The Chronicles of a First-Time Home Buyer: BE PREPARED

Today's Tip:

BE PREPARED

Being prepared is a good motto for life in general. But when it comes to buying a home, it is particularly keen advice.  There are lots of things you will encounter or have to complete before getting the keys to your new home.  Knowing some of the things to be prepared for in advance can take some of the burden off of homebuyers who have never bought a house before.  

BE PREPARED...

...To wait. 

In the dream world of real estate, particularly to those of us who have never bought a home, the process goes something like this: you find a house you like, you bid on the house, your offer gets accepted, and you are handed the keys the next day.  In real life, the process is not like this.  Most settlements are 45-90 days after the offer is accepted.  So be prepared to wait for 1-3 months, in some cases longer. If you are working with a short sale or foreclosure, the wait time could be longer (and there are no certainties or guarantees for exact closing dates).  Sometimes settlement gets pushed back after items are found out of compliance on an inspection, or if there is a home sell contingency. Be flexible, and be prepared to wait.

...To move quickly. 

In direct contradiction to the statement above, you should also be prepared to move quickly, if the need arises.  You might be expecting 45-90 days for a settlement, but circumstances might be such that settlement must be pushed sooner (I had friends who settled 3 weeks after their offer was accepted - rare, but possible).  With a short sale, while you often have to wait months for the deal to go through, you might be given only a 1-2 week window of notice before settlement happens.  Be prepared!

...For anything that might arise.

Expect the unexpected, and lower all your expectations when buying a home.  Not on the actual house, but on how things will play out.  Expect for things to show up on your home inspection.  Expect negotiating instead of a clean deal. Expect timelines to change.  Expect unexpected costs. Expect bumps to arise.  Things WILL arise.  And better to assume they will than to be caught off guard or blind-sided!

...With all your paperwork.  

This will be a longer, more comprehensive post in the near future. But, as you are getting ready to start looking at houses for the first time (or you are already in an agreement of sale and waiting on settlement), make sure you have all your paperwork in order.  Some of the forms you might need with both realtors and mortgage brokers:  Bank statements from the past 3-6 months, Tax statements from the past 3-5 years, personal identification information (social security, birth certificates, passports, etc), household budget, employment contracts, any and all forms/proof of debt (credit card statements, alimony/child support statements, school loans, car loans, etc).  Go back as far as you can with these statements - better to be safe than sorry (or left routing through your house at all hours of the morning in a panic - been there, done that).

...For life as a homeowner!

As you stay flexible and try not to get too attached until the keys are in your hand, get excited!  Dream!  Go furniture shopping as the settlement gets closer.  Home-buying shouldn't just be stressful, it should be fun. You are buying a house that will become your home!  With that said, be sure to go over your new household budget, with the figures of taxes, mortgage, and every bills so you are prepared and not totally thrown during your first few months as a new homeowner. Do everything you can to think ahead and be ready!

Little steps help you be prepared for one of the biggest (and exciting!) purchases of your lifetime.  Make it easier on yourself and think ahead, so you are ready (and not freaking out) when settlement arrives.

We'd love to hear your First Time Homebuying tips and stories - so please leave a comment below!

Chronicles of a First Time Homebuyer: Know Your Limits

Today's Tip:

Know Your (Financial) Limits

In our last First Time Homebuyers post, we discussed knowing what you want and making sure your realtor does too. Being on the same page, both with your realtor and with yourself, it such an important home buying aspect.  It will save you a lot of heartache in the long run!


Today we will talk about another important aspect, which goes hand-in-hand with our previous post: Knowing your limits.


We all know the economy is in a bad place, and part of the reason it declined is due in part to real estate.  People were buying bigger and better, despite not being able to afford bigger and better. So they stretched their credit, their wishes, and then the foreclosures started popping up. 


One thing I really appreciate about our journey is that after our initial chat with the realtor, my husband and I were directed to speak to a mortgage company.  We crunched numbers, down to the penny, and had a solid grasp on what our absolute limits were.  We knew we could not go above and beyond a certain amount (partially because we couldn't afford it, partially because no bank would [thankfully] approve loans above a certain amount).


Now, with an absolute range in mind and a mortgage pre-approval in hand, we knew exactly what houses we could (and couldn't) look at. We knew what bids we could put in.  And even though a particular house might have been approved by a bank, my husband and I knew OUR limits. We knew what we could and couldn't afford (or, rather, what we wanted to afford).  It really helped narrow down our search. 


