It’s official: I’m an adult! Just went through the home-buying process for the first time. Well, not officially, as we close on June 23, but the paperwork is all done and approved. I thought I would run through the process for other first time home buyers, and give some tips for how to make it painless- and perhaps add some things you didn’t consider before. Both our mortgage broker and realtor have mentioned that I should teach a class on “how-to for the no-clue”, so I shall blog instead. I have had friends who have cried through the process, and others where it was seamless. Well, here is my experience.
We will get to decorating, redesigning, moving and Pinterest another time.
Tips from a first-time home buyer:
- Make sure you have a team that you trust- and is well seasoned. You can appreciate that your friend’s daughter is trying to build up her client list, as she just got her real estate license, but I’m sorry, she simply will not do for what you need. You need experience, savvy and balls. You are buying a home post 2008 subprime mortgage disaster, so the lenders are going to dig DEEP into your life before giving you a dime. Do you really want a 12 year old helping you with this? That’s what I thought. You need to have a team that has been around the block a few times. My realtor and mortgage specialist are AMAZING at their craft. If you are buying a home in NH/ME- TRUST ME and use these guys.
- Make a folder on your desktop to put all forms, PDFs and other information that is requested and sent to you. Save everything here. You will find that being organized and taking one little step to do this will make it MUCH easier, should a file get misplaced and you need to resend.
- When they send you forms to sign- print, sign and scan IMMEDIATELY. This way it is done. You won’t forget – and no one will be sitting around waiting for you. I often find that if a part of my job depends on getting information from someone else, I get very unhappy if I have to wait for it. Get it done.
- If you know there are other offers on the house, make your offer at least $500 over asking price- and keep in mind that the closing date your realtor sets might win the vote, not necessarily the price tag. Just ask Jessie.
- Make sure you have access to your original employment offer letter or contract. Make a digital copy, put it in the folder. They will ask for this information/proof.
- Ask your payroll department if there is an online portal to your pay stubs and to verify employment. Save the last two months from when you plan on closing.
- Pay down your credit cards to under 20%.
- Don’t buy anything big! Wait until you close to purchase that new furniture, car, TV, etc. I have a horrible shopping habit, so this one was hard.
- Be prepared that the appraisal of the house might be less than the asking price. The appraiser doesn’t take into account the market (low inventory). This person is only looking at the value of the home and the selling price of the homes in the area. If the appraisal comes in LOWER than the asking price- then remember that the bank will only give you a loan based on the appraised value. Which either means you have to come up with more money out-of-pocket at closing or you need to negotiate the asking price after you are already under contract- or both. Don’t be afraid to negotiate!
- If your parents are going to give you money for the down payment, make sure it is in your account 60 days prior to when the underwriters will see your account, unless they are willing to write a “gift” letter and show the underwriter a copy of their bank account. It’s super invasive, but they want to make sure you’re an honest person and not laundering money.
- Be prepared to explain your tax write-offs, and to have to write letters explaining every decision you made on your tax forms. They want to understand how much money you are actually spending and how this affects your income. Got excited you were able to write off a lot last year, so you got a big return check? Well, this is where that will bite you in the ass. I even had to explain how many miles I drive daily. Thankfully, this move brings me closer to work and they liked that fact. phew.
- Get better-than-you-need insurance by a real insurance company. I upgraded to Liberty Mutual– and combined all our auto and home on one rate. It’s more efficient, and while in college and post-college-ignorant-twenty-something years it was cool to skimp on monthly car insurance, this is the real world and you want to make sure the big boys are behind you. Sorry Flo. It’s not you, it’s me. Well, it might be you a little.
- Make sure you get a good home inspection and keep the digital receipt. This will come in handy, as the underwriter will request it. Be prepared that the home inspection will take a really, really long time.
- Just because you were “pre-approved” for the home loan doesn’t mean you will actually get the loan. There are still many hoops to jump through before the underwriter will give you any dough. It’s almost like those “pre-approved” credit card mailings you got in the mail in your twenties, when your credit was shit from poor college decisions. You might have the direct mail in your hand, but honey, there is no way you are getting that card. Sowwy.
- When starting to plan your move THROW SHIT AWAY. I have boxes of shit I have moved with me since college (I graduated in 2001), I am going to guess I don’t really need that stuff anymore. Just toss it. Purge! I even threw away 8 pairs of shoes. Gulp. I have not really begun packing yet, but I will soon and the less I have to pack/carry/unpack- the better. Oh shit, I said I would discuss moving later. I digress.
Side note: who is this “underwriter” I keep mentioning and what does that word mean? To the lay people (IE people not in the real estate industry) it’s basically the person who will be giving you the loan. Their opinion matters MOST. This is the determining factor on whether or not you get your home. The realtor and the mortgage specialist work for you- well, the underwriter works for the bank. I shall be sending cookies.
My last bit of advice would be this: Don’t forget to THANK the people who are helping you purchase this home! You have no idea how much work they are doing on your behalf. Most of the time, people are unappreciative and thankless. Well, just be sure to remind them from time to time how much their hard work has meant to you. Be sincere, damnit! We have got emails past 10pm and before 7am from both our guys- that’s working. We are plan on using food and libations to show our true thanks, but you can do as you choose. I’m sure a note card works just fine- or perhaps hyperlinked contact information in a blog post?
As long as you stay organized, act immediately and follow directions- it’s really easier than people let on. Either that, or my A-type personality was actually useful for once. That’s about all I can think of for now. We close on June 23rd on the new house and cannot wait! Pictures to come…