10 tips for buying your first home from a Homie in the trenches #Nitty Gritty#buying a house#new home September 10 | Guest post by GrimmGirl Sold Sign © by AKZOphoto, used under Creative Commons license. This should really be titled "things I wish someone had told me before we tried to buy a home." So, because no one told me, I wish to tell you, in hopes that it will help. 1. Realtors and mortgage people do not deal with first time home buyers very often. They are not used to having to walk buyers through every step of the way. Make sure to ally yourself with an outside party (a parent or friend) that has purchased a home before, the more recently the better. You will find this very helpful. 2. But first, we needed earnest money. Earnest money is a "small" amount of money (normally about 20-30% of your down payment) that is given to the seller to show that the buyer is serious. If they do not accept the offer, or the sale falls through, the money is returned to the buyer. If the buyer decides they do not want the house for what they consider a "stupid" reason (it's too small, we found something better) the seller has the option of keeping the money. The earnest money is part of the down payment and is credited as such at closing. That evening, they accepted our bid, and the games began. An inspection of the house must be done within 10 days of the bid being accepted. The buyer is responsible for setting up and paying for the inspection. This is not credited back to the down payment. 3. A regular home inspection only covers certain aspects of the house. Be sure to ask the inspectors exactly what the inspection covers. In our case, the initial inspection showed issues with the plumbing. Because the inspectors were not plumbers, we had to call a certified plumber to find out how much repairs would cost. This, of course, was an extra cost. In our case, we found the plumbing to be a problem we could not live with, so we had to fill out a form that basically said we couldn't move forward with the purchase until it was fixed. Because the sellers now live six states away, we opted to have them escrow the payments. Why we had to fill out four different forms to make this happen? Your guess is as good as mine. Related Post Oh shit, we bought a house! What now? I called my husband and told him, "Oh shit, we bought a house." He said, "Okay, we need to sit down tonight and make a... Read more 4. In this case, escrow is an account set up by the seller's bank to pay for work done by a contractor. The seller gives the money to the bank, the bank gives the money to the plumber, and the plumber does the work. If the work exceeds the amount of money in the account, you can renegotiate with the seller, or pay for it yourself. 5. Some banks won't let you escrow. Like mine. So, we worked with the seller to pay the plumber without involving our bank. This could end up biting us later if the work exceeds the price we agreed upon. We will have no legal way to negotiate the sellers paying a higher amount. Yes, this scares me. While this was all going on, I was not only dealing with my realtor– I was also dealing with my mortgage lady. They need a lot of personal information about your history and finances. Make sure you are not giving out this info willy-nilly (i.e. make sure they are legit). And that leads me to point 6… 6. My realtor and my mortgage lady did not communicate with each other unless I asked them to. They each expected me to inform the other of major things happening on each side. We didn't know that the bank didn't approve the escrow until almost a week after we had agreed to do it because I didn't tell my mortgage lady about it and neither did my realtor. 7. They need your race, nationality, last two paychecks from all places of work, info on all other loans you currently have including credit cards, social security number, one month's bank statements for all accounts, tax records, W2's and work history for the last two years. In my case, I had just graduated from college, so that was used as my work history. I had to prove it by getting my transcripts reprinted (in the summertime). We were a little short with the down payment, so my mom lent us some money, except… 8. You can't acquire any new loans while applying for a mortgage, even from family. A family member or employer can gift you money, but they must sign a form saying it is a gift, not a loan, plus provide bank statements proving that it is their money, not a loan or gift from a third party. My mom transferred the money from her saving to her checking to cut me a check and then had to prove it. 9. You also need an appraisal. An appraisal is different from the inspection; it is done much later in the process and ensures that you aren't overpaying for the home. This is something that the buyer is responsible for paying, but is credited back to the down payment. 10. Banks get overwhelmed with closing at the end of each month and will push back your closing date. Then you have to sign another form allowing them to do this. The most important thing I've learned from this: have easy access to a scanner or fax machine. The biggest hang up I encountered was having no easy way to have my fiancé sign paperwork (while at work) and send it to my realtor. I ended up driving all over town, wasting gas, time, and money. We probably could have closed early if I had my own scanner. New homeowners, any "wish I'd known" tips you'd like to share? Reporter Name * Reporter Email * Original text Enter the original text here. Edited text* Enter your suggested copyedit here. Notes You can add a note for the editor here. * Required information. Fix Typo GrimmGirl My name is Jen. I live in Kansas and am getting married in September. We currently live with his mother, hence the need to get out. PREVIOUS Yarn-pocalypse: Boring corner overhaul NEXT Great idea of the day: Use Skittles to flavor and color your drinks Show/Hide comments [ 62 ] Wow! That sounds super exhausting…. 