What we’ve learned about buying a home by actually going through the process, is that while the steps are ostensibly the same across the board – find a home, secure a loan, get an inspection – everyone’s experience is vastly different based on the state of the home they’re buying, location, financial situation and people involved. But hopefully this covers some of the considerations that might trip you up along the way:
1. Find an agent who has a good reputation. Use someone you’ve worked with before, get a recommendation from someone you know, or research highly rated firms in your area.
We luckily fell into business with our real estate agent when we were first looking to rent in Jersey City. Yuan Zhang of Keller Williams Realty was one of the many brokers who was attached to a property we were interested in. She sent us her portfolio of listings, and we realized that she had nearly every property we had marked as wanting to see. Yuan ultimately got us into our first-choice unit in our current building.
When we decided to start looking into buying we contacted Yuan and her boss, Andrew Sanderson. They talked us through the home buying process, timeline and expected costs. When our current landlord decided to sell our unit, they carefully counseled us through our options. Yuan eventually started showing us homes and, yet again, helped us secure the home we wanted at the right price.
Your real estate agent will be your guide and partner, answering all the dumb questions you have about the process and connecting you with the right people (see steps 2 and 3).
2. Get a loan so you can pay for the thing. Make sure you look into any first-time homebuyer programs that your state or city might offer. For example, New Jersey has a program called Homeward Bound. Are you or your partner a veteran? A member of a union? A member of a credit union? These are all routes through which you can secure a loan.
Get the details of all the options available to you and determine how high of a down payment you can make. This will help you figure out where you’ll be able to get the lowest rate. For example, if you are able to put up a 20% down payment and have good credit, you might be able to secure a lower mortgage rate, and secure it much faster, than you would through an FHA or other special program. Even a 1% lower rate will save you lots of money over the life of the loan.
This was the case for us. We got information on the New Jersey program, and then Yuan hooked us up with Chris Gallo from NJ Lenders. Comparing rates, it was obvious that while the SmartLoan would have been a boost for us in the short term, the better financial decision over time was for us to go with the lower rate from NJ Lenders. Chris has been so helpful in this process – very responsive, knowledgeable and patient when explaining the details.
Bonus tip: Find a mortgage originator and get a pre-approval letter before you make an offer. In a market like the New York metro area, being quick is key.
3. Find an attorney who will guide you through all the legalese and answer more of your dumb questions. Yuan recommended us to Joseph Scanlon of Scanlon & Scanlon PC in Hoboken. He has been great – patient with our questions, responsive and direct.
4. Make an offer. Once your offer is accepted (or you accept a counter offer) you will have five days to get the contract signed and put down a 5% deposit (confirm this with your agent) through your attorney so you can secure the property. At this point, your seller can no longer show or back out. The quicker you can secure your property, the less anxiety you will have.
5. Sign lots of papers from your mortgage company and attorney, and make sure you read through them all even if you don’t understand half of it. Make notes to remind yourself of the stuff you don’t know.
6. Ask lots of dumb questions and don’t be afraid to ask for clarifications. You’re putting up a lot of money for a piece of property, this is not a time to be timid or worry about looking stupid.
7. Hire an inspector and do that ASAP. The quicker you get a list of requested repairs to your seller the quicker they can get started. Ask for everything that doesn’t meet your standards. It’s better to be overly thorough here, even if it’s just so you have some items to give up. If you’re in the Hoboken/JC area do yourself a favor and hire John Losquadro to do your inspection. He’s a true professional – thorough, knowledgeable, helpful – and highly rated in the area.
8. Pay attention to details as you read the reports and make more notes and ask more dumb questions.
9. Get the property appraised. Your real estate agent should help with this. If the report comes back much higher than your agreed-on price it’s good in that your property is worth more than you’re paying but your seller might also draw a harder line on the repairs list. If it’s too low you might not be able to get the mortgage you’ve applied for at the price you need and will need make up the difference with cash or renegotiate the price. Generally, neither of these are great scenarios, especially if you’re on a tight timetable.
10. Get HoA documents (if you have one). This was surprisingly difficult and took lots of nagging from us. You need to know the rules and make sure that there’s nothing in the by-laws that you can’t live with and that your dues are calculated correctly.
11. Wait on repairs, which requires more back and forth than you might think. We had to get clarifications on multiple repairs. Make sure you get receipts for everything. Even something as small as replacing screens is more complicated than it sounds.
12. Schedule a final walk-through and closing! This is the exciting part. Where it finally becomes real and you start piling up all the pennies you can find to go towards your down payment. Your mortgage disclosure will break down all the costs but you might want to check with your attorney on how payments will be made – usually wire or certified check – so you can prepare.
I’ve heard some horror stories about closings. Mostly that it’s just a bunch of attorneys and agents yelling at each other across a table. The process has been pretty benign so far so I hope that is a good omen for our closing next week.