We also had a solid concept of our present financials. We were clear on how much actual money we had to put towards our offer.  We did not kid ourselves with what savings we would have after we bought the house (for unexpecteds, for home repairs, etc).  We knew without a renovation loan, it would not be prudent to look at major fixer-uppers (even if they were really inexpensive) because we did not have the actual funds in hand to put towards the repairs.  We knew we could deal to buy appliances if it came down to it (which it did - a refrigerator, washer and dryer).


Today's Takeaway: Know your financial limits by meeting with a mortgage broker or bank before you start actually looking at homes. Know your current money and asset situation inside and out, so you can feel comfortable with what you can (or cannot) take on in possible renovations.  And even if the perfect house is just a few thousand dollars outside of your range, check yourself by asking: Am I REALLY able to afford this on a monthly basis?  


So I would encourage you to Dream Big as you search for a home.  Make sure you are on the same page about those dreams.  But then anchor those dreams with a visit to your mortgage broker or bank, so those dreams can become an affordable reality. 

Chronicles of a First Time Homebuyer: Know What You Want

Today's Tip:

KNOW WHAT YOU WANT

(and make sure your realtor does too)

My husband and I had a general sense of what we wanted in our home:  3 bedrooms, a yard and nice neighborhood.  We had a financial range we could work within.  How hard could it be to find a bunch of houses that fit that criteria?

Well, not hard at all.

We found TONS of houses that fit the criteria.  And we went to every. single. one.  Over the course of 2 years, we saw a lot of houses.  It became frustrating, because houses would have the 3 bedrooms, a nice yard, but...something didn't fit the bill.

Enter in our realtor, David.  David did something the first night we met with him that totally changed our outlook on looking for homes.  He had Bill and I sit down and each write out the Top 5 Things We Wanted In A House.  Dream big, he had said.  So Bill and I scribbled away on our legal pads of paper, and when we were done, David went through each thing with us.  This exercise helped us realize which aspects we were NOT on the same page about.  And since David challenged us to think beyond how many bedrooms we wanted, we were able to realize some of our deeper desires for a house. 

David then proceeded to ask a lot of questions:  How long are you planning on living there?  Do you want a move-in ready house? You want to live in this town, but what is your radius that you'd be willing to look within?  Or are you willing (or want) to do some work?  He went over our financials so he completely understood what we had to work with.  David helped paint us a picture of the kind of house we wanted.  And after our first meeting, I felt confident that David knew exactly what we were looking for as well. 

This made the home search process more simple: if a house didn't fit inside the perimeters, we didn't look at it.  And since David had a good sense of what we wanted, he knew what kind of property listings to throw our way.

We still saw a lot of houses, but the houses we looked at all fit the bill (a future post will be about how to handle multiple offer declines. Ahem).  And it felt good knowing that we weren't compromising on anything:  Bill and I were finally on the same page, and David knew what we wanted.  Win - Win -Win.

Home Search Pointers

Spend time nailing down exactly what you want in a house

I highly encourage the exercise David had us go through: writing down your top 5 Non-Negotiable Desires for a Home.  Dream big, and let yourself think through what you really can't do without.  Is it a garage?  An updated kitchen?  A certain number of bedrooms? A particular town?  Renovations?

Be on the same page with your buying partner

Whether it is a spouse, a family member or business partner, if you are co-buying a property, make sure you understand what each other wants.  Being on the same page keeps you from seeing unnecessary properties, which saves you time in the long run.  And in the end, you can be confident that you get exactly what you want.

Make sure your Realtor knows exactly what you want

A lot of time can be wasted when there is a lack of communication between you and your realtor.  If your realtor only knows you want a 2 bedroom condo, she will spend a lot of time getting you 2 bedroom condo listings.  But maybe you deep down really want a bi-level, or a turn-key property.  Perhaps there is a particular neighborhood you'd prefer to buy in.  Maybe you want sliders to a patio, or can't imagine not having an end-unit.  If your realtor doesn't know your Non-Negotiables, you will become frustrated with one another and waste a lot of time looking at properties that don't fit your true criteria.

In the end, keep this in mind: Know what you want and open the lines of communication!

We'd love to hear from you:

How did you keep the lines of communication open between you and your realtor?

What are/were YOUR non-negotiables?

What other advice would you give first-time homebuyers?

Leave a comment below!

