Ready to buy? Here’s The Next Steps…

So you’re a few years out of college now, landed a quality job, and you’re moving up in life.  But, how many of you are still splitting the cost of laundry detergent, milk, and eggs with a roommate? How many of you are waiting for your roommate’s significant other to finish taking a shower so you can get ready for work? Tired of coming  home to find out someone in  your apartment ate your leftovers? 

Guess what: all of these frustrations of shared space means you’re ready for your first house!  I know – why go to all the hassle of buying a house?! It’s a LOT of work and it’s so stressful. You don’t mind seeing your roommate’s – possibly your roommate’s significant other’s – some random person from that party you threw’s underwear hanging from the lampshade for a few more years? 

No. You’re past all of that. But there are a few things you should know when venturing into your first home.  Yes, you will have to talk to a LOT of people – an agent, a mortgage lender (unless that first job is paying REALLY well), inspectors, title officers, possibly an attorney, etc.  They’ll be using terms like fixed rate, contingency clauses, knob and tube wiring, etc. and you will have no idea what it means, and you’ll freak out, and why not just stay with your roommate and their rotating door of lovers?!  

Because, all of that is jargon you are NOT expected to know.  The statistics on how many homes an individual will own in their life vary, but unless your career is as a real estate investor, you probably aren’t buying homes with the same frequency you buy Starbucks.  It is MY job to help you understand what knob and tube wiring is (we will be avoiding houses that have it) and how a contingency works and so on.  

So here are the basics to buying your first house.

1. 1. Talk to a lender. A GOOD lender.  What I mean by that is a lender that is NOT going to make you cash poor and house rich.  There are a lot of sketchy lenders out there that will tell you that you can afford that house you saw on MTV Cribs but when you go to move in, you won’t be able to furnish it.  You need to realistically know what you can afford to spend to make sure the house you are living in makes you both personally and financially comfortable.  Knowing what kind of budget you’re working with helps me help you when we are looking for homes.
   2. Reach out to an agent – preferably me – to discuss where you want to live.  It’s a lot to reflect on and my job is to help you itemize your priority list to get you into a home that works for you.  A good rule of thumb is to think about what you NEED, what you WANT, and what you WISH for.  What’s the difference?  A NEED list identifies the requirements that are absolutely necessary to living your life on a daily basis. Do you NEED to be in a certain location to commute to your work? Do you NEED to be in a certain school district? Do you NEED a specific amount of bedrooms/office/work space? A WANT list helps you figure out things that “would be nice” but aren’t necessary or are deal breakers to owning the home.  Stainless steel appliances, walkable to bars/restaurants, an eat-in kitchen, etc.  These are items that aren’t deal breakers when considering a house.  A WISH list is just that.  These are the ONE or TWO things that you say “hey, if we can swing everything else, it would be GREAT if I could get this too.”  This would include items like a pool, a wine cellar, a game room, a home library (this is on my wish list).  Being able to slide what you’re looking for into these three categories will make our search much easier. Fine tuning this list and really knowing where your priorities rest will keep your expectations in check.  
   3. Start looking at houses – this is the fun part where you get to go and say “what substance were they on when they selected their wallpaper?!”  This is where you go out and try to get a feel for what’s going to work best for you.  I could say a lot more about the house searching process – and I will in a future post – but I’ll keep it to these two points.  The first: there is no such thing as the perfect house.  The need/want/wish list will NEVER be filled.  Even if you build from scratch, you will end up finding something you don’t like.  I don’t say that to be pessimistic, but to be realistic. The quicker you make peace with that, the easier your search will be.  Second: do not burden yourself with looking at dozens of houses.  Choice is actually your enemy.  Too many options will confuse and frustrate you.  Again, knowing where you stand on your need/want/wish list will keep the frustration in check.  

• Put an offer in – Once you find something you like, you and your agent will work up an offer.  I won’t go into details about market conditions.  That’s something your agent will talk to you about, but when you write an offer you will discuss with your agent how much of a deposit you will make, a down payment, when home inspections will be and when closing will be.  

• My offer got accepted! – Congrats!  Now you need to move a bit quickly! You need to get inspections scheduled! A basic home inspection is standard no matter where you’re buying.  However, other inspections include septic inspections – sometimes these are required by your lender – sewer line inspection, oil tank sweeps, pool inspections, and various others.  Your agent should be able to direct you to quality inspectors.  Once these inspections are complete,  you’ll sit with your agent to discuss the next steps.  These could be anything from asking for a buyer’s credit, asking for a lower home sale price, requesting repairs for certain items, or even terminating the sale.  No matter what occurs, a good agent will walk you through each of these items slowly.

1. 1. What else? Once you’ve moved past the inspection phase, you’ll be doing most of your work with your lender.  You and your agent should stay on top of dates to make sure everything is being completed in a timely manner.  

• It’s closing time…. – You’ve made it.  A smooth closing should take around forty-five days, assuming your new home isn’t built on an ancient burial ground or a toilet isn’t missing.  But you’ll do a walkthrough the day before or day of closing to make sure everything is in order then you’ll head to some office and sign a LOT of papers and get your keys. Do NOT be scared to ask what you are signing!  This is one of the most significant purchases of your life.  You have every right to know what you are signing! Congrats on your new home! At this point in time I’d suggest getting to know where the closest Lowes and IKEA are!

So that’s the home buying process in a nutshell – a very small unsalty nutshell.  Yes, there are other factors that can be a part of this process, but they aren’t worth discussing unless they do come up.  My point is, don’t be afraid to go down this road.  A quality agent will be able to get you through all of this.  So, ditch the annoying roommates and get a house already!