Crazy like a fox! Yes, just one year after closing on my original purchase, I’ve refinanced my mortgage twice. It cost me nothing but a little bit of time and paper, but the combined refinances will save us $160 a month on the mortgage. Over ten years, that’s a whopping $15,000!
How I Got Two No-Cost Refis in Six Months
I have a mortgage broker friend. He emailed me about four months after we closed on our first loan to let me know he could get me a free refi that would drop our rate by a quarter point. At the time, this was a fantastic deal.
We sent him our bank statements, got the appraisal, and then he sent a notary to our house to sign the papers. We closed right before Christmas.
Fast forward five months. After rising slightly, interest rates started falling drastically. My mortgage broker friend emailed again, with another free refi offer. This time he could get us down to 5% even. I confirmed that we could refi while my husband was on disability. He checked and said yes, so we started the process again.
Fortunately, the answer turned out to be no. We were midway through the process when we had to call a halt. I say fortunately, because rates continued to fall. About six weeks later, my husband was back to work full time and we had a full-time paystub to send over. The appraisal was still good, and in fact our loan paperwork was still in the system. Even better, we could now get a rate of 4.875. We closed within ten days of restarting the process.
What about the Extra Year of Interest?
Both times we refinanced into new 30 year mortgages. We didn’t add to our loan balances, so the equity we’ve accrued over the past year is still ours. We did essentially “lose” that extra year of interest we paid, however it’s not a big concern for me for three reasons:
First, we don’t plan to stay in the house for 30 years. I imagine we’ll be here about ten. It doesn’t make a difference at that point whether we’re at year nine of our loan or year ten. The loan balance is the same.
Second, if we did somehow stay in the house for more than ten years, by that point we should be able to make catch up payments. We’d have $24,249 in interest to make up, but it’s still doable if we spread it out over a couple of years.
Third, over thirty years, the interest savings is $25,640, so even if we stayed thirty years and never made catch-up payments, we’d still save $1,400 in interest.
Why Not Pay Costs?
Both times we could have paid the closing costs to get the rate down another 1/8 of a point. We opted not to because the additional savings weren’t significant enough to save us a big chunk of change. We’d rather keep that money in our pockets, thank you!
Why Not Wait?
We could have waited a little longer to see if rates fell further, but I also need to buy a new car. It looks like I’ll be buying it in the next two weeks. I wanted that refi done before I started applying for car loans.
So now you know my story. Tomorrow I’ll tell you how to get a free refi of your own.
We’re already refinancing our mortgage due to the recent rate drops (it’s a free refi that doesn’t increase our loan balance). So, we had to get reappraised. I didn’t think we’d see a value increase because it’s only been 4 months. Well, I was wrong. Our appraised value went up 2% in four months, and I think I’ve figured out why. If you’re planning to sell your house in a traditional sale, take these steps to improve your home value and your chances of getting the price you need.
Polish or Refinish the Floors
We bought a foreclosure with bamboo floors. Unfortunately, the previous owners used it as a rental property and the tenants had a dog. Bamboo floors and dogs don’t mix. The floors in the main living areas had deep dirty grooves in them. We had the floors refinished before we moved in. All the scratches are gone and they gleam beautifully.
Apply Fresh Interior Paint
When we bought our house, all of the walls were Swiss Coffee – the classic rental color. It’s also boring as hell and the walls were filthy. The furnace had never been cleaned (it has been now), so it had 5-7 years worth of dust and grime in it. That black grime was on the ceilings and the walls in the rooms closest to the furnace. We scrubbed the walls and applied fresh paint in several attractive colors. The walls look fresh and bright and new.
Install Shutters and Blinds
We didn’t install shutters and blinds in the whole house, just in the rooms where we’re not making curtains. These stay with the house when you leave, so they also add to the value.
Clean Up the Yard
Although it’s not really supposed to influence the appraisal, a messy yard can. Our yard wasn’t raked, but we’ve trimmed the trees and removed two dead ones. Even if it doesn’t affect the home value, overgrown trees can detract from a buyer’s impression of the house because they’ll factor in the cost to trim them.
