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What I Learned From Buying My First Home

A few weeks ago, I closed on my first home. (Two months ago, I didn’t even know what closing on a home really meant…that’s how fast this all happened!)

Still, we’ve been on the road to this day for a few years. My husband and I paid off our student loans and my car loan about three years ago and have been saving for our down payment and extra money for expenses ever since. A lot. As much as possible. Often, more than 50% of our net income.

It wasn’t easy, but we knew it was smart to wait and save as much as we could as we transitioned from depending on a landlord to depending on ourselves. Here are some lessons we learned along the way:

Patience!

I cannot stress just how important it is to be patient during the home buying process.

For starters, there have been very few times in history where both home prices and mortgage rates are so shockingly low. Usually, it’s one or the other. Because we waited, we were able to snag a 4.0% fixed-interest rate and negotiate a price on a home that was well below it’s market value. We also felt like we were able to skip the so-called “starter home” and jump right into a home that will be large enough to accommodate a future family. This way we don’t feel like we’ll have to move any time soon—or ever—if we don’t want to. This was a purposeful decision because we are definitely not interested in selling a home in a couple of years in a bad housing market.

As with any home purchase, we faced a few bumps in the road. Negotiating was especially tough (more on that later). Tears were shed. Husbands were forced by their wives to call real estate agents and “get tough”. Numbers were crunched. Breakdowns happened. We almost lost our dream home.

But every time we wanted to cave in or move on, we stayed patient. In the end, the sellers caved and we got a better deal.

Consider Credit Unions

For our mortgage pre-approval, I immediately went to the local bank where we have accounts. They were nice enough and gave me a good deal of helpful information. But their closing costs about gave me a heart attack. And their interest rates fluctuated daily—common for most institutions, but still something that made me nervous.

Luckily, someone recommended that I check out some nearby credit unions.  Boy, am I happy I did!  Their interest rates did not fluctuate daily and were even slightly lower than our bank. Even better, though, were their closing costs. In total, we paid about $3,200 in closing, which was about half of what our bank was going to charge. (We also were able to negotiate that the seller paid $2,000 of our closing costs, helping us out even more.)

Expect Unexpected Expenses

Since the sellers accepted our offer, we’ve been shelling out money for a lot of things we didn’t anticipate.

In addition to the closing costs (e.g., title insurance, appraisal fees, and more), you’ll have to foot the bill for any inspections you want conducted on the property. For us, this meant a building inspection, termite inspection, and radon testing.

Our inspector found two dozen minor issues that needed to be fixed within the house. So we’ll be loading up on caulk, hedge trimmers, and new dryer vents in the weeks to come; all expenses we hadn’t anticipated when we were saving for the house. Sure, this stuff comes along with home ownership, but it was all new to us.

After we moved in, we also shelled out $125 to replace the locks. We needed a refrigerator and washer and dryer set, so I stalked deals and coupons sites for a couple of days before handing over $3,000 for all three appliances. We also bought a new lawn mower just yesterday for a cool $300.

Prepare for An Emotional Roller Coaster

Negotiations can last a day or a week or a month—however long it takes in your particular situation. And this time should really be called Hell Week.

We submitted our offer on a Sunday and didn’t have a signed contract until the following Saturday. Here’s how our week went:

  • Sunday: Submitted a low offer and asked seller to pay closing costs.
  • Monday noon: Received a counter of $5,000 less than their listing price. No closing costs. We countered at $10,000 above our first offer.
  • Monday afternoon: Sellers countered at $2,000 less than their previous counter. Confused yet? We countered back with our final offer of $20,000 above our original offer and asked for closing costs.
  • Monday evening: Sellers countered with their final offer of $2,000 above our final offer and would not offer closing costs.
  • Later Monday evening: We agreed to their price, but said we still wanted money for closing.
  • Tuesday: We waited.
  • Wednesday: They lowered their listing price. They were playing hardball and looking for other offers. At this point, we started looking for other houses.
  • Thursday: Nothing. Even worse, we weren’t interested in ANY other house. We considered giving in to their final offer.
  • Friday: Their realtor calls our realtor three times to feel us out. Finally, at 3pm, they accepted our final offer. Hooray!

That entire week, I couldn’t concentrate. I couldn’t focus on work or anything else. It was especially devastating because there were no other houses we were interested in. We were even considering backing out of the home search for a couple of months and continuing to save.

It seemed silly because both of our final offers were so close to each other. It was almost comical that we couldn’t agree on something. Truthfully, we would have caved to their final offer the next week if they hadn’t finally agreed to ours.

