If you would have told me one year ago that I was going to be a homeowner by now, I would have rolled my eyes and told you to stop putting pressure on me. I’m doing just fine the way things are, thank you!
But then, I started diving in to the personal finance blogging community and quickly learned from blogs like this one that your money is pretty useless sitting in a standard savings account. I also learned how renting a home can be a waste of money if you’re financially ready to buy. So I grabbed a handy myFICO calculator and crunched the numbers. And then my head exploded. Not only could I afford a home, I could afford a pretty decent home. Who woulda thought? I sure didn’t.
Flash forward 6 months and I’m the proud owner of my first little desert bungalow, fully-loaded with years of home repair and improvement projects. Here’s what I learned in the process:
1. You can’t rush a house
I mean this in two ways. First of all, the home buying process is long. I was lucky enough to have a lender willing to do a 30-day close. That means only 30 days passes from the time you make an offer to the time you have the keys. This led to a scramble of gathering paperwork and signatures (see #5).
I was unlucky enough to have sellers that were completely unprepared to sell a home. Plus, there were three of them. And they hated each other. To make a long story short, our close date got pushed back 4 times, we had to have the sellers pay to extend our interest rate offer and we were constantly living the reality of “hurry up and wait”. It ended up being a 60-day close. So what can you learn from this? Don’t expect things to go smoothly. It will just stress you out in the long run. Keep calm and take hiccups as they come. You’re going to have the house for, presumably, many years, so you can wait a few extra weeks to seal the deal.
The second part of this lesson applies to once you’re in the house. We bought a historical home that seemed to have enough upgrades to be considered in pretty good shape. So we excitedly moved in, and then approximately 500 things broke. Or if they didn’t break they revealed themselves to be shockingly archaic (see #2). At first, I wanted to fix or improve everything immediately, which we did for approximately 3 weeks until we realized our home account had dwindled to a shockingly pitiful amount. Ouch. With our home budget already at serious risk, I then realized that our Dwell-worthy vision for the perfect home was going to take much longer than I thought. In fact, it’s probably going to take over a year. But it will be worth the wait!
One of the biggest lessons I’ve learned is this: Home improvement takes time and care. Rushing it will look bad and will ruin your budget and savings account. Do one project at a time when your budget allows and after you’ve done a lot of research about it. Then, take your time to do it right. It will cost you less in the long run.
2. Your inspector doesn’t know everything
One step in the home-buying process is the inspector stage. Our inspector was really nice, and did a good job of calming me down when he listed every little thing he could find wrong with the house – most of which weren’t necessary repairs. We had the sellers fix a few major things, and moved in feeling pretty confident. Well after one visit from our handyman, we learned that our house wasn’t grounded – meaning we’re not protected from electric surges. This is something an inspector could easily determine with the right tools. But the thing about inspectors is they know a little bit about a lot. They aren’t specialists, because they can’t be. If I were to do it all over again, I would have paid to have an electrician and plumber inspect the house separately. Hiring a local contractor like Tony’s Roofing to inspect your house may cost you some money up front, but they can save you a lot of money in the long run by finding problems that ordinary inspectors are ill-equipped to discover.
3. Buying a house is oddly easy
Don’t get me wrong, buying a house is also very stressful. We spent a lot of nights anxiously waiting a call from our lender or realtor. Plus, a lot of the steps required us to drop everything and sign or meet someone. I often felt like I was on call. But here’s the weird part. The actual steps are easy. We signed 75% of our paperwork on our phones. Yup, didn’t even have to bust out a computer – what a hassle. Putting in an offer took seconds. The hardest part was probably meeting our inspector which took a whopping 20 minutes. No part of this process is time-consuming or difficult. So make sure you’re sure you want a house before you get started, because you might blink and own one.
4. The lowest credit scores wins (or loses, depending on how you look at it)
I applied for a mortgage with my boyfriend of six years. Although practically married, we had never really talked about our credit scores. I mean neither of us have had any major credit issues, so it’s not like we were going at this blind, we just didn’t know the specifics. I figured our lender would look at us as a whole, and my FICO® scores would help his or vice versa. Wulp, that’s not exactly the case. Our lender took the lowest of our six FICO Scores (one each for each credit bureau), which was his. Mine didn’t even matter. Next time, I’m going to make sure we’re both monitoring 3-bureau FICO Scores and credit reports for at least 9 months before we apply.
5. You should probably buy a filing cabinet
When you get approved for a mortgage loan, an underwriter goes through your application, credit profile and paperwork trying to make sure you are who you say you are. The underwriter is looking for red flags, things that signify that you’re a credit risk… or a drug dealer. If you have a lot of change in your life in the last 5 years, you’re likely going to have to provide more paperwork. I honestly have no idea how I found all the paperwork required. We were asked to provide: W2s from 8 years ago, a letter from our landlord and even proof that my corporate credit card was actually a corporate card. It was crazy. I had about 55% of my employment and tax documents in a filing cabinet (whoopee!) and the other 45% scattered in various cabinets and “to do” piles. It made the process more difficult (although #3 still stands).
Moral of this story: Organize your life. I am now in the process of scanning all of my paperwork into my Evernote so that if I’m ever asked to prove that I did indeed purchase a home in 2014, I will be able to do so.
In the end, I’m thrilled to be a homeowner. It’s much less stressful and much more rewarding that I had imagined. Plus, I feel like it was a smart step towards reaching my financial goals. But with all of that said, I will definitely do some things differently in the future.
Did you have any surprising lessons in your home-buying process? If you’re thinking about buying your first home, start by seeing how much home you can afford.
Kelsey Havens is a writer, financial health enthusiast, consumer protection advocate and Content Manager at myFICO. You can read more by Kelsey and other FICO experts by visiting the myFICO blog.