Friday, June 27, 2008

So you want to buy a house?

It seems like a great idea, right? No more giving someone else your hard-earned cash, no more management companies, landlords and dish disposals that break once a month. No more shitty appliances and security deposits and loud upstairs neighbors.
Let's be honest, for the most part, renting sucks. Eventually, it becomes time to buy a house. Are you ready? Even if you think you are, you're probably not. I would argue that no first time homebuyer is ever completely ready.
The Boy Next Door and I have finally decided to take the plunge and buy a house. We weren't sure if we were ready, but we both knew that we were ready to stop putting our money into someone else's bank account and start putting our money back into our own pockets. So we started house hunting. It was the 3rd house we looked at...and we fell in love. It all happened so fast, a whirlwind of excitement and insanity all at once. At first everything was smooth sailing, but 3 weeks in, we started to hit some speed bumps, and then some pot holes and then eventually a full on road block. We will finally close on our house in 2 days, but it has been a long and stressful road. We have learned a lot from this experience, so I have decided that I should pass my wisdom on to whomever reads this (I'm guessing no one), in case you too, gentle reader, are thinking of committing to 30 years of debt, er, purchasing a home. So here are the things your real estate agent/mortgage processor/friends who already own homes won't tell you.
1) Get your shit together. Not personally, I mean paper-wise. Get 2 years of tax returns, 2 years of W-2s, 3 months of paystubs, copies of grad school or college transcripts, and make copies of EVERYTHING. Don't be stupid (like me) and give the bank originals of anything. They lose shit. And they WILL call you 3 days before closing and ask for another copy of a W-2 that they swear they never received.
2) Be prepared to write letters. The loan underwriters will want to know everything about you short of your bra size. They'll want to know why you have a P.O. box that you never use, why you you have had more than one credit inquiry in the last 6 months, and why you worked a job for only 3 weeks.
3) DO NOT BORROW MONEY. The first thing to do is to find out EXACTLY how much money you will need at the table to close. If you must borrow money, try to get it from one person (immediate family only), with a gift letter, and make sure its in your account at least a month before you're supposed to close. Do not let the bank see ANYTHING with the word "loan" on it (which means even if you have every intention of paying your mom back, in the lender's eyes, it must be a gift.) Do not apply for any loans (no matter what they are for)if you're within 6 months of buying a house. If your lender even thinks you're using borrowed money for your down payment, they can (and will) dump you. It would take too long to explain what happened to us with this, but trust me on this one.
4) Get a home inspection. Yes its optional and yes it costs $400 bucks, but do it. The inspection can reveal problems with the house (even brand new houses) that could cost you thousands of dollars down the road. Plus, if something comes up in the inspection, you can ask the seller to fix it, or get a credit off the sales price to fix it yourself. Get a termite inspection too while you're at it. Trust me, you'll save yourself a lot of grief.
5) Be a pain in the ass. Stay on top of everyone. Call your real estate agent every day just to "check in." Call your mortgage lender every day to check interest rates (you will have to lock in an interest rate at least 4 days before you close). Ask a TON of questions. These people are working for you and it's their job, so no question is too small or too stupid. Be up front with your agent. If you want your hand held, tell them. And ALWAYS make sure you run ANYTHING you submit to your lender by your agent first. They're on your side and they know the ropes and can save you a lot of BS. Again, you'll have to trust me on this one.
6) Read the fine print. Its always a good idea to have someone (a lawyer, a friend who is an underwriter, your dad) look over the papers before you sign. Just in case.

Thats the best advice I can give at this point. If you've actually read this whole thing, woo hoo! Your reward will be to see the first pictures of my new house!
Happy Home Buying!

No comments: