avlena

Our lease is up in 4-5 months, and we're trying to decide if we should buy a place (we'd love a house, but it would most likely be a townhouse or condo) instead. So, what's the best way to start the whole process? How do we know we're financially ready for buying a home? Should we get a pre-approved loan from a bank or something first? Get a real estate agent? Just start looking at housing listings?

Our alternative is to sign another 9 month lease, with probably another rent increase ($50-75/month). Is the housing market REALLY getting better where it would be more beneficial to just wait it out for another 9 months?

TIA!

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brainsmile

Location, Price range, Income, Credit Scores? Start with these. PM me if you like.

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avlena

so-cal (LA area), not sure yet, good, good. I guess I need to get more specific?

so sounds like we at least need a price range then... does that mean we need start looking into how much of a loan we can get? I really have no clue how to start, other then dreaming of the places I see on Craigslist!

Daedalus

If only we knew the answer to that one! If the market tanked 40% like it did back in 1991 in hot markets, it would probably be worth it to keep renting--for years even. By most measures, today's market is more overpriced than in 1991. If you bought and the market did correct, would it upset you? Could you sleep at night?
Banks usually think you can afford 28-33% of your monthly gross income on payments. Depends on debt and credit score too of course. Bunch of info and mortgage calculators/tools:
http://mortgages.interest.com/conten...ors/index.asp?
I just read that this week's average 30-yr fixed rate is at 6.49%. You can do a little better with your good credit score.
Be wary of agents who want you to sign an exclusivity contract for more than 3 months. In my limited experience between friends and myself, most of us found our homes without our agents' help. I recall the agent pretty much spending a couple hours with us sorting through paperwork after we found the house and decided to make an offer, and he showed up for the home inpsection, and that was it. An awesome guy, and I still recommend him, but it seems like he made a nice paycheck for the work done. Also, you can go through the seller's agent, but they are always legally obligated to act in the best interest of the seller.
Consider looking at FSBO listings. I think they get less visibility, and therefore will have less competition. You probably have to pay an agent out of your own pocket, so look for one who will work on a flat fee if you go that route. Their knowledge of all the legal requirements and protections is helpful.

zippyjuan

Might try to find out about getting pre0 qualified for a loan. This is not the same as pre- aproved. This will tell you how much you can afford to borrow and this how much home you can afford. The more you can put down usually the better- up to 20% of the price. You will need money for closing costs too- I think that is around 5% but that will vary. If you look at condos (or some houses) there will probably be homeowners fees that go for upkeep of the property- that will be in addition to your mortgage payments. If youi don't plan on staying in an area for long you may want to continue to rent.

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