• Sunshine and Unicorns
  • Sunshine and Unicorns
  • Sunshine and Unicorns
  • Sunshine and Unicorns
  • Sunshine and Unicorns
sunshine & unicorns: a blog about love, learning, and life in the upper midwest

19 April 2009

i'll light the fire while you place the flowers in the vase

Our house-buying adventure is pretty much on auto-pilot right now. Occasionally our agent or our broker calls us and we have to go somewhere and sign some papers, but other than that it's a waiting game. On Monday we had an inspection. It turned out well. The house is old and it has some issues, but nothing major, and that is a load off our minds.

The next hurdle is the appraisal. The bank sends an appraiser who charges us $500 to go look at the house and decide whether or not the bank should finance it. I think an appraiser is involved in every home purchase, but with an FHA loan (which is what we're getting), the appraiser can nitpick all sorts of things inside the home, holding up the closing until each thing is repaired. The appraiser then charges another hundred bucks to go back and re-inspect said repairs prior to closing. Among the things an appraiser can take issue with are: stairs without hand-rails and chipped/cracked/peeling paint. This home has both. We'll see if they notice or care.

In case anyone out there is wondering what the home buying process has been like, here's a run-down of our experience thus far as first-time home buyers.

1. Get Pre-Qualified. We went to our bank and got lots and lots of forms. We had to detail all of our loans and assets. If you've got car payments, student loans, or other debts, be prepared to get really depressed about how technically "poor" you are when you see the totaled amounts at the bottom of the Assets and Liabilities pages, but remember that you're buying a house (so you'll be much, much poorer soon!). It took about 3 days to get our pre-qualification letter. The letter gave us a ballpark home price to work with, told us how much cash we'd need to close on a house at that price, and gave an estimate of what our monthly payments would be for that size loan. It also gave us a rate quote for the type of loan we requested.

2. Go look at some houses! A lot of people have said "isn't it fun?!" It was fun for us for about 5 minutes. The excitement of buying a house is fun, but it's also very stressful, and walking around in other people's homes is downright odd (and in some cases, a little gross). We looked at 13 houses and had serious interest in three. We then went back and did a more thorough look through each of those three. In one, we found a lot of major maintenance work to be done. Another was too expensive for what it was. The third is our pending property. It's got some minor issues, but is a good house and a better price than we thought we'd end up paying for a home in our preferred part of town.

3. Get your money together! The pre-qualification paper told us how much money we needed to close. In order to get a loan approval letter, we had to have that money in the bank. (So even though the closing date isn't for another month, we still needed to have the money ready two weeks ago, before we made our offer.)

4. Make an offer. Be prepared to sign your name about 20 times. I'm told this pales in comparison to how many things you sign at closing. Figure out what to bid and what kind of contingencies you'll want. Our offer was contingent on a home inspection (paid for by us), our FHA appraisal (still to come), and the repairs of a few minor issues in the house. We also had to provide "earnest money". This is a sum of money (usually less than 1% of the house's value) that is held in escrow by the seller's agent. It lets the seller know that we're serious about the offer. (If we randomly change our minds and walk away from the deal with no good reason, the seller keeps our money.)

5. Counter-offer. This is a game you play with the sellers. We countered their counters a few times. After 5 or 6 negotiations back and forth, we had a deal.

6. Go get that loan approval letter! We had to get ours within a week of our offer's acceptance. Basically we went to the broker's office and signed our names about 30 more times.

7. Take care of any other contingencies that are your responsibility. One of our contingencies was the home inspection. This is a third party inspector (in our case, a team of inspectors) paid by us to check out the integrity of the house. It had to be done by yesterday (and it was done on Monday). Had we NOT gotten it done by yesterday, the sellers would have been able to walk away from our agreement on the basis of our not meeting our contingency. I think they could have kept our earnest money too.

8. Get the bank appraisal/FHA appraisal (as I talked about at the beginning of this post).

If the appraiser does NOT find issues (or if they're easy repairs), I think we're coming up on the finish line. We have more papers to sign, probably need to do another walk-through, etc., but mostly we just hope that the bank can get everything settled and ready by our closing date (tentatively about a month away). Our earnest money will be applied to our closing costs, and we'll bring the rest to the table on closing day. Meanwhile, we'll busy ourselves by packing, reserving the moving truck, putting in notice on our rental, getting homeowners' insurance, and (oh yes...) finishing our class finals of course!!