We just closed on our house three weeks ago, but as first-time homebuyers, we still have some thoughts on the process. It was grueling and stressful, but we both learned a lot through the challenge. As you can tell, it wasn’t all for nothing (spoiler alert: we got the house), but we hope our experience is helpful to others too, so we wanted to share our key takeaways. Our day jobs aren’t lawyers though, so don’t take our advice as legal advice. These are just some first-time homebuyer tips we think are worth sharing:
1. MAKE IT PERSONAL.
When we put in our offer, the house had all-cash offers higher than ours. Because we went in only $1K over list price (sidenote: it might seem like we would get the house since we met list price, but this is prime Austin realty and it just doesn’t happen like that), our realtor advised us to write the seller a personalized letter. So we did. And it worked.
The owner had lived in the home since it was built (AKA 52 years) and had strong emotional ties to it. We assured her that we weren’t developers trying to flip and sell the house for a quick profit. Instead, we were looking to start our lives together and we wanted to do so there. Because of this, she chose our offer and even came down a bit even though the property was being sold as-is.
2. SEEK APPROVAL.
Full disclosure: Zach handled all finances. He didn’t start out familiar with the process, but when you’re first-time homebuyers and talking this amount of money, you force yourself to learn pretty quickly. And I must say, I think he did a hell of a job.
Typically, time to close is about 45 days. Often, when a seller thinks a home is going to a developer for all cash, the time to close is shorter than average. Ours was 30 days. That means you have to settle on a rate, submit all your paperwork and have your money ready to wire at the end of that period. One thing that helped us meet the deadline was getting a conditional approval up to the amount we were seeking from our lender. This is different from pre-approval, as it carries more weight with sellers and banks. Having this expedited our process and helped us not only secure our offer, but also close without requesting an extension.
Again, all Zach. Lenders know that the process is overwhelming, especially for first-time homebuyers, and they may try to capitalize on that. Zach figured out our closing costs, seller’s closing costs, our rate, our loan amount, interest and every other factor you could think of. When negotiating, we experienced lenders that would switch numbers around to make us feel we were getting a better deal when we actually weren’t. Don’t let them fool you. Pour over the numbers and make sure they aren’t moving something from your closing costs into your mortgage and vice versa.
I would also encourage being upfront throughout the entire process. As Zach explained it to one lender, “You’re a financial guy; would you make a dumb financial decision?” Ultimately, don’t feel like you have to be so loyal to one lender; if they were in your shoes, they would vet the loans in the same way. Lenders are in the business of negotiation, and everything is negotiable.
4. COUNT YOUR PENNIES. (and I legitimately mean pennies)
Zach and I went through every credit card bill. Here’s an excerpt from that saga:
Zach: What the hell did you spend $200 on at REI?
Zach: What about $150 at J Crew?
Zach: And $50 a BJ’s?
And the main thing: keep your money in its place. When you get into moving your money around, you kill your contingency plan. To prevent having to move all this dough and to figure out how much house you can afford (not just using an online calculator because fun fact: those suck), calculate everything — how much you spend on groceries, your car payments, expected costs of utilities, property taxes, big upcoming expenses (#weddingsarestupidexpensive), typical credit card bills (even if you think they can be lower), expected costs of renovation + 10% cushion, prescriptions, contact lenses, your Netflix account…I literally mean everything. And I think this goes without saying, but don’t spend right at whatever number you arrive at. Because if you overspend one month, you miss your mortgage payment. And that is bad.
5. DON’T GET TOO ATTACHED.
You need to know and get real cozy with your walkaway point. No house is worth insurmountable debt and the stress that comes with that. If it’s too expensive, it’s too expensive. Be okay with cutting ties if you have to and know when you’re willing to suck up that $2000 and when you’re not willing to spend that extra $5000. It isn’t being cheap; it’s being fiscally responsible.
As I said, these are just the things that stand out in our minds as first-time homebuyers when we reflect on the process. Again, not exhaustive, not legal advice, just our thoughts. And of course, we’re still learning but wanted to relay some of the info we found helpful! Hopefully it’s helpful to someone out there too!