~56~On Buying a House, Part 2

The other day, I posted about the processes we went through and decisions we made prior to finding our house.  Today, I'm going to outline the steps we took from the moment we found the house to close. 

Jake discovered our house at the end of January while perusing the Realtor.com website.  I had previously saved the listing in my "favorites", but never looked at it close enough to schedule a showing.  I think that part of it was because it was originally listed outside of our ideal price range, so I never took it seriously.  In December 2012, it was price reduced into our search boundaries.  Thankfully, Jake made me look at it again and we agreed that it would be worth looking at.  I quickly contacted my realtor and scheduled a time for us to look at it. 

It took us a couple of tries to view the house.  The first time, our realtor got sick and asked to reschedule.  The second time, one of the seller's children got sick and asked to reschedule.  We started to get antsy about getting in in a timely manner, especially, when we were informed that two other people were coming to look at the home before we were able to go due to all of the rescheduling.  
During the showing, we considered the amount of space that was available, the layout of the home, and looked for our must haves.  This was honestly the first home that didn't make us say, "I really like it, but…."  It has all of our must haves, plus some.  It was completely move-in ready and aside from some paint and a little updating, didn't need anything done to make it feel like home.  The carpet was new, kitchen remodeled, newer roof, newer furnace, newly painted siding.  We were very excited about the possibility of making this our home and made sure to let our realtor know.  After Jake and I discussed the desire to pursue the house, we set up a second showing with Jake's parents to get a second set of eyes looking it over.  We wanted to make sure that we didn't overlook anything that might cause problems down the road.  We got the seal of approval and decided that we wanted to put in an offer. 

Once we decided to make an offer, we had to decide what to offer.  We used the recommendation and expertise of our realtor to guide our decision.  We looked at what other homes in the area had sold for and considered any areas that we'd need to put money into in the near future.  We settled on a low-end offer that was $8,000 less than what it was currently listed at to feel them out and provide a starting point.  We asked that they pay all closing costs, and leave all appliances (the listing only offered the stove/microwave/dishwasher, but withheld the fridge/washer/dryer).  
Putting in an offer was a much more official process than I had thought it would be.  We met with our realtor at her office, filled out, and signed a purchase agreement that stated our offer price and conditions.  We also wrote a check for an earnest money deposit.  This basically tells the sellers that you're serious enough about the property that you're willing to put some money down on it.  These funds do not go to the sellers themselves, but rather are held in a trust account and credited to the down-payment/closing costs at closing. I was most surprised by how quickly we were expected to get a response.  This was written into the purchase agreement-requiring the sellers to respond by noon the following day.  We heard back that evening.  
The sellers countered our offer, raising it $6,000 from our initial offer, agreeing to closing costs and the fridge.  Prior to our offer, they had two accepted two other separate offers and both of them had fallen through before they made it to closing.  The sellers were a bit hardened about the whole process.  As a result, they asked us to increase our earnest money deposit to $1000.  We didn't have a problem with this because it all goes towards your amount due at closing anyway.  If anything falls through between then, the deposit is returned. They also asked for a two day difference from closing to possession.  This baffled us a bit, but after talking to our realtor, we learned that the reasoning was that since they can't close on their new house until they'd finished closing on their old (the one we're buying), they might not be able to move until the day after we close.  The two day buffer gave them some wiggle room.  The timing was perfect and we intentionally scheduled our closing date in the middle of my spring break to allow ample time to move and get settled before going back to work.  This 2 days to possession prevented that perfectly laid out scenario from happening.  In our counter offer back, we asked that if they wanted a 2 day buffer, that we close 2 days earlier so that we'd still be moving in on the same day.  Since they were still planning on keeping the washer and dryer, our new offer was $1500 less than their counter.  Their response came the next morning.  They raised our newest offer by $1000, but included the washer and dryer.
We decided to accept!  

The negotiation process was honestly really stressful for me.  I hate the unknown and even more so, I hate waiting.  It was practically killing me.  I kept going back and forth on whether or not we should agree to a higher price.  I kept saying that I never wanted to go as high as we did, but then I realized a couple things that helped me see why it was ok.

1. We were getting everything we asked for in our original offer, but for $6,000 more.  Was I really willing to give up this home over $17 a month ($6000/30years/12months)?  Was I really prepared to walk away from the house and be okay with it.  In the end, the answer was no.
2. There were no other homes in this price range on the market that we'd seen in the last year that had newer everything.  It was worth the piece of mind knowing that we probably wouldn't have to spend a bunch of money on large repairs shortly after moving in.  I'd rather pay a little more now than potentially a lot more later.

*I will note that the final purchase price was within our monthly budget that we set for ourselves when we first started looking at homes. Had the sellers wanted more than what we could have comfortably afforded, we would have walked away.*

Within 10 days of an offer acceptance, we had to schedule and complete an inspection, which was paid by us.  From what we heard, most inspections cost around $250-$350.  Luckily, a neighbor of Jake's parent's was a certified inspector and was available to complete our inspection.  We knew that we could trust him to tell us if anything was wrong with the house and he also did it at a lower cost of $200.  During the inspection, myself, Jake, and our realtor were present while the inspector worked the entire house-exterior and interior making sure everything was in good, working condition.   It passed with flying colors!  We had also contemplated having the fireplace and chimney inspected because on the disclosure, the sellers weren't sure if it was working or not.  This would have been a separate inspection.  We didn't get it scheduled within the 10 day window, but we agreed that if it didn't work, it wouldn't be a deal breaker for us.

