My wife and I bought our first home, a condo, in 2016. At the time, we were only dating and the home was on a whim. We were only window shopping through Zillow and found this amazing condo with an open house the following weekend. Without an agent and no expectations, we decided to go. When we walked through the home, we instantly fell in love with the place. Immediately following the open house, we started the buying process. Here are a few things we learned along the way about buying a home.
Vet Out a Mortgage Company
When buying a home, you must be pre-approved before submitting an offer. The pre-approval doesn’t have to be with the company you wind up having a mortgage with. It is only to show you are creditworthy to purchase the home. After our pre-approval and offer being accepted, we went to work. My wife and I reached out to as many as three mortgage companies. We had three main criteria we looked for with our mortgage partner: interest rate, closing costs, and their ability to explain “mortgage things” to us.
We were going to be first time homeowners, so we wanted to work with someone who can explain things to us and not be pushy. My wife and I wound up with a great contact and company at First Federal Lakewood as they got us a great rate and walked us through every step of the process.
Don’t be Shy About the Home Inspection
It’s one thing to be present at the home inspection. It’s another to be the inspector’s shadow. You are about to make one of the largest purchases of your life and you should know about every squeaky faucet and defect about the home. You also get to learn about the things that make your home great. Furthermore, if there are defects, the inspection is your opportunity to negotiate or point out defects for the seller to fix.
Payments are More than a Loan, Save Every Dollar You Can
Your mortgage and interest will be just part of your monthly payment. Typically you have an escrow account set up that you pay into. Not only do you pay your mortgage and interest into this account, you pay property taxes, insurance, and private mortgage insurance (PMI) if you don’t put 20% down on the home.
This is why it’s important to save money where you can. We saved a ton of money by bundling our home and auto insurance through Progressive Insurance. They have been a great company to work with! It may only be a few dollars saved, but every dollar matters when you purchase a home. Also, if you can afford a 20% down payment, you should do it. It will lower both your mortgage payment and eliminate PMI, lowering your overall monthly payment by hundreds of dollars potentially.
And What About Closing Costs?
Not only do you have to pay for a home inspection and put a downpayment on the home, you have to pay closing costs. These closing costs are typically fees and charges associated with using a title company, legal fees, banking fees, appraisals, and much more. They can be very costly depending on your home’s value. The closing costs can be as much as 5% of your home’s purchase price.
The closing costs are typically lumped into your down payment and may eat into your total down payment. If you intend to put 20% down, be sure to account for the estimated closing costs. The mortgage company should be providing you updated numbers throughout your purchasing process.
In the End…
As challenging and expensive as the purchasing process may appear, it is totally worth it to call a place home. Buying a home is a great and fulfilling experience. Once you close on your home, be sure sure to kick up your feet and relax after all the hard work. After all you need to relax before move in day!