Paint the Trim
When the termite company repaired the termite damage, they didn’t prime the replacement boards on the front of the house or in the carport. They just left it bare wood. I recently primed and painted those boards. At the same time, I peeled off some of the paint in areas where it was visibly peeling and cracking and painted that, too. I had the paint matched perfectly, so you can’t even tell where I touched up. The house looks much better with fresh trim.
I can’t say for sure how much these things improved the value, but the living room paint was five days old when the appraiser came. He even commented that it was a nice color, as did our handyman and my parents. I walked him through and showed him everything we’d fixed or had done.
Now, if you want the bank to agree to a short sale, don’t do any of these things. You want the house to look bad and overgrown so the bank will think it’s worth less and won’t get much as a foreclosure.
It feels almost like a pregnancy, except it won’t be over in nine months. Maybe I’ll just stop counting by the time nine months have passed! This last month has presented us with several more challenges, but what some of my homeowner friends are going through is much, much, much worse.
Don’t Buy New Construction
This isn’t my lesson, this is my friend’s lesson. So far he’s discovered that his brand new condo was improperly plumbed (found courtesy of a major leak) and improperly wired (found courtesy of sparks shooting out of the wall after he plugged something in.) Those aren’t minor issues. Meanwhile most of the problems in my 60-year-old home have been minor, or are at least big things that can wait and that are to be expected in an older home. If you’re thinking of buying a condo, do not buy new. Buy one that’s at least five years old. True, it may not have of-the-moment fixtures, but you also won’t be the one to discover the bad wiring, plumbing, etc.
Even the Simple Things Go Wrong
So, in my last homeownership update, I talked about the surprising cost of blinds and shutters. Now a new problem has developed. The major company we went with screwed up our order. I discovered it during the installation. I immediately called and was assured that the replacement shutters would be ordered. Fast forward a week and I haven’t been able to get confirmation of the order. Finally I called the shutter company – they have no order. I called the company’s local office – no order. I was assured that they’ll contact the consultant to sort it out and then call me tomorrow about fixing it. I’m not hopeful. Meanwhile I’ve got a wrong set of shutters that are only half installed.
Eventually the Warranty Has to Cover Something
My friends who recently bought have had nothing but good things to say about their warranty. This morning was my fifth claim, and the first thing to get covered. I think my warranty sort-of sucks.
Claim 1: Leak next to the dishwasher. It turned out the leak was from a disconnected tube under the faucet. Dishwasher guy didn’t fix it – I found a valve and turned it the other way to see what would happen.
Claim 2: Mysterious damp spot on the upper corner of the wall that forms nightly. They sent an AC guy – nothing. They sent a plumber – nothing. Finally our roofer went up there and patched it. It’s not entirely gone, but it’s better. I’m considering going up into the attic and poking at the insulation to see if that’s the problem.
Claim 3: Inadequate heat in the back bedrooms and a weird rattle in one register. The heater guy adjusted some registers to balance the heat, and determined that it was too cold in the back because the “standard-sized” ducts are too big for the rooms next to the furnace, and too small for the rest of the house. New ducts: not covered, but not in dire need of replacing. Meanwhile it’s 5-8 degrees cooler in the back part of my house.
Claim 4: Circuit breaker trips when we use more than one kitchen appliance at a time and some of the breakers are wiggly. The appliance issue is insufficient wiring: not covered. He said the wiggling was normal. Except that he knocked out power to whole house before he left and then the bathroom didn’t come back on because of that wiggly circuit. Once again we had to go out there and jiggle it until it came on. I called warranty, and the electrician insisted the bathroom problem was from the kitchen wiring and refuses to see if it might be unrelated unless we either a. fix the wiring in the kitchen, or b. have our own technician diagnose the problem. If he deems it’s not related, warranty will consider covering it.
Claim 5: Plumbing stoppage this weekend. Warranty called to warn me that if my cleanout was outside the foundation of the house, they wouldn’t cover it. Fortunately, the plumber snaked it and they did cover it. Finally, we got one thing covered. And it only cost us $260 in claims to get there. Sigh.