28 agree Reply I clicked THIS but it's worth repeating. THIS. 7 agree Reply Yes. Yes it was. 1 agrees Reply My husband and I just closed on our first home (yay). I think that in addition to having a friend or relative who has purchased a home before, it is a good idea to find your real estate agent through a friend or relative if possible. My husband's aunt has been living in the area and gave us the name of a real estate agent. With so many agents out there, it's important to have one that's going to show you the kind of house you want in the area you want to be in at the price you can afford. Also, in some states (like Delaware) you're required to have an attorney to facilitate the closing. It's another decision and potential cost to be aware of. 4 agree Reply Definitely find a realtor through a friend's recommendation. Also make sure they are familiar with the area you want to look in. You want them to be able to answer questions about what else is in the area (grocery stores, malls, other shopping, doctors, etc.) 3 agree Reply Mine was my friend's Realtor and from the area. It was a good start, but she still had trouble connecting the fact that we were first time buyers. Reply maybe, maybe not. my number one piece of advice is get with people you trust. there are a *lot* of people out there doing every single step (realtor, loans, inspectors, etc.), so if you don't like who you've got, get someone new. seriously. we went with a friend of a friend as our realtor. it was not a good idea, but we were so overwhelmed with the process that we didn't know how to change midstream. don't be like us. i love our house, but we'd have paid less for it had we had some good advice. which brings me to advice #2: get a good inspector and *follow them around*. ask questions. i know a lot about construction, but i thought "oh, he's a professional home inspector; i don't need to crawl around the attic." wrong. our inspector sucked, and (as with the realtor) i was overwhelmed enough by the process to just "trust the professionals" even on stuff where i did know better (unlike with the realty). again, i would still have bought the house, but if our inspection had been worth a damn (or i had paid attention), we would have paid a lot less for it. however, our loan person and insurance person were really good, and answered all our questions. so i'm convinced that had we bothered to make sure everyone in the process was as helpful it would have been much less stressful, and with a better end result. 4 agree Reply This is really good advice. We just bought a foreclosure ourselves, and though the rules are a little different, I feel you on the reams of paperwork and the driving all over town all day long. I believe we could have adopted a Russian orphan with less paperwork than we had to fill out just to put in a bid on the home. And I was amazed that everyone, real estate agents, HUD people, home inspectors, just assume that everyone has a fax machine in their home. I mean, really, WHO HAS A FAX MACHINE IN THEIR HOUSE? Maybe I'm living in some kind of cave reality, but I sure don't. Me and the dude at Kinkos were best buds by the time we made it to closing. Congratulations on your new house! 12 agree Reply My Hubby found a really great app on his iPhone that can take pics of paperwork and email it to anyone. It's called "turbo scan." It's better then just taking a picture because it actually accounts for the fact that you are taking a pic of a text document, not just your drunk friend doing something stupid. 3 agree Reply We are closing in three days!! One thing we wish we'd known is that if you want to include closing costs in your loan, you need to specify that when you make your offer. Also, we took a class prior to finding the home we are buying and that helped immensely. We took ours through the city and if you end up purchasing in said city and using one of their "preferred" lenders, you might be able to qualify for some assistance. Didn't work out for us (we stuck with the mortgage broker we had already been working with, plus we make *this much* above the qualifying income), but it might be extremely helpful with closing costs. Oh yeah- closing costs. Not something we realized we should be accounting for til we took our class. On top of your down payment, be sure to have a few thousand for this! Unless you incorporate it into your loan (see above). And one more thing- don't use every penny for your purchase! Make sure you have emergency funds! What if you buy a house and then lose your job? Sucks to think about, but it could happen. You don't have to include this emergency account in your assets if you're not planning on using it for your down payment. 4 agree Reply You could also have the seller pay the closing costs. I see a lot of people work that into the offer. 5 agree Reply Completely agree with leaving yourself some 'leftover'. Have some there for unforeseen expenses and actually setting up the new place. We just bought a house and settled 1.5 months ago – the night before settlement and moving (simultaneous settlement) my husband did lose his job. Thankfully our mortgage broker had worked the loan so that we still had several months worth of mortgage payments available after settlement, which gave us room to breathe and not break down completely. (Sidenote: husband signed new employment contract last week *phew*) In terms of professionals, in Australia at least you should be working with a real estate agent, banker or mortgage broker, and a conveyancer or solicitor to handle everything legal – that's not something you want to handle yourself and risk buggering up. In our case mortgage broker kept communications open with conveyancer and real estate agent and took all our questions (however stupid and obvious!) seriously and tried to 'fix' things for us. Bonus: she charged nothing – I believe she recieved commission from the bank, but as her bank of choice was the bank I'd already researched and wanted, no drama to me. 1 agrees Reply Yay for fab mortgage brokers that charge nothing! Ours also answered a multitude of 'stupid' questions and was so darn helpful though the whole process (I think we took over 12 months from our first discussion with him to settlement) that I felt bad we weren't paying anything (even though I knew he was getting commission on the loan) so I sent him a bottle of wine, and he was totally taken aback! He said he was supposed to be the one giving gifts, we'd just bought a house! So, my one piece of advice, if you're in Australia, not sure how it works in the US 1 agrees Reply **stupid touch screen!!