So, we bought a house. Yay!
Boy, was THAT a process and a half. First, we spent months looking at well over 100 houses online and visiting probably 40 or so in person. One random day, I walk into this house with our amazing Realtor while Andrew is at work and I just knew- THIS. WAS. IT! It was at the very top of our budget (Ok, technically $2k over, but who's counting). It had everything we wanted - modern amenities with old craftsman style charm. I was in love. But then the panic set in. It's a big step, a 30 year commitment. Hell up until we were married the longest contract I signed was my 2 year agreement with Verizon and even that gave my anxiety.
But as usual, Andrew helped reign in my fears and now we have been living in our dream home for over a year.
But, my good heavens the paperwork! I'm pretty sure we signed away our first born in the midst of the 100+ pages, but none the less here we are.
A few tips we learned along the way:
1. Write down what you want. Then split that list into Must have/Absolutely important and Would really like. Example, we looked at 10 houses before I realized how important a large dining room was so we could host the holiday dinners that we always talked about. It seems like it should have been so obvious, but there is just so much to decide upon, that sometimes the most obvious hits you square in the face and you're like, "Uh, DUH!". Also, consider are you planning to live here forever or is this a starter home? Tell your Realtor. That will help them pull listings for you. If a starter home, they will help you to take into consideration the ease of resale. Also, decide if you are interested in a short sale or foreclosure. Personally, we decided buying a house as is or a foreclosure was not for us because the moment it is yours, it is your expense. Example: turn on water, pipes burst, it's your expense, but there can be benefits to both. Figure out what is best for your lifestyle.
2. Find a phenomenal FULL TIME Realtor. One that has 10+ years experience. The loan requirements and rules are constantly changing and you need someone who knows what they are doing and what to look for in a home when it comes to future inspections (I'll get to that). Example: FHA just changed their loan requirements in June-which is why we bought in May. You need someone who knows the market and can guide and advise you through the offer and negotiation process-never pay full price. They will be able to tell you what you can probably actually get the house for. We started with one Realtor who had been doing it for 2 years who I proceeded to fire because she 1. didn't know what she was doing 2. only did real estate part time and the market moves FAST. We lost two potential homes because she didn't react fast enough. You need someone who is checking MLS daily (Master Listing System which all Realtors have access too) and has the time to move the paperwork quickly through the chain of command.
2. Research types of loans-there are many. Each with benefits and quirks. Conventional, FHA, FDA, VA, etc. Some will not apply to you, but it's good to know what they are. Most first time home buyers use FHA because it requires the least amount of money down, but with that comes more stringent requirements for approval. Whatever you get, make sure you get a good LOCKED IN interest rate. Check the national average. When we purchased it was between 3.75-4%.
*Keep in mind property, school district, and regional taxes differ for each area and how they are typically paid. I don't know about other states but in PA they are built into our monthly mortgage payment.
*Keep in mind property, school district, and regional taxes differ for each area and how they are typically paid. I don't know about other states but in PA they are built into our monthly mortgage payment.
3. When you decide what type of loan you want, I would start with the recommended preferred lender and ask questions. Also, think about how long of a mortgage you want (10 year, 15 year, 30 year). 30 is common. That will change your monthly payment though. Consider who are they with- Keep in mind that most loans can be sold to other companies once finalized however going directly through a financial institution may help to minimize that. Ex: Our financing and mortgage are directly through PNC Bank. Currently, we pay our mortgage through PNC Bank. Another option we were presented with through our old Realtor was Howard Hannah Financial Services. 99.99% of the time, they resell the loan to another company. Also, keep in mind your Realtor may get perks of some kind for recommending them. We actually used our Realtor's recommended lender because I liked the guy and the rate was great. He helped us to figure what our estimated monthly mortgage would be based on the sell price of the house. I gave him two scenarios so we had a high end and low end range to work with. Ask about Escrow and Home Owners Insurance requirements.
4. Once you chose a lender, get pre-qualified. That way, you know what you can spend and when you find a house and you can immediately submit an offer without the waiting for approval process. Decide if you are going to both be included on the mortgage or just one of you. You will have to provide a ton of information re: income and spending. Be prepared and start pulling the information together ahead of time.
5. When submitting an offer, consider Seller's Assist if you do not have a lot of cash flow available, but keep in mind you will pay back interest on that Seller's Assist. Honestly, have as much cash available as possible, but be prepared to provide documentation for where every dollar comes from-even if someone gifts it to you like your parents.
6. Once you make an offer, whoever's financial information was used for the pre-qualification is whose name will be on the mortgage and deed. You can always add a name to the deed after the sale is final for usually around $150 at an attorney's office. Your finances will be monitored to the penny and you will basically only be able to pay for your bills until the loan is finalized. It can be stressful! I'd recommend a 60 day closing which is usually the max because even with 60 days the loan process was rushed.
7. There are usually around $1,500 in loan underwriting fees - cash or certified check is usually required because your bank account is monitored. Ask your lender.
8. Get an inspection. Ask your Realtor for a recommended company and check on them with the BBB. You should have someone who will provide a full top to bottom house report with details and photos. They nit-pick as they should. Most are little stuff like "crack in the wall". Average cost for an inspection is $300 - usually cash because remember your bank account is being monitored. I'd recommend being there during the inspection so you understand the report hands on.
9. Shop around for Home Owner's Insurance. I started with our current car insurance provider (who we ended up with), but there are many different policies and premiums available which will be based on the type of house and square footage. We chose our current company because with my 10 year loyalty discount and combined with our car, the rate was less than the 3 other competitors I quoted. Your policy will have to be in effect and paid for by your closing date. Make sure you know what your policy includes.
10. All utilities have to be switched to your name by the closing date.
11. Whatever you owe for closing costs will be required by certified check usually. The one you have to get from your bank and must match the exact amount on your loan contract. Kind of a pain, but it is what it is.
12. Don't kill each other- it can be so stressful but it's so worth it in the end. Don't settle on a house-find one that you really want. It's out there, it just takes time. We started in September and didn't buy until May. When you finally get into your new house for the first time, it's really a feeling like no other!
and here are the two newest additions to our circus <3
Renegade
Suisham
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