This weekend, we had a very smooth closing day. Like our wedding day, the special moment was marked by a cold, rainy day. Of course. But I think we are getting used to it at this point. :) So, now I can officially say that we are homeowners. And to mark this special occasion, I thought it might be an appropriate time to go through the steps we took to find our house. We started our process in January, right after New Years. I hope this list is helpful for all those of you who might be buying in the future.
1. Figure out what you can afford. Amortization schedules are a perfect resource for this or any mortgage calculator, both of which can be easily googled. Find a number for your monthly payments that isn't going to stress your budget too much. But keep in mind that even though you may find a number that you are happy with, the mortgage company may not agree, so my next suggestion is step 2.
2. Talk to a lender about how much they are willing to lend you. It is pretty easy to find a lender who can give you this information. You could even go talk to your bank. Keep in mind that this person does not have to be the person that you ultimately get a loan from. It was not for us. A good resource for finding a mortgage company is google.com/comparisonads/mortgages. If you add your down payment amount and the amount the lender is willing to lend you, you will have your maximum number for the house you can afford. I would keep in mind that typically, the lender will approve you for more than you will probably feel comfortable with. If you are diligent about knowing your monthly expenses and monthly income, you will be able to adjust the range of prices that are in your range. A word of warning about mortgage companies - staying local, especially for your first home mortgage, is always a better idea. You need someone to be able to answer the phone or go see in person if things get dicey in your process. The same is not true for re-financing, where this doesn't matter as much. But I always like meeting who I am dealing with.
3. Now that you know your housing price range, you can go get a realtor. Now, if you live even close to any metropolitan area, you know that there are a lot of realtors, and knowing which one to pick can feel overwhelming. We used homegain.com to find ours and it worked out really well. You can also ask friends for recommendations. We met with our realtor before we went out and saw any houses so we could explain what we were looking for and get a sense for whether our personalities would mesh. We wanted someone patient and that was what we got. We were really happy with our choice. We used Virginia Cheezum from Re/Max and she was really patient and helpful during the whole process. Having a good realtor makes a huge difference. I've heard this advice from friends so I will pass it along: don't sign a commitment to a realtor until you are sure you will work well together. We didn't have to sign anything until closing, whereby we were explaining that she was representing us.
4. Find your home. Your realtor will be helpful in showing houses that meet your needs. Make sure you make a list with exactly what you are looking for. This is helpful in evaluating houses that will work for you. Your realtor should be able to tell you if you have unrealistic expectations for your price range. Otherwise, make sure you are getting what you want. It is a lot of money. Somewhere along the process, make sure you solidify a choice for a lender. You will need a pre-qualification letter to make an offer.
5. Once you find your home, make the strongest offer you can to try to win your house. The biggest factors, especially with competition, are down payment, financial stability and contingencies. The sellers want to make sure you can get to closing, so having a strong down payment makes a big difference. A good down payment (>20%) also prevents you from having to pay mortgage insurance, which runs about $200/month.
6. Once you are under contract, make sure you have an open line of communication with your lender and realtor. Most things need to happen quickly so making sure you are able to be contacted is important. Things can come up with the inspection and appraisal. If you have been diligent about finding a good realtor, she/he will be helpful in making tough decisions.
7. Closing day is easy and fun. You sign many papers and get keys to your new house!
There is probably more to say on the subject, but that is all for now!
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