What is Digg?44 Comments
- VeryAngryJim, on 10/12/2007, -0/+7it deserves to be buried, but only because you're spamming it.
- encognito, on 10/12/2007, -2/+9What world are you living in that requires you to chose between a car and a house? Last time I checked you needed both to live in a modern society. IMHO, if you have to ditch your car to buy a house then you can't afford said house or you need to buy a much cheaper car. And believe me, I know about CHEAP cars, no car payments and housing.
-Real estate broker still driving his first car, a 1989 Ford Probe GT (which I bought used in 1993) - akcoder, on 10/12/2007, -1/+7I'm 28 and on my second home. I do indeed agree that the first night sleeping in your new home is indeed very joyful. Then reality sets in and you realize that for the next 30 years someone owns you. You can't move at the drop of a hat. When a pipe starts leaking *you* get to make 3 or 4 trips to the hardware store to fix the problem. Ahhh, the joys of being owned by your home!
- krahzee, on 10/12/2007, -0/+5#11 Check the zoning on any empty lots adjacent to your property. For example, I know of someone who bought an existing house that had vacant land behind it. What they didn't know was that that land had been zoned as commercial/light industrial as well. Because they were too lazy to check zoning, they now have to live with a warehouse building behind them that produces granite counter tops.
BTW: we're not talking some far away neighborhood, this place is one block off the main road in my towm. - elebrio, on 10/12/2007, -1/+6Horrible article.
1. Don't ever sign a buyer/broker agreement. If you end up using someone else the realtor still gets paid. You're under no obligation to do that whatsoever.
2. Ameriquest was recently forced to pay a $250 million settlement for defrauding consumers.
4. Pay off student loans? Paying off any debt is good but to advise someone to pay off (relatively) low interest student loans as opposed to credit card debt?
5. Current debts will show up on your credit report. Skip them. If it's not on your credit report the lender doesnt care.
7. While lending tree has a nice slogan, the companies that buy lending tree leads are no more reputable than any others. I'd advise going through two brokers. Remember when banks compete, a bank still wins, when brokers compete (with access to hundreds of banks) the consumer wins. (generally) - theblooms, on 10/12/2007, -3/+7"current debts such as car"
When buying your first home, as I did in 2001, you do NOT want to be making car payments. Pay it off or sell it ASAP! And I know what you are thinking, "Sell it? No way! That's my car!" But I will tell you this, NO CAR can EVER bring the sense of joy and wonderment as your first night living in YOUR house.
Remember what it was like the first time you got behind the wheel of your first car? Exhilarating, wasn't it? Well, multiply that feeling 1000 fold, and you might get the picture of what your first night in your first house is like. - marinist, on 10/12/2007, -1/+4Wow, real depth of information here. How does blogspam make the front page of Digg?
- jbzd, on 10/12/2007, -0/+3I used lendingtree and played it off a local mortgage broker... got a free point which saved quite a bit up-front.
- djruden, on 10/12/2007, -1/+4I bought my first home in November, so to add to what this article says:
I had to get 3 years of W-2's for my bank, which required me to call the IRS since I didn't keep them from that far back.
and #9 -- GET AN INSPECTION. My home inspector found that there was possibly a serious problem with the heater so I had a specialist come in as well and he found it was leaking carbon monoxide and 2 fuel cells were cracked inside. Aside from the cost of the 2 inspections, (home inspector was $250 and the heat specialist was another 150ish) the previous home-owners had to put in a new heater for the sale to be finalized. It definately saved me some money.
Talk to your realtor about good inspection agencys in your area. - elebrio, on 10/12/2007, -1/+4Never mind you're just a multi account of the submitter.
http://digg.com/users/cdl512/news/dugg
Your blog sucks. Quit gaming digg. - pgothica, on 10/12/2007, -0/+2 I bought a home recently and it was stressfull as all hell. Definitely do not skip on the inspectoin like he says. We got $2K in credits from it. Nice tips.
- mousky, on 10/12/2007, -0/+2Suckers. I can't believe how many people never ever check what the zoning is on those vacant parcels. They think that some grassy field or tree clump is a natural area that will never be developed because the realtor told them that. The first item on this list should be: "1. Don't believe a word a realtor says to you." We had a local realtor telling people in a newer subdivision that the vacant land behind their house was a natural area even though he knew it was for a four-lane arterial road.
- encognito, on 10/12/2007, -1/+3@ akcoder,
You are so spot on but don’t tell people hell bent on getting a house your observations. It is like the Holy Grail for people, the American Dream and all that. A lot of people will put themselves in a severe financial bind to “own” a home. Hence all the ARMs and increasing foreclosures coming up. The next couple of years at least in my area are not going to be pretty. And the true ownage shows up when some people realize that those little online rent Vs buy calculators are often biased and wrong AND that real estate doesn’t always appreciate in value especially in the short 7-10 year periods that most people “own” homes. - elebrio, on 10/12/2007, -0/+1I generally agree with your assessment. Especially the pre-approval part. All loans are specific to the real estate involved.
