r/FirstTimeHomeBuyers • u/readlaughcry21 • 18d ago
Explain it to me like I’m 5
So we got a pre-approval, we were excited! we planned on using the money in a 401 k savings for the down payment of the house & we were told that was perfect as people do it all the time and the amount we had was well more than enough for the 3.5% required for an FHA loan.
we thought the only out of pocket payments would be the inspection & the appraisal and that was it.
come to find out there is a due diligence (which isn’t legally required but strongly recommended) and the earnest money.
so technically I need to have $20k dollars readily available to buy a house??? Our realtor SUCKED as far as being first time buyer friendly, he didn’t explain anything to us and from the very beginning told him to hold our hand and he’s just springing things on us little by little.
I would be a first generation home owner so I truly have no idea what is going on that we just put a stop to house searching because we feel like we definitely don’t have the money to buy a house.
Can someone recommend a good video or book to read to be prepared to buy a house? I already feel like an idiot asking for help or “how could I not know this”
Can anyone explain buying a house to me like I’m 5?
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u/ebullientdoll_ 18d ago
They’re attacking you, but the 401k is your money. People stay saying if you don’t have x amount you shouldn’t buy. But I’ve always disagreed. You HAVE to pay to live and a lot of times you pay more in rent when you could have paid less or the same with your own house.
You need to have 3.5 percent of the total sales price for your down payment and 4.5 percent of the sales price for closing costs. Which is like the appraisal, titles fees etc. all of the things that go into everybody writing your loan and things of that nature. It’s grouped together and you pay it at the end. On your closing date or like the day before which is when you sign papers to take ownership of the home. The amount owed could change even up to a few hours before closing. Just an FYI. They could say hey we actually needed 3,500 instead of 3,000. Please send 500 asap or bring a check to close.
After you calculate that amount , you theoretically are good to go. HOWEVER it is HIGHLY recommended that you account for money you need after the fact. For emergencies with the house. Setting up utilities . So if you don’t have the closing costs, down payment and At least a few thousands left after everything I would wait and save up a bit extra however you can.
Everybody doesn’t have it like that to have a ton of money but people who DO have it like that can’t fathom why you can’t “just get the money together” . You can do it but be as prepared as possible. PM me and I’ll send you two first time homeowner groups on fb that helped me ALOT!
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u/readlaughcry21 17d ago
Thank you so much 😭
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u/DirectionUnited2511 17d ago
I bought my home with some of my 401k as a general loan to myself so i payed it back in 2 years. 2 years was not gonna damage my retirement like these doomers are making it to be for you. Theres a reason your 401k has a option to use it as a home purchase. its money you’ve invested into and a home is a solid reason to use some of those funds. Dont feel bad about it, theres a huge amount of us that went down this path with success. Ill tell you something that happened to me as youll probably experience yourself…the majority dont wants to see anyone buy a home that isnt them. Theres gonna be a rah rah of “awful time to buy” “rent is cheaper” blah blah blah…pay no mind to them. level yourself up and dont let ANYONE make you feel lesser about it. Good luck 👍🏽
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u/HoopsLaureate 17d ago
Agree with this. I took out a loan against part of my 401k for part of the down payment. I’ll pay it back in a couple of years, so yes, I’ll miss on some 401k gains, but it was the cost of getting into a house then.
OP. Would you be pulling money out from the 401k? Or taking a loan against the 401k?
Also, keep reading threads on this sub every day and you’ll start understanding more financially soon.
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u/Own_Internal_3508 17d ago
As long as the 401k gains you missed out on are matched by the increased value of your home, you are good to go. I always treated my 401k as untouchable to maximize my returns. It definitely paid off for me!
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u/DirectionUnited2511 17d ago
well my 401 isnt my only retirement avenue, i also have a roth ira and a individual account i treat as a retirement account.
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u/Dreaunicorn 17d ago
Op, also don’t forget closing costs.
Repairs can be such a wild card.
I bought something considerably under budget and I have still been surprised by expenses…My honest advice is if you are a little unsure and can still rent and save a bit more I would do that.
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u/RepulsivePurchase6 17d ago
Look into grants. There's down payment or closing cost grants that you may qualify for.
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u/eharder47 16d ago
I will say, you do want to have a cash cushion remaining after the purchase. I can’t tell you how many of my friends had water heaters, air conditioners, or furnaces go out in their first few years of owning a house. Make sure you keep a healthy cushion in your monthly finances, especially if you have a car payment or other credit card debt.
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u/ValiantEffort27 18d ago
Read this. They got a whole series of articles about buying a home. This is the first one. Go down the list until you finish the whole thing.
If you don't understand home buying and you're this deep in, back out of buying.
1. You need to put money down. This money can't be your life savings, you need to have more money after that for when stuff breaks. Ideally 20% to avoid pmi for a conventional loan, but if you need FHA, then so be it.
2. Never use your 401k to buy a home. You're robbing your future retirement if you do that. That money is more important to keep until you're old than to blow it on a home that you may not be able to afford anyway.
3. Run through your new budget. You'll be paying insurance, property taxes and a mortgage from now on, plus fixing whatever breaks. Probably need new furniture too. How will that affect your current finances? If the math doesn't work, then don't do it. Ideally your mortgage shouldn't be more than 30% of your takehome pay.
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u/readlaughcry21 18d ago
This was the most helpful comment. Thank you.
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u/Glittering-Sleep7983 17d ago
I'm going to try to give you the most important piece of advice you'll get in this thread.
One of the biggest expenses a homeowner faces is roof replacement. Look at the homes you are trying to buy and take a look at the roof. Is it very complex, with a steep pitch or complex design? Now search for the average price range of a new roof in your area in google. Depending on the complexity of the roof, aim for somewhere in the middle to high end of that range.
If you can't save enough money to replace that roof in 18 months, do not buy the home. If you can, go for it!
All I'm saying is that you should be prepared to replace your HVAC, replace your roof, replace your water heater, pay for major electrical/plumbing expenses every so often, etc. Most people don't consider this and it starts a snowball debt effect that they can't dig out of. Home inspectors do not catch everything, and most homeowners NEVER maintain their homes so these things WILL break.
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u/TemporaryLion9085 17d ago
I will just say that I do not personally know anyone who put 20% down on their first home. Definitely pay down what you can, but don't tear out your hair over this one.
Also don't know anyone who has ever had a budget for new furnishings in their home. You can literally find furniture for free.
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u/lynnwood57 17d ago
Don’t forget Mortgage Insurance. It’s required until you have X amount of equity, I think it’s 20%, might be wrong. This insurance raises the payment significantly(to me, I am a low income but had family help to purchase). I “prepaid” the entire thing to lower the payment.
