Buying a Home: Redux

Early on this blog, I wrote a post about buying a home. At the time, I had no experience in buying a home, so I used knowledge from people I trust who had been through the process. Now, however, I do have experience, as I bought a home in April, so I thought an update and more detailed breakdown would be a good idea!

In contrast to what I wrote about in my previous post, I actually ended up with very few documents in hard copy, so I only had one folder for hard copy files throughout the process, but I had several email labels and computer file folders set up to keep things organized:

During the actual search process, I had a property comparison spreadsheet that was so helpful. I would fill out as much of it as I could from the online listing and then make sure to look for or ask about each of the open items when I visited. This not only helped me differentiate between the properties after I’d seen them, but it also made comparisons easier, as I could focus on the things that were top priorities for me.

And then, of course, I had a running to-do list throughout the entire process. It got very long - like five and a half pages long. If you’re ever thinking about buying a home and want a detailed breakdown of all of the various things involved, let me know! I would be glad to send you my detailed list, or even talk through it with you. For the purposes of this post, though, I have condensed it down to five major categories: The Agent, The Lender, The Offer, The Closing, and The Move.

The Agent

I started by going to open houses of places that caught my interest. I chatted with the agents and got business cards. I then contacted a few who I felt might work for me to set up introductory meetings, and then picked the one that I thought would work best for and with me. Once you sign an agreement with an agent, you can start to visit condos with whenever you want instead of just open houses, so this is definitely something to figure out early on!

The Lender

I got a few lender names from trusted friends, but you can also search online or ask for recommendations from any of the agents you talk to. Just as with the agents, I talked to a few lenders to find the one that was the best fit for me. To get a pre-approval letter (required when making an offer) you will have to submit a whole bunch of documentation to the lender. You can get a pre-approval from any lender, and it doesn’t necessarily have to be the lender you end up using. If you are a first time home buyer or are hoping to use a home buyer assistance program, make sure to talk to your lender about what options are available to you, though I would also recommend doing some of your own research. As you get close to making an offer, make sure to get interest rates quotes from each lender you're considering, and if all else is equal, go with the lowest rate! Once you’re under contract on a home, you will be able to lock in your interest rate when you’re ready and the lender will help you prepare the official loan application and any other necessary documentation.

The Offer

When you’re ready to make an offer, you will draft it with your agent and submit it with your pre-approval letter. If your offer is accepted (or through countering, you reach mutually agreeable terms), the contract will be ratified. In the period between ratification and the closing of the purchase (typically 30-ish days) there will be a lot of paperwork that you have to review and sign.

Additionally, you will have submit an “earnest money” check to your Title company. This is basically money that is held in escrow to show you are under contract in good faith. If all goes well, it will be applied to your down payment and closing costs. If the seller backs out or if you back out for one of the reasons allowable under the contract (inspection, financing, etc), you get the money back. If you back out for reasons not allowed by the contract, then you lose that money.

Once your home inspection is done by a licensed individual, you can negotiate with the seller about what you want them to fix, or if you want them to give you a credit on your closing costs to cover anything you find.

You should also start shopping for homeowner’s insurance at this point, as you will be required to have it in place before closing.

The Closing

A couple of days before your closing date, you will receive documentation of your closing disclosures, which shows all of the costs and credits on both the buyer and seller sides. This document will also tell you the exact cash you need to pay at closing. Once you know the number, you should confirm the wire instructions with your Title Company and set up the wire to be paid (some Title Companies will also accept a cashier’s check).

On the day of closing, you will do a final walk-through of the home to make sure the repairs you requested have been completed and that everything is in the condition you expected. Then you go to your closing where your hand may almost fall off from the number of times you have to sign your name and your signature will forever be altered, but you'll officially own a home!

The Move

I would suggest starting to make all of these arrangements as soon as you are officially under contract, especially if you plan to move soon after your closing date.

- Start packing!!

- Hire people for anything you don't want to do yourself: movers, cleaners (for the new and old places), contractors to do any work on the new home that you want done before moving in (painting, locksmith, etc).

- Arrange for internet, cable, and phone installation, as necessary.

- Give notice if your current home is a rental. Talk to your new building (if it isn’t a single family home) to make sure you understand all relevant move in procedures and protocols.

- File a change of address with USPS and start changing your address in all relevant places. You should probably wait to do this until you close, so you don’t start sending mail to a place you don’t actually own yet. In the weeks leading up to your move, keep a list of all the places you receive mail from, so you have an easy reference when you are ready to change your address.

- Cancel your services and utilities at your old address and return any equipment.

- Set up direct debit for your new mortgage, HOA fees, and other new costs.

The process of finding, buying, and moving into a new home can be very overwhelming and is a lot of work. Being organized and prepared as you approach the process, though, will at least relieve some of the stress of the unknown and worries that you'll forget something important.

If you are thinking of buying a home, especially if you’re a first time home buyer or in the DC area, let me know, as I’d be glad to give you more detailed advice and recommendations of particular people or companies that I had good experiences with!

[There won’t be a post in July, as I’m taking time off for a vacation, but I’ll be back in August!]