However, Option ARMs don't adjust to fixed rate rates. Hence the name ARM. They do however usually carry a life cap (max interest rate) of either 9.95% or 10.95% at which time it could be considered a fixed rate mortgage. A Typical option arm however is going to be in the 7.5% range when it resets. Of course this will depend entirely on your MARGIN and index used. (margin+index = note rate). I would like to see where you're getting that junk bond info and foreclosure stats. Mortgages are sold on the secondary market as MBS's (mortgage backed securities) and are specific to the company packaging them together (think Bear Stearns or Countrywide). So to say ALL option arms are junk bonds is highly irregular. Golden West (wachovia - world savings?) for instance has been selling/servicing option arms for decades with tremendous success. - inactive, on 10/12/2007, -0/+1Thanks for pointing that out elebrio. I buried the article as spam.
- wh0wants2know, on 10/12/2007, -0/+1I just bought a house, and I have some friends who bought a house a while ago. The biggest thing to beware of is the "fixed payment" loans. These loans are NOT a fixed rate, they are an ARM with a fixed payment, so you can easily get negative amortization, but you see the word "fixed" and you'll think it's a fixed rate loan. Be very careful, I almost got screwed by one of these and my friend actually got one, he's now paying 3600 per month in mortgage costs after the rate adjusted. Also make sure the mortgage you get has no prepayment penalty nor a refinancing penalty. If it does, just keep shopping around, you'll find one without penalties easily enough.
- mousky, on 10/12/2007, -0/+1Ricsad: From the article: "Quicken Loans, AmeriQuest, or Wells Fargo". I'm thinking the 'author' is American.
- insomuchas, on 10/12/2007, -1/+2If youre planning on buying a house I suggest you read this article first.
http://patrick.net/housing/crash.html
The best advice might be to rent for a couple more years and save your money, get the house when the prices drop again and save possibly hundreds of thousands in interest. - inactive, on 10/12/2007, -0/+1The easiest tip to save money on your mortgage:
Instead of paying monthly, pay weekly or biweekly (whichever your bank allows). On a 25 year mortgage, biweekly payments cut down your term down to 20 years and weekly payments cut down your payment to 17 years. - zSlider, on 10/12/2007, -0/+1I can save you 15K on your down payment right now.
20% * 300K = 60K
75K-60K = 15K savings!!
Math is wonderful. - RGT88, on 10/12/2007, -0/+1I'd definitely make sure that lender, appraiser, inspector, title company, and real estate agent are not interconnected. There are plenty of instances where they recommend each other and it ends up hurting a customer. For example an inspector might ignore a crack in your basement, and then a flood happens. Appraiser might boost up the estimate for seller. Not good.
Check for any existing tax liens on property!!! Prior owner could have been a loser and not paid his property taxes, and you don't want to be stuck with those.
As for other payments...it's all about debt-to-income ratio...stay under 50% and you should be fine. Avoid having any negative records on your credit report such as lates, collections...as that drives your credit score down thus increasing your rate, and limits your max CLTV eligibility. (Improve your score...do heavy research)
Also analyze the area really well...look at the comps, how much they're worth. See if you can find a house which is for sale by owner, that will always save you money. Think ahead. How long do you see yourself living in the house? Is it going to be your first home? Or will it be your residence for next decade+?
Average borrower who is tight for money should avoid Option ARM, Interest Only Arm, 2 or 3 year ARM. These are exotic programs which are intended for people who need to have flexibility. If you do take an ARM then 5 and 7 year ARMs are good. Typically these are lower rates than fixed (fixed products usually have a bump of another 50bps depending on lender), and in few years time when rates are lower (prediction), borrower will be able to refi into a fixed when ARM expires.
Don't refi all the time...since closing costs will need to be covered, and typically they're rolled into principal. Plus ammortization will start all over again, so you'll be losing money on paying interest.
If I'm going to reside in my house for at least 10 years I'd probably get a fixed product such as a 20yr fixed, and then if I'm financially well off, pay extra...that way I'll save on paying interest. Avoid getting into bi-monthly payment programs...you'll still lose. Just prepay yourself.
If your credit is good don't deal with subprime lenders since rate will be higher (their investors need to be compensated for higher risk), and you might have to deal with prepayment penalties.
NEVER buy more house than you can afford...that's the number one driver of foreclosures right now. Give yourself breathing room...a house can be a joy or it can be a burden. Don't buy crap, and then trick yourself into thinking "oh I can fix it up"...it costs a lot of money to properly fix up a house.