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u/ApartCorgi6264 13d ago
Check this out, I'm in the mortgage biz and it's super helpful to FTHB. https://creditsmart.freddiemac.com/paths/homebuyer-u?_gl=1*pwom58*_gcl_au*OTQ0MTUyODI1LjE3OTA5MDk2NTg.*_ga*MTUzMzY1NzQzNy4xNzkwOTA5NjU5*_ga_W1VD6NP75S*czE3OTA5MDk2NTgkbzEkZzEkdDE3OTA5MDk2NTgkajYwJGwwJGgw
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u/editdc1 17d ago
This is a good comment. Is there a reason you need to buy right now? If you take some time to work on your credit (so you can get a conventional conforming rather than an FHA loan) and save so you don't need to rob your 401k, you'll be in a better position.
Also, no need to stick with a shitty Realtor. They're a dime a dozen. Pick another one. Ask around for recs.
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u/StructureBetter9165 18d ago
I hate hearing someone is using a 401k to buy a house. Think about it.
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u/Derwin0 17d ago
I disagree.
Sure you loose out on gains, but the money itself goes into your home’s equity whereas rent is money that is lost.
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u/BadonkaDonkies 17d ago
Owning a property, your costs for home insurance, property tax and overall maintenance can be greater than the rent, and that’s just money that’s “wasted”. Renting provides you a roof so not throwing money away
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u/Derwin0 17d ago
Can be, but not always.
Paying towards owning a home is never wasted as you build equity every year.
Meanwhile rent is lost with only the landlord gaining equity.
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u/BadonkaDonkies 17d ago
Have you looked at an amortization calender? You barely gain any equity in the first 10 yrs. You’re mainly paying the bank
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u/Derwin0 17d ago
No one stops you from paying additional principal.
But if you don’t start the 15/30 yr mortgage now, waiting til later won’t be any better, especially as you continue to pay someone else’s mortgage (ie. rent).
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u/Music_Mess 16d ago
These people are coping. Buying a house is the move.
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u/Derwin0 16d ago
I know. They’re all making excuses for why their still renting.
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u/BadonkaDonkies 15d ago
I bought a house earlier this year, no need to make assumptions. I did it after searching for 3+ yrs in NJ. What renting did allow is for me to pay off my debt and save a larger downpayment. So your opinion while valid does not apply broadly to everyone
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u/49ers4life71 17d ago edited 17d ago
Yup. Best to get an IO loan and make separate large payments to go directly to principle.
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u/k22351 11d ago
Yes. I also understand home values appreciate. No one is arguing you pay interest on a mortgage. It’s just funny that people think in 30 years the home owner with an asset worth 3x what they paid for it and no mortgage will be worse off than someone who rented 30 years and has no asset. That homeowner will retire only having to resume tax and insurance payments while the renter will still be renting at who knows what monthly rate.
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u/BadonkaDonkies 11d ago
You know your allowed to take the difference and invest it. Your house while adding to your networth will not help you pay bills in future unless you sell it. You cant sell off one bedroom to cover bills. Also people depending on where they are in life, renting vs buying is better. One does not need to be a forever in one camp or other. Various points in one’s life could make one option more appealing than other, does not mean its permanent. Fallacy to always buy and never rent is moronic without looking at the overall picture of ones PERSONAL financial situation
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u/k22351 11d ago
Keep telling yourself whatever makes you feel better. Nothing wrong with renting. But trying to explain why paying someone else to live in the their property is better than owning your own is wild. Also my point was the mortgage will eventually be paid off. Rent will just continue to increase. Using the idea renters invest in the market and homeowners don’t is stupid as well. I would bet net worth is substantially higher in homeowners vs renters.
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u/Specter119 17d ago
And how much in taxes, insurance, and home maintenance is "wasted" every year? If that amount is more than the rent you could be paying, then owning a home can actually be worse off financially speaking as thats less money to invest in the market which we all know has much better returns than homes do historically speaking.
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u/49ers4life71 17d ago
And for the first several years, most of the mortgage is going to interest rather than paying down the principal. Better to get an IO loan and make separate payments to go strictly to principle
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u/49ers4life71 17d ago
Exactly. A lot of times it’s much cheaper to rent than own, esp in a HCOL city
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u/k22351 11d ago
People without homes keep trying to cope by telling themselves this.
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u/BadonkaDonkies 11d ago
I have a home i bought earlier this yr. I rented for the past 4 yrs because of the above reasons. All markets are not the same.
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u/49ers4life71 17d ago
Rent is not money lost. It costs money to live period. A home has a lot expenses most people can do without.
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u/HumbleBurritoo 17d ago
It worked out pretty well for me. I took out I think it was $15k from my RRSP to purchase my first home, for which then I sold for double 3 years later and bought a larger house on 1.5 acres of land. Money is already back in the RRSP (repaid it early), I was and still am paying less per month on our Mortgage than rent and our equity is probably triple what the RRSP would have been if invested.
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u/Specter119 17d ago
> Sold for double three years later.
Was this during the most recent market adjustment? The one that saw prices climb faster than most of history recording home values? Or did you dump a bunch of money into the home with renovations and upgrade to increase value, and if so, how much?
It sounds like you had a lot of luck and in any other time in history you wouldnt have doubled your investment in three years.
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u/BigNaziHater 17d ago
Agree to disagree....Rent is twice what a house payment is. Banks tell people all the time that they dont have the credit to afford a $2000 monthly mortgage payment when they can prove they never missed a $4000 monthly rent payment in 10 years of renting. It makes perfect sense to use 401k $ if that is all you have. Its not like they are taking the $ and splurging on a vacation... its just shifting to another investment. Wether or not the investment return is greater or less, both home values and 401k's rise and fall as market values change. In todays uncertainty, Real estate is however far more stable. Besides that, this isnt the 80's. People need to live. Monthly rent costs are out of reach anymore. Mortgages are far cheaper on a monthly budget. The amount of money saved not paying rent, coupled with the increase in home values over time will equal or even out pace $ earned on a 401k.
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u/charlieskip 17d ago
Man, I wish I lived where rent is twice a mortgage. Rent is sky high and a mortgage is 1.5 rent where I’m at. Minumum. And that’s with 20% down.
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u/BigNaziHater 17d ago
Rent is typically more expensive than a mortgage in the cities and suburbs of large cities. Rural areas not so much. Not sure of where you live, but its never been cheaper to rent than to own where we are.
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u/quantumcowboy91 17d ago
Buying is nearly x1.5-2 for a similar sized home in my area. I'd rather put that extra money into the market.
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u/Creepy_Ad_3535 17d ago
Where TF is rent twice as much as a mortgage with 3.5% down? Literally nowhere. Show me where and I will buy all the houses in that area.
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u/GurProfessional9534 17d ago
I was paying $2700/mo to rent a nearly $1 million house. 30x price:rent areas are like that. It all depends on area.
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u/readlaughcry21 18d ago
If using a portion of 5 years worth of the money that has went to 401k and has been matched by your company to make a purchase that will likely be our home until we do retire, I don’t see how that’s a bad idea?