** My one piece of advice, if you live in Australia (or the US, if brokers work the same way over there) is to get thee a helpful broker. Ours was recommended by the realtor, but ask around for recommendations. Reply Right after we closed, our sink broke. Good times. HAVE CASH ON HAND. 1 agrees Reply Yes. A hundred times This! The day after we closed on our house, someone broke into our crawlspace and cut out the copper pipes from under the house. We had to shell out 750 bucks we were not counting on just to be able to have the utilities turned on. Had we not luckily had some money in reserve (because we knew we were buying a fixer upper too) we might have been the proud owners of a condemned house. Reply We just closed on our second home and I think finding a good Realtor really makes all the difference. Our first Realtor was totally competent, but our second one was just really on top of everything, communicated with us regularly, communicated with our mortgage broker and basically made everything as easy as possible (which, when you are both selling and buying a house, is important for sanity.) She also used Docusign, which is like an online signing thing, that lets you do all of your signing over the internet, making things way easier. You may have to re-sign papers at the closing, but at least you don't have to scan and fax everything. Also, it's going to cost you more than you think in terms of extra costs and fees. Have more money set aside than you think you need. 7 agree Reply Furture hubby and I are thinking about moving closer to our jobs and buying a new home. But this would require us to sell our current home at the same time. Did you do this? Any tips or suggestions? I'm terrfied that we will be stuck with 2 mortgages! Reply Yes, we did the sell and buy at the same time. It was a little nerve wracking, but it actually worked out really well for us because we just closed on our new house and will be closing on our old house in a week, giving us just enough time to move and clean the old house. I think you have to get your Realtor's honest opinion on how long they think it will take to sell your old house. Our Realtor had an average list to sell time of 3 weeks, so we felt pretty confident that she could sell our house fast, even though it was a tiny little house (in Texas, where people like things big!) It ended up taking just over a month, which was great for us, but certainly not the norm in many of areas of the country (the real estate market in our city is pretty hot right now.) Also, you need to decide what you can deal with, either buying your new house before you've sold the old one and dealing with two mortgages or selling the old house before you buy the new one and potentially having to move into a temporary apartment or something like that. For us, we couldn't move into an apartment (we have four pets and a five month old, so it would have been terrible,) and we had enough money saved up that we could handle two mortgages for a few months if we had to. Of course, some people can't get a loan for a new house if they don't sell the old house, so then you have to deal with a contingency offer, which isn't always the most attractive for the sellers. All this is to say that it can get very complex and a Realtor who is used to doing these sorts of sales is essential in my opinion. Don't be afraid to ask your realtor straightforward questions about the market in your area, their experience doing contingency offers, etc. Also, one thing that I think was pretty amazing with selling our house was that our Realtor paid for a stager to come and tell us what to do with our stuff to make it look the most attractive for buyers. She also paid for a professional photographer, which I think is pretty important. I pretty much ignored any house with crappy pictures. 1 agrees Reply Katie, that's exactly what we had to so, and multiplied the stress a millionfold! We got our preapproval sorted through the mortgage broker, then put our little 2br unit on the market, with a condition for a long settlement (12 weeks). It sold, but buyers threatened to pull out of the sale unless we negotiated the settlement period, we ended up with 9 weeks. We then started looking frantically for places and freaking out coz everything we liked was for auction, and standard settlement is 6 weeks. after a few weeks, we were convinced we wouldn't find and have time to settle on a new place before we had to be out of the old place, and started making plans for storage of things, pets, and selves just in case. We then were successful at an auction, and that vendor agreed to a shorter than usual settlement of 30 days, to make it the same day as the unit we had sold. That side of things went smoothly, thanks to the great team of real estate agents, conveyancer, and mortgage broker, but the settlement day was ridiculously crazy – stressful doesn't begin to describe it! We had to be out of the old place by 2pm, and couldn't get the new keys til the second settlement had happened at 3.30, so just had to sit outside with the truck, then get in and clean and unpack all in one go while dealing with electrical failures and…and…and… On the plus side, we were forced to be mega organised (especially as the big day was mid-week when the only help was ourselves, our mothers, and 2 manly friends with a van and a truck) and were completely unpacked and box-free within a week. Reply THIS. a good realtor makes a ton of difference. My husband and I bought a house (while wedding planning! because we're crazy!) a couple years ago, and the realtor was a long time friend of my family. I can't tell you what a difference it made to have a realtor that communicates with you. She also was friends with the mortgage broker we used (since she was used to HFA loans), and she was used to first-time buyers. So between all of that, we got a ton of communication between all the parties. So I think the very very best piece of advice is get a good realtor. 