Several months ago my fiancée and I made the decision that we were tire of renting and that it was time to look into buying a house. Oh. My. God. There is so much involved. It’s not as simple as “I want that one, give me a loan so I can buy it.” We looked at so many houses online at redfin.com, talked to a lending broker and worked closely with a realtor. We learned so much about shopping for a house, like looking for water damage and other possible repairs that might need to be done. Financially we learned that you can’t just walk in and apply for a mortgage loan – you have to have a few thousand in cash already set aside to be able to put a down payment as well as pay for inspections and appraisal fees. That last part we learned the hard way, having found a house we really loved and wanted to make an offer on, only to discover that had we tried to move forward we wouldn’t have had enough cash to cover all that (nod to our realtor, Darrell Hess for preventing us from getting in too deep on that one).
Why buy? Well, we’ve been paying rent now for three years at the same location and the rent has increased every year: 2012-2013 = $890/mo., 2013-2014/mo. = $940, 2014-2015 = $990/mo. Based on the numbers we’ve had a mortgage broker do for us, we can get a mortgage, insurance, and our property tax into a monthly escrow payment for only a little bit more than that, and it would be ours. We only have a 2 bedroom, 2.5 bathroom townhouse right now, and we not only share a common wall on both sides, but we can’t paint or make any changes, and we have no yard (not that it matters since we’re not allowed to have pets). Also, last summer, when my fiancée’s parents and brother came to visit, it was a little cramped in our tiny townhouse; her brother slept on the pull out couch in the spare bedroom/office, her dad slept on the couch, and her mom in the recliner. Having a house with at least one extra bedroom (since I need one to serve as an office) seems pretty necessary if we ever want family or friends from back home in North Carolina to come visit.
The whole process is more emotional and stressful than I thought it would be. I don’t think anything sucks worse than finding a house, falling in love with it, and then not being able to get it. House number one, someone beat us to the punch because we didn’t quite have our finances in order to be able to make the offer. My fiancée’s father, a few days later, told us he was gifting us money to be able to buy a house with. So with his gift and the money I had already set aside, onward we went with our search. We found another house that we loved – this time with four bedrooms, even though we only needed/wanted three. This time we made an offer; the owner countered, so we re-countered, but it was too late as they had received several other offers on top of our counter offer and they chose one of those instead. So, strike two.
A few days after losing out on the house we just knew we were going to get, Roxanne spent two days driving past around 30 or so houses from our list of favorites to narrow it down. That weekend, with our agent tied up and unable to tour anything with us, we took advantage of a couple of the houses on our list having open houses on a Saturday (one in the morning and one in the afternoon). Neither house particularly gave me a warm-fuzzy, but I didn’t necessarily dislike them either. We sent our somewhat abbreviated list to our agent to try to set up some tours. Time was running short with our lease set to expire at the end of May, and it already being close to the end of March. To make matters more challenging, the last week of March was once again my turn to be the on-call technical support engineer for work, so that would be a week plus one weekend that I wouldn’t be able to venture out to look at houses. On Friday afternoon of March 20 my agent called me as I was leaving work to ask if we wanted to go look at some houses – he had six that we could get into that night; naturally I said yes. Of those six, three made the cut for consideration but there was still one more scheduled for late Saturday afternoon. This one was the only one we had found in a USDA district, which would mean 0% down compared to 3.5% down for a standard FHA loan. We had some concerns, as our agent had mentioned that scheduling this tour had proved a little bit challenging – it wasn’t listed on MLS because it was for sale by owner, so he was dealing directly with the owner and not a selling agent. But, we were able to go see it and so we did. We met the owners (which was a little different) who showed us around, and were very honest about what they had or hadn’t done during the five years they had lived there. We fell in love with this house! We loved the layout, we loved that it sat on a large piece of land, that it had a guest suite and three car garage. Compared to the two we had lost out on, this one blew them both away.
After that tour, we chatted with our agent in the parking lot of the church down the street for a while. We knew we wanted to make an offer on this one. Darrell had been able to find out from the owner that they had already turned down several previous offers, so that made us a bit nervous, but apparently the previous offers were for considerably less than their asking price. They also, because of not having an agent of their own, were asking that the buyer pay the closing costs. Since this would be a 0% down USDA loan, we could possibly do that, but it gave me an idea. I was willing to meet their asking price, but I really didn’t want to come out of pocket over $5,000 if I didn’t have to. So, we asked for them to contribute a certain amount to the closing costs, but we added that amount to the purchase price for our offer, so in actuality, they really wouldn’t be losing anything in the sale. That night, our mortgage broker got us a pre-approval letter for USDA and our real estate agent drew up the offer contract. I electronically signed it Sunday morning, and then we waited. It was sent to the seller Sunday and they said they would let us know by the following day.
All day, on that Monday (March 23), every time my phone chirped to let me know I had a new email message, my heartrate increased. And finally, it happened. An email from my real estate agent with a subject line that simply read, “Congratulations!” I’m not going to lie, I teared up a little bit and wanted to jump up and shout (but I was at work so really couldn’t). Then the real fun began – getting everything done so we could close by May 7.
