Adventures in Home-Buying

In case you missed my announcement on Twitter a few weeks ago…we’ve officially started the home-buying process and we are so excited!  Though to be fair, our home-buying process started awhile ago…over two years ago to be exact.  That’s when we sat down and mapped out a five year plan for the direction we wanted to take our lives after our wedding!  This was done informally, at first, over dinner dates and such, but took on a more formal approach after our honeymoon, which is when we altered our savings plans and took a closer look at how we manage our stock assets, retirement funds, life insurance, etc. so that we would be on pace to buy a house in 2012.  And now, here we are!

I thought I would blog much of this process as there doesn’t seem to be much out there that’s NOT written by a real estate or mortgage professional.  I find most of the content on buying a house out there pretty drab and mostly common sense, and I would definitely have been more interested in reading people’s personal stories.  So here is ours!

The first step in buying a home is generally the pre-approval process.  This occurs when you go to the lender and apply to be pre-approved for a mortgage.  The bank will tell you, based on current financial information, how much you can budget for a home and how much to expect to pay for closing costs, etc.  I thought this would be a super easy thing and we could walk into a bank and walk out with a pre-approval 2 (or 24) hours later.

I thought wrong.

I wish people would TALK about the pre-approval process.  Most people just say, “Oh, we got pre-approved, la-di-da,” and are on their way.  A lot of people say “pre-approval was easy peasy.”  For us, it wasn’t so easy, and I wish I had known it could be this way ahead of time!  So why wasn’t it easy for us?

First of all, we didn’t do our research.  We assumed we would just get a home loan from our current bank (which is actually a credit union).  We have some of our other loans there—auto loan, a few student loans—and thought, being loyal customers for over 10 years, that it would be perfect to get our home loan through there.

So, we went to the bank, filled out the online application, and waited for them to contact us.  72 hours later, they contacted us, detailing an exorbitant amount of costs we had to have on hand for closing.  We asked a few questions, and got a few non-responses.  Being first time buyers, we had hoped for a little more communication and DEFINITELY a little more explanation, but that wasn’t the case with our bank.  So, we withdrew our application.

Needless to say, it was a huge bummer and caused me some major anxiety.  Here we were, with plenty of money in the bank, a nice stack of assets, excellent credit scores, and hopes to buy a new home, and it seemed our bank didn’t want to lend to us.  Scary and heartbreaking. 

Back to square one. This time, we were committed to doing research and finding a bank or mortgage company who would be more understanding of first time buyers and the many, many, MANY questions they may have.  We asked for recommendations from friends and family members, and looked at several different companies to compare rates, fund and down payment requirements, etc.  Ultimately, we settled on a company that as of now, we couldn’t be happier with.   They made the process relatively easy (though there was still a lot of paperwork!) and their customer service has been excellent.

Second of all, I failed to take into consideration our student loans.  While it’s my understanding that student loan debt is generally considered the best kind of debt to have, of course it’s still a factor in how much you can afford.  B went to a private, out of state school for pharmacy school, and as such, he has a lot of student loans.  I have some from college too.  We are very aggressive in paying them down and plan to have all of our loans paid off in 10 years, rather than the standard 20 year rate that most people pay at.  So while that’s all fine and well, it is still a factor in how much home we can afford. 

(Source)

Thankfully, B had already planned for this.  I am so lucky that my husband is the MOST pragmatic person ever, because he was able to talk me off the ledge when I got cold feet about buying a home.  Because yes, I did get cold feet and thought maybe it wasn’t the right time for us after all.  But once we sat down, went through all our financials again, and looked hard at what we wanted our purchase price to be, my feet warmed up and I realized we still had all of our ducks in a row.  Because for us, it makes more sense to BUY now, then it does to consider renting again.  And although the prospect of taking on a mortgage is daunting to me, I know that in the long term, it will result in us being more financially fit than we are, even now (and I feel pretty darn good about where we are now). 

After all that, we were able to get pre-approved for a budget that fits with our needs AND wants.  And I feel comfortable moving forward, knowing that purchasing a home right now is the right decision for us!

So the moral of the pre-approval story is:  do your research and make sure your ducks are in a row. Ultimately, if you’re financially fit and have planned ahead, you’ll be better off in the long run!

Stay tuned for the Phase Two…the fun stuff:  finding a realtor and actually looking at homes!