Make Sure You Buy the Right Paint
We had to paint one of our ceilings. I went to the paint store and asked for “flat white for the ceiling.” What I got was the pastel base with no color mixed in. We discovered this after applying the first coat late Saturday night. It was splotchy and uneven. We scoured the internet for a paint store that was open Sunday, thinking we needed the same paint for a second coat. That’s when we found out the base looks white, but can be transparent. And it’s not meant for ceilings. My husband came home with a can labeled “ceiling paint” that had been tinted “ceiling white.” Problem solved, but we wasted money and three hours on that first can.
Isn’t home ownership grand?
Congress passed legislation expanding and extending the homebuyer tax credit. The President is expected to sign it November 6, 2009. Here’s an update on how the credit works and how you can take advantage of it if you haven’t already bought a home.
Homebuyer Tax Credit Extension
The original First-Time Buyer Tax Credit was set to expire November 30, 2009, which meant the sale had to close by that date. The credit has now been extended to purchases under contract by April 30, 2010 and closing by June 30, 2010.
Active members of the military who served at least 90 days outside the US have until June 30, 2011 to take advantage of the credit.
Homebuyer Tax Credit Expansion
Congress also expanded the tax credit in two important ways.
Higher Income Caps
Previously the credit started to phase out at $75,000 for singles and $150,000 for married couples. The new caps are $125,000 for singles and $225,000 for married couples. Don’t ask me why the joint cap isn’t double the single cap, that’s just Congress not understanding basic math again. The new cap applies for sales that close after November 6, 2009, so if you bought before then, the original cap still applies.
Additional Credit for Move-Up Buyers
The credit is still $8,000 for first-time buyers, or buyers who haven’t owned a home in the last three years. It now also offers $6,500 for move-up buyers who have lived in their home at least five consecutive years out of the last eight and are buying a primary residence worth less than $800,000. If you’ve been thinking about selling your current home and upgrading to a larger one (or I suppose downgrading, it doesn’t say your new home has to be worth more than the old one), this is a great opportunity to score a little bonus on the deal.
How to Claim the Credit
Contrary to what some scammers are doing, you have to actually close escrow on the house before you submit your claim for the credit. There’s no credit for thinking about buying a house, although some states and the FHA do offer programs that allow you to borrow the credit for your down payment and then repay it as soon as you get your refund.
You can file the credit on the current year’s tax return, or wait until next year’s return to file. If you need the money now and are below the cap, you can file an amended return for your 2008 taxes. The credit will arrive in 12 weeks or so, and include interest since April 15, 2009.
The other option is to wait and claim the credit on your 2009 taxes (if you bought in 2009). If you buy in 2010, and close before April 15, you can claim the credit on your 2009 taxes, or file an amended 2009 return after closing. Otherwise you can wait until your 2011 return to file the credit. Once again, check and see where you expect your income to be if you’re riding close to the cap. If you’re at the edge, try to delay bonuses to get yourself the maximum credit.
If you’ve been thinking about selling your home, call a real estate agent now. If you’re looking for a home, don’t stop now. And if you’re on the fence, take a hard look at your finances to figure out whether now is the right time for you to buy. If you can’t afford the mortgage, then don’t buy just because of the credit. An unaffordable home will cost you a lot more than the tax credit will save you.
It’s only been a few weeks since my last update on new homeownership, but somehow my math was really off last time. I don’t have a special time machine that allows me to zip through five weeks in a mere three. Still, a lot has happened in the last three weeks, including some important new lessons.
Contractors Sometimes Give Cash Discounts
We got our carport roof fixed three days before the first rain. However, we learned far more from this experience than that we might have fortuitous timing. We also learned about the cash discount, and about asking for little extras once the contractor is there.
As I mentioned in my last homeowner update, we discovered some odd moisture in one corner of our ceiling. Out came the AC guy. Nothing. Next they sent a plumber. Nothing. Since the roofer had offered to squeeze us in a couple days later, I asked him to take a look at it when he arrived. He said he couldn’t find anything in the attic, but there was a patch in the roof above that corner that might need sealing. He did it for free. Then while replacing the carport roof, he found rotting boards. I agreed to pay for the repairs.
The original quote was $1200. When he arrived, he said we could save $100 if we paid cash. The quote to fix the rotting boards was $150, bringing the total to $1350 by check/credit or $1250 cash. Yet, when we paid him, he only took $1200. So paying cash saved us $150!
