Oh, hello again. Look at what we did to the web site! Do you like it? Well, I decided to hire an SEO professional to make the change from SquareSpace to WordPress! I hope you find this site just as fresh as the last one.
Before we begin, a big thanks to everyone that participated in the Summer Swag contest last month. For those of you who did, I hope you’re enjoying your DAB gear. I am going to keep the contest open for the rest of the summer so be sure to read July’s post on how to participate. There’s still plenty of swag to give away.
As my frequent readers may know, Heather and I bought a house! And as of last week (which explains why this month’s post is a bit late), we’re moved in and officially suburbanites (for the second time in our lives respectively). Hazel is loving her new nursery as indicated by her superb ability to sleep long hours at night and take big naps during the day. “She’s a good gurl,” as her mommy would say.
Sticking to the theme of home buying, this month’s blog is about the home buying process and what (somewhat simplified) steps we took to find ourselves in place we now call our #familyhome. Due to its length, I will split the post into two parts.
I will be blunt. I did not find the process enjoyable whatsoever. It was long, stressful and draining on everyone involved. Being a financial advisor didn’t help either. I actually thought it made it worse. I am sure most of you who’ve bought a home might agree here. Therefore, I thought it would be helpful to walk you folks through it so that you can stay organized and focused during this seemingly arduous process. Let’s go!
Pre-approval – More than likely, you will borrow money to buy your home. This form of debt is known as a mortgage. Qualifying for one will depend on your credit, income, existing debt and a myriad of other financial factors. Prior to doing any home shopping of any kind, you should first see how much money you can borrow. There is no shortage of mortgage companies and lenders out there so I encourage you to shop around. I generally have little love for the big banks, but Wells Fargo in our case had the best mortgage products available for us, so that’s who went with.
Just because a bank is willing to lend you money doesn’t mean you should take it. Rarely does the amount a bank is willing to lend you correspond to what it is you can actually afford. (You can read more about that from industry dynamo Michael Kitces on his blog.) The short end of it is that understanding what you can afford can only be achieved by mastering your cash flow. If you aren’t a master of cash flow, I strongly suggest you become one before buying a home. You will need to be disciplined and intimate with all things related to cash before embarking on this endeavor. You can download my Financial Planning Launchpad to get yourself pointed in the right direction.
Finding a town – What do you need? Good public schools? Access to transportation? Close proximity to your job or family? A walkable downtown area and spacious parks? Before you think about the house itself, start thinking about what you want out of your new town. For New Yorkers like Heather and I, we first narrowed down what suburb of New Jersey met our requirements. For us, quality of schools and access to mass transit were at the top of our list. What about timing, you ask? We started these first two steps about a year out from when we imagined buying an actual home.
Once you’ve done your research on the areas you would consider buying, go visit them in person. I cannot tell you how many cups of coffee I consumed in a downtown area while checking out the “scene” and getting a feel for the town. After this ritual, we then would weave in and out of the neighborhoods in our then rental car to get a general sense of what homes looked like and how far they were from the local schools and the train station. From this, we narrowed down our preliminary list of five towns down to two.
Hiring a real estate agent – At this point, you should know how much house you can afford to buy and which towns you would consider buying in. This means it’s time to start looking at actual homes, which also means that it’s time to hire a real estate agent. While using websites like Zillow and Trulia are invaluable for home buying research, in fast moving markets finding your actual house on these sites is difficult because of how quickly homes are scooped up after they are listed (unless the home as been sitting on the market a long time, which usually means it’s over-priced or that there is something wrong with the home).
Side story: Heather and I learned the hard way when we failed to bid on a home that met all of our requirements. We honestly didn’t know what it took emotionally to pull the trigger. I understand that no one wants to make a big decision in a hurry, we sure didn’t, but when you see something you like in a hot market, time is usually not on your side.
Hiring a real estate agent is going to assist you with gaining access to open houses and homes that are on the market more quickly than if you were doing things on your own. For example, the first thing Heather and I would do each morning when we woke up was check the automated e-mail from our agent, which contained all new homes listed the day before. If we saw something we liked, we knew were making a trip to go out and see it later that weekend or potentially even sooner. A good agent will also contact you when something hits the market that’s in your wheelhouse.
Working with a real estate professional is like working with any other service professional: it’s about the relationship, saving you time and finding value in the quality of service provided. Asking friends and family for referrals is a great way to find a great agent. Of course, you should make sure your agent is qualified and has suitable experience, but you most definitely want to make sure that you get along with them, since you will probably be interacting with them quite a bit from now on. We loved our agent and she worked her butt off for us. She also helped us get through some very stressful moments and, honestly, I can’t put a price on that.
Ok! Heather says dinner is ready so that means I gotta run. Did you know she’s an amazing cook and ran a successful food blog? True stuff. In just a week or less, I will have the continuation of this post. There’s much more to the process and we’re only getting started. Be back soon.