You may have seen this phrase in the real estate listings for teeny tiny little houses and apartments converted into condos to try and entice buyers that just happen to fall in my demographic. The listing for my condo said “Bring your decor ideas and enjoy!” If only the process was that simple…
I started contemplating the idea of home ownership in the summer of 2012. Living with my parents was starting to annoy (‘where are you going?’ ‘when will you be home?’), and renting seemed the likely next step. And then the news stories began: Record lows for mortgage rates. I thought, why not? Throughout the chaos that ensued from that point, I’ve found that these were the most helpful steps:
- Organize your documents
- Find a good team
- Research, research, research
I must stress this fact: I absolutely did my due diligence when researching mortgage information, and you should too. Knowledge will be your best friend throughout this process. You’ll get hit with paperwork from every angle, and the more you know ahead of time, the less likely you are to stumble across something you don’t understand that will slow you down.
Organize Your Documents
I knew from word-of-mouth that the first step in buying a home is to get pre-approved from a lender. For all intents and purposes, it really does not matter which lender you get your pre-approval letter from. I went with the major bank where my other accounts were held because it seemed like the easiest option to start, plus they have my entire financial history, so what more could they need, right? Let me tell you, I had to unearth some of my most obscure financial documents right off the bat … and this was just the pre-approval! The mortgage application process in itself is an even bigger beast, so my first tip is to organize all of your pertinent financial documents. Of course, these will be different for everyone, but it is a good rule of thumb to start some file folders with your recent tax returns, W-2s, pay stubs, and statements from all of your accounts, from regular checking to mutual funds. Once you’re a few weeks in, many people will expect you to know a lot of this information off-hand, so making sure it is in one convenient place is the best favor you can do for yourself.
Besides all of the boring (but important!) financial paperwork, I also recommend keeping notes on all of the properties you go to see. Many people just rely on pictures they take, but pictures cannot always give you the whole story when you’re looking back a week after the showing. What was your initial impression? Did you get a feel for the neighborhood? What did you hear? (or, God forbid, smell?) Did your realtor mention any issues he/she knows of ahead of time? These are all things you should jot down when you’re looking at a property, as well as some of the general listing information, i.e. beds, baths, address, and listing price.
Finding A Good Team
Thanks to my good buddy, the World Wide Web, I was able to look through tons of resources that explain the steps to buying a home. (I recommend checking out Wells Fargo: My First Home. It’s interactive and free!) But the Internet is no substitute for a hard-working human team. Everyone in your life, including family and friends, will obviously play an integral role in supporting you throughout the process. But for our purposes, when I refer to my “team,” I am including 3 people: my realtor, my mortgage broker, and my lawyer. I cannot stress enough how important it is to find people who will work hard for you. Trust me, you’ll thank yourself later!
My realtor was absolutely top-notch. She listened to all of my requests and demands (“Don’t you dare show me anything out of my price range.”) and would meet with me at any time of day to show me a listing. I have a reasonably flexible job, but this was still very important to me, which leads me to my next point. Make sure you know what you want in a realtor before signing an agreement. I was looking for 3 qualities: someone who would be available at the last minute (hey! sometimes a good Zillow listing comes out of nowhere), a fun personality, and someone who would offer up plenty of information about a property. Have a face-to-face conversation with your realtor to see if you’ll be a good fit. It’ll help in the long run too- the more they knew about you, the more intuitive they will be into your wants and needs in a home.
My broker was also outstanding. I ended up choosing a brokerage firm instead of going with a major bank mostly because my realtor recommended my broker to me. I found that this happens a lot in real estate; many people are looking to work with someone that they know has a proven track record, especially throughout this long and often frustrating process (not to mention that referrals are half the business). However, that didn’t stop me from looking up the broker on my own. I also had a long sit-down chat with her, and I asked her to go over every single point on a cash-to-close worksheet, which she gladly took 2 hours to do. What I was looking for in a broker was flexibility and a willingness to answer every single one of my questions. During the mortgage application process, you will find yourself sending and filling out endless amounts of paperwork with so much fine print your head will spin. So, in my humble opinion, someone who will take the time to answer your questions is absolutely crucial.
My lawyer is actually a friend of the family, so I didn’t have to do much searching. However, I do recommend using an attorney who specifically handles real estate law, and is not so much of a trial attorney. The last thing you’ll want is to have to postpone your closing because your lawyer has to go to court for a few weeks straight.
Research, Research, Research
As with any major undertaking, don’t forget to stock up on information. I looked around at the housing market, including rates and trends, and determined what kind of property I wanted and what the market was doing in my preferred location. Appraisals often look at the selling prices of similar properties nearby, which can help you determine the kind of deal you’re getting. I was willing to go with a place that needs some work as opposed to move-in condition, so I made sure to research the cost of improvements I wanted to put in.
Above all, I researched what I could afford. Your pre-approval letter will give you a ballpark range to help guide your search, and I also asked my broker for a sample cash-to-close worksheet on every property I was interested in, but I never stopped double- and triple-checking my numbers to ensure that my offers and expectations are realistic. No one wants to have to foreclose on their first home.
From the first meeting with my realtor to the time of my closing, it took just over 6 months. It was frustrating and discouraging and exciting all at the same time. I found that I kept having to remind myself to enjoy it.
But in the end, I now have a brand new home to try a whole bunch of Pinterest hacks! Because that’s what’s most important, right?