Blinds Cost More than You’d Expect
After living in our house for a little over two months, we realized that we really, really need to order blinds. One of our cats will be saddened by the loss of her sunbeam, but our budget will thank us when it our power bill goes down. I didn’t really have a budget in mind, but for some reason I was thinking blinds would cost $600 or $700 for all our windows. WRONG!
The first quote was $2400 for eight blinds and two shutters. The second quote was $1800. I’d made appointments with an independent contractor and a major company, expecting the indie to be cheaper. WRONG again. The indie guy came down to $2200, but the major company was offering additional discounts that brought the price down even further. Even though we liked the independent guy, we can’t spend an extra $500 for good customer service.
Holy Power Bill, Batman
We finally got our first power bill, and it was way more than I was expecting. My husband wasn’t too shocked by the amount, but I immediately ran around the house hunting for any lights I could turn off. Then I realized that our power bill includes electricity and water (which I knew), but it also includes sewer and garbage. I didn’t realize how much the two of those would cost. I didn’t even know we had to pay for the sewer. Still, that high bill heightened my motivation to get blinds and install a ceiling fan in our family room before next summer.
Furniture Costs More, Too
I really don’t know what I was thinking when I budgeted $1500 for living room furniture and $1500 for family room furniture. After pre-shopping online, the living room is now up to $3000 and the family room is up to $2000. As I mentioned yesterday, we’ve also delayed those purchases into next year.
Yes, we could probably find really cheap furniture, but we’d rather pay for quality now than have to replace a cheap sofa in a few years. Frankly, I was just being an idiot when I came up with my ballpark figures. I spent $2200 for an oversized sofa and chair-and-a-half in 1998. I don’t know why I thought I’d be able to spend less for more furniture 12 years later.
Sometimes I can’t believe we’ve already owned our house for nearly three months. Other times, I wonder why we haven’t gotten more done! We’ve still got five rooms and two ceilings to paint, ducts to have cleaned, furniture to buy, and a million more things.
I’m a planner. I love lists. I love checking things off lists. So, the day our offer on a home was accepted, I created this detailed moving checklist. Then my real estate agent emailed me a few more things that I added to the list. Now, at a reader’s request, I’m including my entire moving checklist in the approximate order they happened or needed to happen. This is also an escrow checklist, so if you’re not buying a home as part of your move, disregard that part.
Modifying the Moving Checklist to Your Needs
This is just a starting point in case you don’t have a checklist. For example, you might not need to buy appliances. We did, so that’s on my list. I also included vital phone numbers so they were in one place. Review the list and then add or delete items as you think of them. You could get really detailed and list items/rooms that need to be packed, but I did that as a separate packing list.
How I Used the Checklist
I printed the moving/escrow checklist and kept it on my desk, in the center where it wouldn’t get buried. Each week I copied the items for that week into my to do list and then marked them off as they were completed. I didn’t pack the list, but carried it to the house in my purse and now it’s back on my desk again so we can finish checking off the items now that we’re in.
The Complete Moving Checklist
Now, without further delay, here is my entire moving checklist:
Order appraisal – bank
Order inspection – realtor
Provide deposit funds
Apply for insurance
Give 30 days notice
Make vet appointment
Measure for painting, estimate needs
Inform painters of timing
Verbal estimates for floor refinishing
Choose paint colors
Schedule time off for close/move
Arrange for power/water/gas
Arrange for phone/DSL
Arrange for garbage pickup
Apply for appliance rebates – power/gas utility
Arrange for appliance delivery
Pets to vet for check-ups/shots
Wire funds to escrow
Find locksmith and schedule for closing
Confirm power/water/gas transfer date
Schedule floor estimates
File change of address with: post office, credit cards, banks, subscription services, magazines, newspaper, student loans, 401K, work, dmv, club cards, cell phones, professional memberships
Confirm appliance delivery
Have phone/DSL turned on
Have cable/DirecTV turned on
Freeze blue ice
Turn off phone, water, power, cable, DSL at old address
Clean/patch old residence
Stop junk mail/no call list
Update budget with new expenses
It’s done. The move is over and I’m ensconced in my new house. Every move has its challenges, but ours was relatively smooth. If you’re planning a move, here are my top tips for making sure it goes as smoothly as possible.
