So you’re maybe possibly thinking about buying a house, because you hear it’s a good investment? But you don’t know where to start? And people use big fancy words when they explain it and you’re still confused? Well. Let me help. We’ll get through this together… it’s lengthy, but worth it. Also, this is merely my way of explaining things without big fancy terms that are confusing. There’s a lot more that goes in to this process, but this is a start.
So an idea strikes you… maybe you should think about buying a house? Why in the world would you do that?
- Every mortgage payment you make builds equity. What’s equity? It’s basically a way for you to pay toward a place you live in—in a way that you will eventually get back. Say, for example, you’re renting. You pay $800 a month to live in a place. After 1 year, you’ve spent $9,600 to live there. When you move out, you never see that money again. Adios, cashmoney. But when you buy a place and (eventually) sell it, that excess money (after paying off the remainder of the mortgage), called equity, is all yours (generally to put toward another house).
- You can do whatever you want to your place. Granted, this is if you have a home that isn’t governed by homeowner’s associations and/or a condo. But you can paint the walls, ceilings, floors… whatever you want to do. Nobody’s gonna tell you no.
So now that you’re into this whole “let’s buy a house” thing, what’s next?
1) Plan for it. Start saving your pennies. I’d say a general rule of thumb is to have a few thousand dollars saved up. And when I say a few thousand, I mean you should shoot for $10,000. (GAH! THAT’S A LOT OF MONEY!) This money will go toward a down payment, closing costs, and the TONS OF JUNK (and sometimes repairs) you’ll have to purchase when you move in.
2) Let’s say that now you’ve got $8,000 in the bank. Awesome. Don’t buy anything now. Keep it right there and be conservative about what you spend your cashmoney on. Don’t buy a car, don’t buy diamonds, just keep it there. (This makes your mortgage lender a happy camper.)3) Find a Real Estate Agent. How do you do this? Well, if you’re in Hampton Roads, obviously, call Jonathan. But if you’re not, ask friends/ family/ even acquaintances for recommendations. You don’t want to get stuck with an Agent that ignores you, makes this search more difficult, or just wants to make a commission. You want someone that will reply to your questions, handle the issues, and basically just tell you where to sign once you find your place.
4) Once you’ve found your Agent, get pre-approved. What’s that mean, you ask? Well. Your Real Estate Pro (if they’re any good) will have a mortgage/ loan person they like to work with. Your Agent will send you a link (generally, you can get preapproved online/ via email), where you fill out lots of info (salary, debt, SSN, etc.), and the Loan guy will come back and tell you how much you can spend on a house. Your Real Estate Agent should also have a fairly good estimate on what a monthly payment would look like for your pre-approved amount (taking in to account insurance and taxes and other associated costs).
5) So you’ve got a general price range. Now narrow down a “must-have”, “really want”, and “would be nice” list. These guidelines are REALLY helpful for your realtor to begin their search. For example, must-haves are typically number of bedrooms, bathrooms, school district you’d like to be in, and whether or not it’s a fixer-upper, or move-in-ready.
- Side note: a Fixer-upper is really that. It’ll require a good bit of elbow grease to get it to look like you want it to (could be anything from updating kitchens/ bathrooms, to tearing out walls/ floors/ serious house issues).
- Move-in- Ready means you may have to paint a room or two a different color, but other than that, everything else is ready to go. Kitchen and Bathrooms are fairly updated, no termites, no moisture damage—just unpack your junk.
6) So now that we’ve got those things narrowed down a little bit comes the fun part: finding your dream home. You most likely won’t put an offer on/ get the first house you look at. Be prepared to look at a lot of houses. This can either be really tedious, or really fun. As long as you’re prepared for this to take a while, it can be a lot of fun.
7) Your Agent will then start sending you emails. These emails will typically include a link that will send you off somewhere into the interwebs, and will magically take you to a place where it will show you homes in your price range, in your selected area, and that have most or all of your must-haves.
8) At this point, you say… ooooh that first one looks really pretty. So does the 14th one on the list. Let’s go see those! Then your fancy Real Estate Agent sets up appointments for you to be able to take a gander. Typically, your Agent will pick you up and head out to see a few homes in one day. You may like them, and you may want to vomit. Be prepared for the latter option. Some people have SUPER WEIRD homes.Wait wait wait. Let’s take a moment here to discuss some things. When looking at homes, you need to keep a few things in mind.
Paint, wallpaper, and other general wall treatments ARE EASILY CHANGED. Don’t pay attention to those. Things you should REALLY pay attention to:
- Layout of the home. Some of these items are easily fixed (like opening up a doorway, changing the orientation of a door, etc.). Things that are not easily fixed and/or cost a lot of money: changing the layout of the kitchen, opening up a space into a great room, weird bedroom placement.
- Cracks around windows and/or doors. This indicates settling of a home. Sometimes, minor cracks are nbd. If the crack looks big and scary, it’s something to really consider.
- Take a peek in the attic, if you dare. You’ll want to check for storage space (heyoooo Christmas decorations!), as well as the general look of the ductwork and underside of the roof. If you see big ugly water stains on the roof, this could be a big issue.
So. You’ve fallen in love with a home. Make an offer. This is the fun, nail-biting-OMG, I might Die-part. You tell someone what you’re willing to pay for their house. They can sit on that for a couple days before they get back to you. Meanwhile, you incessantly check your phone and/or ask your Real Estate Agent if they’ve called back (no they haven’t). Chiiiillll. Go shopping. Distract yourself. Helpful, friendly Agent will give you the deets once they know them.
Maybe Current Owner says… nah. Maybe they say… “I’ll see your $200,000 and raise you $20,000.” And then you’re like… how about we meet at $210,000, and they’re all like… yeahhhhh. High fives for everyone. Agreement.
Once the agreement is made, your Agent really gets to work. They schedule all these inspections and assessments and junk, while you get a bunch of boxes and pack up your trinkets. And send your Loan guy a TON more info. Yayyyy. And then 30-ish days later, you go sign a MILLION papers. Seriously, get ready for hand cramps.
But, for real. Want to buy a house in Hampton Roads? Drop J a line.