After 3 years of saving, 2389012 Zillow searches, 20+ showings, and 3 offers that fell through…we finally bought our forever home.
This was my first time going through the homebuying process. Some parts were really easy and other parts were extremely stressful. I learned A LOT and I wanted to share all the homebuying details with you (the good, the bad, the ugly). If you’re going to be buying a home soon, make sure you read this entire post.
We started saving for a house 3 years ago and I am so glad we did. We started a house sinking fund and if we didn’t start it while paying off debt and saving for other goals, we wouldn’t have had enough cash to cover the down payment, closing costs, and random repairs.
At first, we wanted to buy land and build so we could build our dream home. We found a piece of land and put an offer on it which was accepted. BUT it appraised for $50k less than our contracted price (I had a feeling it would appraise for less) and the seller wouldn’t budge so we pulled out of the contract. We had a clause that it had to appraise for at least the contracted price, or we could pull out so thankfully that made it easy.
Then we decided it was time to look for land or a house with land. We learned that land sometimes doesn’t appraise because banks don’t really see the value of land so we it was going to be easier to find a house/land.
After another year of searching, we put an offer on a lake house. Beautiful house. But the asking price was really high especially since the neighbor (who had a bigger house and more land) just sold the house for $50k less than this guy was asking. Long story short, we didn’t get that house either because they wouldn’t accept our offer. Months later, it is still on the market.
Fast forward a few more months and this 24-acre farm came on the market, we saw it the next day, made an offer, and boom it was ours (contingent on inspection and appraisal). It was about a month from the time our offer was accepted until closing. But honestly, it was the most stressful month ever.
As the buyer, I felt like I did everyone’s job. I had to follow up with the bank to make sure they were moving things along. The day before closing, I had to personally call our appraiser because he was not responding to the bank (although the bank hired him, and we paid him $700 already) and they had follow-up questions for him. I was on the phone with the loan officer at least once a week. It was stressful and I am so glad it is over.
1. Get preapproved early, but not too early
Preapproval is important but they do pull your credit so you don’t want to get preapproved too early or they will have to check it again. It is important that you have an idea of what you are looking for (type of property, acreage, price) so you can make sure that bank offers those types of loans and you know what you need to be approved for. The first bank we went with was a credit union who wasn’t familiar with mortgages for a lot of land and wanted us to jump through a lot of hoops, so we switched lenders to a bank that was familiar with the area and the fact that it was normal to have a lot of land.
You usually have 60-90 days (depending on the bank) to find a house before they would pull your credit reports again. When we were casually looking, I did not get preapproved but when we were ready to make that first offer, I went through the preapproval process. It took less than 24 hours to get preapproved. Having cash in the bank and an excellent credit score helped a lot.
2. People suck at their jobs
Like I said earlier, expect delays and a lot of follow-ups. I was shocked at how unorganized it was at times and how often I had to follow up for such a standard process with standard templates. The day before closing I was on the phone with multiple people trying to get everything together because I had to wire money for closing costs and down payment.
The good news is, if you use Ally bank for your house savings it is very easy to set up a wire transfer and it was an extremely smooth process. They were definitely the easiest vendor to work with. The appraisal company and lender were pretty useless.
3. Credit score is extremely important
Seriously if your credit score isn’t excellent, you need to focus on that now. You can click here for my course, Master Your Credit, to help you increase your credit score but honestly it had way more of an effect on our interest rate than I thought.
The mortgage is just in my name because my credit score is excellent and Joe’s is good (it isn’t bad but mine is better). They take the lowest score if you are buying a house with someone and to have Joe on the mortgage would cost us an extra $150-$200/month. It clearly makes no sense to pay extra so the mortgage is just in my name but the title for the house is in both our names. You need to be in the excellent range to have the best interest rate so I highly recommend making sure your credit score is as good as possible before you buy. It makes the process a lot smoother (and saves you a lot of money).
4. Make sure you have enough cash
We only put 5% down but you also need cash for closing plus any repairs that are needed unless you get the seller to pay them. The seller was selling the house as is and thankfully there weren’t major repairs but things we need to do before we move in. Even if you can only put $25-$50/month in a sinking fund right now, do it. It adds up and you need to start. I also wanted to have 3 months of our mortgage saved as a “just in case” fund.
So, we had a 5% down payment, around $12k for closing, $10k for repairs, and 3 months of mortgage payments saved. Like I said earlier, this took THREE YEARS and clearly did not happen overnight so start early. You might not need that much time but it was helpful for us to have the money there. We are also able to take our time with repairs/moving since we had enough saved to pay for two mortgages temporarily.
Our house is old and needs a lot of work, but it is livable and is functioning. We passed inspection and all of the recommended repairs were minor (none for safety). There is about $10k worth of stuff we want to do before we move in because it is way easier to do with nothing in the house.
It is a 4 bedroom and 3 bathroom home on 24.3 acres. I mean…that is our dream. The land is PERFECT. The perfect mix between pasture and woods. The deer literally come up to the porch and I cannot wait to be BFF with all of the deer. Our neighbors have horses. It is so quiet out there which is exactly what I want. The house is around 2,000 sq feet which is a major upgrade from our 700 sq foot home right now. It has a barn that is in really good shape (aka plenty of room to rescue dogs).
Eventually we will need to redo the kitchen because it is realllllyyy old and not ideal but we will save up and pay for it. Long term we want to do a nice backyard area (grill/seating area and a pool) but that won’t happen anytime soon.
Repairs we will do before we move in:
- get rid of popcorn ceilings
- new vanity and sheetrock in one bathroom (water damage)
- clean out crawl space
- paint interior
- new carpet in 2 of the bedrooms (other bedrooms are hardwood floors)
- move the electrical box because it is too close to the water heater
- new light fixtures, blinds, and random stuff like that
You might be rolling your eyes like wow they must make a lot of money to afford a 24 acre farm and honestly, we make average salaries. We currently live in a 2 bedroom, 1 bathroom home that is 700 sq ft and located in not the best area (if you follow me on Instagram you’ve heard stories). A lot of people don’t want to make that sacrifice to save but for us it was worth it. Honestly, I am going to miss our current house.
This purchase was strategic. I created many mock budgets to see what we could actually afford each month. Just because the bank says you can afford it, doesn’t mean you can. I had long discussions with Joe about how much we could afford and still make sure we were saving and investing for other goals. We didn’t want to be house poor.
This new mortgage is A LOT more than our current mortgage, like a lot a lot, but we’re prepared for it. We still have our emergency fund, other sinking funds, retirement accounts, custodial accounts, and now we have 3 months of our new mortgage saved just in case.
Figure out what your big dreams are and go for it. Don’t let anyone tell you that you can’t do it. I NEVER thought I’d own a 24 acre farm. Ever.
The process was so much easier with a lot of cash in the bank and an excellent credit score so start saving now and work on increasing your credit score (click here for my course—it’s only $27).
What homebuying questions do you have for me? Leave them in the comments and I will answer them!
Ready to finally take control of your finances and maybe you’re not sure where to start? Start with my FREE course (click here to sign up).