Chronicles of a First Time Homebuyer: Expect the Unexpected

Today's Tip:

EXPECT THE UNEXPECTED

As a first time homebuyer, it's easy to get caught up in making it work: accepting the idea of an kitchen that doesn't quite meet your standards, embracing a longer a commute, learning a different town, and reconfiguring a budget so you can make a potential house your home.

When we were looking for houses, we did our fair share of changing our design expectations.  We forfeited big bathrooms, updated kitchens, level yards and varying commutes for the sake of potentially owning a home.  We'd walk through a house, wrapping our mind around things that fell outside of our expectations. And once we could mentally make it work, we'd put in our offer.  We knew that in many ways, beggars couldn't be choosers.  We knew that there would be some sacrifice along the road to our Dream Home.

There were also sacrifices in our household budget.  Every house we viewed would mean taking a knife to our budget: reconfiguring, estimating, verifying, and deciding what we could and could not live without.  When we finally got an agreement of sale on our current home, we finalized some budgetary matters, and felt prepared to go from first time homebuyers to first time homeowners.

But then came the Unexpected.

While there is an important learning curve associated with the leap from renting to buying, it's important to take note of the unexpected: the things you do not account for, the surprises, the wrenches thrown into an otherwise perfect plan.  They will happen.  

In our first year of owning a home, we were met with plenty of Unexpected: raise in utility prices, unforeseen house problems that required fixing, and the introduction of bills that we had in no way prepared for. 

One of the best things you can do as you are looking for a home is to PREPARE for the Unexpected.  Whether it's making sure you have a cushion of savings for unexpected costs or to leave room in your budget for unexpected bills, being ready for the Unexpected is half your battle.

Since most first time homebuyers are renters making the transition to owning, many do not know what possible Unexpected things to prepare for. Here are some to keep in mind as you consider homes:

Rise in utility prices

Having been renters, we had never really encountered the cost of oil. Oil is expensive, and we happened to move into our home right when oil prices tripled.  Literally.  We were surprised by how our bill jumped over the course of the year.  Oil is not the only culprit.  Electric and gas prices are going up as well. Keep in mind that it costs more to heat a split level than a ranch. If your heating system is older, it may be less efficient, resulting in higher-than-expected bills.  Energy bills are often higher in the Summer, due to Air Conditioning.  And even though it might be a short season, holiday lights and decorations can put a slight raise in your energy bills while they are up. Estimate higher for energy bills for your first few months until you get a good feel for your usage.  Budget for a slightly higher bills in the warmer months (and possibly around the holidays, if you go National Lampoons Christmas Vacation on your house). 

Pest Control

This is a bill that really threw us for a loop.  We never had to deal with pest control as renters. We moved into our home in the Summer, and all was well.  Winter proved to be no big deal.  March arrived, and with it came ants.  Lots of ants. More ants than cans of Raid could conquer.  We tried to manage it ourselves, but finally surrendered and took on a Pest Control contract.  I soon found that most homeowners have this in their budget.  It's inevitable that at some point in our homeownership, you will deal with pests, so consider leaving a cushion for pest control, just in case.

Change in Commute

Depending on how far you are moving from your current residence, you may have to account for an increase in transportation costs.  We moved about 30 minutes from our previous home (and my husband's job).  And it did not take long to realize that our driving gas costs would be going up.  Not only is my husband's job 30 minutes away, but so are many of our doctors, as well as our family.  So we had to build up the transportation expenses in our budget. Take any change in distance into account when you are reworking your new budget.

Home Repairs

Even with a home inspection that passes with flying colors, you will encounter various repairs throughout your homeownership.  Some are small: leaky faucets, loose lighting fixtures.  Some require more attention: a broken disposal, a clanking washer, a damaged gutter.  Many of those repairs can be addressed by you.  Then there are the Unexpected big repairs that come out of nowhere, but require special (contractor?) attention, and often a good bit of cash flow: a leaking roof, a dead HVAC, a dryer that no longer dries, a broken window.  These are issues that there are no way around except to fix it.  And they don't care whether you are ready or not!  Having a small savings set aside for these kind of issues can give you a peace of mind.  Investing in a Home Warrenty can also save you money in the long run and may be worth looking into.

Unexpected issues do not have to stand in your way of homeownership. Planning ahead and Expecting the Unexpected can help your Dream Home remain a dream and not a nightmare!

