One of my groundhog day resolutions this year was to buy a house.
It resolved rather quickly, although the build-up took a while:
- Last year, I receive a letter about low-income housing that will be available specifically for small-business owners. I check the income level. We are over. But some of our good friends are not — and they go through the process and get a house!
- Two months ago, those friends tell us that there is still a house available and the housing program is considering being more “flexible” with the income level. We decide to go for it. After much paperwork and scurrying around, we find out that our income level is still too high.
- But in the process, my mom offers to loan us some money so that we can make a larger down payment.
- We think seriously about whether or not we can continue to live in our [relatively expensive] town. I open up our finances to my family (two much-older sisters and brother-in-laws and my mom) to see if they have any perspective or insight to offer. One of my sister points out that we can change the amount I save for self-employment taxes because of house-related deductions, plus we’ll have a dependent as well. We discover that the numbers could work out. Then my mom ups her already generous offer to loan us even more money.
- We find a realtor by word-of-mouth and start looking at houses. We go out three times in the next month and a half.
- We decide we really like one of the smaller houses we looked at because of the condition of the house, lot size, neighborhood, and very close location to a community park. Plus the former owners put in a sweet deck in the back yard.
- Although the market is soft, this house has been priced low enough that there are other interested parties. We sign the offer papers before we go off to Santa Cruz for our last pre-baby vacation over this long weekend (starting Thursday), receive a counter-offer by fax at the hotel on Friday, sign it and fax it back, and find out on Saturday that we got the house!
We’re excited because it looks like we’ll be able to close and move in before the baby comes. It will be a bit crazy this next month (especially as my mom took a month-long trip overseas so doesn’t have easy access to her finances) but we’re looking forward to the adventure.
From my two-month experience in the world of real estate, here are some “tips” and general thoughts about the process that I have:
- It really helped me to read a basic book about buying a first home so that I could understand the process before going into it. (I read Buying Your First Home published by Nolo Press.) While I didn’t retain everything, I was familiar enough with the terms and concepts to be able to ask intelligent questions about things I forgot.
- The more people we’ve talked to, the more we’ve found that lots and lots and lots of people get into their first house with the help of family members. This surprised me and made me even more grateful for the generosity of my mom’s loan
- Finding a realtor that we could trust was a key step in the process. I went with word-of-mouth and asked friends in the area for people they knew. We really appreciated our realtor’s experience in the area and found him to be a very helpful guide in navigating the different properties that we looked at; we trusted his opinion and advice because of personal stories we had heard from our friends about his integrity.
- Having organized finances made the pre-approval loan process much easier. For the low-income housing application and loan pre-approval, we needed three years of tax records, three months’ worth of pay stubs, various bank statements, and a good idea of our financial state for the next year. My filing system and keeping on top of the budget each week helped the information-gathering to go very quickly.