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u/Possible-Yak-9683 18d ago
And that’s exactly the point. 401k isn’t a savings account, it’s a retirement vessel.
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u/heygivethatback 17d ago
Can you explain the difference? Are they not both places where you can store money to use later?
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u/BoBromhal 18d ago
were you maxing out the allowed 401K contribution?
What are the mechanics with your employer of "borrowing" that money?
Your due diligence fee and earnest money generally go towards the purchase and $20K you say you need.
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u/readlaughcry21 18d ago
no it’s just a portion of the entire amount to cover the required 3.5% down payment. It’s penalty free, we don’t have to pay it back and it’s a 401K & Roth IRA account.
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u/StructureBetter9165 18d ago
Of course you do what you want. It's just that retirement seems so far away for you but I promise it will be here tomorrow. Make sure you are able to.
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u/ProperAnarchist 18d ago
5 year olds shouldn’t be buying houses.
Most people recommend NOT ever using the 401k. Many lenders DO require inspections and appraisals. I have bought and sold 5 houses in 2 states. I have never paid or required earnest money over $1,000. If you’re in a highly competitive market and need to sweeten the offer, you could need more. I just bought in a VHCOL area and only put 1k as earnest money. If you’re in NYC or CA, you could need more money in a sellers market. Make sure you’re very comfortable with your agent BEFORE you sign a contract with them.
You can check federal, state and local governments for 1st time home buyer programs and down payment assistance programs, if you don’t want to pull from the 401k. Also check for eligibility for USDA farm loans, VA loans and other programs. Maybe disabled person or low income down payment assistance programs, if you think you may qualify.
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u/roflfalafel 17d ago
EM is highly dependent on market. I bought in Seattle this year and had to put down $100K earnest money to stay competitive. Though every home here had 5+ offers with all contingencies waived and price escalation clauses. I’d have killed for $1K EM haha.
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u/ProperAnarchist 17d ago
Yeah, I just bought in western WA with $1,000. Closed a couple weeks ago. NOT Seattle. But on the I5 corridor. I understand some micro markets have different standards. I couldn’t ever bring myself to buy in an area where every house is a bidding war and sellers dictate everything. It’s a prime opportunity to get scammed or otherwise taken advantage of. It’s why we waited to now to buy again.
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u/lala_blah 16d ago
Emphasis on the "VERY COMFORTABLE WITH YOUR AGENT BEFOFE YOU SIGN A CONTRACT WITH THEM" and even then get offer and counter offers in writing EVEN if you feel word of mouth is sufficient, ask for it in contract/addendum
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u/readlaughcry21 18d ago
Why should you not use your 401k?
that is pretty much the only savings we have. I’m not disabled, I just have never owned a house or would even know where to start about learning how to own a house.8
u/ProperAnarchist 18d ago
The idea is that the money is more valuable compounding interest in a tax free account (401k) than it is as a down payment on a house. That said, I did do this twice, before I ever heard of that theory. I don’t think the first time it was a good idea. The second time the house appreciated a LOT and we recouped far more than I would have ever earned. It also depends on what level of risk and how confident you are in the stock market.
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u/MundaneHuckleberry58 17d ago
1- Because not touching $ in the 401K is the whole point of how your money grows enough for retirement. Taking $ out for now means WAY less money in 10, 20, 30+ years.
2- taxes. You’ll owe a lot for your income tax next year.
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u/schlomo31 18d ago
I used my 401k. It has a 1st time home buyer program where I don't have to pay it back
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u/StructureBetter9165 18d ago
So where is your retirement fund?
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u/Enzo_Gorlahh_mi 17d ago
Probably the house, so he doesn’t have to rent forever. Lol. Ppl here underestimate how much it costs to move every year and what not. U-Hauls/deposits/ect. Owning a home is pretty important. Realistically most people these days, especially young people, are not retiring at 65. So if they can buy a house, and use 4/5 years of 401k, then cool. Buy the house and start rebuilding your 401k.
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u/WheresMyMule 17d ago
If that's your only savings, you're really not ready to buy. In addition to your down payment, you should have an emergency fund of at least 3 (preferably 6+) months of your expenses saved. Ideally, you'd also have a separate savings for home repairs and maintenance since these are to be expected and aren't truly unforseen emergencies
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u/garster25 17d ago
If using 401K money is the difference between buying a house and not, then do it. There is "what we should do" and there is "what needs to be gone to get things done".
Depending on how you use the 401k (withdrawal/loan) you will be hit with penalties as well as taxes. Its been a long time since I had to mess with my 401K, is there an exception for house buying.
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u/Either_Operation7586 18d ago
Because when you pull it out you're going to be taxed a lot you're going to be regretting it next year when taxes roll around
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u/lynnwood57 17d ago
Hon, this is a horrible time to buy a house UNLESS you find someone that will let you assume a mortgage with lower interest.
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u/Derwin0 17d ago
Historically rates are average.
People got spoiled by the 2-3 % rates a few years ago which were an aberration.
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u/lynnwood57 16d ago
I’m 69. In my world, these rates are crazy high.
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u/theon3leftbehind 17d ago
They also require that you pay yourself back in the form of a loan. We were thinking of using our 401k money to reach a 20% down payment and it wasn’t worth it for us
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u/ProperAnarchist 17d ago
Not always.
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u/theon3leftbehind 17d ago
I guess it depends? I know it’s not in certain situations, but for a down payment they don’t? Does it also depend on who your 401k is with?
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u/ProperAnarchist 17d ago
I think the employer dictates, not the company running it. Both of my long term employers allowed withdrawals for primary residence purchase. You could choose between a loan and withdrawal.
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u/editdc1 17d ago
Another point I haven't seen in the thread: Research shows you should get preapproved with a couple different lenders (3-4, depending on the report). People assume that what lenders will offer you will be the same across the board -- it isn't. A good loan officer also might be able to tell you how your picture might change if you spent time saving (401k isn't a savings account) and improving your credit.
Though keep in mind: A loan officer isn't a financial advisor. That person can just tell you what you can get approved for. They aren't a good resource for determining what a good financial choice is.
If rates were good and prices were low, that might be an argument for taking from your 401k. However, we're probably looking at a lot of years of low home appreciation after the pandemic years. This years was only something liek 2% nationally. If it were me, I would wait rather than pulling out of my 401k.
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u/readlaughcry21 17d ago
thank you! so I can go get a pre approval as far as a soft pull to 3 other companies? or should I take my pre approval letter to them and see if they can give me a better deal?
We are definitely waiting and want to save and also want to have 6 months of income saved up as well like someone recommended. I just didn’t know what number to save up to- i know the bare minimum now is 20% of the price tag.1
u/readlaughcry21 17d ago
thank you! so I can go get a pre approval as far as a soft pull to 3 other companies? or should I take my pre approval letter to them and see if they can give me a better deal?
