property virgin

**roozoo** · 01-09-2013, 07:30 PM

Hello. I'm looking to buy a house very soon. First time entering the market in earnest. Some of the neighborhoods I'm looking at are Fishtown, Kensington (between York and Lehigh), and possibly Port Richmond. I'm not sure what to do when buying a house. Any ideas/ suggestions? What to look out for in these neighborhoods?

**bonzombiekitty** · 01-10-2013, 08:39 AM

Before you start make sure you WANT to buy a house. Are you planning on living in the same place for five years at the very very least? As to what to look out for, that depends. Do you have kids? Then you would obviously need to put their priorities (schools areas to play) high on your list. Otherwise, it comes down to whether or not you feel comfortable in the area. Walk around it. Are the houses decently well kept? Do you feel safe? Is it close enough to the things you want to be close to? How do the people in the neighborhood seem? What do YOU want in a house?

So let's say you have an idea of what sort of house you would like and what area:

First - establish your budget. What do YOU think you are comfortable spending in total on a house payment including tax and insurance? I sat down and did rough calculations based on my and my wife's after tax monthly income (basically two paychecks each). I deducted all of the stuff we HAD to pay such as student loans; some higher end estimations on monthly expenses including utilities, food, gas, 'fun money', etc; a certain amount we wished to put into savings at the end of the month; and a little bit extra on top. The remaining would be the maximum payment we could afford. Mortgage people will say you can afford way more than you would personally be comfortable with - the guy who did our mortgage pre-approved us for something that was significantly more expensive than what we were willing to spend monthly (by $1000+). Based on that number, you can get a rough idea of how much you can afford on a house. There's a variety of online calculators that can give you a rough idea of how much your payments would be.

Additionally, consider the condition of the house you are willing to deal with. Are you willing to do major renovations? Minor ones? Nothing more than maybe some paint? That can make a big difference in your budget - both financial and emotional.

Second - make sure your financial ducks are in a row. Check your credit report and make sure it's as clean as you can make it. You are, by law, allowed to get credit report (not your credit score) from each of the major credit reporting agencies once a year for free. Some people stagger them so they can check it ever few months. Other alternatives are to use a free site like Credit Karma, which will give you an estimate of your credit score - it won't give you an actual report, but if you see your score has plummeted unexpectedly, you will get the idea that there's an issue. It will also give you hints on how to improve your credit.

Third - make sure you have something in the bank. The more you can put down NOW, the better. Some people say at least 20%, but I think that's a high end estimate. Though I personally think unless you are getting an FHA loan or it's the absolute house of your dreams that you want to live in forever, 10% down is a good minimum. An FHA loan allows as little as 3.5% down I think - personally I think that's too little, I prefer to have a safety margin when it comes to equity. There will also be closing costs, some of which you MUST pay, some of which you may be able to get the seller to pay for. You won't know what those closing costs, and a mortgage person can probably give you a somewhat accurate idea based on the neighborhood and price of the house.

Fourth - If you are totally serious about buying a house, you will need to get pre-approved for a loan - it's useful for when you make an offer. Talk to a mortgage person, I personally used Cardinal Financial (on 2nd St). We basically had to show the guy our last couple paychecks, tell him what we had in the bank, and he ran a credit check.

Fifth - Have a good Realtor. We had a Realtor, John Mendys of the ReMax office in the Piazza, that spent a lot of time with us, was in contact with us near daily, went out of his way for us, and even managed to convince the seller's agent that what the seller was asking was completely out of the ballpark resulting in the seller going from being offended at our offer to actually negotiating with us.