Phew… so… here I am. We just finished buying… packing… moving… unpacking… renovating… and it is all (really) stressful. Not only does it stress me out but it consumed all of my time (hence my lack of posting).
I think this is a universal stress point- especially when you’re an emotional gal (or guy of course) like myself. All that being said- I kind of did okay. There were a few freak out moments but they were survivable. I recognize them as part of the process. Now that I’m through the thick of it- I thought I would share my personal emotional girl’s guide to buying a home.
We closed on our new house July 7 (little bit lucky right?) and have spent the past several weeks working on the house and getting moved it. Maybe I’ll post pics when we are all straightened out? Is anyone into that idea- a home tour?
Anyway- we had a semi-long closing process of 45 days (not crazy long… but a little long for it being a standard purchase with a loan and downpayment and what not). All that waiting and prepping and so on drove a gal like me a little crazy. I like to be settled so when I was mentally ready to leave the condo but couldn’t… I started to feel all sorts of unsettled.
Let’s step back for a quick moment. Maybe you have never purchased a home- so your experience with home purchases might be limited to tv (like mine was) where someone just says “I’ll take it!” when they’re standing one of the three homes they have toured and then… poof… they’re in that new home just a few tv-seconds later all moved in and happy.
First off- it is a really complicated process. Second of all- depending on the market you’re in it doesn’t always work like that.
For example- Denver is a madhouse market right now. There are not a ton of houses for sale for the size of our population- so houses on the market on in high demand and lots of people want that house. So while you may love the house… so do about six other people. So you have to compete with all those other people for the house.
Then on top of that you have a myriad of contracts and inspections and approvals and financial documents… sound a little overwhelming? Well this is where my little guide starts-
The Emotional Girl’s (and Guy’s) Guide to Buying a Home
One quick thing though- I’m no expert. Different states have different systems and I have only experienced purchasing a house in Colorado. This is just from a survival stand point. ;)
The process is more complicated than on television. You initiate it by contacting a realtor and a lender and telling them you are looking to purchase a house:
A realtor (also know as a real estate broker) is a licensed individual that can show you homes for sale and manages the communication between you and the seller. They are paid by the seller from a percentage of the home sale- the buyer doesn’t pay them anything (at least that’s the way it is in Colorado).
A lender (or mortgage lender or mortgage broker) is another licensed individual that manages the financial loan part of your home purchase- check out this article for more information about lenders (cause that stuff can be a little over my head).
Pre-approval means the lender has done a once over on your financials and deemed you highly likely to get a loan for a certain amount. This usually requires that you gather your pay stubs and your bank statements- plus hand over your social security number for a credit check. Pre approval makes your offer to the seller more appealing. Check out this article for more info though.
Once you find a house you love/like- your realtor will draft up an offer listing how much you would like to pay for the house that he/she will then submit to the sellers with your pre-approval letter. There might be some back and negotiations over price and other details.
If the seller accepts your offer the house is listed as under contract. This contract lists the price you’ll paying for the house and all the dates for important events including the actual closing date.
Also (in Colorado at least) you’ll submit an earnest money check (which is usually about $5,000) to hold the house under contract. The amount of the ernest check gets deducted from the sale of the home- it is not an extra amount on top of the amount of the home. All along the process of the house being under contract the deal could fall through. There are certain points when you can cancel the deal and get you earnest money back- and then there are other times when you would loose the earnest money if you cancel the deal (your realtor will let you know all of those details along the way).
A home inspection is usually the next thing on the list- an inspector (usually scheduled by your realtor) will come and look at the house with you to evaluate the condition of the home. They’ll comb over the house and give you an overwhelming list of everything they see (mostly there a ton of small issues). If anything major does pop up on the inspection (anything not up to code mainly), your realtor will list it in a dispute document- asking the seller to fix any of those issues. They seller may agree or not agree (if they disagree- this is a time that you can cancel the deal and get your earnest money back).
An appraisal happens next usually- you don’t participate in this inspection at all. This one is to determine for the lender how much the home is worth- this will determine if the bank is willing to give you the loan for the amount you’re asking.
Then seven days before your closing date you have to get final approval on all of your loan stuff (also known as your mortgage)- I feel pretty unqualified to tell you all about this stuff. You should check out this article about the absolute basics of a mortgage and this resource of the different parts of your mortgage.
A down-payment is the money you actual have on hand at closing to put toward the house. It is recommended you have 20% of the home’s price, but you can do less than that. You may have to bring it to your closing as a cashier check or have it wired to the title company.
