Buying a home and what to do?
Moms View Message Board: General Discussion: Archive June 2007:
Buying a home and what to do?
My DH and I are looking at buying a house and our both of our credit scores are good. (My beacon is an 809 and his is an 803.) I'm a SAHM that makes about $400/month and he makes a six figure income.
Question is, for those of you who have BTDT, should I also apply for the mortgage loan and have the house in both of our names? We have a stable family life but I'm always the "survivalist" type that looks after my own finances and I usually want my name on everything he owns as well. Pros/Cons Does it matter?
Also...have any of you gone through the process of buying a home and had any regrets in the offer process...ie, wish we had included appliances, etc. We've owned 2 houses thus far and each time we've learned something about being on both ends of the deal. Just curious about your thoughts?
We always have big purchases such as cars and homes in both of our names. I honestly don't know why a married couple wouldn't. And yes, buying a home is always a learning experience. I'm there right now. 
I have never looked at it as covering my own finances, our houses have always been in both of our names. It is my understaning that it just makes it easier in the event of a death if both names are on it. As far as credit goes, unless yall have a history of credit issues there aren't any disadvantages to having both names on the deed.
What have we learned in the house buying process? Well we have bought 4 houses now. You need to make a decision on a house based on location and schools, you can't change that. There are lots of things you can change A house is just walls, a home is the family that makes it so. Things will break, things will go wrong, prepare for it ahead of time. Make sure your budget allows money to be put aside for that.
We have been pleased with all our house buying, we didn't settle, we just kept looking till we found what met our needs. I really like looking at houses, so that helps. We have relocated with each move, so we have had to get to know an area and massive shop in a week, a little crazy, but works for us.
Absolutely in both your names,"jointly with right of survivorship". Without even looking at the stability of your family life, there are two good reasons. The first is that heaven forfend anyone sues one of you, for whatever reason, your house is safe because it is in both your names, and can't be at risk if only one of you is sued. The second is that, God forbid, one of you dies, because the house is held jointly it is not considered part of the "estate" for estate tax purposes and transferring title is so much easier (and cheaper).
As for the other issues - you learned some things from buying the previous two houses, and will undoubtedly learn something from buying this house. Be sure to get an inspection from a licensed inspector - not one recommended by the real estate agent. Call your lawyer and ask the lawyer to recommend some home inspectors.
Have your lawyer look over any paperwork before you sign it.
Don't go through the real estate agent or a "mortgage broker" for your mortgage - why pay either a commission (actually, they usually get paid a "finder's fee" from the mortgage company, but in the end you are paying it even if it is hidden). And, given what a lot of financial pundits in the newspapers are saying, think very, very carefully before taking anything other than a fixed rate mortgage and be sure there are no penalties for early payments.
If you can, put 20% down so you don't have to get mortgage insurance, which only benefits the mortgage and mortgage insurance company. If you want insurance, buy term insurance instead from a national insurance company.
When I refinanced my mortgage (to get a lower rate than was available when we bought the house), I decided to pay an additional 1/4 point at closing so that escrow for taxes and insurance was not part of the mortgage payments. Instead, I put that amount (1/12 of taxes and homeowners insurance) into ING every month, and I get the interest instead of the mortgage company. And, I had experience with a mortgage company not paying the real estate taxes in time to qualify for the early payment discount on the taxes.
I'm sure our house is in both of our names.
Ditto what Kaye said. Keep looking for a house until you find one that fits your needs. Don't settle. My husband and I house hunted for a year and a half before we finally found "our" house. There were many times where we would say, "this might be ok", but we'd always go back to what we wanted in a house. It was kind of a checklist that we had. Did I mention I was pregnant when we were house hunting? We had desperately wanted to be in a house before our second child was born. First trimester came and went, second trimester followed. Towards the end of the third trimester we'd go house hunting and some of the realtors would look at me and say, please don't have your baby during the tour. Still, we didn't settle. My little boy was 7 months old when we finally closed escrow and moved in to our new house. My dh and I look back at some of the houses we had considered and are glad we didn't buy any of those. The house we finally found is perfect for us.
Oh, and as far as the deed, both of our names are on it. The loan, however, is only in his name. His credit was a teeny tiny bit better than mine at the time, and his profession allowed him to qualify for special rates.
Good luck.
I re-read your question and my answer. Whether both apply for the mortgage depends to a great extent on the mortgage company. If they will allow you to both have your names on the deed, jointly with right of survivorship, with only dh actually applying for the mortgage, then why not? But I suspect that if both names are going to be on the deed they will want both signing for the mortgage, to protect their interest in the property.
