Things you wish you would've known when house buying

Enhance

Enhance

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I'm starting a new job at the end of the month and I'm buying my first house.

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I am, however, curious - what are some things homeowners out there wish they would've known before, during and after they bought the house? Anything that caught you off guard or that you wish you would've done ahead of time?

As a little background info., my girlfriend and I are buying a house for $115,000 (valued at $130,000). It sits on half an acre. We're getting a home construction loan for around $140,000 to completely gut and redo the kitchen, stain and finish the wood floors, upgrade the main bathroom a bit and finish the basement bathroom. After all the work is done, it's going to get reappraised and then we're going to refinance the loan.

**Edit - I know some of you mean well, but please leave the relationship status out of the advice. We've taken the steps we feel are necessary in this area and this is not the type of advice I'm seeking. Thank you**

 
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Have a commitment from a bank in writing to refinance after the renovation. I know someone who was told to go ahead and build their house with the construction loan and the bank would finance it with a mortgage only to have them back out at the end and had to almost take bankruptcy because of it. Don't trust a banker to just say...oh yeah...go ahead and we'll take care of it in the end.

 
BigRedBuster said:
Have a commitment from a bank in writing to refinance after the renovation. I know someone who was told to go ahead and build their house with the construction loan and the bank would finance it with a mortgage only to have them back out at the end and had to almost take bankruptcy because of it. Don't trust a banker to just say...oh yeah...go ahead and we'll take care of it in the end.
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Good advice. We're working through a banker that my girlfriend's mom knows very well (he did the finances for her brother's home.) I think there's a lot of trust there but would be a good idea to get it in writing anyways.

 
Yeah...I've worked with bankers before that I've known for a long time only to have them attempt to back out of something previously agreed to.

 
Do you have good bids/prices for the remodeling you're wanting to do? When we bought our house a few years ago we redid the kitchen and master bath along with paint and carpet throughout. Sounds similar the the scope you're doing but it ran us quite a bit more than what you have allowed for. Kitchens and bathrooms are expensive.

Other than that, ask as many questions as you can think of:

- Age of everything: heating, air conditioning, water heater, roof. Probably want to know if you're getting close to major replacements.

- Any problems with water in the basement or roof leaking

- Real estate taxes - can vary quite a bit

A lot of that is probably on the disclosure and other stuff but just don't assume everything works fine.

 
We bought two houses in Iowa and every time the seller provided a home owners warranty on the mechanicals for one or two years.

We moved to central Nebraska and everyone looked at us like we were idiots for asking for it. The house was only 10 years old so we didn't push for it.

Yep....less than a year later, we had to completely replace all the heating and AC unit. That was an expensive over site.

 
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Enhance89 said:
fb30 said:
Don't buy a house with you're girlfriend.
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Our future is not in question.
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Many now screwed men have said that exact same thing. Either you buy it or she buys it but if you're not married or plan to be married before closing on said house, don't do it as boyfriend girlfriend. Buying a house is extremely stressful in and of itself, not to mention now you're planning remodeling which is another huge stress thing. If you do go as unmarried couple get an attorney involved to draft up some sort of "just in case" type paperwork.

 
Has the house/property been appraised by an appraisal company? I know you said it's "valued" at $130k but value and appraised at are not the same thing. Make sure your contract has a clause where you pay the agreed upon price or if the appraisal comes back below the agreed price that you pay the appraised value.

Are you doing the work yourself?

 
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HuskerInLostWages said:
Enhance89 said:
fb30 said:
Don't buy a house with you're girlfriend.
Click to expand...
Our future is not in question.
Click to expand...
Many now screwed men have said that exact same thing. Either you buy it or she buys it but if you're not married or plan to be married before closing on said house, don't do it as boyfriend girlfriend. Buying a house is extremely stressful in and of itself, not to mention now you're planning remodeling which is another huge stress thing. If you do go as unmarried couple get an attorney involved to draft up some sort of "just in case" type paperwork.

Click to expand...
I knew a guy in his early 30s who had owned a house for roughly 10 years and built up some equity. He was going to go buy a house with his girl friend and put the house in her name so they could get first time home buyer benefits. Yep...take all your equity and immediately put it all in her name with no ability to get it back if she all of a sudden decides she doesn't like him anymore.

