Monday, October 14, 2013

First Time Home Buying: {The Crash Course}

As recent first-time home buyers, there were many things we wish we had known before starting our house search. And as much as we wish there had been a required Home Buying 101 course in college, we got through the process with some valuable lessons for years down the road when house number two shows up on the horizon.

So here are a few words of wisdom for anyone who is approaching the home-buying phase of life.

1. No Credit is Bad Credit
  • As much as I hate debt of any kind, you will have major trouble getting a home loan unless you have some type of credit history. My husband has always been extremely good with money and has avoided debt and credit cards altogether (Dave Ramsey would be so proud!). Not inheriting debt on our wedding day was an added bonus, but it turned out to also be a thorn in our side when we started applying jointly for home loans. If you are looking to buy a house and have never had an open line of credit before, consider getting a credit card so that you will have some type of credit history when you start the loan application process.

2. A Good Mortgage Banker
  • Having gone through Dave Ramsey's Financial Peace Course, we knew most of the basic home-buying lingo. "Adjustable-rate mortgage, fixed-rate mortgage, etc." And we thought we were doing pretty good. But boy were we wrong! There are more loan options out there than hairs on my head. I really think we would have just thrown in the towel if it wasn't for our amazing Mortgage Banker (if anyone wants a recommendation, just ask!). She knew that we were new to the process and answered all of our seemingly stupid questions in ways that we could understand. She got us a great interest rate and went to bat for us several times to keep it when rates went up. Basically, she was a life-saver and we couldn't have gone through the process without her help. Ask friends and family for recommendations before you start the process and it will be one of the best decisions you'll make!

3. A Good Real Estate Agent
  • For as long as I can remember, I always thought a real estate agent was just the one who let you into the houses so you could look at them. Wrong again! We got lucky and had an agent who had been in the business for years. She knew all the neighborhoods, school districts and areas to watch out for. She showed us how to look for water damage, foundation problems and roof problems. It's my first instinct to just wander through a house and admire the floor plan, pretty cabinets and wood floors, but apparently there are many other things to be on the look out for. It may not be as fun as my way of looking at houses, but it sure saved us from some lemons. When the time came to negotiate on things like price and additional repairs, our agent turned into our personal assistant. She handled all the negotiations for us and made sure all the loose ends were taken care of. As much as I hate real estate fees and trying to find a good agent, it is 100% worth your time. 

4. Base Your Budget on You, Not Them
  • If you want to know how the housing market went bust, just go apply for a loan. If you calculate what monthly payments you can safely afford, I guarantee you'll be approved for a house that will absolutely max out your monthly income. DON'T FALL FOR IT! Know your monthly income and base your total home loan amount on what you need your monthly payments to be. Sure, you can get approved for more, but that's how people overextend themselves and forget about all the other monthly expenses. Banks make more money if you borrow more money, so it's no surprise that many people take the bait (after all, who wouldn't want a bigger house?!). Sticking to your budget will free up enough monthly income to let you continue to live your life and enjoy it. Moral of this story: own your house, don't let your house own you.