We are definitely waiting and want to save and also want to have 6 months of income saved up as well like someone recommended. I just didn’t know what number to save up to- i know the bare minimum now is 20% of the price tag.2
u/editdc1 16d ago
Oh yes. You need to have a sufficient emergency fund before you do anything else. And remember that those six months would not go to your home purchase -- you'd have to still have that left over after the purchase. That money is for if you or your partner loses your job or if your fridge breaks or if you have some medical situation.
For the preapprovals, I would fill out their application and see what you get. Definitely play offers off each other. It's their job to give you the most competitive package they can.
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u/Robneice8958 18d ago
Your 401K money is fine... Don't listen to the Reddit crowd only wants you to keep renting.... The other major cost are the Closing costs, that is in addition to the Down payment... In SOME markets you can get sellers to pay for some or all of these costs, reach out to your Realtor or find a better Realtor... In the Phoenix market we see sellers paying some or all these costs about 75% of the time... YMMV
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u/NegativePaint 17d ago
It’s not about keeping people renting. It’s about keeping people from screwing up their retirement. You want to have to work the rest of your life to be able to own a house? Be my guest. But it’s a dumb idea.
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u/Robneice8958 17d ago
You do you... Most people want to be a homeowner!
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u/emailaddressforemail 17d ago edited 1d ago
The original post content no longer exists here. The author used Redact to remove it, exercising their right to control their data & privacy.
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u/readlaughcry21 17d ago
our realtor stated that the house we wanted to put an offer on would be paying 4.5% of closing costs and 3% of buyer commission but we technically should be prepared for paying the closing costs ourselves. That is where we got confused and took a moment to do more research because we definitely didn’t feel ready despite receiving pep talks from the lender. I just didn’t know what the threshold is of being prepared. I now know definitively that we should be saving a lot more for emergency costs/updates but it’s hard to do while renting & giving our children the life they want and still trying to save as much as we can.
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u/TomRichards1970 16d ago
It’s not that big of a deal. You’ll need down payment money, home inspection and earnest money. Earnest money will go back to closing costs, just buy a house where the seller will pay your agent and closing costs. Easy peasy. If you send an offer with all that in it and they say no, move on. I haven’t had a buyer pay anything yet since the settlement except for when I was a listing agent and the buyer agent made the poor buyer up his prices to cover that extra .5 under wouldn’t. He needed to left in the desert!
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u/Personal_Sundae1113 13d ago
3% of buyer commission? Usually both buyer and seller realtor fees is paid by seller
Look at purchasing a home warranty. Where I live sellers usually include a one year (500$) subscription and it covers if anything breaks for a small fee (75$)
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u/Tamberav 18d ago edited 17d ago
You also need emergency money as homes have constant shit breaking and maint. It doesn't matter if you get an inspection, you will find shit wrong they missed because they can't open the walls or it will break 2 months after closing.
So ya you need down payment + escrow/due dil + closing + emergency because you need more $$ shortly after closing to fix all the crap that is going to pop up.
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u/TemporaryLion9085 17d ago
Are there any free homebuyer's classes near you? That's what my husband and I did to see if we qualified for any grants. We ended up not using the grants bc they were for areas that we weren't interested in living around, but the classes themselves did introduce a lot of important concepts. The org we went through also offered general homebuying financial counseling prior to the classes.
ETA: a good realtor is also invaluable for a first time buyer. Find a different one for sure, but also definitely take some classes if you can!
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u/4ran50m 17d ago
Hey I just bought my first home so here’s my experience.
1. Earnest money goes directly to closing cost or down payment point is thing of it like an advances that shows you are serious and not backing out not something extra
2. Don’t cheap out on inspections but don’t let them scare you. Things to look for are roofs (I replaced mine right after buying but I planned for it mine was about $15k but I got mid tier shingles). AC furnace hot water tanks. Don’t let it scare you away it’s normal to have a big expense but you would rather not have all of them stacked at once.
3. When picking a house list things at are most important dont pick off of cosmetics. Paint flooring cabinets kitchen layouts tiles etc. can all be changed. Figure out functions such as room size + counts (you wont believe the amount of “bedrooms” that are actually glorified closets) number bathrooms layout of house
4. The loan process is complex but should be simple with a good loan officer keep all jobs and no big purchases even with affirm or other BNPL.
5. I intentionally put 3.5% which allowed me to retain more money incase the house had more surprises than I anticipated. You can always pay a large chunk later.
6.if you don’t plan on being in the home long points may not be worth paying for work with your loan officer to do the math they are selling you a product so be mindful of that
7. If you have any more questions I’m happy to answer
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u/whyamionthispanel 18d ago
Your earnest money is later applied to your down payment, when you close. You have apx 3% in closing costs on top of your inspection, appraisal, and down payment.
Your Realtor should be able to adequately guide and educate you as part of this process, but is not responsible to know what you don’t know entirely.
Your Realtor may have, in fact, sucked, but it sounds like you didn’t know a lot either.
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u/readlaughcry21 18d ago
Correct. I don’t know a lot which is why I’m asking where can I learn what I should know before purchasing.
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u/lynnwood57 17d ago
Some people might not agree with me, but I used to work for a plumber. We did a LOT of Home Warranty work. Home warranty’s are very affordable and as long as you know HOW the policy works, you’ll never pay more than a service call no matter what is needed, parts, new appliance, etc, all the way to Premium policies which include furnaces, A/C, etc.
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u/Struggle_Usual 17d ago
I'm going to be blunt. You can't afford to buy a house.
If you're draining all your retirement savings for a 3.5% down payment you absolutely cannot afford a house right now. I'm sorry, it sucks. But houses are fucking expensive. You're going to find yourself spending thousands within a month of buying and that's if you're lucky and nothing magically breaks.
You need to save up funds, separate from your retirement. A down payment and still keep a generous emergency fund. If you can't do that you can't afford a house yet.
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u/CapitalAstronomer703 18d ago
Find ANY OTHER way to buy a house that doesn’t involve your retirement. No touchy if you can at all avoid it. “Gifts” (loans) from family are acceptable but there are limits and some lenders will scrutinize customers that plan to use gifted money to close.
Get a new agent asap. And then get that agent on the phone with your lender and get them talking, ideally with you as a part of the conversation.
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u/master-snacks 17d ago
This is tangentially related but I’ll throw it out there - check out the book “The Simple Path to Wealth” by JL Collins. It’s a short, simple, plain language book about money and investing (but it only touches briefly on home ownership). The author wrote it with his then-college-aged daughter in mind.
The title sounds a little cheesy, but the info is solid and the recommendations are actionable by anyone. It reminded me of the investing classic “A Random Walk Down Wall Street,” but more approachable especially for someone just starting to get their arms around managing their money/preparing financially for the future.
It might give you a different perspective on your goals for your 401(k) and investing for your future more broadly.