He finally decided it was best to get married. But....that could have been a disaster for that guy.

 
Lots of issues when buying a house that I'm sure others can speak to. Below are some items that are more affected by your specific situation. I am not saying any of these will be a problem for you but some things to consider...

  • Get an independent mortgage broker at least as a backup. From what you have described, you will be tripping a number of red flags that could end up being easier to get past with an independent broker. This is nothing against your banker, it's just how the "system" works...
  • Contact your local Housing Authority if one exists. Oftentimes they can help steer you through roadblocks/red-tape for such large remodel. HFA's & HA's exist to increase property ownership and are an underused resource. They may help you with the refi if the house in a qualified "urban renewal" corridor...
  • Do a home inspection and be nit-picky. Since you will be doing a major remodel, I would have a structural engineer inspection as well. For some reason, structural engineers seem to find water & abatement issues normal inspectors miss. This could save you on the remodel.
  • If you are switching jobs, make sure your current loan is locked up. Fully pre-approved & locked-in for at least 60 days. Get this in writing...
  • Loan underwriters like married couples (or common law, domestic partnership, etc) since it eliminates all sorts of issues. If you are buying the house with your GF, have an attorney create an agreement between the two of you (research joint tenancy vs tenancy in common). This protects both of you (and the lender) if something unexpected should happen. It will make the refi easier.
  • Ask your banker & new-employer about any Employer Assisted mortgage options. A common one is where the employer doesn't guarantee the loan but promises to expedite collection if you fail to pay & notify the bank if you leave your job. This can save 2-3 points on the loan.
  • Recent job changes can cause an issue when you refinance, especially if you are primary on the loan. If you can make your girlfriend primary, this may save you some headache.
  • If you have not closed yet, take a recent letter of employment from your employer to closing. A lot of first-time buyers get flagged for additional last-minute employment & income verification.
  • Before doing the construction loan, pay for a full market analysis & appraisal on your own to verify the upgrades you are doing should increase the property value enough to consolidate your loans afterwards. About $400-$600 is pretty typical.
  • Make sure neither loan has an early payment penalty. Last couple years, banks have been adding this to a lot of first-time buyer's loans. Often there is a penalty for not carrying the loan 12+ months... There are also requirements here for FHA/VA loans depending on your location.
  • That is a pretty big loan for home remodel given the property price. Make sure to document that all contractors are licensed when they do the work. Often banks will not refi after such a large remodel without proving every trade was fully licensed at the time. This would include every sub, not just the GC. If you will be doing the work yourself, consider paying a licensed contractor to inspect & sign-off on at least plumbing & electrical.
  • Make sure your Homeowner's Insurance has an umbrella policy that will cover things with the remodel. Common items are non-delivery or failure to meet code; it's way easier to resolve with insurance...
  • It is not uncommon for major remodels to trigger some weird gotchas. Opening up the walls of kitchens or bathrooms could invalidate grandfathered code compliance for various items. Utilities are common (water, electric, sewage, gas, etc) but also heard of windows, hvac, ingress/egress, smoke/CO detector, property survey issues. Sometimes these are local building department, other times bank initiated. Definitely contact the relevant building department upfront to see if anything like this gets triggered. Do this by letter/email and have an actual Planner do the research; don't rely on the analyst... Do the same with the bank before pulling the construction loan.
  • Plan for mold remediation on the kitchen/bathrooms even if the home is new. If the house is pre-1970, plan on significant electrical/water/sewage remediation.
 
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HuskerInLostWages said:
Enhance89 said:
fb30 said:
Don't buy a house with you're girlfriend.
Click to expand...
Our future is not in question.
Click to expand...
Many now screwed men have said that exact same thing. Either you buy it or she buys it but if you're not married or plan to be married before closing on said house, don't do it as boyfriend girlfriend. Buying a house is extremely stressful in and of itself, not to mention now you're planning remodeling which is another huge stress thing. If you do go as unmarried couple get an attorney involved to draft up some sort of "just in case" type paperwork.
Click to expand...
I know you mean well, and no offense intended, but I'm not going to go into detail about my relationship in connection to this home purchase. In fact, I intentionally haven't. I'll put something in the OP so people stop referencing it. The steps we feel were necessary to take have been taken in regards to those concerns.

 
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