So you’re thinking about buying a house? CONGRATS! This is a huge step for you! Buying a home will be one of the biggest (and hopefully, smartest) financial decisions you’ll make in your lifetime. While the process isn’t easy, it will absolutely be worth it. When I first started my home buying process, I was overwhelmed by how long and complicated the process turned out to be. But I did my research & stuck it out for the 7 months it took us to find our dream home.
Here are some of the things that I wish I knew before starting the home buying process:
It is a LONG process
The average time from when you put an offer in on the house to closing is about 30 days. This time allows you to get inspections and an appraisal done on the property. It’s also time to get your financing in order, figure out home insurance, etc. The way I look at it, this waiting period is there for a reason and there’s no reason to rush it. If everything goes to plan, you’ll be able to move into your new home about 1 month after your offer is accepted. And if something comes up that extends the timing, so be it. The last thing you want is to overlook something because you were in a hurry to get the keys.
As far as the time frame for finding a home….that can vary tremendously. Some people fall in love with the first home they see. Others search for months before they find something they love. It took us 7 months of searching before we found our perfect home. If it takes you longer, then that’s ok!
Option money and Earnest money
These are part of the “closing costs”, a term you’ll hear thrown around quite often during this home buying process. Whether your contract will require one of these, both of these, or call them by some other name will vary state by state.
In Texas, option money is what you pay to purchase the right to cancel the contract within the timeframe specified within the contract. It’s typically nonrefundable and allows the buyer time to do due diligence before moving forward with a deal. This is usually due as soon as the contract is executed. Ours was $100
In Texas, the earnest money is paid to the title company and is usually due a few days after signing the contract. This money gets put into your escrow account and is credited at closing to either your down payment or any other closing costs that you may owe. If you end up canceling the contract for any reason, the money will be refunded to you in full. Ours was 1% of the purchase price of the home.
Read all of your contracts at least once, and ask questions
Please, please, PLEASE read your contract from start to finish at least once. You must know exactly what you are signing before moving forward. And if there is a clause or phrase that you don’t understand, Google it. If you don’t find the answer there, don’t be afraid to ask your realtor to explain it to you. You must understand what options you have if, for instance, the appraisal comes back lower than expected. Or if the inspector finds issues with the foundation. You also need to understand which party is expected to pay which costs at closing. Your realtor should be able to explain all of the legal mumbo-jumbo if you have any questions. Which is why…SEGWAY –
Choosing a great realtor is SO important in the home buying process
It’s 2020, and most listing agents are posting homes for sale on sites like zillow.com and realtor.com. Don’t be fooled into thinking it’s a good idea to contact the listing agent on your own and work out a deal directly with them to “cut out the middle man”. While this might seem like a good idea at first because that’s one less commission that the seller has to pay, remember that the listing agent only has the seller’s best interests in mind. The seller likely won’t adjust the price solely because they’re not having to pay another agent’s commission. There’s no requirement for them to do so.
You need a good real estate agent to represent you in the deal. They will pose questions that you wouldn’t otherwise know to ask and be a resource throughout this long, complicated home buying process. You want someone in your corner that only has your best interests in mind. I think that the best way to choose a real estate agent is through referrals. Ask friends, family, or co-workers about their home buying process and whether they recommend their real estate agent and why. Please don’t go with so-and-so’s cousin that just got their real estate license. You should choose someone experienced and familiar with the area in which you want to purchase.
Choosing a great lender is ALSO important
Interest rates, fees, loan types, it can all be pretty confusing. That’s why it’s important to choose a lender that can talk you through the mortgage process and define all the terms for you. I spent over an hour on the phone with our Home Mortgage Consultant one day just going over our interest rates and all of the fees associated with a mortgage. It’s complicated stuff, and it’s great having someone that is willing to take the time to ensure you understand and are comfortable with everything.
Get pre-approved BEFORE you start seriously looking at properties
While it may seem like you are jumping the gun, it’s a good idea to get pre-approved before you start seriously searching for properties. That way, you know exactly how much you can afford. You wouldn’t want to fall in love with a house, later to find out you can’t get approved for a loan that high. Also, having a pre-approval letter shows sellers that you are serious about buying and will make them more comfortable accepting your offer.
By getting pre-approved, you are not locking yourself into anything. You can still switch lenders if you find a better rate somewhere. You can also adjust the amount down if you find a house that’s below your budget. And getting pre-approved typically does not lock in your interest rate. A pre-approval letter is simply proof that someone is willing to lend you $XXX,XXX so that you can buy a house.
Make a list of your must-have attributes for a property & share this with your realtor
Giving your realtor a list of must-haves will ensure you’re both on the same page and will allow your realtor to send recommendations that fit your criteria. This really should be a list of MUST haves, items that you could never see yourself buying a house without. You shouldn’t be sending your realtor attributes like “we want white cabinets” or “the door handles need to be brushed nickel”, as those are all things that can be easily changed. Your list should contain things like “must have 2-car garage”, but only if you could never see yourself buying a house that didn’t have a garage.
It’s important not to get too nit-picky about things that can be easily changed, such as cabinets and paint colors. Otherwise, you’ll be searching forever before you find the perfect property. Instead, focus on the attributes that can’t be changed. These include the location, the layout of the home, and the size of the lot. I know you’ve heard this before, but it really is all about LOCATION, LOCATION, LOCATION!!!
Once you’ve found a property for which you want to put in an offer, research the heck out of the surrounding area
Research the neighborhood. Is it in a historic district? Look up crime statistics. Walk around the area on different days. Talk to the neighbors if you can. You are making a long-term decision, the last thing you want is for a surprise to pop up after closing.
An example from my experience: we found a house that we loved. The home checked so many of our boxes and seemed to be in a good neighborhood. The only downside? It was located near a shingle factory that emitted this AWFUL smell on certain days of the week. Thankfully we saw the house on a day that the smell was present and the wind was blowing in the right direction, otherwise it might have been weeks before we found out. Even if it’s an issue that you think you can live with, such as being close to a major highway, keep in mind that things like this will always be an issue when you try to sell the property later down the road.
There WILL be bumps along the way, but don’t get discouraged
I PRAY that you have an easier home buying experience than we had. I really do. But I also know that there are definitely people out there that have had a far worse home buying experience than we did. There will be hiccups. You might find a home that you love, only to learn that someone swooped in and offered $20K above asking price & you can’t afford to counter. You might be looking for a home during this pandemic, when people are hesitant to list their homes for sale, causing there to be fewer options.
It might not be easy, but it will absolutely be worth it in the end. You’ll find that perfect home, just keep a positive outlook & it’ll all work out in the end!
Are you searching for a home right now or just thinking about starting the home buying process? Leave a comment telling me why you want to buy a home & what part of the process concerns you the most!
If you’re trying to save money to buy a home, check out these 11 no-brainer ways to save money at home!