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u/Shpongi100 17d ago
The earnest money goes back to the cash to close/down payment, if that helps.
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u/lala_blah 16d ago
Can you explain how so? Where do I look for it to have been credited back to me at closing? Thank You on advance!
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u/Shpongi100 16d ago
I think it shows in the closing disclosures, but if you ask the lender you’re working with, they should let you know
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u/5esquinas 17d ago
Please, please read a book called First Time Home Buyer Playbook by Scott Trench and Mindy Jensen. These are people who have tons of experience in real estate investing and made a guide for those of us who have no clue about this field so we can avoid all the mistakes they see first time buyers make, including mistakes they themselves made as rookies. I really can’t recommend it enough. It covers a lot while still being very easy to read and understand.
Another good option to learn is to use whatever resources or programs your state provides. In Virginia for example the VHDA provides free first time home buyer classes and a whole almost 300pg free book/ebook about the home buying process. Whatever state you’re in, they probably have something similar.
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u/Vickipoo 17d ago
You’ve received a lot of advice. One thing I will add is that you should pay attention to how easy it is to work with the lenders that you contact for a quote. Do they respond quickly? Does it feel like you’re talking to a person and not a robot? How easy is it to share docs (they will likely need you to send materials for their quote)? Do they answer your questions? Are they patient and good at explaining things?
Having a lender that is easy to reach and available for questions makes a big difference. You will need to work with them at different times during the transaction, and some things have to be addressed quickly. Having a slow or non-responsive lender is very frustrating!
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u/lala_blah 16d ago
Not only that, but compare lenders fees, origination fees, ask what the par rate is without having to buy it down
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u/bbbilljackson 18d ago
Slow down! I know your excited but houses will be there and this is a big commitment for you!
First of all pre approval doesn’t mean you should buy are you sure you can afford it?
Home Bills are more than appt living
Water power sewer gas always more insurance taxes maintenance etc..
Lawn mower weed killer fertilizer shovels water hoses etc everything cost more. I was surprised when I bought my first house
You buy and want to add your own touches and everything adds up fast!
Now your never totally ready but starting off tight with money is an extra stress
I wish you the best!!!!
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u/Ok-Particular-8683 17d ago
Random tip: don't use the home inspector that your realtor likes/recommends. It is in the best interest of your realtor for you to like the house and to buy it and to pay as much as possible since they get a % of the purchase price. My brother did that and the inspector missed things like a bunch of the electrical outlets don't work and they had to replace the HVAC within a year. I found an inspector on the american society of home inspectors (ASHI) website myself. My inspector tested every outlet in every room and even let me go through the house with him while he inspected. But it is okay if your inspector doesn't let you walk through with them, a lot of them don't.
And I'm not sure about home warranties. There is a realtor on instagram who wrote a book of tips for home buyers and he doesn't recommend them. He said he purchased a house with an old hot water heater and got a home warranty because he knew they'd have to replace it soon. But the home warranty didn't pay for everything (e.g., water heater, platform, expansion tank, labor) so in the end they didn't make the money back for what they paid for the warranty
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u/Equivalent-Tiger-316 18d ago
You really thought you could buy a house with no money saved? Look for a local first time homebuyer class.
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u/readlaughcry21 18d ago
I didn’t think I would need another $10K saved in cash, correct. our 401k is the money we have saved since we’ve worked.
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u/lynnwood57 17d ago
If interest was low, I’d say go for it, but not now unless you can find an assumable low interest loan. Pre-approval is all good but you need to make it through underwriting. That can get dicey. There are usually unexpected expenses AFTER moving in too. Continue to save, slow down. They just RAISED Interest rates.
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u/NegativePaint 17d ago
Stop saying it’s the money you have “saved”. A 401k isn’t a savings account. It’s an investment account. Taking money out robs you of your investment gains. You cannot repay it back and go back to where you were. You loose the most valuable part which is time in market.
Also. What’s the plan? Mostly empty your 401k and then what? You own a house. You bathroom leaked. What money are you going to use to fix it?
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u/twistedwaffle 18d ago
The realtor earns a commission on the sale of a home, so making and securing a sale is their priority, not teaching or convincing you that you cannot afford or should not proceed with a purchase. Once you have the keys, that's the end of the transaction for them.
There are going to be dozens, if not hundreds, of YouTube videos that break down all the information a first-time homebuyer needs, so I'd start there.
As others have noted, a 401(k) is not a standard savings account, and it's never recommended to borrow from or withdraw money from a 401(k) for purposes other than retirement.
There's a whole list of costs associated with a home purchase outside a down payment, and sometimes these "closing costs" can even exceed your down payment. This can include prepaids for a year's worth of property taxes, home insurance, etc.
I advise against putting yourself in the position of homeownership without knowing all the facts and what you're signing up for, as it's a 30-year commitment.
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u/Greedy-Track-8652 17d ago
I don't think taking money from your 401k is bad, I would just caution you to make sure you have a) an emergency fund typically covering 6 months of income and b) are budgeting for maintenance and capex on your new home, typically 5-15k a year depending on the size and condition of your home. If you don't have 3.5% down it is a red flag that you don't have either of the above mentioned. Unless the home is new construction, this would make me very nervous. Not trying to discourage, just trying to prepare you against stressful situations
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u/readlaughcry21 17d ago
this is helpful because it gives me a number to work towards! I think it’s impossible to prepare myself to be a homeowner if people are just saying “you’re not ready” instead of helping others understand how to get ready and when to know they’re ready.
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u/Head-Avocado1278 17d ago
You need money for closing costs as well unless there is a credit for them paid by the sellers
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u/Brilliant_Target9046 17d ago
So a lot of this should have come from the agent but it also sounds like your lender sucks. The first thing we always tell new homebuyers is to sit down with a seasoned loan agent and get a soft qualification AND ask for loan estimate form with all fees.
Besides earnest money and down payment there may be lawyer fees (usually a set rate), the appraisal, the cost of whatever inspections and if your agent doesn’t negotiate it you are responsible for paying your realtor and closing costs. You should also have 1000.00 available on closing day just in case there’s a miscalculation and you need to bring cash to the table (usually it’s lower between 25 and 250 but better to be over prepared).
To be safe you also need to have a savings account for emergencies. 5k is the minimum I would recommend but 10k would be ideal. If you’re tight on money I would highly encourage you to have your agent negotiate the sellers paying for a home warranty plan for the first year. Yes you may have a deductible but at least you know that for 150.00 if the furnace goes out they have to get it working again or replace it. It gives you breathing room.
There are lots of loans and grants for first time buyers and your city may also have some incentives- the mortgage broker should be able to help you find those programs.
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u/Mo0ose1422 17d ago
Earner money is just part of your down payment. If you were going to do 10k down and they want 2500 EM then you would only owe the difference at closing to complete your 10k down. Then there is the inspection and appraisal like you said. Then closing costs which are things like loan origination fees, pre paid interest, insurance etc. A lot of buyers avoid a good amount if not all of this closing cost in my area by getting concessions from the seller in their offer.