In a word, YES! Ditto Ginny!
I spoke with my son who is a lawyer and works for a major financial institution. He reminded me that for married people, it is not "jointly with right of survivorship", but rather
"John Doe and Mary Doe, husband and wife, by the entireties". He also said that whether the house could be vulnerable if only one of you is sued and both of you own it depends to some extent whether you live east or west of the Mississippi. There is something about community property states (west of the Mississippi mostly), and he didn't go into the explanation, that makes a difference. He concurred that a mortgage lender is very, very unlikely to get into a situation where the name on the mortgage does not exactly match the name(s) on the deed, because if only one person is obligated on the mortgage and both names are on the deed, it makes the mortgage company have to jump through several additional hoops if they ever have to foreclose (not that foreclosure is at all a possibility with you and your husband, but that's how mortgage lenders think).
Thanks, everyone! I think I'll be on the mortgage and deed. I hate applying for new credit, but it's worth it in this case.
Ginny, what is term insurance and who offers it? (BTW, we are west of the Mississippi.) We aren't able to put 20% down since our old house hasn't sold yet and the market is fierce. We thought we would get a lot more out of it but we keep having to lower the price.
So, we'll make probably $18,000 so we can pay off my car that has $12,000 left (his car is paid off) and then we'll have $16,000 in savings. (Unless, of course, we can find a fixer upper in the low 200's, then we can put some cash down. We are looking in the low 300's otherwise.)
You will probably have to get mortgage insurance then, and that comes through the mortgage company. I would suggest that unless the $16,000 you plan to put in savings will put you at or over the 20% downpayment mark, you are wise to keep it in savings.
Term Insurance. Life insurance comes in two general categories - whole life (and sub-categories of this) and term insurance. Whole life insurance builds a certain amount of cash value over the life of the insurance, and in a pinch (which my parents did at one point) the cash value can be applied towards the premium if you hit a tight spot.
Term insurance is just that - a specific amount of insurance bought for a specific term - usually 5 or 10 years. The premium is much lower than whole life, but it does not build up any cash value. If you stop paying the premium, it is "all gone". Term insurance is useful if you want a large amount of life insurance coverage for a specific period. For example - when my ex and I separated, my sons were 9, 11 and 16. As part of our separation agreement, he bought two terms insurance polices - one for a 5 year period, that would cover the probable amount of child support and college tuition for our oldest son, and another for a 10 year period that would cover the probable amount of child support and tuition for our two younger sons. This way, if he died before they reached a certain age, I would be assured of enough money to raise them and send them to college. And, when my parents and I bought a house together, I carried term insurance for the value of the house so that if something happened to me the mortgage would be paid, and cancelled it after both of my parents died.
I'm sure other people here could give you better explanations and point you to good websites. I think Consumer Reports did a report once on term insurance companies.
The only thing I will say is I wouldn't write off "mortgage brokers" entirely. My dh is one and to be honest, knowing what I know now, even if he wasn't in the business, we would at least talk with one before getting a mortgage.
Brokers deal with hundreds of banks. They have hundreds of different programs and rates that most regular banks don't offer. A lot of brokers sell their loans to banks and that is how they get paid. Banks like to deal with brokers because they end up with the loans and have to pay no overhead at all to get them. Don't get me wrong, there are many crooked ones out there that charge tons of fees etc. BUT, there are many that are good too. Get a good faith estimate (that should have all fees, rates and prepayment info on it so you are comparing apples to apples) from lots of different places. Tell them you are shopping around and if you get a great deal someplace, don't be affraid to mention it to the others. You would be amazed how much wiggle room there is for rates/fees etc. I am not saying that you should definately use a broker because you might not get the best deal from them, but my dh does about 85% of his business through past client referrals. If he was bad, he would be getting those!
Ok, I guess I thought you were talking about a type of "term" homeowner's insurance.
We are looking into a house now that has been foreclosed on but is on a golf course. It needs to be gutted but we could also make a lot of $ on it. It's also a ranch house, which I love. But, then again, our other house hasn't sold...aye aye aye. 
Before you buy a house on a golf course, the NY Times has run an article or two recently about people who find themselves with lots and lots of broken windows, dented siding, and unable to sit in their yard because the house is near a golf course. Seems equipment has improved drastically in recent years and golf balls are going much farther, faster and harder.
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