflation :/ -- "the rich" neighborhoods have the assumption that they'll send their kids to private schools (one reason I haven't moved up!).

6. After wiring for Ethernet, I found that a lot of my 2k sqft home can be handled with an Amp'd up wireless unit... so... (but Netflix vastly prefers the wired connection, so it was still worth it).

(cont'd)

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(deals)
7. Don't rent if you can buy. It costs me only as much as rent in my current house.
8. Make the pre-qualification binding... if possible. One of my friends "pre-qualified", but the bank called 2 days before closing and said "no-- you gotta pay 18% interest"
8a. Once you qualify for the loan do not look at cars or do anything that can change your credit report until closing!

9. (Doesn't apply to first timers, but I saw a guy get burned badly). If you're selling and upgrading, split the checks to under-fdic-limits. I used to bank with NetBank, and was chatting with a guy on their forum when it died. He had just sold his old house for 350k, and was closing on the new house (400k) that week, so he deposited the entire check into NetBank.
Poof - now he only had $100k...!

10. Be realistic as to what you want to do if you're trying for a fixer-upper -- I had such grand delusions (new deck, new kitchen, etc)...

vote-for5vote-against

I purchased my first a year ago and have a couple of regrets, so please learn from them for me:

1. The concept of buying a bigger house now and growing into it seems like a great idea, especially given the fact that you can lock in a pretty low mortgage rate and not have to worry about losing your good rate when you move up to a bigger home. With that being said keep in mind that: A. With larger homes comes larger utility bills, B. With larger homes comes much more maintenance, C. If you don't have family/friends nearby that will come over often, a larger home can feel pretty empty (I live with my wife and we have people over as often as possible). So in my mind if you find a great deal on a slightly-larger-than-you-wanted home, then sure, jump at it, but if the home is much larger or much "fancier" than you need in a first home, pass. Your first home WILL be a learning experience, and you will want to move on.

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Wow this ended up a lot longer than I thought..

2. If at ANY point you're not comfortable with the price, walk away. Your agent and their agent WILL tell you about how this deal probably won't last. They'll probably be right. But a LARGE investment decision is NOT to be made in the heat of the moment. You will possibly lose out on a house because you waited too long, but it's likely you'll be happier in the end (with lower payments) somewhere else because of it.

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And part 3...

3. The inspection is KEY. Do NOT skip it, and accompany the inspector on ALL portions of it. If you start finding things during the inspection that the inspector missed to the point that it's making you uneasy, get a different inspector. At the same time, expect your inspector to find something wrong with the house and don't freak out when they do (if they don't, find another one because they missed something). When the inspector finds things wrong, do research and get quotes on what it will take to correct them before sending terms to the seller; do NOT trust your agent to tell you offhand how much money/time it will probably cost to fix.

4. If you didn't get that this may be where I was going from my other comments, here ya go: always remember that your agent is still looking to make money off of your purchase of a home. Yes, they're on your side, but if you don't buy they don't make money. Trust, but verify.

vote-for6vote-against

I think you are one step ahead of yourself. The question you should be asking, rather than "what is the best way to buy a house", is "should I be being real estate right now".

First, you say that you are active duty Army. Unless you KNOW (for a fact, know) that you are going to be in an area for at least 4 years (it used to be 3, I wouldn't now go less than 4) don't buy. You won't nearly have enough time to make back closing costs, broker fees, et al, in appreciation. Also, if there is ANY kind of market dip, you are going to be upside down (the term for owing more on something that it is worth). There are thousands (maybe tens of thousands) of military who had to walk away from properties because they got caught and had to move. This will require filing for bankruptcy, which (I'm sure you know) is not good for your military career: if you need a security clearance it might end it.

(continued below)

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Second: Are you comfortable where you are, and with your work and life situation. Buying property is a big deal. One of the big takeaways from financial crisis and housing bust of 2007-now is that people are more circumspect about that huge financial obligation. Houses are NOT a guaranteed investment: values can (and do) go down, especially in the short term. Renting isn't the end of the world: there are many advantages. You can walk away whenever you want. If the market goes down, you don't have to worry about getting stuck. If there are repairs that need to be done, you don't have to pay for them. Maintaining a house can be very expensive: there were 4 trees that needed to be removed from my yard this week. That was a very, very expensive evolution, yet something I couldn't put off (they were too near neighbor's yards). Roofs need repairs and replacing. HVA/C systems break, usually at the worst time.

vote-for5vote-against

Stuff to keep in mind -
1) Stuff will break. When you own it, you pay for it all. You can get a home warranty that will help cover parts of it, and depending on the market you can make your seller provide it. Home warranty only helps a little - mine costs $75 a visit and has a ridiculous list of exclusions. Like, when my AC got fixed, because it was short 2 lbs of coolant, the home warranty only paid $5 a pound on coolant, which left me with a bill of around $120 for just coolant (not counting the $75 visit fee). Have an emergency fund, and have enough money to replenish it when something breaks, because it will.

2) Don't stress out about home values. Buy a home because you want to live there. If values are steady, the cost of the loan will force you to stay there for at least three years to build enough equity to get past the cost of the loan. A "cheap" loan will cost you around $4000. Sell before you had equity - you lost that no matter what house values are doing.

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It matters a lot how long you expect to stay in the house. Everybody I've ever known with a military background seemed to move a lot.

If you're going to live somewhere essentially forever, you have more latitude than if you plan to sell. For a place to be easy to sell, it needs to meet more mainstream needs. That usually means close to town, schools, shopping, etc. Rural home turnover generally is much, much slower.

The place to start is to ask yourself what you really need in a home. How many people, will there be children growing up, how close to schools, work, etc. do you need to be. Will you entertain? What are the essential indoor and outdoor features?

Don't let yourself be distracted with weird alternatives. You've got a weekend coming up here. Go pick up a newspaper and pick out 20 or 30 open houses, and start looking at houses. That will start to give you an idea of what you like.

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I want to thank everyone for their input. Knowing that as a servicemember I'll move a lot is one thing that complicates a decision to buy a house. I hope to buy a place in an area that has housing values close to the sum of the parts of the house instead of buying land in a "rich" area of town. We also hope to buy in the place we want to retire and get the house paid off before we need to live there. It helps that we want to retire in an area of the country where we have a lot of family/local contacts. That will make finding a good place a lot easier. What do y'all think about renting out the house we do buy while we're waiting to retire/move in (if we live there before we retire)?

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@ewaldjw: In many parts of the country right now, renting is a better option than buying, so depending on your part of the country, the "rent it out till we need it" plan might work. However, I get the impression that you're relatively young [I'm retired, though, so half the world sounds young too me], and it's possible that housing tastes and features will change considerably over 15-20 years.

If you do decide to rent it out, though, I would strongly encourage you to use the services of a good, reputable property management company.

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Having read all the comments on this thread two or three times, I'd like to note that I'm totally blown away by the depth and breadth of knowledge and experience provided. It's one of the best collections of good advice I've seen in the years I've been here.

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Not that you need any more info, but I love this guy's articles and here is one on house hunting: http://www.daveramsey.com/article/the-dos-and-donts-of-house-hunting/lifeandmoney_realestate/