Start Packing Early
We started packing the weekend after our offer was accepted. My first step was to make a list of everything that could be packed well ahead, 1 week ahead, 1 day ahead, and the morning of the move. We worked through the early packing list quickly, and were done with the week ahead packing a couple days before the move.
Finish Packing the Night Before
The night before the move, finish packing everything except the sheets on your bed, the food in the freezer or fridge, and the items you’ll need to shower and dress in the morning. Have a box or suitcase ready to go for those. Have a cooler for the food and a freezer stocked with blue ice. You don’t want to be running around packing last-minute things while the movers are there.
Have a Plan for Your Pets
This is key. Even if you have a yard, you may not want to put them out there because the commotion may make them too skittish to catch when it’s time to pack them up to go to the new place. We put our cats in a room (with food and litter) with the door closed and then transferred them to an empty room when all the other rooms were empty. We had their carriers waiting. Once we go to the new house, we put them in a room that could stay empty while we unloaded. The other option is to take your pets to a friend’s the night before the move so they’re out of the way.
This is optional, but frankly, hiring movers saved us a lot of hassle. We didn’t have to corral friends to help us move boxes and it saved us hours of backbreaking labor. What movers can do in two hours will take you and your friends four hours, trust me. I looked on Yelp and MovingScam.com to find good movers. You should plan to book them early, because the really popular ones book up well in advance. If friends want to help with your move, get them to help paint, pack, or unpack.
Make a Checklist
Before we opened escrow, I made a checklist of everything that had to happen between then and about a week after we moved. That included all of the things that needed to happen to close the loan, transferring utilities, painting, packing, hiring workers, changing addresses, etc. I tried to put the list in the approximate order in which we’d do them, then checked them off as we went. I included important phone numbers on the checklist so they were in front of me when I was working through it.
Label the Boxes and the Rooms
Mark your boxes with the contents – put “large pots and pans” rather than “kitchen stuff” – and the room they go in. Print signs for each room that you can tape to the doors for the movers.
Take Time Off Work
I took off the Friday before the move and the Monday after so I could finish packing without being up until midnight and then so I could unpack and settle in for an extra day. I’d been hoarding my vacation time for a while and it was worth it to be able to have two days to put things away and make my home usable quickly.
Make an “Unpack First” Box for Each Person
This should contain your towels, bedding, sheets, PJs, toiletries, a favorite book or toy, and medications. Move these in your car, not in the truck, and put them in a spot where they won’t get buried so you can have some of your creature comforts right away.
Use this Time to Throw Stuff Out
We’d already done a lot of our purging in the last couple of years, but I found more stuff to throw out as I packed. If I hadn’t looked at something in years or couldn’t remember why I had it, I tossed it.
Label Your Styrofoam
If you plan on keeping your electronics’ Styrofoam after the move, label it with a black marker. We’d shoved all of our Styrofoam into a closet, but couldn’t quite match it all up with our stuff when we started packing We suspect that some of it belonged to things we no longer own. It would have been a lot easier to tell if we’d labeled it in the first place.
Buy Lots of Boxes, Bubble Wrap, and Unprinted Newspaper
We got some free boxes on Freecycle, but they were flimsy and not uniform. We had better luck buying boxes. I also picked up bubble wrap and unprinted newspaper. I went to a box store to buy a few larger boxes, mirror boxes, and dish boxes, but Home Depot’s prices were better and their selection was decent. For our 2-bedroom apartment, we needed approximately 100 boxes, although a good 15 of them are filled with books. If you don’t own books, you may not need quite so many.
Moving is difficult. It’s one of the things people hate most. Hopefully these tips will help your move go more smoothly.
Most of the homes my husband and I looked at were empty, so we didn’t worry about overpaying for a well-staged home. I think the home we made our first offer on sold for too much because it showed well. Don’t let yourself overpay by falling in love with the dressings. Here are my top ten tips for evaluating a home.
Ignore the Furniture
For the most part. If the dining room has a really small table, that could be because it’s too small for you. Measure the space. At the same time, you’re not buying the table, so don’t let a table set with fine china and nice linens con you. People stage homes for a reason – buyers pay more for staged homes.
