Things nobody ever told you about house-buying Part 1

If you're ever going to buy a house, you'll find there are plenty of sites out there soliciting your money (Lendingtree brokers, etc) but very few that offer real-life advice. Here are a few of my humble tips if you are so inclined to pay heed to:

1. Do not bank with the big dogs
Especially Bank of America. It has consolidated so many banks that now it cannot even keep track of what it's doing. Saving that $2000 in closing costs is not worth the angst and ill preparation they put you through. Suck up the closing costs and negotiate on them if at all possible.

2. Do not have a rookie loan officer service you
In Texas, instead of having an attorney to handle the closing, we have what they call a Title Company. The title officer told us he asked the rookie for a most fundamental request and the rookie had no idea what he's talking about.

3. Save. Save. Save.
At least up to 20% of the house you're going to buy. For instance, if you think you can afford up to a $140,000 house, you need at least $28,000 for a 30-year conventional loan. If you cannot afford 20%, then go with an 80-10-10 loan. That means you pay 10% in closing cost of THE HOUSE (not all the closing costs that include fees, tax, insurance etc), and you are left with 2 loans at 80% and 10%. The 80% loan is lower in interest for 30 years, and the 10% loan is higher in interest for 15 years. You will now have 2 mortgages - 80% and 10%. But this will save you money in terms of not paying PMI.

4. PMI
It's the obscene interest you pay the bank for lending you money since you don't have 20% of the house price towards closing costs. The bank will try to tell you it is easy to get out of but it is NOT. Especially after they sell your loan to a different company, they do not have to deal with you anymore. That different company will require you to jump through lots of hoops to clear that PMI

5. Discount Points
What a misnomer. It's no discount. It's a fee the bank charges you to relock a rate. Be sure when you apply for a pre-approval that you specify you don't want discount points and PMI.

These are the lessons we've learned so far in our home acquisitions. I'm sure there'll be more growing pains to come. If you have any advice for me, I'm all ears.