When hundreds of thousands of your dollars are in limbo for a whole week, it’s slightly traumatizing. Be prepared!

Don’t Fall in Love With One House

I kept beating myself up over this during Hell Week. I was so irritated with myself that I had fallen in love with one house. This is not the trap you want to fall into when you’re shopping for a home. Remember: have a few different houses that you’re interested in when you go to the offer table.  Otherwise, you’ll drive yourself crazy during negotiations AND you’ll probably ending up paying more than you wanted.

Keep Things Professional With Your Realtor

I live in Kansas, where college basketball is in almost everyone’s blood. Our real estate agent was no different—he was one of the biggest sports fans I’d ever met. There were many times where him and my husband were on long tangents about sports or tournaments when I wanted to be talking business or looking at a home we were viewing. Of course, this set the two of them on a friendship vibe instead of a business vibe.

During negotiations, we weren’t thrilled with a few things our realtor did and said. So when my husband had to get tough with him, it was harder because they’d been treating each other like pals instead of business associates. It’s fine to be friendly, but everyone needs to remember that there’s a lot of money and a big life decision on the line.

Enjoy The Process

If you remember to take a step back and enjoy the process, it can remove a great deal of stress. Spending Saturdays looking at homes is fun! Knowing that you’re about to be a homeowner is exciting. You get to choose your perfect house—-no one can choose for you. It’s definitely a process like no other, so take the time to relish it!

What about you? If you’re a homeowner, what did you learn from buying your first home?

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About Amber Gilstrap

Amber is a twenty-something CPA from Kansas City, Missouri who loves writing, working out, and---of course---finding fresh ideas for saving money. Follow her on twitter @ambergilstrap.

Comments

  1. My wife and I closed on our house almost two years ago. We had really liked a condo that was priced at $15,000 to $20,000 above the others in the same complex, and the seller wasn’t being reasonable with negotiations. Ultimately we bought a house that has two more bedrooms, 500 more sqft, and allows me to walk to work; therefore saving money on commuting. The purchase price was more than what the condo seller was asking, but the complex had high association fees, so the monthly payment was a wash.

    I’m still not sure if this was the best thing for us, strictly because of what we learned. I learned that I want a garage and central air. My wife learned that she wants a dedicated dining room. We both learned that we’d like a different location better. It’s easy for us to focus on the negative aspects of our home, but there’s so much that we like.

    The only real error here would be to not learn from our experience.

  2. Great post. My wife and I are in a similar situation. When you started looking elsewhere for a better loan, did you have to go throug the whole process again, to be able to compare loan products? We went through the pre-approval process which required so much paperwork, took over an hour meeting, several phone calls and verifications and about a week later we got our pre-approva. Plus,wouldn’t shopping around require another credit check, which can affect the ever so important credit score?

    • Yes, I was worried about the second credit check affecting our scores. But we had prepped our credit scores for about 2 years before this process to make sure they were top-notch to get the best loan. Turns out, 2 credit pulls hardly affected them. The pre-approval process at both our bank and the Credit Union were extremely quick and easy — it was the final mortgage approval that took forever! So, we had to fill out a form at both institutions, but it only took a couple of minutes.

      • Amanda M says:

        For the credit check “ding,” multiple pulls for the same reason within 30 days affect your score as one check.

  3. Great post! That’s really eye openin to hear all of this. I’m not sure when I’ll be in the house buying market, probably not for a good 5 years but I’ve started saving for a down payment now. I may be in the condo buying market though. I’ve learned a lot from your post, thanks for sharing!

  4. Putting offers in is hard. I feel in love with a house a year ago, put in an offer and didn’t get it. I then spent another year searching for a similar house to fall in love with. When I did I was thrilled to get it, even though the closing process too forever. Congrats on your new home!

  5. My husband and I bought our home 4 years ago, and we learned two big things: you can find your home when you least expect it and don’t be afraid of ugly! We had both always said that we didn’t want either a split level or a ranch home. That left us with a two-story home – which can be found for reasonable prices in our area. We looked at two homes in the same neighborhood that met our wish lists, but neither felt right. We looked at the third home only because we were already in the area. Its a split level home with a level entry that we immediately felt at home in. It was empty, and badly out of date – I’m talking orange, brown, and yellow floors in the kitchen, gold pattern wallpaper in the entrance, and pink and brown paisley wallpaper in the bathroom. Most people who looked at this home couldn’t image the possibilities and we were able to turn it into our dream home with a few weekends of work and whole lot of paint!