One of the things needed to buy a house, other than decent enough credit to get the mortgage loan, is enough on-hand funds to pay for all the stuff that goes into getting the mortgage. A good bit of the fees apparently get rolled into the loan, so in our case, since we were getting a USDA loan which requires a 0% down payment, our loan was actually for a bit more than what we were paying for the house. The first chunk of money spent was on the $1,000 in earnest money; this, of course, is a good faith deposit toward the purchase of the home. The next thing I had to pay for was the appraisal, which was $475. I also paid for a separate inspection of the house for $385; this was optional, but everyone I’ve spoken to that has ever purchased a house has said not getting one is very unwise.
Inspection day arrived and we ventured back to the house to meet the inspector. It was totally worth it, but following the inspector around for three hours was not exactly my ideal day off from work. Still, he did find some things that we would need to bring to the attention of the owner about getting fixed. Some of them the seller agreed to fix, but others we’ll need to take care of ourselves, and I am oddly OK with that. Nothing was a major issue – they were mainly cosmetic problems. Overall, the house is in great shape for being fifteen years old.
The hardest part after ordering the inspection and appraisal is the waiting, because really that is all one can do. The rest of the mortgage process cannot move forward until the appraisal results come back, which took a week for some odd reason (maybe because it was right around Easter?). And so I waited, confident that all would be well, but there was still that bit of worry that the appraisal might come back for less than the purchase price, which would mean having to go back to the seller to adjust the offer and hope that they wouldn’t back out. The good news was that the house appraised for $5000 more than our purchase price, so we were good to go. Then there is all the paperwork; thankfully most of it, at first, could be electronically signed, but I was quickly getting tired of having to get copies of check stubs, bank statements, etc. over and over again.
And money; did I mention how much money I had to spend up front to buy a house? I think I did, but let’s break this down again. $1,000 Earnest Money, $475 Appraisal Fee, $385 Inspection Fee, and $350 to get the Septic System pumped and inspected. Oh, and I also needed to get a Termite inspection for another $45. So, all totaled that was $2,255, so it’s a good thing I got the seller to agree to the $4,500 closing cost contribution added to the purchase price.
Did I mention the waiting? I’m sure I did, but I’ll mention it again, because that’s the most stressful part. Especially when, with only two weeks to go, the lender informed us that USDA was very backed up and we most likely wouldn’t get the underwriting from them in time for our May 7 closing date. What?! Ain’t nobody got time for that! This caused us to have to invoke the unilateral extension clause in the contract to extend closing by seven days. That probably wouldn’t have been as big of deal had it not caused the seller to have to do the same for the house they were buying contingent on the sale to us. So, regardless of if USDA somehow miraculously caught up in time to make our original closing date, we still weren’t going to be able to close before May 15. With our lease expiration of May 31 looming, and the scheduled time off from work I had already booked, my stress level went up pretty quick. It only got worse as we started daily checking the USDA website to see which day’s files they were reviewing and counting days on the calendar. We soon realized, there was no way we’d close on May 15, let alone our original date of May 7. So, though it meant using the “dad money”1 for down payment instead of being able to buy things for the house, we made the decision to switch to getting a FHA loan; even then our lender had to bust serious ass to get everything done in time for May 15. My fiancée wired the $4900 estimated needed for closing to the attorney on May 13th so it would already be there, and we sat back and waited. I even texted the lender on the morning of the 14th to make sure all was well and was told they were basically waiting for the amended appraisal but that we would make it.
Of course, even with all the assurances of getting it switched to FHA in time to close on May 15th it still didn’t go smoothly. The lender was supposed to have everything to the attorney by 3:00pm the day before, but of course at 4:30pm that day I get a call from my Realtor that the attorney is still waiting on the package. Awesome! Then the lender needed an amended contract showing with a FHA loan exhibit to replace the USDA loan exhibit on the original contract; my real estate agent was not pleased, citing that it was a redundant piece of paperwork. But, whatever, the seller and I DocuSigned it at just after 7:00pm (yeah, a little over four hours after all this shit was supposed to have been completed) so we could finally be done and hoping the folks at the lending agent actually got it to the lawyer by 9:00 am on the day of closing.
Somehow, it all came together and on May 15th at 2:00pm (well, 3:00pm really – it took an hour to sign all the paperwork) we became home owners. We even managed to get some money back at closing.
If you had asked me in October 2010, when I took the big risk of moving from Fayetteville, NC to Atlanta, GA if I thought I would be buying a house in the Spring of 2015, I would have said, “No.” Yet here I am, a home owner. We had to jump through a ton of hoops, endure a lot of stress, and shell out a lot of money, but we finally have a home we can call our own.
~ JC
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- By “dad money” what I mean is, my fiancée’s dad was gifting us $5000 to be able to buy a house. Since we were supposed to get a USDA loan with 0% down, we had planned on using that for things we’d need for the house, like washer and dryer, lawn mower, perhaps some furniture to augment what we already have since we would have so much more space to fill. But, $4900 of that ended up having to go toward closing costs because of the 3.5% down needed for FHA.
Carlisle's Chaotic Commentary v2 