The ‘American dream’ isn’t for everyone ~ By MirandaMarquit
Once upon a time, I bought a house. I did not live happily ever after.
While I wouldn’t call the purchase a mistake, I did learn a lot of things.
Buying a home seems like a natural progression at some point. You’re tired of apartment living. You’re an adult now. You think you can afford it. Shouldn’t you have a home?
Before you venture too far down the rabbit hole, learn what goes into buying a home. (Hint: It’s a lot.) Here are five things I wish I’d known before becoming a first-time homeowner.
- 1. An error on your credit report can really slow things down
A few years ago, a Federal Trade Commission (FTC) study found that 5% of consumers had an error on at least one credit report that could impact their finances.
When you buy a home, the biggest things lenders will consider is your credit score. If the information in your credit report is impacting your score, you could end up paying a higher interest rate. In some cases, you might see a delay with your paperwork.
As a loan officer reviewed my then-husband’s credit report, we realized that one of his student loans and one of his credit cards were reported twice. This made it look like we had more debt than we actually did.
It worked out in the end, but it added another step to the process since the loan officer had to go through an extra hoop with underwriting.
You can avoid these unpleasant surprises by looking at your credit before you even go in for a preapproval. Check all three of the reports from the major credit reporting agencies and look for errors. If you find any, dispute them so they are fixed before you apply for a mortgage.
The FTC report discovered that a little more than 10% of consumers saw a change in their credit score after errors had been fixed. You might see a change, too.
- 2. The homebuying process can take forever
As a first-time homeowner, I had no idea how long the process would take. It’s possible to have it all wrapped up in a week or two, but most of us need much longer. Just getting the paperwork done can take four or five weeks.
When we finally sold our home, the closing date was two months after the buyers put in an offer. They had a bit of irregularity in their income, and that needed to be sorted before we could close.
If you have your ducks in a row the whole process goes smoother, even if it is your first time buying a house. Have your documentation in order, know your income is high enough, and make sure your down payment is ready to go. The better prepared you are, the less time it takes.
Even if you have everything together, though, it can still take longer than you thought. Be ready for that possibility.
- 3. Don’t let emotion rule your decision
First-time home buyers are sometimes so excited that they let the “perfect” home get in the way of better judgment.
I didn’t think through my home very well. I saw the vaulted ceilings and I fell in love. Was the home slightly overpriced for the market? Sure it was. But I didn’t care. It seemed perfect.
When the real-estate agent told us that someone else was looking at the house, we panicked a little. What if they swiped it out from under us? We only had 48 hours to decide on the counteroffer we were given by the builder, then we risked getting caught in a bidding war.
We went for it, but some days I wish we’d held out. The home seemed smaller once it was done being built. Plus, we had to stretch to afford the mortgage payments for those first few years until my income improved.
It’s easy to get excited about what seems like the ideal home. Those warm feelings can lead you to pay more than you planned or overlook some of the realities of the situation. Take a step back and make sure you’re not getting too excited about a home.
- 4. A newly built home has plenty of issues
As a first-time homeowner, you may be wary of a fixer-upper. After all, making all those repairs can quickly add up. But buying a brand new home isn’t all it’s cracked up to be, either.
Our home was about half-built when we agreed to buy it, and it was fun to pick the interior colors and the faux stone for the outside.
However, a newly built home doesn’t come landscaped or fenced. We had to pay for those things. We also had to negotiate a price for the builder to finish the basement. We bought the appliances for the home and paid for myriad things we didn’t anticipate.
A few months after moving in, we also found that a bathtub hadn’t been properly installed. Thankfully, we made this discovery while the home was still covered by a one-year warranty for those types of quirks.
Don’t assume that a newly constructed home is going to be perfectly finished for you and your family. There may still be some hiccups along the way.
- 5. You don’t have to buy a home to be an adult
I was sure that I needed to buy a home to take the next step in my life. Today, I know that my adult credentials don’t come from owning a home.
If you aren’t ready to be a first-time homeowner, don’t force it. You may never feel like buying a home is the right move for you, and there’s nothing wrong with that. Figure out what kind of lifestyle you want before you make the decision to buy.
Make the home-buying decision fit your lifestyle, rather than try to fit your life around a home.