Home Buying (Part 5) - Qualifying for a Mortgage

So our contract on the house got accepted. Inspection came out fine. Or if it had isseus, we took it back to the seller and he was able to handle it to our satisacation. So now contract is accepted by both parties. We need to decide on a closing date and get on to finding best mortgage rates. Lets see what are different morgages available.



1. 30 Year Fix - Most common one. Provides for same payment through out the life of the mortgage and minimum monthly payment. Some lenders may provide 20 or 40 year morgage too.

2. 15 Year Fix - Same as above. But since you pay off the loan in 15 years, your monthly payment will be higher, but you end up paying less interest. This type of loan might be helpful during refinancing. For example you had a 30 year loan and then after a while rates went down (usually atleast rate should go down 1 point to cover for closing costs), you have about 20 or so years left on loan, getting it refinanced for 15 year fix may keep your monthly payment almost same, yes you will finish loan soon and also pay less interest.

3. ARM (Adjustable Rate Mortgage) - This is the kind of interest rate, because of which we are in financial mess right now. Yes it does make in certain scenarios. eg. You are not planning to stay in same house for more than 4-5 years.

4. Interest Only - This is the kind of mortgage where you pay only interest during part or full mortgage term. Capital is paid off at the end of the term or at the end of predefined term.

5. Biweekely Mortgage - Could be same at 30 Year fix mortgage, but it is paid Biweekely. Hence reducing the interest greatly.

There are couple of websites that let you put your information and provided you couple of quotes.

I loved http://www.zillow.com/ the most. No personal information is required. You get you contact the lender you think is best.
Another good one is http://www.lendingtree.com/ . But here you do have to provide all personal information before you can get any quotes.

Home Buying (Part 3) - Bidding On a House

Ok so now I found the house I like and meets all or majority of the criteria thatI am looking for. What is the best way to put a offer? How do I increase my chance of my offer being accepted.


1. Market Condition - Is this a seller's market? Seller may not consider lower price than his asking price. So study market condition before putting the offer

2. Previous Sale Prices of the house - Check what was previous sale prices of the house. Determine current comparables of similar houses in same area. You agent can help you get this information. Analize cost per square footage.

3. Items you would like to stay in the house - Usually permanent fixures like dishwasher , cabinates, bathtubs stay in the house. But there could be window treatments that owner may want to take with them even though they are well fixed !! You should make list of such things and put it in the contract.

4. Items you would not want to stay in the house - Some ugly storage cabinate that must go. Put that also in the contract.

5. Offer Price - Consider house as it with items you want to stay and items that should go away and put the price you think is reasonable.

If seller does not agree with any of the above items he/she can modify the offer and can make a counter offer. This may go back and forth couple of times.

Last but not least, do not get emotionally attached to the house. Be ready for a counter offer. And keep your options open.

Home Buying (Part 2) - House Hunting

So I figured out how much I can efford on a house. Then I went on deciding what all things I should look for in a house.

1. Location - This is one big thing. I came accross some very beautiful houses, but in a rundown neighbourhood. Be sure that how much ever perfact that house is, it will lose its value very soon being in such a neighbourhood. Keep away from such houses. Do you need a public transport? Is this house close it? How about schools? Grocery stores? Hospitals?
2. Features - Look at every aspect of the house. Imagine yourself leaving in the house. Is lighting enough? Does each room have anough privacy? Is kitechen sink in right location !! Yes such little things will also become very important when you start leaving there. This is long time commitment you are making and you do not want to rush into it.
3. Lifestyle - This is again goes with features. If you need a office space or extra bedroom. Do you need a media room or a game room.
4. Size and floor plan - Decide on your needs and see how big house and what kind of floor plan you need. If have guest staying with you often, probably a two story home with master bedroom upstair and a guest bedroom with full bath downsteir will give you much needed privacy.

After deciding on my criteria for a house, here are the websites I used to search for houses.

One of the best sites I found was realtor.com

http://www.realtor.com/

Thsi site lets me search by city/zip code. What I did not though that it does not allow me to search by subdivision. We are looking for specific subdivision and we had to go by zip code and then see if house belongs in subdivision that I need.
Yes this site had biggest database of house that I could see.

There was another site.

http://www.ziprealty.com/

It it kind of similar to realtor.com but it also shows subdivision level information. (Does not let you search by it though!!) But makes it much easier to view all the specifications of the house. I kind of liked this site better than realtor.com in terms of ease of searching, but they still need to build a bigger datastore.

So after two months of search we have figured out which house we like and we are ready to put contract !! Next step -> What to make sure while bidding on a house.

Home Buying (Part 1) - How Much Can I Afford

I just went through my first home buying experince. It was an overwhelming experience. I am going to capture my experience and learning in couple of posts. My first post in this seriese is process to figure out how much I can efford. How much base price and montly installment I can efford. Also how much down payment I can efford.


(Before you decide "how much you can effod" you want to decide whether it is wroth buying or renting. I will talk about this in some other post).

Here are the tools that has helped me a great deal deciding how much I can efford.

This calculator from bankrate.com (http://www.bankrate.com/brm/calc/newhouse/calculator.asp) helps you calculate how much base price of the house you can efford. It does require you to estimate home owners insurance and property taxes, on top of all the earnings and expenses.

Here are couple of articles I used on zillow.com that got me started on home buying process.
http://www.zillow.com/wikipages/Getting-Ready-to-Buy

Starting with renting vs buying which is better, home values and credit scores which helps you decide your budget and readyness to purchase a house.

Looking at these sites and doing calculations, now that I have figured out how much I can efford, I am ready for next step. --> Home Hunting