Ignore the Paint Colors
My husband and I have watched several home buying shows, and we always see people commenting that they don’t like the paint or the couch. You’re not buying the paint! Paint is the easiest thing to fix. We saw one home with no less than three different types of hideous wallpaper and bad paint. We looked past that for the structure and layout.
See What’s Next to the House
We really liked one house, but it was next to the pool for a large apartment complex and had a rickety, low fence. The first house we made an offer on also had an apartment complex behind it, but you couldn’t see it because the owners had planted tall hedges that provided privacy. We checked Google maps to see what was behind each house and make sure it didn’t backup onto a school playground or popular pool.
Ignore Minor Landscaping – Good or Bad
This is another trick. If a home is nicely dressed up with pretty flowers, it attracts buyers. Dead plants make some people drive right by. You can plant new flowers and mow the lawn once you move in, so don’t let that be a factor. However, you should check out major landscaping issues like a solid concrete backyard or a big dead tree.
Lots of pictures. Then you can send them to friends or relatives for their opinion or refresh your memory about particular features. If you like the staging, take pictures so you can buy similar items when you do find a house.
Look for Deferred Maintenance Issues
It’s common for a house to have some minor maintenance issues, like a few spots that need paint, but you need to watch for potentially expensive issues, like an old roof, extensive visible termite damage, an old HVAC unit, or old windows. All of those will need to be fixed or replaced and you should factor it into your budget when deciding on a price.
Take Your Time at Each House
Many people spend as little as 15 minutes in a home before making a decision. While you can know for sure that the house is wrong for you in 15 minutes, you can’t know that it’s right for you. Take your time walking through the home and discussing it. Completing the checklist and taking pictures helps you do both. We probably spent an hour in each of the homes we made offers on.
Imagine Where You Would Put Your Furniture
This is where the measuring tape comes in handy. Measure the bedrooms to be sure your bed will fit, especially in older homes. Try to picture your own furniture in the house. Can you imagine yourself actually living in and using the home?
Drive Around the Neighborhood
After leaving a home you’re pretty sure you want to make an offer on, drive around that neighborhood specifically. Find the local park, the nearby school, and other local amenities that are a part of the living experience. Make sure it has what you need.
Get a Second Opinion
I’ve said it before, but this was key for us. Each time we considered making an offer on a home, we sent the pictures to my parents and then called them to discuss. They wouldn’t talk us into or out of a home, but they would point out things we might not be considering.
Obviously, there will be some emotion in the purchase, but you need to use common sense to make the final decision on such a major purchase.
When my husband and I started looking for a house, I reviewed several online home checklists. Most of them either had too many details or not enough, so I created my own in Excel. You can download the Home Checklist and print it to help your own home search.
House-Hunting Made Simple
Along with this checklist, which we attached to a clipboard, we brought a tape measure and a digital camera. The tape measure helped us complete some details and really assess whether the dining room or bedroom was large enough. The checklist ensured that we didn’t forget details. The pictures reminded us of what it actually looked like.
Customize Your Checklist
My house checklist is just a template. You may have other things that are more or less important to you. For example, I had to see a place in the kitchen where I could fit my stand mixer and it had to have a full-sized oven (as opposed to the tiny original oven common in 1950s homes.) We also needed a place to put the litterbox. You’d think that would be easy, but it wasn’t in some homes.
Completing the Checklist
Once you and your real estate agent have compiled a list of homes, print out a checklist for each one. Before we left our apartment, I completed the address, asking price, neighborhood, square footage, and year built portions of the checklist.
Once we reached the home, we walked through it and noted our observations. One of us held the clipboard while the other handled the camera. As we walked, we noted the size of each bedroom, the condition of the floors or kitchen, things that would need replacing or that we really liked. The checklist tended to be more complete in the early homes we looked at, and then on homes we really liked.
Before we even went to a house, I used the LAUSD’s SchoolFinder search to verify the school associated with the house. If it wasn’t on my list of preapproved schools, we didn’t see the house. If schools are important to you and you live in an area of mixed school quality, investigate local schools when initially researching potential neighborhoods. I used GreatSchools.net to find test scores and student body profiles.
