Expert: Connie Wildasinn-Broker,GRI,Realtor® - 12/16/2008

Question
QUESTION: Hi, we would love to buy a home in Toledo, ohio..but since it's our first time..we have absolutely no idea what to watch out for while house shopping, and what expenses would come additional to the mortgage ( the ones no tells you about, until after you buy the house). I would really appreciate some inputs, so we can better estimate how much house we can afford.
Also, since we aren't in a big rush...I was wondering if buying a house would be better after 6 months (I heard house prices may drop lower, and we'd have a little more to put toward the down payment then)..Thank you ..:-)

ANSWER: Hi Heidi,

I am glad to hear that you see the benefit of buying a home... in this lending environment it can be a challenge to qualify for a loan, we don't anticipate it to get better anytime sooner... that being said prices are so low .. if you are buying your residence to say at for a 7-10 year window now is a great time to buy.

You will need to speak with a lender in your local area and get a 'good faith' estimate of your closing costs.  Make sure when you are looking at that the estimate included... lender points, credit report checks, discount points, escrow or attorney charges, title charges, messenger fees, doc prep, notary etc... out here in California you can expect to pay from 1.2%-2.5% of the purchase price in fees... and depending on the type of loan you are getting you may have 'pre-paids' 'impounds' and other charges...

A good lender can go through all this and explain the ins and outs of a loan...

You also mentioned saving more money... keep in mind many loan programs are going away... so you may not be able to save as fast as the programs go away... case in point...

Stated - gone
No Income, NO Asset - gone
3% Conventional - gone
some 5% - gone
investor 10% - gone
no FICO minimum - gone

these are things that truly impact the average consumer... and to save an additional 10% because your loan just went from 10% down to 20% down could mean you can't afford to buy... for many the 10% will translate into $20,000 - 40,000 and for most we are not a nation of savers... if you are 30 years old, been working since you were 20-22 years old and have only saved $10,000 in you house fund to buy property... what would make a person think that in 6 months they could save an additional $10,000 to make the loan a better proposition for them? most will not be able to...

Now I don't know your situation... but that is a repeated scenario I hear all day long...

Figure out how much home you can afford, shop accordingly, and buy wisely... get the best loan you can find, and sit tight... then if you do get extra 'cash' buy income properties... and get ready to collect the rewards "Rents!"

Hope this helped... Good luck

---------- FOLLOW-UP ----------

QUESTION: Thanks a lot.
I was basically hoping that I be able to buy a house while the prices are low now or 6 months later(at a higher finance rate) and then assuming bank rates drop next year, I could just refinance at a lower interest rate and hopefully lock it in... but I guess that a lot to assume right now.
Thank you so much for your inputs!

Answer
No problem, but do contact a lender and good real estate agent to assist in your quest.... keep in mind, most re-finances require a 20-40% equity share in the property, so if property values continue to decline, you will not be in a position to re-finance. You also in general terms don't want to refinance unless you are saving a minimum of 1% on the interest or moving from an adjustable to fixed rate product... be sure to take the difference in payments over the term and find out how long it takes to 'break even' that is your key to refinance...not always worth the time and money to do so... Good luck!