Tuesday, January 20, 2015

We didn't mean to buy a house...

So, ours may not be the typical first-time home buyer story.. The story where the couple has scraped and saved for years for a down payment, or where the couple is newly married, or the one where the married couple is expecting a child and want to move into a house before the baby is born. I wanted to blog about our process to help others along the way and give you a personal insight into first-time home buying. I was also contacted by a company called Compass that is starting a project called "Starter Stories" to feature stories about real people who are starting in their new first places, whether they be apartments or homes.

First of all, I'm 32 years-old, my husband is almost 30.. We have been married for 7 years. We have a 4 year-old kid. I have been in my career for over 6 years, and my husband is just starting his. We have LOTS of student loans to pay back.. Enough to choke on. And, we have consumer debt that we've been slowly but surely paying off with some major setbacks (remember, we also had to buy a car earlier this year too?).. So yeah, we were not exactly the best candidates to buy a house either..

So anyways, since we decided to move on from Graham's schooling and start looking for a career that didn't require a bachelor's degree, we had to adjust our expectations for a house. First of all, we wouldn't be able to afford as much as we thought we could. Second, I couldn't get everything I wanted in a house (i.e. a great big kitchen, big master suite, and lots of space for guests). Third, we had to decide which house features were the most important to us. Our list of wants included the following:
  • an affordable house in general, 
  • a big backyard (Graham's request--not mine), 
  • a spot outside where Graham could put a basketball hoop, 
  • a kitchen with enough space for more than one person to cook in, 
  • good schools nearby, 
  • a room where we could exercise without restraint. 

Finally, we had to re-think about where we could actually buy a house that met our requests. The different areas in our county vary widely in price, depending on the proximity to the ferries to Seattle, or waterfront properties. The first thing we did was finding a geographic region in the Puget Sound area that has affordable houses yet is in a good school district. Certain areas were out, because the high schools were awful (yes, we are thinking that far ahead), or the neighborhoods were spotty. So, we finally settled on an area right outside the county lines. Oddly enough, we are moving to the same town my ancestors settled in after moving from Iceland and Canada. It is a beautiful area of land, on a peninsula on a peninsula (you'd have to look at a map to know what I'm truly saying--Puget Sound is kind of complicated). You have to cross a land-bridge to get there, so it feels like you're going on a vacation when you cross it just to get home.

Anyways, after semi-deciding which area we wanted to look for houses, I signed up on the Redfin app, and saved some of my favorites. Of course, the website/app is smart enough to send you reminders when new houses in your desired area and price range are put on the market. In November, I noticed a house that was newly remodeled and had an open house that weekend. I showed it to Graham, and casually mentioned the open house. We went after church and fell in love with this house. Of course, it's not perfect (who can afford a perfect house the first time around anyways?), but we started asking the real estate agent what to do if we were interested in the house. She recommended contacting a lender she works with that is located north of Seattle. So, from there.. we got started.

We were almost positive we wouldn't qualify for anything as we thought our debt to income ratio would be too high. So we said to the lender, "We're not sure we can qualify for anything, but we want to run some numbers just to see if we can.." I don't know how many of you are familiar with USDA home loans.. I for sure wasn't before moving up here. Much of the land up where we live is considered to be "rural" and qualifies for USDA home loans. First of all, there are income limits for family sizes (which luckily, we meet), and most importantly, you can put 0% down on a house with no PMI. That's the biggest thing. If you cannot save up 20% of your home purchase price, you need to pay PMI (mortgage insurance), which jacks up your monthly payment a couple hundred dollars. So, USDA loans are amazing if you qualify for one! It would've taken us forever to finish paying off our debts and save up 20% for a down payment at the same time.

So, the loan process was the worst part. Daily, we got e-mails like, we need this paperwork filled out, we need an explanation of why your income isn't at high as it should have been, what are your daycare expenses and why don't you have any, etc. We also had to explain old collections from like 2008, like when Graham had an unpaid speeding ticket that we didn't remember and an old lost library book. I was like I have no clue what this $108 collection bill in 2009 was. Plus, since Graham didn't have a job for a bit while he was in school, we actually had to obtain his transcripts to prove that he was in school and to provide somewhat of a "work history" during that time frame. It was form after form after form. Luckily, the mortgage company people were very helpful and had timely communication with us.

Then, the appraisal came in slightly lower than what we had offered for the house. USDA loans won't pay for much more than what the home is appraised at, so that was a problem. Thankfully, the seller came down to the appraisal price, which was pretty fair in my opinion. Then, the USDA loan paperwork had to be processed during the holidays (it was put in on the day after Christmas), which set it back a couple of days. Now, we are approved, and ready to close on January 20th. I know we have a lot more papers to sign with escrow and all that, but other than that, everything is set to go. The entire process has been exhausting, crazy, mind-blowing, and full of anxiety. The crazy thing is that everything has all been working out for us, and our mortgage will only be ~$50 more than our current rent payment (yeah, I know there are extra expenses like taxes and insurance, but still).

I am still in shock that we are going to be homeowners after what seems like forever. I see all these young 20-somethings buying houses and I'm all like, really? You're ready for that?? This has been our dream for a long time, and we are getting most of the things we want. Plus, there's room to grow and improve. Our life is finally moving along its course. Finally. We are set to close today!

FYI, I did not receive any compensation from Compass to blog about my story. I just wanted to be a part of their project!

1 comment:

Sarah said...

This is great information! We need to get on this!

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