Tuesday, December 23, 2008

buying a home, part 1

so i guess i've taken a step into purchasing my first house. i think it might be useful to try to document step by step the process we go through, whether it works out or not, so that if anyone else is doing it, or if i decide to go at it again sometime in the near future, there will be a resource here.

basically, some friends i found a foreclosure property in somerville that is very interesting. i say interesting because i have no sense of somerville/cambridge properties, values, what constitutes good or bad, etc. we (but not me personally) had searched for a long time and last week came across this listing:

PROSPECT ST, Somerville, MA 02143**
Beds: 5 Type: MFR Sq. Ft.: 2,057 Lot Size: 1,536 Sq. Ft.
Baths: 2/0 Built: 1900 $/Sq.Ft.: List Date: 11/10/08 On Market: 43 days
List Price: Price reduced

it's been months since i saw anything affordable that wasn't a 100 sq ft condo. so over a bowl of chili we decided to go take a look, and yesterday we scheduled a visit with the bank's realtor to visit. after about half an hour waiting in the bitter cold, the agent arrives (for his first viewing of the house too) and we take a look around inside the two floor, 1 attic, 1 basement, 5 bedroom (with an additional two rooms in the attic) house.

Initial impressions

again, i would describe it as "interesting." it's an old house, obviously, and with a decent amount of work could be made to be really nice. the heating system is old (there are pipes sticking out of the walls as a radiator system...i have never seen anything like it) and if the carpet is replaced and the walls repainted, i think each tiny bedroom can made to not look like a drab madhouse. but the two kitchens are decently sized and pretty nice, and there are three levels of porches out back.

outside, the house is *immediately* next two a U-Save car rental place. and by immediately, i mean i think one of the vans had backed up too far and knocked over the chain linked fence between the U-Save lot and our walkway to the back yard. On the other side is some sort of condo, but past that is a place called "Creative Ironworks." so not the most friendly neighborhood to raise twin babies (hypothetically), for sure.

Making the bid

after we expressed interest in the house, the real estate agent left us with some paperwork in order to make an offer. We spent a few hours at the office filling out paperwork, doing a preapplication for a mortgage loan, and writing a check. the first check is something to prove we have a bank account and is never used. we emailed the papers and the scanned check to the agent, and now we await approval. upon approval (as in we are the highest bidders and now are allowed to talk with the seller) we'll be able to do an inspection, and be paying 5% downpayment, a portion of that going initially into escrow.

Getting the money

the loan we applied for was through MITFCU, but it turns out they work through Members Mortgage which is a partner for credit unions. I talked with John McSherry on the phone today and we got through a lot of the questions that were on my "Conditions of Approval". Some items include:

- private mortgage insurance is required - because we downpay <20% of the cost, we are required to purchase this.
- proof of debts paid off from loan proceeds - i had indicated that a large sized credit card debt was recently paid off. this actually increased our requirement of proving we have $xx assets on hand, which is still counterintuitive to me. John cancelled that, and put back my debt into the credit report, but that lessened the total cash assets we needed to have by that much. still makes no sense.
- interior/exterior appraisal - will be arranged by the mortgage company after we receive approval of the offer.

So there you have it. It seems like we are just waiting to hear back about our offer, and then we are going to get the house inspected. If nothing major is wrong, looks like we're going to be purchasing a property, which could be a huge headache or an awesome project for the next few months/years.

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