3 agree Reply Great advice but I would also add a few things. Depending on your location, you may be required to have an attorney involved. Find out if that's true. Make sure your parties: realtor, mortgage rep, lawyer, home inspector don't know each other, or at least have had minimal interaction. I personally sensed a sketchy thing between my agent and the lawyer he recommended. Like when I got my inspection they both tried to tell me the HUGE glaring issues in the house wouldn't be a problem and we could work through them. Fact was, I wasn't willing to work through them. I knew it'd be an additional $50K to fix before we could even move in and we were not up for that. It's ok to say no. Meaning, if you change your mind, that's ok. It's also ok to find a new anyone if they're not doing what you need/supporting you in your choices. I found a new agent and new lawyer based on the pressure I got over a lemon house. Earnest is not always 20-30% where I bought, it's $1K, that's it. The deposit is usually 20-30%. FHA loans. You can get more "money" in an FHA loan and they're totally doable. Don't be afraid to go that route to buy and then once you've gone up to the 20% paid in you can refinance to a regular loan. 4 agree Reply My wife & I are in the throes of house hunting at the moment and I just want to Super Extra Second the "don't work with sketchy people" sentiment. It does not matter if your bestest friend recommended this guy to you if he is being weird. You are not socially obligated to work with him. We have fired both friend-recommended people we've worked with so far and it is an utter relief. Exhibit A: our first realtor was unresponsive and didn't seem to have time for us (we suspect because of our budget). Fired. New realtor selected by my aunt who's in the real estate business: made of magic and pixie dust! If you live in Indianapolis, I highly recommend Mr. Roger Lundy. This man is on the ball. But you're not obligated to go with him just because I'm your Internet buddy. Exhibit B: our first mortgage broker refused to explain a particular loan program until we got to the point that we wanted to make an offer on a place using it. Then she surprised us with the rules, which we couldn't meet! Lost the house. This plus some unsolicited political opinions = oh honey no. Last week we met with a mortgage lady who sat with us for 1.5 hours in an after-business-hours meeting just to explain how everything worked. She actually encouraged us not to leave too soon in case we thought of another question as soon as we left. Guess who's going to be getting our interest payments. Short version being: people who are worth your money will let you know. 8 agree Reply My big tip is this- talk to a mortgage person BEFORE you start looking. Not only will they give you a sense of what you can actually afford they may be able to clue you in to some helpful government programs specific to first time buyers. I had no down-payment when I started looking for my first house last year and didn't know when I'd be able to afford one, but by having a discussion with a mortgage consultant when I decided that I wanted to start thinking about buying, I discovered I qualified for a small, super low interest down payment loan offered by my state specifically for low-income and first time home-buyers! My only out of pocket costs were earnest money and some closing costs… amazingly I actually got $300 back at closing!! Also, take approval amount that they give you with a grain of salt. I was approved for a mortgage that was almost twice what I actually paid for my cute little cottage. There is no way I could have actually afforded that. I bought in an "up and coming" area. Its a little rough around the edges, but the houses were cute and affordable now and are increasing in value. My monthly payment is easily manageable and I feel like I have made an investment in my future and my community. Buying a house was exhausting, but I am SO glad I made the leap!! 5 agree Reply If you have a iPhone or a Tablet of some sort – try downloading "Type on PDF" – you can get a free version. That lets your realtor email PDF's to you and you can sign them right in the PDF form and email them back. We're using it now as we go through the stuff to buy a house. 4 agree Reply We bought our house last December. Our loan took twice as long as anticipated because it was applied for at the end of the budget year and no one could agree what the next budget year should look like. It shouldn't have been that big of a deal (because their should have been more than adequate funds for a loan, being at the beginning), it was the semantics of it all, and no one could do anything about it or speed it up. So we were stuck living with my in-laws while someone else decided how much money should be devoted to that particular type of loan. Heads up, because I had no clue that was even a factor. Reply Congratulations on buying your first home, how scary and thrilling is that roller coaster ride? Things are a little bit different in Canada. In BC anyway a lawyer is a must for closing on a house. We were rushed on our closing date because there was already an offer on the house so our agent set up a quick close so that the seller knew we were serious. We never would have thought about putting in a back up offer on a house but our agent was great and she said that offers fall through so often that it is always worth putting in a back up offer if you have all your finances in place, we did and it worked. We had a great agent and lawyer. The mortgage broker sucked, she got it done in the end but her communication skills were terrible and I would never use her again. As fist time home buyers we really needed good communication from everyone involved she really dropped the ball. Our agent on the other hand was fantastic, make sure you have a good agent. She spoke up about concerns when we went to view one house, we loved the location and it looked good until we went in the basement, it had issues to say the least. She just looked at us and said "Keep looking, this is bad news. You can find a house in better condition than this in your price range." She was right and I was so glad she was willing to speak up. Ask a lot of questions at the bank, or broker, ask agents and friends, you can never have too much information when you are buying a house for the first time. Also our house inspector gave us a binder with full colour pics and descriptions of every area of our house that was covered in the inspection. This has been helpful many times since we bought the house. For one thing we don't know the age of the roof but when we went to get house insurance we took the inspectors report with us and they could see the condition of the roof so there wasn't any question that it is still good. It has been a good reference for us about any minor things we need to work on around the house as well as well. Reply Kansas doesn't require a lawyer, but I kind of wish they had. I was even given a lawyer as an option. It didn't even occur to me. Reply Oh man, has the industry changed since I bought my house! Luckily, I also work in real estate… 1st: Get pre-approved for your loan! Don't wait until you find a house you love to find out you only qualify to borrow 1/4 of the purchase price. 