  6. We bought a house 4 months ago (man, I can’t believe it’s been that long!) and we had a very similar experience to you. We also bypassed the “starter house” thing and I’m so glad we did. We have a few friends who bought 5-6 years ago in houses way out in the burbs and are having a tough time selling their homes. In our city, home prices are going UP, but in the burbs, they’ve taken a hit. I love that we could stay in our house for 5, 10, 15, 20, 50 years if we so chose!

  7. We just moved into our new home 2 weeks ago after living in a 2bedroom (no washer/dryer) 1 bathroom apartment for almost 7yrs, first time homebuyers. I totally feel in over my head with all the unexpected expenses, but I know that as the kids get older, the expenses grow and we just wouldn’t have been able to make it. So, we’re going to learn how to make it with what we’ve got. Before I even unpacked most of the boxes, I bought 5 petunias to plant in the front yard…that’s been my dream, to make a beautiful garden. Right now, we need $ for food, mortgage, gas, and other bills, but one day…

  8. Congratulations on your house! It looks like you had a lot of learning to do in a short amount of time, but luckily you hung on tight and finally have your dream home. Congrats and I hope your family settles in well.

  9. I’m 21 and just went through buying my first house. I would definitely say that doing research and being very well-informed helped tremendously because they definitely smelled the fresh blood of a first time home buyer. A lot of people forget that as the buyer you have all the power and the moment you let the seller forget that, you lose the battle.

    Congrats on your house!

  10. Amanda M says:

    I went through this process alone, which is VERY difficult. I was looking at houses with a Realtor when he showed me a home that he was selling. I liked it, but didn’t like the idea of going through him on the purchase (especially since he was friends with the seller). So I chose to use a different realtor to buy the home. The original guy was not happy at all, but I didn’t really care. Negotiations were awuful (offer $10K under, responded $500 under, Offer $8K under, responded $800 under). Eventually I just gave in because I liked the home. We did a home inspection, and the inspector found about $15K in repairs that needed to be done. The seller offered a $2K payout because they wanted to close quickly and gave me a list of the “improvements” they had already made to the house. I went over this completed list (about 12 things) and found that half of them hadn’t been done at all. I walked away from that home furious (They waited another 2 months – carrying costs – and the next buyer paid $3000 less than my offer. Ha!)
    The home that ended up buying was one that I had walked through 4 months earlier, but I wasn’t able to see the structure for what it was: a very well built home that needed updates because the owners had lived there 50 years. It was painless compared to the first (I offered $10K under and they accepted), and the issues were nothing compared to the first home, all athetics and one dripping faucet. I love my home, and I wouldn’t have my living situation any other way.

  11. I am supposed to close on my first house in less than two weeks. My home buying experience has been strange. Ive rented the house for the last 7 months from an owner who is way underwater. We negotiated a short sale. The interesting part about that was the owner does not care what the house sells for because he gets no money. He is a real estate agent and was actually helping me to get it for as low as I can. (“Ask for $2000 seller concessions, the bank will give it to you!”, he told me as we signed the offer.)

    Ultimately the short sale was a real pain because the banks would not negotiate until they saw a HUD-1 form with the bottom line on it. I learned a lesson from the pros there when and if I sell… Ultimately I had to go up $7000 and accept the banks offer but it is still a pretty good deal.

    Plus I already live here and love being here. It’s like being on vacation in my own home. I figured moving somewhere else would cost another $4000, so it’s really a discount if we compare bottom lines.

    My advice to anyone would be to rent a house, then negotiate a short sale. Time is on your side… If you’ve got the lease you control the timeline, at least until the Protecting Tenants at Foreclosure Act sunsets. An underwater owner is easy to deal with, he just wants the deal done. and short sales can be a good deal if you can wait for them, which if you live there anyways you can.

  12. Michelle says:

    I just closed on my 1st new home about 2 weeks ago myself.. congrats to you as well! I bought a new home build (which I thought would be easier!) but it was a lot of work. The biggest thing I tried to do is prepare myself for each step, so I wasn’t surprised by anything. I literally researched and wrote down questions at eash phase and wasn’t afraid to ask them. The loan people as well as the builders got a bit erked with me because I went through their things with a fine tooth comb… but hey it’s part of their job and helped ease my concerns. Though things can go wrong (and did) I can’t say anything crazy/unexpected happened. Closing was super-easy. I had been very nervous for that day… but made sure to review the HUD extensively before that and be prepared and it was less than an hour!