I’ve always wanted to buy a home, to have a place where I don’t have to worry about the rent going up or sharing a wall with too-loud neighbors, where I can plant a flower garden in the earth and not just in pots on the porch. I’ve always viewed it as one of the milestones of my chosen path through adulthood: marriage, mortgage, munchkins.
But I wasn’t sure my finances were up to the task, and as a first-time homebuyer, I wasn’t sure what to expect. What I found was that buying a home is a series of leaps of faith.
In my work at Idaho Business Review, I keep fairly good watch on the Treasure Valley housing market, and what I hear over and over from real estate professionals is that home prices are low, but rising; mortgage interest rates are low, but rising; and the inventory of available homes is low, which means competition is heating up for appropriately priced homes. The more people I spoke with, the more I thought I’d better evaluate my finances and find out my options for buying a home.
Unfortunately, Past Cady has always been perfectly content to let Future Cady deal with Past Cady’s financial decisions. As such, I have very little in savings (certainly not enough for a significant down payment on a house), more credit card debt than I would like (though I diligently pay more than the minimum balance each month), and what feels to me like an avalanche of student loan debt (though I certainly know people with larger burdens).
I knew my credit was at least OK, if not stellar, but I truly did not think I would qualify for a mortgage, especially with no down payment. And even if I did qualify, I was certain the monthly payments would be more than I could afford.
But each time I met with real estate or construction professionals, we chatted a bit about our personal lives, I expressed my dream of homeownership and doubts it would happen, and they encouraged me to check out my options. I figured they were right; I might as well find out how seriously I’d need to buckle down, and for how long, to make my dream a reality.
Lars Hansen, president of Brighton Homes, was one of those people. Though the homes he builds are generally out of my price range, he encouraged me to get ahold of Amy Johnson at Guild Mortgage. I submitted an application online with information about my lack of down payment and the monthly payment price range I was looking for.
Much to my surprise, Johnson got back to me right away to let me know I’d qualified for a loan. Being naturally inclined to worry, I assured myself it was an adjustable-rate mortgage, or it would require a huge down payment, or that the monthly payments would be much higher than I could afford.
But when I talked with Johnson about the details, it turned out Past Cady hadn’t treated me so badly, after all. Through the Idaho Housing and Finance Association, I was able to get a conventional, 30-year mortgage with no down payment, as long as I took a homebuyer education course and paid at least $500 upfront toward the purchase of the house. Amy explained what I’d need to get final approval, and told me to get shopping.
Meanwhile, my husband, Frank, and I had been browsing homes for sale online, which is an adventure in itself. Every real estate web site is set up with different search options and displays properties’ information and images differently. I decided my favorite search function was on BuyIdahoRealEstate.com, run by Boise’s Silvercreek Realty Group, so I signed up for an account and started searching there.
We found several houses that we liked, but most of them were pending sale. Mark Paljetak, an agent at Silvercreek, emailed me to find out if we wanted to view any of the houses on the site. When he first contacted me, we hadn’t yet gotten the go-ahead to shop from Johnson, and I wasn’t sure if we should choose our agent based on who had our favorite online search engine. But when I told Johnson we had been talking with Paljetak, she said he was her “hero,” so we decided to put our home-shopping fate in his hands.
Johnson gave us the OK to start shopping on a Friday, and I asked Paljetak if he’d be available that Saturday to show us some properties. He said he would, and I made a list of the homes that looked all right to me. We also gave Paljetak a list of what we absolutely needed in a home: at least two bedrooms, fenced space for our dog and chickens, and what I refer to as a healthy home infrastructure, meaning the plumbing, heating/air conditioning, electric and structural parts of the house are all in good shape (neither I nor Frank are at all handy).
Everyone who tells me inventory is low must be right, because there wasn’t much in our price range to choose from. There were some decent houses, but they seemed to need some work on the inside, and I knew any repair work that would fall to me and Frank would be poorly completed, or at least nerve-wracking.