2nd: Some closing costs are tax deductible, so hold on to your settlement statement (and all other closing documents, for that matter) for tax time to get some of that $$ coming back to you. 3rd: I personally loved working with a loan broker, as opposed to a bank. If these species of awesome are around any more, it's hard to say, but they are middle-men and women who find the best loans for your terms. You'll pay more for them at closing, but you also might save more in payments by getting better loan terms. 4th: You can roll your property taxes, closing costs, and homeowners payments into your monthly payment, but this will increase your monthly payment (and this isn't factored into your "first look" quote). You can also choose to not escrow, and will pay a minimal fee at closing to do so. There are so, so many more, but these are the first few off the top of my head. Happy House Hunting! 4 agree Reply It depends on what you mean by loan broker, as a number of clients for which my employer (an AMC company) provides appraisers identify their reps as "brokers" or "loan officers". Reply We had just bought an all-in-one scanner/printer/fax thing for our wedding invitations (yes we bought our house in the year between engagement and wedding) but it was a sanity saver for buying the house. We asked our buyer's agent (more on this awesome person below) to email us all the forms so we printed them out, signed, then scanned then emailed the scanned images. Multiple times day even. Never used the fax feature. Most offices and kinkos also have email scanners – easier then faxes. But even better, was having a buyer's agent. This is a realtor who works for YOU – finding mortgage people last minute when your bank bails on you, harassing seller's agent, getting closing scheduled, helping you find an inspector, sorting through listings, setting up showing appointments, asking you sane questions about house needs/wants and generally being your guru through the whole process. (at least those things are what ours did for us) A buyer's agent agreement (signed before you see ANY houses) should specify if they split the standard commission with the seller's agent or what. If your friend or aunt is a realtor, they should be able to act as your agent and they should actually know the buying/selling process (unlike your old roommate who just went through house buying hell…and maybe you don't want their advice…) 1 agrees Reply We closed a month before our wedding. DO NOT DO THIS!!!!! 2 agree Reply we closed 10 months before our wedding and it was too close. Buying a house WHILE planning a wedding is stupid stressful and crazy. Kind of nice to have it all over with, but I can't even imagine doing it less than 6 months apart, nevermind 1 month. 1 agrees Reply Also make sure you account for things like PMI (private mortgage insurance) which is required if you have less than 20% down, taxes, and homeowners insurance in your monthly mortgage payment. I really wish we would've contacted the subdivision trustees to find out our subdivision rules (where we could put up a fence, what kind of fence, could we have a detatched shed) Our subdivision rules were written in the early 60s so the only kind of fence it allows is chain link and no detatched sheds or garages of any kind. Problem is more than half the houses have not followed the rules over the years and the subdivision trustees are just now enforcing them on new residents. Grrr 2 agree Reply It is a good idea to get pre-approved for a mortgage. And an even better idea to get pre-approved only for what you can actually afford, not for what the lender is willing to approve. Then you can ignore houses that are out of your price range, and there's no temptation to bid too high on something. 1 agrees Reply When you find a house you like, look into the HOA rules (if there are any) for the neighborhood. You never know what the HOA is going to care about. "Thou shalt not have a red door." Our HOA has a weird rule that makes banks run away screaming ("right to first lien", I still don't fully understand it, but i think it's only legal in Texas and only active in about 3 neighborhoods in the whole state). We ended up having to scramble to find a new mortgage company that would agree to this rule. We ended up stuck with a guy we did not like, but we managed to get through it and the loan was promptly sold to a bank so we never have to talk to him again. (he got all panicky about the cost of our insurance on day and tried to get us to switch to something cheaper on the fly, I managed to keep my head cool enough to say that we'd rather keep what we have or at the very least research it on our own time, thank you very much). 3 agree Reply Fellow Texan here. The "right to first lien" rule you are referencing can cause a lot of headaches for people trying to buy houses with HOAs using unconventional loans (FHA loans, typically). We lost a buyer for our townhome because she had an FHA loan and we were in an HOA. The specifics are a little too complicated for this venue, but it's basically a "King of the Mountain" situation, where the lender and the HOA won't agree who has the superior lien on the property. Bottom line – If you (1) live in Texas, (2) are considering buying a home with an HOA, and (3) are buying a house using an unconventional loan like an FHA loan, check with both the lender & the HOA to make sure you can. Do this before you get too invested in the house/subdivision and it will save you a lot of grief later. Silver lining – we now live somewhere without an HOA and love the freedom to paint our house any color we want, put up a cool custom wrought iron fence, and plant a big garden right in the front yard. IMHO, HOAs suck. Reply We had an FHA loan, but the whole process involved a lot of extra headaches. We are extremely happy with our neighborhood now, so it all worked out. Reply Our first homebuying experience was relatively painless, and hands down the reason is that we prepared long before we started looking. 