Brian purchased his first home and ran into some difficulties with using a family member as a real estate agent, and taking out a loan.
Buying My First Home
people found Brian's experience helpful.
Buying a first home is a huge milestone in most people's lives. I was no different. From the time I married my wife, we talked about the house we wanted. We went to open houses. We browsed through real estate agency catalogs. We searched on the Internet. We drove through neighborhoods and picked up flyers for the houses for sale. I was ecstatic when we were finally ready to buy our first house. Yet, the house buying process wasn't as easy as I thought it would be. Here's my story and what I learned. I hope my story helps you on your first home buying journey.
The House Hunt
I grew up in a Cape Cod with lots of character. So when it came to finding a house, I wanted one with a ton of character. My wife wanted the same thing. We asked my wife's aunt to be our real estate agent. She was a relatively new agent, but her first few years in the business had been successful. What we didn't realize was that her typical client was middle class and looking for a traditional ranch or Colonial style house. She didn't usually deal with first time home buyers, and she wasn't familiar with any of the funky, up-and-coming neighborhoods in town. My wife’s aunt told us we could only afford what we wanted in the less-than-desirable sections of town. We believed her, only to see many of those up-and-coming locales go through gentrification within a year or two of our home search. Those neighborhoods are some of the most desirable now and property values have soared despite the real estate mark crash of 2008 - 2009. Eventually we settled on a 3 bedroom, 2 bath, nearly new ranch house.
So, here's what I learned. Know what you want and don't settle for less. If I had to do it all over again, here's what I would do differently. I would have driven through the neighborhoods with houses of the architectural style I liked and noted the real estate agents who had the most for sale. I would have contacted those agents and selected the one who was confident they could find me the home I wanted for the price I could afford. Our agent just didn't have the knowledge we needed to make the right decision for us.
The Down Payment Fiasco
My parents offered to loan me the down payment and closing cost money. Making the monthly payment was never the issue. Like most people, my monthly rent was the same or more than a monthly mortgage payment. My wife and I just couldn't save enough money for the down payment and closing costs. It looked like my parents had come to the rescue when they offered to loan us the money. I had a rude awakening when the mortgage company said that the money from my parents had to be a gift and could not be a loan. In fact, the mortgage company required my parents to write a letter saying that the money was a gift and they did not expect repayment. I thought that was the end of getting my first house, but my parents said they would give us the money and we didn't have to repay it.
If I had known about the mortgage company's stipulation, I would have borrowed the money from my parents and left it in my savings account for 90 days before applying. Then the mortgage company wouldn't have questioned the source of money for the down payment. I'm not encouraging anyone to be dishonest, but not everyone will be lucky enough to receive a gift like I did. Ultimately we did pay my parents back from the proceeds of selling that house.
The Dreaded Credit Bureau Report
I had a spotless credit bureau report, or so I thought. My credit bureau report showed I was more than 30 days late making a store credit card payment one time. When my wife and I relocated from one state to another, we forgot to notify the credit card company of our new address. I had applied for the card to get a discount for the only purchase I made with the card. The amount was under $100. I simply forgot about it until I finally received the statement. I paid off the small balance and the late payment fee, and I didn't think anything else about it until my loan officer called. I wrote a letter explaining the situation and included copies of the bills showing how I immediately paid it off.
What I learned from that was that you should always notify credit card companies and other creditors of a new address immediately. I also took advantage of getting a free credit report before I bought my second house to avoid any surprises during the application process.
Buying my first house is something I will never forget. Here are the lessons I learned. Choose the right agent. Obtain deposit and closing costs funds 90 days before applying for the loan. Monitor credit bureau reports closely. As key as those lessons are, there's one more lesson I learned and it's the most important. Have fun and enjoy the experience! I did and now I have wonderful memories of that time despite the challenges.