We'd love to hear from YOU: 

What "Unexpecteds" have you encountered as a homeowner?  

How did you handle them?

Leave a comment and share your story below!

Chronicles of a First Time Homebuyer: Potential

Today's Tip: 

POTENTIAL

When my husband and I were in the process of looking for homes, we walked through lots and lots of houses.  I mean TONS.  And there were quite a range of homes: nice homes, trashy homes, condemned homes, remodeled homes, dream homes, and nightmare homes.

Yes. We saw them all.

Not everyone has a lot of money to throw at a house, so some people go into the home-touring process knowing they cannot afford to gut a kitchen or redo a bathroom.  Other people are determined to get a "fixer-upper" because they have the money to invest in the renovations.

I absolutely love love love the show House Hunters on HGTV.  Since I enjoy real estate, I love seeing all the houses in different areas of the country.  It's fun to get inside the minds of the people looking for homes, and being a part of their victory when they get an agreement of sale.  One of the things that drives me crazy, though, is watching countless buyers writing off houses because they cannot see past the little things to the home's POTENTIAL. I get so tired of hearing, "This is a great house but, uggg, I hate the paint colors!"

I want to shake them (politely) ask, "Are you really going to give up your Dream Home over an easy-fix like paint?" Regardless of what end of the invest-in-a-house spectrum you fall on, every house needs a little bit of something.  Whether it's a coat of paint, a few whacks of a hammer, or even switching out light switch plates.  

Every house also has POTENTIAL.  Some houses need a lot of work to reach true potential.  Many houses need just a few tweaks to really shine.  When walking through a home, it's often difficult to look past what's right in front of you: different decorating style than the seller, furniture arrangement, paint color, wallpaper, dirty carpets, etc.

But here is my tip today: LOOK AT THE POTENTIAL.  You don't have to write off a house because the powder room has 70's striped wallpaper clinging to the walls.  You don't have to walk away from a potentially awesome future home because the family room carpet is berber instead of plush.  While you may not have the money to renovate the kitchen, many fixes can be made for minimal cash output. Think of the potential: There may be great hardwood floors under that dingy carpet; sellers WILL take their stuff, and you get to start with a clean slate; paint can be changed; wallpaper can be taken down. And in this economy, it may be worth a $100 for paint, some scrapers and a little elbow grease to get into your Dream Home.

My husband and I learned to clear our minds when walking through houses.  We knew we might not get a turn-key property.  So we had a lot of fun imaging how we would arrange things, how we could spruce up the kitchen cabinets, what color we would paint a room.  We knew a few hours of weeding could transform flower beds.  We knew with some ideas and willingness to work, we could make any house our home.

So if you are in the process of looking at houses, keep in mind that little things can be changed. As you open the door to the next house you tour, let your mind run free with ideas.  Be creative. Imagine. Think of how your living room furniture might be arranged.  What might the kitchen look like with a different color paint?  Curtains do wonders for a room!  Try to look past what the house currently is to what the house could be. With a little work, the next house could be your home! 

Think POTENTIAL.

Steph is in no way a realtor, and all opinions are her own. She is only sharing her own experience with buying a house.

Introduction: Chronicles of a First Time Homebuyer

Hello!  My name is Steph, and almost a year and a half ago, I became a homeowner for the very first time.  Before becoming a homeowner, my husband, Bill, and I were first time homebuyers. Off and on for 2 years, we trudged around our county, looking at homes, putting down offers, and receiving a LOT of rejections. I can't begin to count how many houses we viewed in that time (I'm positive it was over 100 - and I am not exaggerating). And if you can believe it, we submitted over 10 offers on different houses. We redefined the term "rejection." We experienced finally entering into an agreement of sale, only to have the deal fall through after a bad inspection.  We saw a lot of...interesting...houses. And after a long journey, we finally settled on our current home.


All that to say, we became quite seasoned in what it takes to look for a house, bidding on a house, settling on a house, moving into house, and making that house a home.


I'll be posting weekly about what we learned on our home search adventures.  I'll be sharing tips, stories, and resources about buying a home, settling on a house and moving.  I'm not a realtor, and I am no expert, but like I said, we learned a lot on our journey!


It is my hope to encourage all of you who are looking for a home, commiserate and connect with those of you who currently own a home, and share ideas for all people on how to make a house a home!  If you have stories, tips or ideas to share, please leave a comment below - we'd love to feature you!


Check back for our first post!