1) We started saving for our house downpayment 3 years ago, automatically putting money aside 2) We bought books on the homebuying process, the mortgage process, and home inspection (we both read them, but one of us was in charge of REALLY understanding the money aspect, which was fun for me, and the home inspection aspect, which worked for him). This helped us understand what kind of house we wanted and could afford, what steps we should take first, and how to find the right people and know that they're trustworthy. But, even when we did find the right people, we were confident in our own knowledge and didn't rely on them for information. 3) I'd also recommend signing up for Angie's List. I purposefully avoided any recommendations that were due to a personal relationship with a friend (ie a friend's neighbor), since I thought it would be much more awkward to say that I didn't want to work with them if they weren't good. 4) And for every person you work with, always always interview/get quotes from multiple people. Some referrals save you money, while others cost you, but you won't know until you shop around. Again Angie's list is great for unbiased reviews. I cannot stress enough the importance of taking your time to do your research and understand your needs and resources and all of the steps involved before you start looking at houses. The time, money and stress you save is definitely worth it. 3 agree Reply Great advice! Are there specific books/websites that you recommend we read as we begin this process? Reply A lot of people have commented on how you might HAVE to get an Attorney. Don't think of it as a burden. Get an attorney people! Nothing in your description mentioned one, or the things they do. Did you have a title search run? Have anyone provide title insurance? Also, a lot of the issues with people not communicating can be prevented by having an attorney as your official facilitator. OH! And they have their own escrow accounts! So that problem could have been avoided entirely. I used to run title checks in a real estate attorney's office. One of the few times I actually found problems? My own house! When running the original title I found many discrepancies about where the property line was so we got a surveyor to come up and draft a new official plot, and got my neighbor to sign a letter admitting that his fence was on my property. His fence had been their long enough, that he probably could have claimed that those few feet were his de facto and had a judge uphold it. Its just a few feet, but those could make a big difference if we ever end up wanting to renovate or expand the house and need to worry about setbacks. There is a brief window of time between when the title is run and when the new deed hits the public record where new liens or other documents could be processed against the property. This is why we always recheck the titles after closing. About 90% of the time nothing comes up, but for my house it turns out that there was a federal tax lien filed against the former owner that processed during that window. Which meant that whoever owned that property was responsible for paying off those taxes or the government could sell off the house to pay them off. Lucky me I had an attorney and title insurance! Some letters from the attorney managed to get the former owner to clear up the lien, but if he hadn't that insurance policy would have been put into affect so that I wasn't on the hook for that money. This is all a long winded way of saying, get a good closing attorney! Even if your transaction seems relatively straight forward. At least around here, most contracts allow for the seller paying a certain amount towards closing costs. Even with the extra expenses of my closing, that allotted amount covered all the fees. 5 agree Reply Yes! We bought our first home this year. Some things not yet listed: 1. It is so stressful. I don't even know why. But feelings+money+home=stress. 2. Do you wanna buy a fixer upper? You can't unless you have a giant chunk of cash. The bank wants to see you have the money to fixit. They don't care that you want to DIY. 3. Know what you can compromise on…. Because unless you're rich you will. 4. When you get preapproved ask the bank to estimate closing costs. We were alarmed! 5 agree Reply THIS. I cried at least 8 times over closing and I am not a crier. Not really sure why, either. 1 agrees Reply Okay, if I were scrolling through this thread, I probably wouldn't stop to read that essay I wrote above. So here's the short version: Get an (good) attorney! They check things you might not check on your own and those things can be important. And they already have escrow accounts. 6 agree Reply Seconding the attorney recommendation. First time home buyer here four months into a short sale purchase and I actually wish we would have talked more with our attorney from the start. He actually just today cleared up a ton of issues we had and is proving to be far more knowledgeable (and powerful) than our agent. Short sales are a true test of patience and endurance and I would never be a party to one without a good attorney to navigate the daunting process. PS- If you are in the middle of a purchase and have an attorney don't be afraid to go to them directly with questions or concerns. The agent doesn't know everything- especially from a deeply legal standpoint. (Don't get me wrong- much love to agents, wouldn't do anything without one of them as well.) 1 agrees Reply On a strictly house related tangent, know what you wnt before you start looking and find a realtor who will show you only what you want and can afford. Also, know what you would like to have but can live without. In my case, I knew I wanted a two story house in a particular neighborhood, and I had to go through three realtors to actually get to see what I was looking for! And lastly, do not be afraid to ask the sellers to include extras – especially on a brand new home! I got my sellers to build my back fence for me – at no additionl cost to me! Reply So, one more thing that I would add, especially if you are buying in termite prone areas – if you have damage that needs to be fixed (or a termite infestation) that shows up in your inspections, be aware how much additional