I know we haven’t been looking for very long, but normally things happen much quicker than this in my life! I mean, take having a baby. Within a 2 month time period I had decided I was ready for a baby, convinced my hubby it was good timing and was seeing the two pink lines on the pregnancy test. Easy-peasy, right??? I thought house hunting would be similar. But, on the positive side, I have learned a lot along the way so far.
What I’ve learned as a first-time home buyer:
1. Finances change. We started out the process thinking we would be able to afford a house about $50,000 more than what we can actually afford. The restrictions on brokers in this economy is much more strict than they used to be. Brokers used to be able to finagle things a little to get you into the house you wanted. Not so much now. They can only go so high with your pre-approval and that’s it. Until your debt (monthly payments going out) goes down, or your income goes up, your pre-approval amount is not going to change. In our situation, DH is relatively new to his job and has gone through a raise (that ended up being lower than expected) and has another raise coming up in about 2 months. Then, I will be done with school and have additional income come May. Our finances are ever-changing.
2. There are different types of financing. For first-time home buyers, there are a few different financing options. We can go FHA, where we would put about 3.5% down on our house. This is available to first-time home buyers only. There is also the USDA Rural Development program. This is available to home buyers purchasing a home in a designated “rural” area. Several cities we have looked at have fallen in this category. This option requires 0% down and no mortgage insurance. This is a pretty sweet deal!
Well, then we considered building a home because we weren’t quite finding what we wanted. This is a whole new financing story. If you build with a smaller company, it is likely they would not be able to carry the construction loan for you. This means you need to get a construction loan through your broker, which will require between 10-20% down. Yikes! We do not have that. If you do find a builder that can carry your construction loan, you are in much better shape. They will most likely require much less $$ down, which they will give back/roll into your end loan finances after the house is built. Whoa! If your head isn’t spinning by now, I’m impressed. Because mine certainly was!!!
3. There are just soooo many home options! I had no idea I would be looking at so many types of homes! And I’m not talking about the style of the home. There are traditional sales, short sales, homes in foreclosure and lender-owned homes and lots. All these different options work in different ways. Traditional sales are obviously the easiest and most straight forward. You find a house you like, make an offer, agree on a price and choose a close date for the house. Nice and easy! Short sales are the most complicated. You make an offer, the seller generally doesn’t care what the offer is and sends it straight to the bank or banks (depending on number of mortgages the seller has). The bank takes their precious time (2-5 months) to decide whether or not they are going to accept your offer. If they do accept your offer, you have a limited time frame to close. These are the two I have experience with so far. But…we are going to see a promising foreclosure tomorrow. I’ll have to let you know how that goes 🙂
Gosh, I feel like I haven’t even scratched the surface of our house hunting adventure… but I will continue to post updates as they happen!!!
‘Til Next Time,