For us, the percentage of students receiving free or subsidized lunches or taking English as a Second Language were important factors aside from test scores. In general, I wanted to see an API average over 800, ESL ratio under 25%, and free lunch under 50%. I chose those numbers because I feel that students at schools with higher ratios will receive less educational support at home than my children will. Schools are personal decisions, so you should adjust these fields accordingly.
After we visited a house, I entered the current data on the checklist to make easier to compare potential houses.
If we liked a house, then I completed the neighborhood data to make sure it met our other requirements. I used WalkScore.com to find nearby parks, libraries, grocery stores, movie theaters, book stores, clothing stores, etc. Then I used Cyberhomes.com for demographic data. The demographics helped us rule out a house when we discovered that there were more people in the 50-59 bracket than the 30-39 bracket, which was important to us.
I kept all of the checklists so we could go back and compare them, or to help us decide on an offer price. If we made an offer, I noted the offer price at the top of the form.
I’m an analytical person, so the home checklist was important to me. You might not need to be as detailed. However, a home is usually an emotional purchase. Using a checklist helped us take some of the emotion out of the equation. Of course, a house could be perfect on paper and not set our hearts racing, but the checklist brought us down to earth when we were on the verge of falling in love with one that wasn’t right for us.
On Friday, I detailed the start of our road to homeownership, which stretched over a year and a half from the initial “we might be able to afford a house” to the “let’s hire a real estate agent” stage. Now I’ll tell you how we finally reached the end.
Careful Thinking about Each Home
All told, we looked at exactly 50 houses, including the open houses. Of the 29 open houses we saw, we liked 3 enough to consider making an offer. They were sold by the time we started looking for real.
Once we started working with an agent, we saw another 21 homes. The first home we considered making an offer on was huge and beautifully upgraded, but it had a weird layout, especially in the kitchen. The second home we considered making an offer on was a fixer foreclosure. Not terrible, but in need of major updating. However, the location killed it for us. With both of these, I lost sleep trying to decide whether to make an offer. However, my husband and I realized that if we didn’t know right away, that meant it wasn’t the right house for us.
The first home we made an offer on was fantastically upgraded. We decided to offer 8% less than the asking price because the sellers were asking too much. We met our agent at a coffee shop to sign the offer paperwork, then waited, and waited, and waited. We were finally outbid four days later, without ever getting a response from the seller. We recently learned that it sold for more than the listing price. We don’t think the home is worth that.
The second home we made an offer on was a short sale that was foreclosed a week later. We made a full price offer, because it was priced appropriately, possibly even a little low. We really loved that home, and still love it, but it was not meant to be. The foreclosing bank is notorious for rejecting short sales, but we had a stressful week waiting to see if they accepted our offer anyway. And then another stressful week waiting to see whether or not it had actually been foreclosed and if the bank would accept our offer post-foreclosure rather than re-list it. That was also a no.
The third home we made an offer on was a foreclosure in great condition. This was house #48 in our list of 50, because we saw three homes that day and then one a couple days later. We were in a multiple offer situation, but came out with the winning bid and went into escrow. It’s 2 blocks away from the first house we made an offer on, but it’s 450 square feet bigger, and 10% cheaper. We’re really happy about that!
Tip: Multiple offers on REOs are not the same as bidding wars for traditional sales. With REOs, the seller doesn’t come back with a minimum bid for the next round, just “highest and best.” You have to be careful not to overbid yourself because you’re basically involved in a blind silent auction.
Then came the flurry of documents, inspections, reports, appraisal, more documents, and then waiting. We probably produced two inches of paper in escrow. We sweated the appraisal, but the inspection was easy.
Tip: If you’re planning to buy a home, invest in a scanner or printer/scanner. Our agent could email us offers and documents to sign that we signed at home, then scanned and emailed back to her. It saved a ton of time.
On the day of the escrow signing, we re-signed many of the loan documents we’d already signed, along with some new ones. Now we just wait for the deed to record before we get the keys. That will be followed by another flurry of painting and moving. While we wait, we’re doing the following:
- recalculating our tax withholding
- updating our monthly cash flow budgets so we set aside money for property taxes and next year’s homeowners insurance payment
- collecting paint chips
- getting mover estimates
- getting flooring estimates (verbal)
- prioritizing/extending our project list.
Once we get those keys, we’ll be ready to hit the ground running.