damage could be done in the 30 days or so it takes for the previous owners to get out of the place & make the repairs/have treatment done. We bought a historic building that was pretty much being used as a furniture stash (imagine piles and piles of antiques & stuff). During the inspections we found no structural issues & just a small infestation of termites in one of the non-structural dividing walls in the basement. The sellers agreed to pay for the termite treatment, however we couldn't have the treatment done until AFTER they moved their stuff out (which took ~30 days). In the 30 days (of record heat & drought) it took them to move everything out the little termite f&^*ers destroyed two structural beams in the basement which we now have to pay to get replaced. It's not an end of the world type deal, but it's an additional $8,000 repair that we really didn't want to deal with. Also I'd highly recommend looking up your county appraisal's office online to see how much the property is valued at & what the neighbors are valued at. Often times the appraisers won't go into homes so it's not the greatest measurement, but it can allow you to get a general idea of whether or not the place is a good investment & when the last permits were taken for upgrades or expansion on the interior. Reply Of all times for a post like this to come up! We're in the process of buying our first home (closing Oct 1) in an extremely non-traditional manner, so I figure I'll add a few of my lessons so far: 1) We're buying our apartment from our current landlord, which means it's a "non-arms-reach transaction" – aka, we don't have a realtor. Now, because both my landlord and his realtor are awesome people, we're getting a great deal of assistance, but it means we've had no guide for the process, and very few people with similar experience. So it was important to have someone we trusted guiding the process. Which brings us to… 2) Our friend is a mortgage broker. In British Columbia, this costs us nothing, as he gets a commission from the lender. His job is to find the absolute best possible deal for the situation. So even if your friend is not a broker, you should find someone who is, and hire them. 3) God help you if you're self-employed. I am, technically, and it multiplies the already massive amount of paperwork by 10. It is doable, but you want to make sure you have very good records of your past two to three years (T1 Generals, income statements, NOAs, contract letters, bank statements etc.). Now, we had extra complications because… 4) Our guarantor. Because my partner's credit is being rebuilt, we decided to use my dad as a guarantor to get a better rate. Of course, my dad is also self-employed…see above for issues. A guarantor can be a great thing for a first-time home-buyer, but you want to make sure the person you ask has excellent credit and a low debt-to-income ratio, so that the lender will be comfortable that they could carry the loan if you default. 5) It's incredibly stressful. Don't ever underestimate that. Okay, so we weren't even thinking of buying until our landlord told us he was selling, and were thus a lot less prepared than most first-timers. There's been a lot of tears. But even if we were completely prepped, the stress could still be overwhelming. It's money, it's time, it's competition, it's home – you're perhaps going through it with a partner…it's fraught. But it's also exciting as all hell. So try to accept that it'll be both, and hang on tight. Reply Our realtor is extremely knowledgeable and thorough…but she's constantly on vacation. Every time in the last six months that we've asked to view a home, she's had one of her coworkers bring us for a showing. But, again, she is very knowledgeable. When I let her know a couple days ago that we want to put an offer in on a house, she immediately ran through the list of things to ask for (inspection, water test, septic inspection, radon testing, etc) even though we've already gone through one offer process. She knows we're first time home buyers, so she's very patient…just wish she was more available. Reply Ugh, anxiety-riddled flashbacks. We had a really smooth home buying process, and it was STILL the most nerve-wracking thing I've ever done. I don't want to move again for a very, very, very long time. 2 agree Reply We, also, are in the middle of buying our first. All of the documents are transferred electronically, meetings are held via email or phone, I've never seen our loan agent. Never. The realtor is a doll. She's helping guide us quite well and did a great job meeting our very specific desires for a place. It helps that the bank that owns the property is doing everything they can to offload it(been on the market for over a year). It is a *very* arduous process in all respects. My best piece of advice is to actually be there when the inspection is being done, follow the person and ask as many questions as you can. 1 agrees Reply Doing all the paperwork and having to sign/send was the hardest part for me. One thing that completely saved me was getting an app (TurboScan, maybe?) that lets you take pictures of a document with your iPhone and will create a PDF of it for you. It's not perfect, but I could just email things to our realtor without having to find the nearest Kinko's and fax it. I also recommend keeping a binder of everything you're sending and receiving. We had gotten mostly approved by one lender, decided to go with another a month before closing, and ended up having to find/send all the W2s, paystubs, etc that we had already sent. Tracking it all down again was a pain in the ass. Reply I'm glad that I'm not the only one who ALL of this happened to. Great advice that I only wish I had read in May when we started the homebuying/mortgage/scan-every-financial-document-you-ever-received process. Especially the "don't get another loan/credit card" piece. My husband and I went to Lowes the night before our closing, got a credit card to get 5% off the tractor we were buying and almost weren't able to close because of it. That would have been nice to know! 1 agrees Reply We bought 2 cars three months before we even saw the house and almost weren't able to close because we "didn't declare it" in original documents. I didn't even know it mattered!! Reply I just started working in a the loan department of a local