Fortunately for us, Paljetak was watching listings in our price range like a hawk, and when we met to start looking, he brought us a listing that had just hit the market. He said he thought it was just what we were looking for, and that we should check it out. It was small, but just remodeled, which meant we’d be able to move in without too much work on our part.
Fortunately for Paljetak, we loved the house. It’s got gorgeous hardwood floors, plenty of blank space for gardening, a back yard for our menagerie, a beautiful kitchen, and no back-door neighbors (unless you count chickens and sheep). We made an offer that day, which included the seller paying much of our closing costs, and the seller accepted it right away. Paljetak tells us we tied his record for the fewest number of homes looked at before making a purchase. We looked at four.
The month between our offer and closing was one of the most stressful of my life. I’m naturally a worrier, so my imagination went wild.
What if the home inspector discovers the house is about to fall over? (It was in good shape for a house of its age.)
What if the seller refuses to do repairs? (The seller completed all the repairs we asked for, and even fixed a garage window we hadn’t asked about.)
What if some long-forgotten financial misstep reared its ugly head and the lender refused to let us borrow? (Johnson later told me the process of securing my loan was actually straightforward and simple, compared to many other borrowers she’s worked with this year, especially folks who went through a short sale or foreclosure three years ago and may be eligible for Federal Housing Administration loans.)
Maybe we should’ve kept looking in case a better house came up for sale. (I’ve been checking online listings in that price range since our offer, and nothing has come up that we like as well as the house we bought.)
The night before signing, I didn’t sleep at all.
The day of signing was full of nice surprises. Between the seller’s share of closing costs and a good credit allowance from the lender, we got back about half of our earnest money (the rest had to go toward the purchase per my loan program). We also got thank-you gifts from our lender and title company (including home-baked cookies), which made me laugh, because Frank and I feel so grateful for their help in finding us a mortgage and a home.
The buying stage of my adventure in homeownership has ended, but the big adventures are just beginning. Frank and I spent the evening of closing cleaning up construction dust and measuring rooms to figure out whether our furniture fits. With all the heavy lifting we’ve been doing to move, we’ve been sleeping rather well at night.
Tips for a happy homebuyer
I learned a lot during my home-buying process, and it was a positive, if stressful, experience. I’ve compiled a list of ways my agent and lender made the experience a pleasant one.
Having a referral network in place
Especially for a first-time homebuyer, buying a home can be a real leap of faith. Unless you happen to know a lot of real estate professionals, you’re trusting people you’ve just met to help you make one of the biggest decisions of your life.
Hansen’s referral of Guild Mortgage gave me confidence in the company, because it meant he had had good experiences working with that company.
I had never met Paljetak before I started looking for a house, and Johnson’s comments gave me confidence that she had had good experiences working with him.
Those professional connections helped me put my trust in people I’d never met before to guide me in the right direction.
Everyone we worked with in our home-buying process was readily available when we had questions or concerns. Whether by phone, email or text, I knew if I had a question, Paljetak or Johnson would get back to me right away.
It’s a no-brainer that a real estate professional ought to have expertise in his field, but communicating that expertise in a way that doesn’t feel like you’re just trying to make a sale is key.
Johnson was thorough in explaining not only how my mortgage would work, but also why it was the best option for me. For instance, loan with a mortgage insurance requirement may have had a lower interest rate, but the payments wouldn’t have been as affordable as the loan I went with, which did not require mortgage insurance.
Paljetak explained he had worked as a home appraiser, which helped us trust his estimate of how much we should offer for the house. The appraisal came out right where he’d valued the house, so we were confident he’d judged its value well.
An educated buyer is a happy buyer
While buying a home required putting a lot of trust in people I hardly knew, the homebuyer education course my loan program required me to take made me feel like I wasn’t going to get bamboozled by anyone.
The course taught me how to identify and avoid unscrupulous lenders and how to work with my real estate agent and express what’s vitally important in a home versus what would just be nice. It also had a lot of good budgeting and debt payment information, which I had already learned about in a college personal finance course and life experience.
Completing that course made me feel not only like the lender would be confident in helping me on my way toward homeownership, but also like I’d be able to navigate the waters.