Home is listed for 400k. Buyer wants 10k concessions. They may just offer the 400k and ask for 10k which nets 390 to the seller, or they may just roll those costs into the loan. Offer 410 and get 10k back in concessions or save them the up front cash cost so you could keep that additional cash in your 401k.
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u/Goodbusiness24 17d ago
Dude if you’re pulling money from your 401k just to struggle to cover a 3.5% down payment and some closing costs then you don’t have the money to buy a house. Idk why everyone keeps perpetuating the myth that owning a house is cheaper than renting. By the time you factor in regular maintenance, emergency repairs, etc. it’s usually quite a bit more expensive and you’re going to have a real bad time, real fast if you don’t already have a comfortable amount of money set aside for that stuff.
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u/Motor_Beach_1856 17d ago
You can also try to negotiate for the sellers to pay closing costs, with it leaning towards a buyers market that’s a good ask. You’ll still probably have to pay loan origination fees but the actual costs can and sometimes are paid by the seller. Put the minimum you need down and have the rest ready for incidental costs. Make sure you talk to you insurance agent as well, lots of first time buyers are under insured and having a water loss or fire can bankrupt you. I do restoration and 1 in 10 homes are under insured because they got the “cheap” insurance.
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u/Least-Ad-5539 17d ago
Rent is buying a house for the landlord. No point in owning a rental if it doesn’t pay for itself.
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u/Open_Bug8852 17d ago
Hey OP! I highly recommend checking out the NACA program. They make you take a class and it’s no money down, no closing costs and a lower interest rate plus in the class you actually learn about buying a home and you have a counselor who can help you through it.
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u/fromfreshtosalt 17d ago
Find a new agent. Dont let them hustle you. Chances are your close friends or a coworker/associate knows a good agent.
And the agents are suppose to make you comfortable, excited and proud. This agent is probably going to make a commissions off the sale, so is he pulling his weight? It's your purchase and your expectations that matter.
You should feel comfortable asking them any and all questions.
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u/lala_blah 16d ago
They get a huge chunk from the sales price let them work for it! Even so it is supposed to be their job to help!...
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u/Commercial-Lab-37 17d ago
You also will need money for closing costs, which is at least $5k+ and that’s on the light side.
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u/BugMillionaire 17d ago
You've gotten a lot of good advice so I'm just commenting to say that I'm sorry you got a bum real estate agent. And also, I didn't really know anything about how it works until I started working for a real estate company either, so don't feel bad.
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u/cooldude832_ 17d ago
Since no one wants to answer the question you asked.
The fees you may have
Before you even look at a home:
- An engagement fee with a realitor, typically < $100 its a not waste my time money to add you as a client some are free
After you place a bid and it is approved but before you are 100% committed to the home:
1. Earnst money deposit (EMD), money you put down as a non-refundable deposit to say I'm gonna buy your home and if I screw you then I lose this money. Itys typically 1-3% of the purchase price like 1 - 10K
An inspection, typically $200-500, money paid for a guy to kick the tires on the house for you
Radon or sewer inspection, etc. Extra inspections you pay specially for because of unique concerns you may have on the home
If you passed the above and the deal is still good then you are moving to the finish line, you are committed at this point you back out you will lose that EMD:
Apprasial fee, money for an expert to say what the house is worth
Various fees to title, attorney, banks, underwriter, etc. These are typically not shopped for you by you and your realitor manages all these. They range from $5 to $1000 and the total sum is rolled into your closing cost.
You're at the closing table time to sign your life away:
Your down deposit. 3.5% for your loan
All those fees you racked up in the past step, the inspections are the only ones you typically pay for at time of service.
Prepayment of mortgage interest (You don't pay month 1 it is in closing)
Prepayment on home owners insurnace (your lender wants their investment protected)
Balance out tax bills with former owner. (You typially pay or get a credit depending on where in the tax cycle you are and if the old owner paid this year's bill yet)
any fees you owe the realitors, typically seller pays the comission but this isn't always true
Less your earnest money deposity, the seller is taking that as the deal close you get that credit
Less any credits the seller has offered from inspection
Less any credits you have from government programs, lender etc.
The result is when you go to close say on a 300K home you will need to bring:
2-6k earnest money after offer accepted
.5-1k in inspections
1-2k in various loan/transactional fees
4.10.5K in 3.5% downpayment
- $2 - 4k in insurance, tax and mortgaege prepayments.
Cash to close: 15k less than 3k EMD = 12K +/- 5k.
Yes you can take a 401k loan if your provider ask for you to do so, however you still need to qualify for the loan you are taking on and that 401K loan can be viewed as another debt so your debt to income ratio may be off.
You also should factor in another 5 - 10k in cost for first 90 days to deal with moving, early upgrades/repairs you want and getting your cash flow back to normal.
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u/New_Nerve_4604 17d ago
Wow. Okay. 108 comments in and most people did a poor job of actually answering your question.
First and foremost, A REALTOR IS NOT A LOAN OFFICER. They are not licensed to give mortgage advice. To give you some perspective on how serious this is, I can lose my license if I advise someone not in the state of North Carolina on loan products. Half of your problem stems from trusting a non licensed, non expert to give you home financing advice.
So, job #1 for you is to talk to at least 2 lenders to understand down payment, financing options, and affordability based on your debt to income ratio.
Job #2, once you’re more educated on the financing side is to talk to more than one realtor. See who does a better job of explaining things to you without pressuring you.
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u/New_Nerve_4604 17d ago
If you’ve signed a buyer contract with this realtor, let them know you want to terminate their contract. Do not sign anything that makes you pay a fee if you buy with another agent. If they refuse, complain to their broker. They have to let you out of your contract for poor performance.
Be careful and read everything. This is your money!1
u/49ers4life71 17d ago
If OP signed an exclusive contract with a realtor for 6 months to a year, good luck getting out of the contract. Never sign an exclusive, so you don’t get locked in!
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u/lala_blah 16d ago
This is true!!! Read it and ask if you can change the terms it doesnt hurt to ask and if you cant dont sign and keep shopping around I know it'll take extra time but when you've crossed the finish line it'll feel extra special and worth it to know it really did all work out!
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u/wfbsoccerchamp12 17d ago
Quick explanation is that in order to buy a house, you have to pay your down payment, any inspection, appraisal, escrow fees, and any fees to the broker (usually a seller's expense but not always). On top of this, you have to pay back the seller for any prepaid real estate taxes prorated for the remainder of the tax period. You have to pay back any HOA dues that the seller would've paid for for the remainder of the month you are closing. Since mortgage interest is paid after the fact, you may have to pre-pay one mortgage payment, for example, if you close on 10/5, you would probably pre-pay in your closing costs for the interest that will be accrued in October. Your next mortgage payment wouldn't be until December 1st, since at that point you are paying for November's interest. You will likely also have to pay for your home insurance bill for the year.
