We bought a house and here is my guide for taking out a mortgage based off my experience…read more to learn more…
October 1st 2021 was the day my fiancé and I closed on our first home together (keep following along here)! As the day was filled with excitement for this big moment in our lives, the process was very opposite. From dis-agreeing on location or spending endless hours on the web trying to find “our” home when it usually ended up in disappointment. Either it was already in contract, the listing agent wouldn’t pick up, one of our agents was too busy or for some reason when we saw it, one of use didn’t like it in person… it was very disheartening. With this said, here is my first word of advice to you….DON’T GIVE UP.
But let’s take a few steps back to top things to do first when you are about to buy your first home:
1. Pick 1-2 neighborhoods or towns you want or would live in
This is so important not only because you want to be on the same page but so you’re not all over the place. Prices vary and there was a moment we were chasing that and the next thing we’d know we were looking 3+ hours away from the city. That was a big no-no! It’s also important to know the schools, transportation and the type of town, meaning young families or a sports community etc. So do your research.
2. Drive around those areas
Once you narrow down that list see it for yourself. Even do a drive by of the house before you schedule a showing. There were a few houses that I’d drive by and text our agent to abort the showing because it was on a cliff or double yellow. Pictures are very deceiving and a lot of things aren’t shown if they can be a turn off. With that said good can also come from it too. For example just driving around Huntington, NY I fell in love with a few neighborhoods and maybe it didn’t happen now but you never know down the road if that can be a possibility.
3. Create a list 1-6 list of must haves
This is important because let’s say a garage is important, why bother looking at houses that don’t have it. Some major things for us was taxes to be under a certain number, street because we didn’t want to be off a double yellow, at least two toilets because let’s be real…men and their tiktok in the morning, and of course space inside needed to not be cramped. I will 100% admit a lot of my items I wanted is not in this house…at least yet…but this part of the process and you need to find the middle ground. So again it’s important to make lists so both parties are aware and stay on track.
4. Find an agent and our agents for the different areas
This is another point that is helpful because if you find someone from the area and spend time with them they can guide you in the right direction. Not every agent will vibe with you and thats normal too. Just find a good fit where you feel you are being taken care of.
5. The Mortgage Process: Start applying for mortgages and have all your paper work ready
A Very important task on this list if you’re financially ready to make the jump of homeownership is to start the pre-approval process of getting a mortgage. You will have to give your social security number and they will have to run your credit. So don’t do this unless you’re ready! However this is the information you’ll need so you know what your home budget will be. For example are you pre-approved for $500 or $700k, that’s a big difference. Also ask about any programs they are running. Some states have great offers for 1st time home buyers…of course New York didn’t but that’s typical haha!
Once you pick the company you want to go with and you have an accepted offer on a house, make sure to have all your financial paper work ready. For example 2 years worth of Tax returns. Also inform your employer that a bank will call because they will want to make sure you are employed during the whole process. They will even ask for a pay stub bi-weekly. So just be ready! You also may submit the same stuff over and over and again this is all normal. at one point I thought I was going crazy.
Another Important factor: figure out how much you want to put down for the downpayment. The more the better, for obvious reasons. Let’s say you do 20% down though, 1, you won’t have to pay mortgage insurance which is a total wast of your money and 2, that’s less money off of the house and will either get you to your mortgage pre-approval number or you just wont have to max on that number. Less is fine too. Buying a house is expensive so you may want to keep some on the side for the unexpected.
Another important question to ask your loaner when picking a mortgage is about the fees. Ask about late fees or lets say if you want to pay your mortgage off earlier, will you be hit with a fee. The sooner you pay it off the less interest you will pay over time so thats a great thing to keep in mind and a lot of loaners will hit you with a fee for that. Remember they are banking to get that 30 years of interest somehow. There is a bunch of other things on the mortgage paper too like points and interest rates which I don’t know how to explain but it’s normal and you will feel like you’re hemorrhaging money at closing….thats all I’ll say.
6. Have money ready for closing
Taking about closing…closing costs are very shocking…expect about 10%-20%. The bank will also ask for proof of the money in your account way before closing. This is something we didn’t know and or expect the amount and time frame so we had to borrow to put it in our joint account and pay back a few weeks later. I share this because it happens and the more you know the better prepared you’ll be. So liquidate those bonds earlier and don’t be caught off guard like us 😉
You will also get a list of the closing split the day before. So this will tell you your official closing costs and the split of of it and who it will go too. Some will have to be certified check and some can be our personal checks.
All these seems like duh items to list but as I dive in with an explanation I hope it makes sense and is super helpful. The process is grueling, not every home-seller is easy…ours surly wasn’t and it can take a while with delays. But hold on, ask your questions and know there’s a light at the end of the tunnel.
Xox
Alex & Kelly
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