Around here, I've developed a bit of a reputation. As " Rachel the Renter" I entertain my co-workers (and you!) with a variety of renting anecdotes and horror stories. But the truth is, I do want to eventually break up with my landlord and explore a monogamous relationship with a mortgage broker. I know "Rachel the First-Time Homeowner" doesn't have the same alliterative ring, but I'm sure we'll all survive.
Thing is, there's lots more at stake than just a change in status from renter to homeowner. Like so many (if not all!) first-time home buyers, I have no earthly idea what I'm doing. Sure, I can read up on all the buying and finance advice we offer here at realtor.com. Of course, I can consult with my real estate agent and my mortgage broker. But if there's one thing I keep hearing from those who've forged the path ahead of me, it's that when you buy a home for the first time, you're constantly faced with things you didn't know you didn't know.
So, before I embark, I thought I'd minimize some of those surprises and take advantage of my home-owning co-workers' experience. They shared these personal anecdotes of surprises they encountered on the road to homeownership. I hope this will help prepare you -- and me -- for what lies ahead:
"I thought our mortgage loan was approved and ready to go, but at the last minute the originating bank balked at the purchase price of our home -- they thought it was too high. This was in 2008 in Silicon Valley -- we thought we were getting a bargain! The bank was based somewhere in the Midwest, though. They assigned an assessor to come check it out, but fortunately the assessment supported our purchase price. It was a suspenseful few days, though." -- Cicely Wedgeworth, senior editor.
Takeaway: Don't count on your mortgage until it's signed. And make sure you double-check your property assessment.
Count your costs
"I might have experienced short-term memory loss during my loan approval process. All the closing costs were a mystery to me, and my loan officer or Realtor had to explain each expense every single time I saw them in updated loan docs." -- Oie Lian Yeh, copy editor
Takeaway: Go over the closing costs with your real estate agent and take notes on what to expect. You'll see these costs itemized again and again, so best to get familiar fast.
Budget time and money for repairs
"I was surprised and worried about the problems that the home inspector found. How serious are termites? How about mold? Can these things be fixed and will the house be safe? Or will we regret buying a house with possible structural and health-related issues?
"And how much money will it cost for us to do roof repairs ourselves when the seller is selling "as-is" and it's a competitive market where we lost out on two previous houses we bid on? Related question: How long could we put off doing roof repairs, since we were raiding our savings to fund the down payment for the house?" -- Kim Moy, managing editor
Takeaway: You can't foresee problems that might arise during the inspection. You might be able to negotiate with the sellers, but you'll want to have enough money left over after closing for any unexpected repairs. Be prepared to walk away from your dream home if needed.
Multiple visits are OK!
"When we were buying our first house, I didn't know I could go back to look at the house again before we placed a bid. I was also shocked that I was able to meet the sellers, which ultimately put our bid over the edge and got us the house.
"We saw the house on a Saturday and bids were due on Monday. The open house was full of potential buyers and I felt like I hadn't spent enough time really seeing the entire house. Our agent arranged for us to go see the house one more time on Sunday afternoon. I assumed the house would be empty, but the sellers were home and welcomed us in to take another look around.
"They were so friendly and walked us through the house, explaining little nuances along the way. We submitted our bid the next day and found out the house was ours a few days later. Our agent told us there were seven bids and ours was the same price as another couple's, but because the sellers met and remembered me, our bid won. I firmly believe it was meant to be, but I'm glad I went back for another peek." -- Erik Gunther, senior editor
Takeaway: Look as many times as you need. This is the place you'll call home, after all. Even in a competitive market, a second look could end up giving you the edge. (And while you certainly don't want to harass the seller, don't be afraid to personalize your offer with a letter describing any details about you, your family, and why you love their home. It could be enough to sway the seller in your favor.)
Learn (and love) thy neighbors
"Maybe this is a very urban issue, but I didn't realize how neighbors can make -- or break -- a home. When my wife and I moved to our small co-op in Brooklyn, we knew we could get along with the three families living on the floors below us, but over the years they've become more than just neighbors. They're good friends: We all had children together at about the same time, so our kids have grown up together, we babysit for one another, and we regularly get together for barbecues in our common space.
It's what people always say about "community" -- you really do want to be in a place that not only welcomes but embraces you, that you look forward to being a part of. Maybe I was just a cynical New Yorker before my wife and I bought this place, dismissive of the idea of community in a city where people cherish their anonymity, but once it happens, you realize how good it is. If I'm ever foolish enough to move away from here, I'll definitely consider my potential neighbors on equal (or greater!) footing with the bathroom fixtures and the price per square foot." -- Matt Gross, former editorial director
Takeaway: Your community is often as important as the home you're living in. Take a good look at the neighborhood, and don't be afraid to ask the neighbors questions. These people could become your babysitters, your carpool buddies, and your closest friends over the years.