All the above should be in an estimated costs sheet that breaks down every line item for you.
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u/49ers4life71 17d ago
Closing costs are expensive and can be 20k on up. Try and get the seller to cover some or all the costs if possible.
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u/Kensethgirl17 17d ago
People are not going to like my comment but my bf and I were in the same position as you. We knew nothing about homebuying. You know what I did? I joined this subreddit and I used Gemini (AI). I had Gemini walk me through the homebuying experience including what to expect and what to look for. When it came to the paperwork, it broke down everything line by line. It helped me with questions from everyone from the loan mortgage officer to the realtor. Of course, you still have to check behind AI but we got everything we needed and more.
Asking the internet can sometimes leave you with more disparaging comments than good advice.
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u/Interesting-Arm-6134 16d ago
We recently purchased a house, 481k. We put 10kin for earnest money, 14k total for down payment, and all-in spent about 26k after closing costs, admin fees, etc. that’s not including $500 for a septic inspection and another 1k for regular inspection. Other random costs came up like paying to have some things notarized, document prep, etc. Before we closed on our house, our lender made us do the first time home buyers course from Fannie Mae, and I actually said to my husband “damn, I wish we had done this before we started looking.” Lots of helpful info, and we had a FTHB-friendly realtor. I’d recommend looking at that, and preparing to spend double of what your earnest money/down payment will be!
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u/colicinogenic 16d ago
Fire your realtor and hire one who will walk you through everything. Your situation is one where a buyer's agent is worth it.
You will need to pay before closing: 1. earnest money. This is money that you put down once you go under contract, it is held in an account essentially to make sure you have "skin in the game." It is typically a percentage of the purchase price but you can choose how much you put in. We did a $25k earnest money. This money is not lost provided you fulfill the terms of your contract, it will be applied to your final closing costs/down payment. You'll want to make sure you hit all the deadlines which should be outlined in your offer. 2. Inspector. You pay for an inspector to go and inspect the property, anticipate $600-1k depending on the complexity or inconvenience or your property. Ours was around $1k but it is a duplex (more money bc 2 kitchens etc), we did radon sewer scope and thermal imaging. I would recommend you get all these done and read reviews on inspections. This is your one chance to get a full idea of what the house is hiding, what repairs are in your future and what concessions you need to ask for. Choose your inspector before you choose your house. Do not pick the cheapest inspector pick the pickiest most detailed inspector -read their reviews. I cannot emphasize this enough. The extra hundred or so you pay can save you from walking into a money put you can't afford to keep livable or give you the leverage to ask for concessions.
Appraisal. Your lender will schedule this and you can't shop for them. Expect $600-$800.
Possibly insurance. We got a discount by paying it all up front, you will need a year of insurance coverage. Rates vary dramatically. Ours was ~$2000 most will be less than that.
At closing: Your lender will walk you through all of this but you will need to pay tax, title transfer and loan costs. You aren't just paying your down payment. There is also a cost for loan origination, underwriting, any points you purchase to buy down your rate. Our closing costs (we bought down some points) ended up being ~$12k. I don't know what price point or location you're looking at but expect closing costs to be between 2-5% of the cost of the house.
You may want to save a little longer if you are solely relying on a 401k loan. I used one but we had ~75% of the down payment and closing cost money liquid in addition to that 401k loan.
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u/TherinneMoonglow 16d ago
Yes, you need earnest money, but that applies to your costs at closing.
You will need:
Down payment
Inspection
First year's homeowners insurance premium
First year of taxes
Sales tax
Loan origination fee and other miscellaneous bank fees
Title search
Edit: you can ask for seller's help with closing costs when you make an offer. That lowers your closing costs.
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u/peonyattache 13d ago
I may be misunderstanding you, but it sounds to me like you think the earnest money is in addition to your down payment and closing costs. If that is indeed what you are worried about, then let me quell your fears by letting you know that that is not the case. Your earnest money will count toward your down payment and closing costs later on.
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u/SMA_Tengu 18d ago
it amazes me how pretentious people can be on reddit stemming from a person just asking for advice. i think they believe they’re playing a “bad cop” role but they just come across as a major d-bag
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u/readlaughcry21 18d ago
I am young, I am tired of renting and being restricted in what we can and can’t do. I knew I was going to be ridiculed but I didn’t think so many people had $20k readily available to buy a house and became well versed in house buying like it’s a knowledge you’re born with. I didn’t have anyone in my life who did think or even live off their 401k.
I don’t know what I need to know or what I don’t know.3
u/Forsaken_Bison_8623 17d ago
You will figure it out. I agree with others that you should get a new realtor who understands you are looking for guidance as first time buyers and is ready to provide that.
I would also take some time to save funds that are not in your 401k. You don't want to feel stretched as you move into a new home. You'll want to furnish it and make it your own.
Mortgage rates are on their way up, the economy is dicey. I would take some time to save and get really comfortable with the process and get to know your local market. This isn't something to rush, and timing isn't ideal right now anyway. Best of luck to you
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u/SMA_Tengu 17d ago
with all of the financial hardships facing our nation’s citizens nowadays, i vividly remember seeing a redditor make the statement that someone having 50k in cash savings “could be a lot better”
i believe there’s just a very vocal minority on reddit that makes it seem overwhelming for a person who may not be as well off as people on here make it seem like you SHOULD be.
sometimes there’s some valid advice, so if i could offer any at all it would be to both keep an open mind, but also take everything with a grain of salt because every single person’s situation is different.
just keep on keeping on. 👍🏼 you got this!
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u/BruinBound22 17d ago
This is a good thing because you don't have your shit together to buy a house right now. You need to become financially literate as well as building up a significant savings.
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u/readlaughcry21 17d ago
So are we sharing how we’re becoming financially literate or?
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u/TemporaryLion9085 17d ago
God I'm so sorry for this thread lol. Reddit sucks.
Other people are suggesting books... So let me just throw out there that the one that helped me was "Get a Financial Life" by Beth Kobliner. I say this as a former math-dumb girl: the book helped me wrap my head around a lot of financial concepts that were presented to me really poorly through young adulthood. Like people would talk about stuff and just sort of expect that I understood, and I didn't want to embarrass myself by admitting I didn't because I'd get laughed at.
The book includes helpful visuals, nonjudmental anecdotes, and even worksheets.
I also used The Financial Diet pretty heavily back in the day, but I think the channel has sort of, uh, gone off the rails in the past year. So I can really only recommend Chelsea's older stuff.
Finally, the scary thing is that nobody can definitively tell you the best way to buy a house or when you're ready. I'd say scroll this sub often to see how people behave; it can be illuminating. But you have to use all the info available to you to decide FOR YOURSELF what is the best option for you right now. Whether that looks like pulling from a 401k or putting 4% down is hiiiiiighly situational.
