After a decade of apartment living, my husband and I finally saved up enough money to buy our first home last year. We did our due diligence—checked our credit, got pre-approved, found a realtor we loved—and then on the first weekend of open houses, made an offer. Sounds straightforward, right? Not quite. The entire process was actually much more complicated and stressful than I expected, despite having our ducks in a row beforehand, and we spent most of the time Googling unfamiliar phrases or asking our agent a million questions. Here are seven things I wish I had known before becoming a first-time home buyer.
- Shopping around for a mortgage lender is kind of like speed dating.
One thing I didn’t realize about mortgage rates? You have to visit quite a few lenders in order to find the best one, and each conversation is basically like, “Show me what you got.” We arrived with our paperwork, waited while the lender looked over our credit, then walked away with some numbers to consider. It felt like speed dating, in a way, because we wanted to match our financial history with their best offer in the shortest amount of time possible—then move on to the good stuff. As newbies, our realtor also recommended that we go through final lender costs and fees—details I hadn’t thought through—with a fine-tooth comb, just to make sure everything was legit.
Today In: Real Estate
The Housing Bust Widened the Wealth Gap. Here’s How.
12 Counties Account for a Third of U.S. Flood Insurance Claims
Housing Market Shows Few Ill Effects from Tax Reform
According to Dallas realtor Jeff Peterson, this is one of the priority items a first-time homebuyer can and should negotiate in the first place. “I recommend my clients to shop around for a lender the same way they would shop for a house,” he says. “Don’t just go with the first lender you speak with as there are many areas that can be negotiated. Different lenders will have different interest rates that you will be charged on your loan. You can save a lot of money on the life of your loan if you find a lender that is 0.5 – 1% less than everyone else. Keep an eye out for ‘junk’ fees that are listed separately but look very similar to other listed fees. Tell your lender that you agree they need to get paid for their services but you are not going to overpay, and you will suddenly find your fees have been lowered.”
- Make sure you budget and plan for transitional costs.
We started looking for a home about three months before the lease on our apartment ended, assuming we’d have plenty of time to find something—and if not, we could rent month-to-month. Of course, the exact opposite happened: we ended up having to cover both our new mortgage and previous rent for a month. Even though we assumed that not having to sell a current home before moving into a new one was a good thing, we didn’t necessarily budget for the unexpected, either. It’s smart to have a plan, whether it involves paying movers or saving for an extra rent check or selling furniture that won’t fit your new space, to avoid unnecessary financial headaches on top of such a big investment.
- It’s really easy to get caught up in the superficial.
The first time we walked through our now-home, I immediately dwelled on everything I disliked—dust-covered countertops, random junk left behind in cabinets, boring beige walls everywhere. Which is funny, because I had just told my husband in the car on the way over, “Remember, don’t get hung up on the superficial stuff!” I never thought I’d be like those tut-tutting wives on House Hunters who complain about small things that can be easily fixed, but I was. It took several visits back to the house before I started to see the potential, and I’m so glad I waited out my initial annoyance. The bottom line: so much can be changed or fixed to meet your specific preferences, so don’t let that get in the way of a great home.
- You might be responsible for the property abstract.
About six months after we moved in, I received a letter in the mail to pick up our abstract paperwork from a local law firm. I drove over, and the assistant handed me a thick stack of documents bound together with a rubber band. “Here you go!” She smiled. “This is the only copy, so don’t lose it as it is really expensive to replace.” Okay, then. I had so many questions: what’s an abstract? Is it like a title? How long am I supposed to keep it? Do I need to read all these pages?
Here’s the deal: a full abstract of title summarizes the history of ownership over a specific property. It’s not only pretty interesting (I learned so much about our subdivision, previous owners and the original land our house was built on!) but serves as a primary document if you ever want to later sell said property. If an abstract doesn’t exist or needs updated, then sellers can pay to either make updates or create a new one, both of which cost money. All in all, it’s valuable paperwork with a whole lot of useful information.
- You’ll change your mind.
I wanted three things for our first home: an attached garage, a fenced-in backyard for our dog and toddler, and a location near downtown. Once we started looking, we quickly realized that these criteria were incompatible. Every home in our price range and in our preferred neighborhoods either had a detached garage or minimal, non-fenced green space, based on the age and style of the houses. Meaning, we either had to re-prioritize our non-negotiables, or cool it on the house-hunting until we could spend more. .
So I thought about it: after being scarred from too many Midwest mornings scraping my windshield in the freezing cold, I really wanted the garage most of all. I figured we could always add a fence later, and as for the location, broadening our geographic search actually opened up the possibilities. Once we took that approach, we found a home in a quiet cul-de-sac about ten minutes from the downtown area, with a huge, private backyard, and you guessed it—an attached garage. Although my heart was set on certain things, I’m glad I changed my mind.
- Your home inspection will find problems, no matter what.
I once asked our inspector, a friend, if he always finds problems with a house. He laughed and said yes, which I actually found somewhat reassuring. I didn’t know what to expect: were we looking for a list of items that needed maintenance down the road, addressing small fixes, or finding full-on dealbreakers? Well, all three.
Aside from non-working electrical outlets and a semi-functional bath drain, our inspection report identified six rotting windows on the main floor of our potential home, and recommended immediate replacement. We talked to the seller, who offered $2,000 to get them replaced. That sounded somewhat reasonable to someone like me, who had never purchased a window before—until I heard back on the estimates, which were closer to triple that amount. We asked the seller to provide more money to match one of the middle-ground vendors, and he balked . . . so we pulled our offer, and the house went back up on the market. About 12 hours later, while we drank our sorrows in red wine, our realtor called: the seller changed his mind and would pay for it in full through a closing credit.
Dramatic? Yes. Worth it? You bet. Despite almost losing our home of choice, I’m so glad we stuck to our guns—when it is a safety or structural issue, it’s absolutely vital to get what you need to fix it, or walk away.
- Don’t be afraid to ask any and all questions.
In grade school, I spent a lot of time feeling nervous about asking a dumb question—and as an adult, I constantly have to remind myself that seeking knowledge, and looking silly for a hot second, is way better than feeling like you don’t understand what’s going on. These feelings popped up big-time during the house-hunting process, especially when I blasted our realtor with ten questions a day via text and email. But you know what? Good real estate agents want you to feel equipped and informed; besides, you’re paying them for their expertise and guidance. Asking any and all questions about buying a home is one of the smartest things you can do for yourself.