So we're just cleaning up on our first home purchase. We've got the closing on Monday and we'll get the keys on Friday evening. There's a lot of things that I really wish that I had known before getting into this whole home buying thing. Also, I feel like we've learned a lot of lessons when it comes to this process.
1) Shop around for who you're working with.- When we first embarked on this process, I was still in School. We actually sat down with a different real estate agent that we really just didn't like. He seemed like a sharp guy, and he knew his stuff, but we just got a bad vibe off of the guy. We felt like he was just a commission shark who was hungry for cash and had seen a lot of it in a very hot real estate market.
So, we shopped around. We spent quite a bit of time trying to get someone that was willing to sit down and walk us through the process of buying a home step by step.
In the process of talking with the first real estate agent, we got in touch with a couple of lenders. Here's one thing that I had never expected- there's a lot to learn about the loan process, it's fees and so forth. I highly recommend one of your first steps as a potential home buyer is to get in touch with a lender that will educate you on the process.
I will tell you that education has been the one biggest thing that I've gained out of this whole process and purchase.
2) The lender.- I've already said how important getting educated on the loan process is, but I'd like to throw in another dimension to selecting a lender.
3) Selecting a price range.- A lot of people will tell you to buy as much home as you can afford right now. I don't agree with that. It is my honest opinion that you should have 20% down on a home before you buy. However, we're purchasing with 10% down. DO NOT fall into the trap of "you only need 3% down" or any of the federal programs. You wind up paying A LOT more money in interest, fees, and private mortgage insurance.
I recommend a 15 year loan. It's just a good financial move. Likelihood is that you're not going to be living in your first "starter home" for 30 years. You probably won't even make it to 7 years. On a 30 year loan you will not have paid off even 20% of your loan in that time. You will still be paying private mortgage insurance. If you do a 30 year loan, sure, you can get a bigger home, but it is so much harder to build equity quickly.
But whatever you do, pick a price range before you ever start looking at homes. Pick it based off of a smart financial decision not because you want "THAT" home. So pick a price, and stick to it.
4) The down payment & initial costs- I was shocked to find out that the down payment on the home is not the only thing that brings cost to you up front. There's lender's fees, taxes, insurance and all other sorts of things. This can rack up quite quickly.
Be careful that you have enough money in the bank and still have some left over. You do not want to buy a house and then find out you don't have any money to put that nice sectional, or tv or whatever in the house.
5) Walking through- Pay attention to the details of every home you walk through. Do the faucets leak. Do the toilets flush. How many weeds are there. What is the floor plan like?
I found that one thing that helped me was to take pictures of homes while we walked through.
Another thing that helped was to draw a map as I walked through the home to keep track of what the floor plan was like and if I liked it or not.
6) The Real Estate Agent- First thing with a real estate agent. Do not sign a contract with him/her that says you will only work with them. That is a rotten deal. If you find out on your second walk through a home that you're working with a dirty rotten scoundrel, you want to have a way out. Some agents will give you a piece of paperwork that says it's a way for them to represent you. Make sure there is a clause in there that says you've got a way out. Don't take them at their word for what they say it says.
I initially had a gross misconception of what a real estate agent actually does. For some reason, I can't even remember what that conception was. But, I'm going to try to put into words what it is, as a consumer, I think they do for you.
You can expect a real estate agent to represent your best interests. If in walking through a home, you've fallen in love with the kitchen sink so much that you neglect that the basement is flooded, the roof is caving in, etc. It's his/her job to make sure you know there's something wrong and you shouldn't buy the house.
Also, if your lender is yanking you around on dates, your agent should be there to talk to the lender to make sure things are taken care of on time.
The agent should take care of setting up all walk through appointments. Our agent was with us at every single home we walked through. Sometimes, the seller's agent will come along for the ride as well.
The agent will suggest homes to look at and features to consider.
Make sure that you and your agent both know that he/she works for YOU. You don't need to feel sorry about making them drive all the way out in the middle of nowhere.
Your agent should not recommend homes outside of your price range. Keep in mind, it is in his/her interest to do so (they're paid on commission). If you find all of the sudden that your agent is pushing you $20k, then $30k then $50k outside of your price range, you need to pull in on the reigns.
You are the one in control of the home you buy, not the agent. He/she might think that one house is great, but you make the final call.
7) The Lingo- Make sure you educate yourself on any word that does not sound familiar. Trust me, there's a ton.
For instance, I had no idea what an escrow fund was. ASK!!! The people you are working with, work for you. Don't feel stupid or naive because you don't know the word for a specific style of floor plan or whatever it may be.
8) Your signature- Just remember to be careful with your signature. There's a lot of paperwork that will be thrown at you. Make sure you actually read what you are signing. Make sure you understand what it is that you are agreeing to.
9) The REPC- This is one of those lingo things that I've learned. REPC stands for Real Estate Purchase Contract. This is the document that you work with to make offers, or changes to offers on a home you plan on buying.
Remember that this document is a living document. If at any time, you want the sellers to do something like...fix the AC, have your real estate agent write up what's called an Addendum to the contract. You sign and send it out, and the sellers accept or reject.
Also, you have certain points to bail out of the contract without losing a dime. But after that, you may lose your "earnest money." So make sure you're serious when you sign that contract.
10) Finances- Make sure you lock in your finances. We made the mistake of getting a major promotion, having payroll issues, getting an irregular bonus, gifts and so forth.
Once you get your new job or raise, hold tight for a couple of months before you run off to buy a house. It will save you headache at the lender's office.
Also, any gifts, cash or any other funds that could go into your bank account hold on to until after you have closed. We received some gifts that we deposited and the lender inquired to every dollar that came in that was not labeled "payroll" on our bank statement.
There's a lot more I would like to say, but that is all for now. Happy hunting!
No comments:
Post a Comment