The title company is who has the title to the home. They facilitate the final closing for the house and the handing over of the keys. You will sign and initial hundreds of documents at their office with you realtor, your lender, the seller’s realtor, and the seller all present which is the final closing officially ending the whole home buying process. :)
what i’ve learned
one. spend some time finding a great realtor
First of all- you have to have someone around with a realtor license to get you in to see homes, to talk with the other realtor, and to draft up the offers and contracts. So you might as well find someone trust and feel comfortable with- they’re your advocate through the whole complicated process.
Take a little time to search a good one out- don’t think every realtor is the same. They’re all different and have something else to bring to the table (I mean… they’re people- we’re all different). Ask friends and get recommendations- do a little interview and be honest about what you need and want. Don’t like pushy people? Don’t hire a pushy realtor. Want a shark when it comes to negotiations? Find that shark.
My hubby and I wanted someone really knowledgable who would help us along and explain everything as it happened. We called up my aunt who is a great realtor in Michigan to ask for her advice- and she helped us interview several people. The realtor we hired is a retired Attorney General of our part of Denver, has almost unlimited wealth of information about homes in the area, and treats us like part of the family. Plus, he is a really good negotiator. ;)
If it weren’t for him- the process would have been a lot more rocky. We adore our realtor and used him both times. When you trust your realtor it is just soooooo much easier to deal with the stress of the process.
two. find a great lender (and get pre approved)
The financial part of buying a home is the biggest and most complicated part of the process. Your lender should work through all of your loan options with you, get your pre-approval letter, and manage everything the banks need for the rest of the loan process. You should feel comfortable and confident in this person since they get access to your already emotionally-sensitive financial information.
Honestly- the financial part can be a pretty shockingly brutal part and the right lender makes a world of difference. During our first home purchase, we used someone without much consideration- and it made the process a whole lot more uncomfortable that it already was. This second time around- we specific sought out a lender that we trusted more. It was a huge huge difference (in a positive way)- much less emotionally trying as we handed over every last piece of financial information we had about ourselves.
three. understand your budget
Prior to even contacting our lender or our realtor- my hubby worked out exactly how much we wanted to spend on our new house based on how much we wanted to be paying each month on our mortgage. During pre approval- our lender informed us that we could get approved for a much more expensive home that what we were looking for which is a little tempting to say the very least.
My hubby can talk about this more later, but you should understand how much you can comfortable afford each month and stick to that prior to talking to anyone else. Be firm with your realtor what you can afford and try not to get sweet talked into anything else.
Biggest tip? Refuse to look at houses that are above your budget- so you don’t fall in love with it.
Also- give yourself a buffer around your absolutely top limit. Trust me- crazy things can come up during the process and there are always more expenses that you planned for. Give yourself wiggle room in your budget to accommodate those issues. For example- our house didn’t appraise for as much as we put it under contract for- which meant we had to pay the difference in our downpayment in order for the loan to go through. If we didn’t have any wiggle room- we would have lost the house.
Money reasons seem to be one of the main reasons house deals fall through- protect yourself from undue emotional duress and stick hard and fast to your budget.
four. know that scary moments will pop up
There is always something that pops up unexpectedly. Both of our home purchases brought up weird issues we had to fight through.
The condo- it had a strict pet limit listed on the HOA that we had to fight. We had to appear before the HOA board and asking for an exception. Then on top of that- my credit check pulled up a issue with a wrongful medical bill I didn’t know had been sent to collections.
This house- it had a weird structural concern that didn’t look up to code and the permit couldn’t be found (we did eventually find the permit- it hadn’t been digitally filed yet). Plus, our HELOC that we were using for our down payment almost didn’t close in time for our home closing.
There is also something you have to work through and deal with during the process- just expect it. Give yourself permission to have a emotional moment to freak out and then move on to fix it. Just don’t dwell on the emotional freak out- just give into for a little moment and then move on (oh and make sure you be mindful of your partner’s feelings too… don’t let the freak our moment hurt them).
five. know that it is never over until it is completely over
It is really really hard to not get emotionally attached to a house- trust me I know. It is darn near impossible for me to not fall in love once I’ve settled on a house. I’ve accepted that as a part of my personality. So I gave myself permission to get really upset for a moment when we lost a house I liked. Then once I got it out of my system, I started looking at available houses immediately to try to get excited about another one.
You can loose a house you like for all sorts of reasons. The seller might not accept your offer, the inspection may pull up a huge problem that you can’t afford to take on and the seller refuses to pay for, the appraisal may come back too high or low and you can’t afford the repercussions, or the loan may just fall through.
Don’t feel completely confident that it is your house until you have signed every single last document at closing and have received your new keys. Again- give yourself permission for emotional moments- then move along. There are lots of houses you could love out there.
So that’s what I know- those of you who know more out there let me know if you see a edit that needs to be made- or maybe give us all some advice of your own in the comments. This is such a crazy process any advice is welcome!