You can always save a lot of money on purchasing homes which are in foreclosure...banks will typically try to sell them, and do so at a loss to them in attempt to recover at least some of the balance owned by original owner.
All of this info is available on-line...research for at least few months, get opinions, listen to past experience, and research again. Dating someone in mortgage industry...always helps. - mousky, on 10/12/2007, -0/+1Edmonton has low house prices? Huh? Average resale price in January 06: $199,148. In January 07: $303,820. Sorry, but that is only $20,000 less than the average resale house price in Alberta - hardly low.
- moskrin, on 10/12/2007, -0/+1
If you've got a friend or relative that's a contractor or has some good knowledge of looking for problems in houses, try to get them to show you things to look for so you've got your eye out while you're shopping around. It's no substitute for a proper inspection, but if you can weed out a property that's a disaster in hiding or have some sort of idea what it'll need, you'll be in better shape making your offer, or deciding not to.
On that same note, when looking at properties, never skip the basement or the attic. - inactive, on 10/12/2007, -0/+1Depends where you live. Some areas, such as Vancouver, BC have such high house prices that it's not worth getting one yet. While other areas, such as Edmonton, AB has very low prices.
- namuh, on 10/12/2007, -0/+1Great advice from some of you, even better than the article. I was thinking of buying soon, but I obviously need to do more research on the subject and on my area (California, Central Valley) any more advice on the subject is welcome!
- mousky, on 10/12/2007, -0/+1Assuming you still have a job when the housing market crashes.
- krahzee, on 10/12/2007, -2/+2Ecognito
My guess is he has a home in a city with acess to mass transit and the car is a luxury, not necessity - sinurgy, on 10/12/2007, -0/+0I don't know if it's horrible but it's certainly not all that helpful either.
Overall it's very mediocre advice. - Urusai, on 10/12/2007, -1/+1Just get a traditional 30 year fixed rate loan; if they offer you anything else, they are trying to scam you.
- instill, on 10/12/2007, -1/+1Yikes! This is a very bad article. There is a lot of truly terrible advice listed here. For example, the article claims you should put down 20-25% of the home value at purchase, "to avoid mortgage insurance." Well, for one, mortgage insurance is 100% tax refundable for buyers with less than $100,000 in taxable income. This went into effect in January 1st 2007. Secondly, 20% down on a $300,000 property is $75,000! Very, very few first time home buyers can avoid a payment like that. Instead, utilize alternatives like first-time buyer interest breaks, IRA non-punishable withdrawls, and other great options.
Did you know you can withdraw, without penalty or taxation, up to $10,000 of your IRA towards a first time home purchase? That means, by funding an IRA today to offset taxes for the 2007 year, within 3 years, you can withdraw $10,000 (IRA contributions are limited to $4,000 annually), pre-tax and without penalty. This easily saves you closing costs or broker fees alone!
Also, the article suggests finding a lender and pre-qualifying. I strongly disagree with this advice as your rates can change based on the property you purchase. Pre-qualifying could lock you into a higher rate as the lenders will default to a higher risk model. Instead, set a personal limit on your affordability, work in conjunction with a Realtor to find a property that fits your cap, then seek a lender with the aid of a qualified mortgage broker.
One of the biggest mistakes buyers make when purchasing is to put their mortgage broker against the wall on all fees, but let their Realtor and title company walk away with obscene amounts. Always clarify and get in writing all of your fees from all three sides before ever signing into a deal. A good mortgage broker will go to bat for you with a lender and will make your portfolio look as best as possible in order to get you a great rate.
Before purchasing, always request an appraisal. The seller should pay for this service. Make sure the appraisal company is fully licensed and insured (which is a legal obligation on their behalf). If the home is over a million (what kind of first-time home buyer are you? haha), make sure the appraiser's insurance can cover the full amount.
Other general advice; Never lock into an Option ARM. These loans have recently (just a couple weeks ago) been degraded to JUNK BOND status. They are the cause of almost 70% of December '06 and January '07 foreclosures! Option ARMs promise low initial interest rates that quickly adjust to outlandish fixed rates that will result in negative amortization - meaning despite paying your mortgage every month, the debt with your lender will be increasing, not decreasing!
As a rule of thumb, mortgage brokers try to make one to two points, Realtor's a point to a point and a half, and title plus appraisal fees are around $750 combined (varies). Knowing this in advance, get a strong Good Faith Estimate from your mortgage broker, then put them against the wall knowing you can rip at least 3/8-5/8 more off the final interest rate. Same goes for your Realtor. Make sure once you negotiate down the rate that the other closing costs don't adjust. If they do, threaten to WALK and carry through on that threat if they don't fix it.
