When Gerald and I started dating, he told me that one of his big goals is to buy a house – and he wanted to buy it within a year. When things got serious with us, we had to make some adjustments to accommodate our expensive (LOL!) long distance relationship challenges.
Since we started talking about the house, we have both downloaded Trulia and Zillow to look Fast forward to – we got engaged, I moved to New York and we got married. We were living with my brother-in-law. Then the pandemic hit. We knew it would be the perfect time to buy a house because all the prices were down. But then, we were out of jobs, so it probably would not be the best time.
When 2021 hit, we decided we are going to really try and buy a house. Or at least, move out and rent. But renting is never a good idea with one income because it would be more expensive than the mortgage and it’s basically not ours. So we started looking at houses again.
Now, we are first time homebuyers, obviously. While our family and friends who are homeowners were offering good advice, we still wanted to do research of our own. I think for first time homebuyers, between the window shopping to contract signing, we held it together pretty good. So I’d like to share with you all the stuff that we learned during this process.
Maybe it’s best if we look at it step-by-step.
- Find a good lender and get pre-approved.
Now, we both know the amount of mortgage we are comfortable paying monthly, so we limited our search to this amount. When you look at Trulia or Zillow, they will give you the house’s selling price and an estimate of the mortgage.
Gerald’s friend recommended a good lender, and he was very nice and accommodating. We thought we were getting a pretty good deal – but there is always someone better.
So, something we learned the hard way is: do not limit your search to one. Also, find someone who is local to the area. Meaning, he knows the area very well. I’ll tell you why in the appraisal part.
Also, remember – just because you are pre-approved for a loan it doesn’t mean you will be able to take the whole amount out. When you put in an offer, and something happens along the way, the loan can still get denied.
- Find a good realtor.
We love our realtor very much! Sometimes, people opt to buy a house directly from the seller because it would come out cheaper on the sale price. They do not realize that sometimes, it would cost them more. Realtors are there so they can represent you in the whole process. It is their job to know the ins and outs of the house, every single detail that you are buying; How old is the central AC? How much is the HOA? What is wrong with the house and why is it just this X amount when it should be worth this?
Our Realtor, Rebecca, helped us in this process. She is very patient, and she is always telling us the truth. “This has high HOA” “This is not a good area to live in, it’s not a good neighborhood” “This house will cost you a lot in repairs” It is up to us to decide, but I love the fact that she guides us through everything from start to finish.
- Making an offer.
Once you find the house that you like, make an offer. It is a really tough seller’s market during our buying process. People would just give 20K+ more than the asking price. After more than 5x of rejected offers and heartfelt letters, I had to research on how to properly make an offer. There is no better way! It’s like winning the lottery. You just put in the numbers and wait for the call.
Take note though, you can make an offer higher or lower than the asking price. It’s basically what the house is worth for you. But once you make that offer, there is no turning back.
- Find a good lawyer.
Lawyers are great to have but for some they are not necessary. We wanted someone to represent us. We are first time home buyers and it would be great to be guided legally as well.
Once your offer is accepted, here comes the paperworks and everything. Your lawyer would be the one to execute them, and they will be the ones talking to the seller’s party.
Your house should be inspected for everything – asbestos, foundations, safety measures, everything. If you do not know anybody, ask your realtor, they will be able to give you a contact person.
During the inspection, you will have a walk through of the house with the inspector. You need to look at every tiny detail in the house – except cosmetics. You need to know what are the problems that need to be addressed by the seller. Everything will be put in writing after the inspection.
Both parties – yours and the seller – should agree which ones should be addressed before proceeding to the next step.
This is when you will find out the value of the house. The loan officer will send someone to the house to appraise it. So they could know how much they could lend you.
Remember when I said the lender should be local to the area where you are buying. Here is why. They will evaluate the house worth based on the area, house prices around it, the condition of the house, all those sorts. If the appraiser is a local, he would know more about the area and how much houses would cost. If the appraiser is not familiar with the area, then it might be a problem along the way.
Once everything is good with the appraisal, you’ll be able to close in on the house. Prepare for expenses – a lot of it. Your lawyer, lender and realtor should be able to guide you through this last step. It took us almost two months to finish everything from shopping to closing.
I hope this helps first time homebuyers there. I also hope that your process will be smoother than ours. We hit some road bumps here and there, but we survived. 🙂
Disclaimer: I am not a Realtor, Lawyer nor Lender.