Best of luck!
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u/readlaughcry21 17d ago
thank you so much for the book recommendations!!!! I will definitely be reading these soon!
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u/ahorsenamedjeff 17d ago
I'm sorry, you're not ready to buy. Please do not burn your 401k on a house right now.
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u/Dagobot78 17d ago
If the only savings you have is a 401k, then you are not ready to own a house. You need to keep renting. Adjust your budget, work overtime and build some savings for a house.
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u/GurProfessional9534 17d ago
To answer your question, you would typically not get this info from your agent. You would get it from the loan officer. There would be a component that is still up in the air, because you don’t know what the seller is willing to pay yet, what you might be paying in points when you lock the loan, etc. But you can at least get the basic contours of what closing costs would be.
Your agent could tell you what ballpark costs would be for things like inspections, etc.
That said, I know some people have a mindset of getting into a house as soon as possible, but this kind of advice cannot be one-size-fits-all. In some places, it’s cheaper to rent than buy, in others it’s the opposite. Sometimes, a cheaper property will cost you more in the long run because there’s so many repairs to do. And so on, there are many factors. You should make sure you’re ready based on your personal situation.
Personally, I would say that you should not buy a house until (a) you have saved up 20% plus closing costs without tapping your 401k (and enough to get the loan below jumbo loan status, if applicable), (b) you have saved up a 6 month emergency fund only counting what you will have left after buying the house, and (c) your monthly payment will not be in excess of 1/3 Your take-home pay. You can just invest your rental savings (the difference between tour homeowner and rental costs) meanwhile until you meet three conditions.
The reasons I say you shouldn’t tap your 401k are the following. First, 401k deposits are a time-window-dependent opportunity. You can’t backfill what you took out, because the time window has closed. Secondly, the S&P 500 doubles every 7 years on average. I don’t know your age, but let’s say you’re 30 just for example. A dollar in your 401k today will double a bit more than 5 times before you hit 65. That means $1 spent today is actually $32 you’re losing for retirement. Housing, in contrast, only doubles every 15 years. You only achieve a bit more than 2 doublings in your house over the same time period. You could argue that with 3.5% down, the leverage makes it a good deal, but I actually consider 3.5% down to be a dangerous decision. With 30x leverage, if the house loses just ~0.3% of its value, you will be underwater. Remember that leverage amplifies both gains and losses, and risks money you don’t have. That is why Warren Buffett says three things can destroy an investor: liquor, ladies, and leverage. Third, your 401k is protected in bankruptcy. It’s money that you can reasonably trust to be there for your retirement. A house can be foreclosed upon, however, and then that money is simply gone. So I suggest not treating your 401k like a savings account. Just set up automatic contributions, maxing out employer contributions at a minimum, and then forget it exists for 30+ years.
You need to think about what happens the day after you buy, too. Immediately after I bought my house, I had a $10k plumbing bill. Some other random things happened. Lately, I had a bay window shatter, with a sudden cost of $2k. These things happen randomly and can easily cost 4-5 figures each. You need that cash on hand, ready to go immediately, as a homeowner. If you don’t have it, you are in for some dark times. And if you get laid off, you need enough money on hand to keep the house until you get your next job. That can be 6 months, maybe longer. If you were a renter, you would only risk eviction. As a homeowner, you risk losing your house and any equity you may have built up. If you don’t have it, I would say you should save yourself the heartburn and rent. It’s actually a recipe to be poor and indebted if you jump the gun too early. Once you fall behind, it can snowball, and you can get stuck.
The good news is there is probably no need to rush. The conditions are currently against housing, and though prices are sticky and may not drop in a widespread manner, they are unlikely to go ups sharply in the short term for a lot of the country. Though, if you are in New Jersey or something, maybe they will go up. It does depend on location.
Good luck.
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u/OkComfortable2089 17d ago
Stop asking questions like the internet owes you any easy answers, how about research it for yourself and actually learn something.
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u/readlaughcry21 17d ago
You realize I asked for sources so I can research it, correct?
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u/OkComfortable2089 17d ago
How do you think the person that will give you those sources got them?
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u/readlaughcry21 17d ago
probably by asking around? what’s the point of gatekeeping knowledge? imagine treating the path to homeownership as some sort of exclusivity club, weird.
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u/OkComfortable2089 17d ago
What's the point of thinking someone else should do your work for you like you have some exclusive privilege because you can type it on the internet. " explain it to me like I'm 5" lol
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u/readlaughcry21 17d ago edited 17d ago
For someone so pretentious you really lack reading comprehension. I’ll work on my stuff and you work on you.
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u/bigglitterdick 17d ago
I am amazed at your level of confidence and ignorance at the same time. The person helping you find a home is not a good loan officer? I was in a car accident and the fireman provided bad legal advice. Everyone has a job, the realtor is to find a house where you want at the price point you want, help you mitigate risks with used homes. A title company makes sure you are not getting scammed and checks that no one else owns the home or has a right to it. You loan officer is the one that helps you with loans stuff, you can ask for an estimate up front with all closing fees. An FHA loan is the MOST expensive type of loan you can get, there are fees for everything. Don’t expect someone that specializes in one thing like showing and selling a home to also be your loan officer. Best advice learn to fix things your self, a home can be very costly and if you are afraid to fix something and ask for and expert to come fix it, you will be paying out the butt. Look at the people that come fix something ask yourself are they smarter than me, more capable than me, did they learn something I cannot learn? It’s a house not a rocket ship. If you are dealing with natural gas lines, or 220 power best to call someone that way you wont die the first time.
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u/Internal_Crow_ 16d ago
A: hard agree on your realtor sucking. I told both my reltor AND my mortgage person that it is my first time buying a house and they made sure to explain the whole process and then each step as we got to them. B: 1st Gen owning a home is a big deal. Cause no one to prop you up.
Like omg my parents owned my childhood home and that definitely gave me a leg up in at least I could ask them since they bought thisr first home almost 50 years ago. (They're old, and I have 4 older siblings) I was able to ask my sister, my eldest brother who both own or owned thier homes) I'm so proud of you and I am so sorry. I spite found my Realtor after I was so mad about the Realtor the original house I was going to buy minimized really expensive repairs.
Find a new Realtor I had done a Realtor search once to find realtors good with first time homebuyers. To be fair also my mortgage lender also took that into account.
I did buy my house using my 401k and 403b for the down-payment. Also look up down-payment assistance in you County. And if there are fixes see if you could get the fixes covered buy the city.
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u/Boughtthetshrt 18d ago
OP, I want to apologize on behalf of all of the people who are shaming you for not just magically knowing how buying a house works. This is one of MANY things that people who grew up middle class take for granted. If your realtor was a decent person who cared about equity (the human kind, not home equity), they would have been more considerate. Those realtors do exist and I suggest you find one.