Get your credit score above 700. Don't listen to what anyone else in the lending/mortgage business says. A 6xx FICO is not a good score and will cost you dearly in the mid/long-term. Pay off all debts, fix all credit problems (which can take 3-6 months), DON'T open any new lines of credit or inquire about new lines of credit within 6 months of buying, DON'T buy a new car within 1-year of buying, and try very hard to either get an existing car out from you under (transfer to a family member, sell it, or pay it off). DON'T change industries/job types within 3-years of buying. If you were a cook in 2006 and now you're a stock broker, the lenders do not look kindly on this. Maintain consistency for a 3-year period with your employment. If that's not possible, do whatever you can to establish one.
Pre-plan to buy a house at least a year in advance so you can polish your FICO and establish savings over a long term. Goodluck! - inactive, on 10/12/2007, -0/+0Regarding student loans, the author may be a Canadian.
In Canada, the student loan interest rates are prime + 2.5 (variable) or prime + 5.0 (fixed). Therefore, I would recommend paying off student loans if the interest rate is higher than your mortgage (which it should, or else you may be getting ripped). I got a new mortgage recently for 5.05% and I always pay the minimum while I pay off my student loans. Student loan interest are tax deductible, but only 17% of it.
I don't know how this is in other countries. - theblooms, on 10/12/2007, -2/+2"What world are you living in that requires you to chose between a car and a house?"
Maybe you misunderstood me AND the article. Lenders DON'T want to see any big outstanding debts when they pull your credit report. Until you have a mortgage, car payments are generally your biggest debts. If you eliminate that debt your score will go up, and you can get a better rate. Ask a mortgage broker if you don't believe me. And eliminating that particular debt is pretty easy to do. if you can afford the down payment on a house, you can afford to either pay off your car, or sell it and buy something less expensive for cash. If you don't have enough cash to afford a good used $5000 car, I almost guarantee you don't have enough money to buy a house anyway. - cockaroachie, on 10/12/2007, -1/+11. Make sure you have a job which pays money.
2. Make arrangements so that the money you make, or a portion thereof, can be sent to the people from whom you are purchasing your house.
3. Enjoy! - encognito, on 10/12/2007, -0/+1@ theblooms,
I am a licensed CA real estate broker specializing in loans. I run people’s credit all day, everyday. I say again, if you have to sell your car to come up with the money to pay off said car loan in order to possibly up your credit score to marginally qualify for a home loan, odds are YOU CAN’T AFFORD SAID HOME! Moreover, if you have less than 12 months left on a car loan, MOST LENDERS DON’T EVEN COUNT IT IN THEIR RATIOS!
You would be much better served by paying down or better yet paying off your student loans and credit card debt. And would you look at that, that is exactly what the article that you claim I didn’t read said! The article never said anything about selling your car to up your credit score to qualify for a home loan. In fact, YOU DIDN’T SAY THAT EITHER IN YOUR FIRST POST. You said, “you do NOT want to be making car payments” and then went off on some emotional tangent about how great it made you feel to buy a house or something. Maybe you need to calm down and learn to say what you mean and mean what you say the FIRST time you say it. Look, I am glad you got into a house and all but from your post it sounds like you are cutting it close financially speaking. I hope you don’t have a financial hiccup and slide into default. That is all. - skinymarink, on 03/18/2008, -0/+0After what we've been through I will never buy real estate through "normal" channels again. Even before this current crisis there were always bank or real estate owned properties available but any Realtor will steer you away from them. There is only 3% commission available and on a split that's 1.5% More than adequate for what they do. Avoid mortgage brokers who don't want to work VA/FHA rehab loans (these loans limit fees) so that's a big red flag that your broker is more interested in maximizing his fees. Fraudulent lender appraisals are the basis for the current fiasco.
- elebrio, on 10/12/2007, -1/+1Ya OK. Maybe what some of us need to do is QUIT ABUSING DIGG WITH MULTI ACCOUNTS.
- seopositive3, on 05/02/2009, -0/+0Its a nice post regarding law and its values.I think its necessary to each and individual to follow the law and order.
http://www.independentinvestor.co.uk - thomasaquinas, on 10/12/2007, -1/+0Great article, thanks a ton!
- cdl512, on 10/12/2007, -1/+0dang, so someone is spamming digg cause you don't like what that person says? Maybe the point was to have some discussion and have an exchange of ideas and information. What I really think is some of you need to do something other than reading digg all day and get a life!
- elebrio, on 10/12/2007, -3/+2You must be a realtor.
- cdl512, on 10/12/2007, -6/+1elebrio you are dumb!
- undersky, on 10/12/2007, -18/+1This article was made front page 10 minutes ago and quickly removed...because it's bad press against Apple? or because it really deserves to be buried...but by WHOM? You be the judge!
http://www.digg.com/apple/Vista_is_a_faster_OS_than_Tiger_when_running_on_a_Mac
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