The 4 most important things I wish I'd known before buying my first home
As we all know, homeownership is a lot of responsibility. Being a homeowner means that, if anything goes wrong or needs fixing, it's on you. You no longer have the power to phone a friend, aka your landlord, to come fix something.
Still, my husband and I were ready. We were tired of renting, throwing our money into what seemed like an abyss. So we set out to buy our first house.
While the process was exciting and fun, we were not prepared for the headaches that came with it. We're now told some of the pitfalls we experienced were considered "normal" and "expected." However, being first time buyers, we didn't know that going into our search. No one told us.
That's why I'm sharing these four tips, so that if you do find yourself heading to an open house this weekend and find the house of your dreams, you'll have some help on your journey.
Keep your landlord informed
When we decided we were ready to buy a house, we had about six months left on our apartment lease. We thought it would take a long time to find a home we liked and wanted to build in an appropriate amount of buffer time so if we didn't find something, we could still renew our lease.
The spring housing market was crazier than we expected. We'd see a home we liked online on Tuesday and by Thursday all showings would be cancelled due to multiple offers. Our realtor was fantastic, but low interest rates and low inventory made homes sell in days – usually for tens of thousands of dollars over asking price.
We ended up putting an offer in on the second home we saw. Our house never made it to the open house phase because it had multiple offers in one weekend, including ours. We found out a few days later our offer had been accepted but, since it was earlier than expected, we needed to figure out a way to get out of our lease. Luckily, we had kept our leasing office informed of our plans.
What we learned here was, if you are renting but looking to buy, it is important to keep your landlord in the loop. If you are going to move to your new home before your lease expires, you could be hit with a fee for early termination. If you tell your building management early enough, though, you may be able to negotiate a deal with them.
We made a deal that we would move out early and continue to pay our rent, but if they found new renters who wanted our apartment, we would get some money back – and we did.
Consolidate money in one account
Once your offer is accepted on a home, break out the champagne — and also a checkbook. You'll need to start putting money down and the amounts are large.
Being newlyweds, my husband and I still had two separate savings accounts, and we were in the process of consolidating everything into one account when we got the news our offer was accepted. We were going to use some money from his account and some from my separate account for the down payment. But every time we combined funds to write the big checks, the bank needed statements showing the transfer to prove where the money was coming from.
Consolidating money into one account in advance of the down payment phase will help you stay organized. If you choose to have separate accounts and plan on moving money over into another account to write the big checks, just know you'll have to keep a paper trail to send to your banker so they know where the funds are coming from.
Finalize your closing date early
Since we had so much time in our lease left, we told our sellers early on we were flexible with the closing date. However, being flexible ended up making things a little more difficult, because there was less urgency to get a firm date down on paper.
Working at CNBC, I was monitoring the moves on the 10-year treasury yield like a hawk — because the higher rates go, the higher the interest rate the bank could ask us to pay on our mortgage. This was right around the time the 10-year was creeping towards 3.1 percent, which it hadn't done in several years.
In the time we were waiting to firm up a closing date, our banker told us the interest rate on our mortgage had risen from 3.75 percent to 4.5 and there was nothing he could do.
After we finally settled on a date and locked in our 4.5 percent rate with the bank, we got a note from the sellers asking if we could extend the closing date by a month. The bank would only extend our date by one day for free and told us, if we were to push the date back, it would have to charge us a mortgage extension fee of nearly $1,000. Needless to say, we kept the original day.
Just days before we were supposed to close on the house, we encountered an unexpected delay on some paperwork which pushed our date back by one day. If we hadn't had that one day courtesy extension, we would have had to pay that fine, which would have been an unexpected hit to our budget.
Get everything in writing
From the first tour we took of the house, the sellers' realtor made clear, in words and in writing, that the sellers planned to take one of the light fixtures from one of the bedrooms. Other appliances like the washer and dryer, refrigerator and microwave would all stay in the house.
During our inspection, we asked the sellers' agent if they would replace the light fixture they were taking with something else, so we wouldn't be left with a hole in the ceiling. The agent assured us they would not leave the open wires hanging from the ceiling and would most likely add another light to replace it. That was totally fine by us.
However, when we did the final walk through on the day of the closing, we saw there was a metal plate bolted to the ceiling – not a replacement fixture or even a light bulb, which we had been under the impression we would get.
This situation taught us that, unless an agreement is in writing, it may as well not exist. At the closing, we brought this up to our attorney, but he told us it was too late. We had not asked to get a replacement light or bulb in writing, so no party was bound to replace the light.
So, if you see something, say something to your attorney and get it in writing.
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