bank, and am overwhelmed with how many regulations there are. One thing that I I would like to point out is about pay. Say you get a bonus or commission every month. Usually unless you've consistently gotten it for the past three years, they won't include that in your income. Just something to think about. Reply This post makes me glad my husband and I bought our condo right after the housing bubble burst. Our closing was only postponed once, and that's because the credit union was blindsided by a new Fannie Mae required form. Other than that, though, it was quite easy. That said, having worked for an AMC for a while, I would like to point out one thing that you should NOT do: try to estimate the value of the house then dispute it if the appraisal comes in lower than what you think it should be. I see this more on home equity and refinance loans, but it can happen with purchases, too. Basically, if you dispute the value, you will hurt only yourself in the long run. Some banks will go through a reconsideration process that can take some time, and the value rarely changes for the better. Most reconsiderations either stay the same or go down in value. In a similar vein, please don't call the appraiser directly to debate this. The appraiser is not legally obligated and is in fact discouraged from talking directly to purchasers/borrowers on other types of loans. Lastly, keep in mind that the appraisal is a required step in the home buying process but is more intended for the mortgage reps. The appraisal does have a significant impact on your loan going through, but odds are good you might not even see the appraisal if you don't directly ask for it. It depends on the bank. Even if you do see it, the document will not make a whole lot of sense to you at first because appraisal forms are a whole different breed of jargon than pretty much any other form of technical writing I've encountered. I've been reading these reports for three years (I review them), and I still sometimes wonder what the appraisers are actually intending to say. Save yourself the stress and try not to interpret every last bit of minutia of the appraisal. It will drive you bonkers otherwise. Reply I just bought my first house in June and I cannot emphasize enough how valuable a good real estate agent is. I went through several agents before meeting the one that I used and continue to refer to friends. Good agents should be focused on helping you find "THE house", not "A house". That is, they should be helping you find a house that is right for you – both in terms of your "wishlist" and your financial limitations. They should be pointing out negative aspects of the home right along with the good ones. They shouldn't be glossing over the issues and continually telling you how easy things are to fix – especially if you have a limited budget, which most of us first-time buyers do! Don't be afraid to switch agents and don't feel obligated to use someone because they are a friend or family or were referred to you! This is possibly the largest purchase you're ever going to make, so make sure you have the right people in your corner! The same goes for your home inspector, lawyer and mortgage broker! 1 agrees Reply Great article. Lots of great tips here. I think #8 is one of the most important tips. I know someone who was just weeks away from closing on his first home (FHA loan) and the loan was rejected at the last minute. The reason was the buyer bought a flat screen TV on store credit during the application progress. That TV purchase messed up his debt to income ratios and he could not buy his first house. He should have waited to buy the TV until after he closed. Steph Reply These are great things and glad to have stumbled across this. We are selling my husband's house and if all goes well with that then we are buying a new one, yeah! He bought his house about 14 years ago so is a bit rusty on all of this. Reply Thank you for this article, I would like to add a small tip while buying a home which is asking about future plans. Do research about the area that you'll buy your property in or ask your agent because real-estate agents are aware of any future plans that will happen in any area they're selling property in because they use it as an advantage for the villa or apartment to increase its price. Future plans may be a hospital, bus station, or even a supermarket that is planning to open. Reply If you want to buy your first home, then you should give focus on these points for selecting the right home for you. Reply Try to find a realtor who specializes in first time buyers. I originally contacted the realtor that my family has been using for years (she sold my parents their first house about 40 years ago) and she suggested that I use her daughter/partner because first time buyers are her daughter's specialty. She was absolutely fabulous and very patient. I actually wound up purchasing a house across the street from her house which turned out to be very convenient when I was meeting with potential roommates before I closed on the house because she could pop over and let us in. It also came in handy when it was time to sell but that's a separate topic. Also, when you're looking at houses don't be afraid to tell your realtor that you're interested in a certain neighborhood even if there are no houses currently listed. Especially in this bad market it's not unusual for them to have (or know of) what are called "pocket listings" or homes that aren't officially on the market but where the owners are probably willing to sell (usually because they were on the market recently and didn't sell). That's how my husband and I got our current house; we were driving back from looking at houses with her and my husband mentioned that he liked a certain townhouse development we were driving by. It turned out her mom/partner had had a listing there the previous year where the sellers had decided to take a break from having it on the market. We were even able to get the house for significantly less than its previous listing price because the owners were so relieved not to have to go through putting it on the market again. Reply Join the conversation Cancel Reply Your email address will not be published. Required fields are marked * Comment Notify me of follow-up comments by email. 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