 |
This is our first home :)
|
I bought my first home! Let me tell you it has been the most exciting, nerve racking and frustrating experience ever. At the end of this experience I am still wondering where our money tree is planted - I should wear a diaper because I've apparently got money falling out of my ass.
If you're looking into buying a house the first step I would recommend is figuring out if you can REALLY afford to own a home. Don't lie to yourself about this either, you don't want to become house poor.
What we did was worked as hard as we could and got our credit cards paid off. If you have a lot of debt you'll want to consider getting that taken care of before you purchase a home. You will be in better shape if you're under 19% debt to income ratio. Plus, paying off your bills will raise your credit score and you'll get a better interest rate.
People, DO NOT GET ROPED INTO THE FLYERS YOU SEE THAT PROMISE A BRAND NEW HOUSE FOR ONLY $800/MONTH. Chances are it's going to be a house out in the middle of no where with no internet connection, you'll have to drive 10 miles just for groceries and you will be pissed off driving to and from work every day. Just don't do it, you will be wasting your time. UNLESS that's what you want to do, then by all means go right ahead....
STEP ONE: SAVE SAVE SAVE SAVE.. did I Mention SAVE!!!! I cannot stress this enough. This crap adds up ..really fast.
Stop spending extra money on fast food, consider letting your nails grow in naturally.... Seriously, cut out all the extra luxury expenses and your savings will grow very fast, Depending one what type of loan you'll qualify makes a huge difference here. Things to think about as well is if you're willing to hire movers, the cost of packing supplies, transferring/setting up new utilities and the fees that come with that. Moving anywhere is very expensive so the more you can put into savings the better off and less stressed you will be.
Next you'll want to determine how much your willing to spend on a mortgage payment. Let's say your rent payment right now is $700/month and the most your're willing to spend is $1500. "Pay yourself the difference", Put the $800 left over into savings and DON'T TOUCH IT. That will let you know if you can really afford that high of a mortgage payment. If you constantly have to dip into the $800, you're not ready or you need to consider buying a home with a smaller mortgage payment.
Determine how much you're willing to spend on a house as well. First we considered buying a fixer upper so we kept our 'max' until $90k, Most of the homes we saw for less that 90K needed about 90K or more put into them so we decided to go with a newer build instead.
Remember to see if the washer/dryer, fridge, dishwasher, sink, etc are included in the home otherwise you will need to set aside extra money to purchase new appliances.
CRAP you'll have to pay for in order to get your house:
- Earnest money - $500 to $2000
- Option Fee $200
- Closing costs $8000 to ??????
- Inspection, $200-$1000
- Turning on utilities - Expect to pay around $200 for each one for security deposits. Most times utility companies waive the fees if you can show a bill with on time payments each month.
Closing costs - If you're doing an FHA loan you'll only be required to put down 3.5%. If you're doing conventional you'll need 20% down. You will need/want to save this money FIRST in order to buy a home.
STEP TWO: SAVE, SAVE SAVE.
This step is the fun part. Looking for your home.
Get pre qualified FIRST. Get pre qualified FIRST. Get pre qualified FIRST. Get pre qualified FIRST. Find a lender that treats you like a human being. This will require some shopping around. Go with the lender that suits your needs.
You will not find your home in one weekend folks. It took us a year and a half to find "the one". This house will reach out a grab you - trust me. I had a coworker tell me that and I thought she was silly until it happened to me. Now, you might have to fight for this house so just be prepared for a bidding war if other people think that your house is their house too.
I hear stories all the time about 'finding the right realtor for you'. Chances are you're going to be doing most of the searching, looking online at pictures (LOOKING FOR FLAWS), reading the information about the crime and schools in the area, etc etc. We really lucked out with the last realtor we used because he came to the showings with information about the house. He had paperwork from the seller saying what has and hasn't been fixed and what other people in the neighborhood paid for homes like the ones we were looking at. The three we had before him basically knew the code to the key box and let us walk in and look around. I am very happy with our realtor.
Once you find your home you will be asked to put down earnest money which lets the seller know that you're serious about buying and option money which lets you get out of the contract if you find anything alarming with the house during the inspection and you can back out if you need to..
STEP THREE: SAVE, SAVE SAVE. DO NOT APPLY FOR NEW CREDIT. DO NOT SPEND ANY MONEY YOU DON'T HAVE TO UNTIL YOU HAVE THE HOUSE KEYS IN YOUR HAND. Now read that again...
This step is the hardest. You will be signing contracts and signing contracts and signing and signing and signing. Most of the time you will get lucky & e-sign most of the upfront stuff. Make sure your realtor goes over EVERYTHING with you. Our first packet had about 20 pages of legal mumbo-jumbo and our realtor went over each section and made sure we understood what each item meant.
After the seller and the buyer agree on the contract the next step is waiting. This usually take 15-30 days. We waited 30 days. The underwriters will ask you to produce the last two months everything.. your 401K statements, you checking and savings statements, they will want to see copies of checks and explanations of what those checks are (incoming and outgoing), your tax returns, etc etc. The will sometimes ask you for something you've already sent 9384 times.
I recommend following up with your lender if you haven't heard from him in a few days - chances are they are going to say "oh yeah the underwriters need this paperwork". If you submit it all and let it go until closing, chances are the underwriters are going to need something from some crap you've forgotten about and they will have to push back closing another week or two. Makes you want to punch them in the throat, twice. Just breathe during this process. It's the hardest part.
After that is all said and done you get the keys, you move in and make your nest.
Your happily ever after begins.