We had originally planned on using our current bank to finance our mortgage, but discovered during our pre-approval process that they no longer do FHA loans.  However, they were able to refer us to another lender that does do FHAs.  In addition, our realtor recommended a mortgage lender that she has done business with a lot. We decided to shop around and see who could give us the best rate.  In the end, our realtor's recommendation gave us the best rate at 3.25%  He was extremely helpful throughout the process and very knowledgable.  We communicated exclusively through email.  It took less than 12 hours to get a pre-approval through him and after our offer was accepted, he was prompt in sending us the paperwork and letting us know everything we needed to do to move forward.
The biggest thing was a 45 page mortgage application.  On it, we signed or initialed several pages, verifying our banking information, employment, and debt.  Also included in it was our estimated monthly payment-known as a good faith estimate, and amount due at closing.  After submitting the application, all we had to do was wait, while underwriting did their work.  While a pre-approval is a good indication that you'll qualify for a mortgage in the amount that you've requested, nothing is set in stone until the underwriter gives you the green light.  It took us almost 4 weeks from when we submitted our application to when we were officially set to close.  Those 4 weeks were agonizing!  While we were waiting, we avoided doing anything house related for fear of jinxing ourselves.

1. Ordering furniture
We started looking at furniture the week that we found out we were clear to close.  We did a first look, thought about it, and then returned to the store with the best deal and furniture the next week.  We're so glad we did.  We didn't think about items being out of stock and needing to be ordered from the warehouse, which we were informed could take 3-4 weeks.  We're so glad that we went when we did to order our furniture because even with ordering a month in advance, our bed frame will not be here in time for the move and we'll have to wait an extra week to get it. (see what we got HERE)
WARNING: DO NOT purchase large amounts of furniture on credit or open any new lines of credit.  Even if you've fully been approved, adding large amounts of debt before you close on your home can cause you to lose your financing.

We put a 25% down payment when we ordered it and secured our shipping date.  We will return after we close to pay another 25% and finance the rest because the store is doing 21 months of interest free financing.

2. Finding a renter to sublease the apartment
Our lease on the apartment that we're currently living in isn't up until August 1st.  With the way mortgage payments work, we wouldn't need to pay our 1st payment until May.  This meant that we needed to get someone into our apartment until May, but would be better if we could get someone to start renting in April giving us a payment free month.  I was skeptical at first about getting someone to rent it for such a short amount of time.  However, after listing it on Craigslist, I had gotten at least 5 interested responses within the first 12 hours. Luckily for us, we had been living at the apartment for so long that our rate was locked in at a low price (over $100 less than they typically go for now) and would carry over to whomever took over our lease.   This made our unit a hot commodity.  By the end of the week, had someone locked in to rent starting April 1st!  This was a huge sigh of relief.  While we were prepared to do it, the idea of having to pay both a mortgage and a rent payment for 3 months did not sound like fun.

3. Homeowners Insurance
Once we were set to close, we needed to set up our homeowners insurance and get the information to our lender because this payment is escrowed into our mortgage payment.  A friend of ours is an insurance broker for his own business, so we contacted him to see what rates we could get.  We also checked with Nationwide, our current provider for renter's insurance.  Our friend got us an amazing quote through West Bend that was almost half what Nationwide quoted us, and with better coverage.  I was pretty impressed with how low homeowners insurance is per month.  We were able to get a rate of about $600/year.  In addition, we were able to bundle in our car insurance for a much lower rate than we had currently been paying.  (I'd tried bundling our renter's/car insurance, but separately, they were cheaper).

4. Utilities etc...
About a week before close, I spent a lot of time on the phone getting utilities transferred, cancelled, and added.  We transferred our electric service, added gas, water, and trash, and canceled our current water and trash.  In addition, we set up forwarding of our mail, set up of cable and internet (we made the switch to DirecTV), and canceling our current car and renter's insurance.

Friday before we closed, our mortgage lender sent us an email letting us know what we needed to bring to closing.  It was just 2 things: A certified check for the amount due at closing (which he also let us know what that amount was), and our driver's licenses.  That's it.  We closed on Tuesday morning at 9am.  It took about 40 minutes.  We met with our realtor, our mortgage lender, and an attorney.  We signed a bunch of papers, were given a key to our house, and walked out as homeowners!

Unfortunately, we weren't allowed to move in until Thursday, two days later.  After closing, we went shopping for a few things for the house,  pay off the rest of the furniture we picked out, and then back to our apartment to finish packing.

We are now all moved in and slowing getting everything put together.  We are loving the new house already and so excited to show it off to our friends and family.  I will be back within the next few weeks to update on our progress.

Until then,

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