House Hunting - Day 1

My wife and I were on Zillow most of yesterday looking at houses and saving the ones we wanted to go see. Later in the evening we reviewed our list and removed the homes that didn't meet our common criteria.

We started out the morning with a list of 8 homes to see. We met the realtor at her office at 10:15 am to give her the list so she could schedule visits with the sellers.

Zillow is not precise. That should come as no surprise to the experienced home shopper. Many homes came off the list immediately. One house is in the wrong school district, one was already sold, two have pending contracts, two are in option periods. That left two houses available to be viewed right out of the gate.

The first is a new home nearing completion. We looked at two models. We passed on both and here is why. They are called express homes. That means the buyer takes it as is. No upgrades, no swaps, no extra money for perks. It's just whatever is there. So, that was the first and biggest issue.

The first house of these two had small bedrooms and just felt kind of cubical. No tub in main bath, just walk in shower. Large bathroom counter and one sink. Stupid.

The second of these two had slightly larger rooms, but the kitchen was a deal breaker. It has an island with a space for a dishwasher that when open would be right in the way. There was no exhaust duct in the kitchen either. Really weird.

The drive was much farther than we imagined as well.

We skipped over to the next town. This one is much closer to our jobs and current location. This house was looking like a very good choice but unfortunately someone made a cash deal on is about an hour after we looked at it. Bye bye!

Lastly, we went back to our town where one of the option period houses is located. We really liked this one though a few surface cracks in the rear ceiling is concerning. It meets or exceeds most of our important needs/wants. Perhaps it could become available but we won't wait for it. Here are some photos of this one and a video.

House Shopping Scorecard

I made a scorecard today. I know I'll get into a house and forget what important things to look for. Not the common things, mind you, the hidden stuff. The idea is to score based on 1-3 with 2 being neutral.

Here is the list I came up with. Keep in mind this is specific to our needs based on our current location and situation.

About the Price:

Asking price (Total)

Asking price (Square Foot)

How much did seller pay?

How much does seller owe?

Comparable sales value

How many offers received?

How many days on market?

Real estate taxes

Water bill average

Electric bill average

HOA dues and frequency

Extent of HOA

About the Condition:

Year built

Number of stories

Square Footage

Lot size

Number of bedrooms

Master bedroom size

Has one isolated room for music studio

Number of bathrooms

Front door faces South

Living room

Dining room

Kitchen

Cabinets

Countertops

Modern open design (Y/N)

Interior illumination/Natural lighting windows

Closets condition

Master bedroom closet size(s)

Laundry space

Storage space (will HOA allow a shed)

Attic storage

Covered patio

Pool (none, included, or community)

Fence overall condition

Landscape condition (lawn)

Landscape condition (flowerbeds)

Trees and shrubs condition

Wood frame, Brick & Wood frame

Roof age (good for 15-50 yrs)

Walls and attic insulation

Refrigerator replaced (Y/N-date)

Oven/Range replaced (Y/N-date)

Dishwasher replaced (Y/N-date)

Microwave replaced (Y/N-date)

Garbage Disposal replaced (Y/N-date)

Plumbing replaced (Y/N-date)

Sump pump/drainage replaced (Y/N-date)

Gas lines replaced (Y/N-date)

Water Heater replaced (Y/N-date)

Water heater adequacy

Electrical replaced (Y/N-date)

A/C replaced (Y/N-date)

Thermostat replaced (Y/N-date)

Security replaced (Y/N-date)

Fire alarms replaced (Y/N-date)

Chimney sweep cleaned (Y/N-date)

Rain gutters cleaned (Y/N-date)

Water sprinkler system

HVAC ducts cleaned (Y/N-date)

Pool pump replaced (Y/N-date) if any

Upgrade to Storm windows? (Y/N-date)

Garage door opener replaced (Y/N-date)

Exterior illumination

Ceiling fans updated (Y/N-date)

Window coverings

Hard flooring

Carpet and pad (If any)

Aluminum siding?

Exterior condition

Garage capacity

Heat is Gas or Electric?

About the Location:

Clean streets

Neighbors' property well maintained

Flooding

Loud noises (traffic, highway, animals, etc)

Bad odors

Train tracks

Open drainage ditch

All utilities installed out of sight

Area zoned residential

Nearby industry

Proposed special assessments

About the Location:

Garbage collection

Street lights

Streets and alleys well maintained

Heavy air traffic

Foot traffic from nearby schools/stores

Neighborhood traffic

Speed bumps/low speed zone

Community rating

School rating

Convenient shopping

Parks

Minutes from Dad's work

Minutes from Mom's work

Elementary School

Middle School

High School

Vicinity to Asian community for my wife

Neighborhood demographics

House Hunting Begins this Weekend

With the holidays finished we can finally get an idea on where our bottom line is financially.

In previous months it looked like we would be financially ready to start house hunting mid first quarter 2015. However, when considering the amount of time it takes to find the right house and close on it, now seems like a good time to get the wheels rolling on the house hunt.

Our pre-qualification letter expired a few days ago. I just got back from the lender. I had to give them our most recent bank statements and pay stubs. They will email a new pre-qualification letter to us and the realtor in the next day or so.

Since the realtor is next door to the lender, I stopped by to put our names back on their radar.

We can continue to save until we close. Meanwhile, let the house hunting begin.

Realtor Interview #2

It's been about a month since we first started our journey toward buying a house. I had met with the realtor initially on September 17. That was the seller half of the realtor.


My family met his wife, the buyer half, today. There was quite a bit covered in that meeting this afternoon. I will post my meeting notes in the next entry.


UPDATE
I had meant to add my notes from this interview previously. See below.


Lender will give itemization of fees in the closing costs.

Process:

1. Up front cost (earnest money $1000 up to 1% of house sale). Option fee $100 paid to the seller for unconditional right to cancel contract 7-14 days, pay for home inspection during the 7-14 days


2. Promptly after entering into a contract to buy a property and before any option period expires, contact your insurance agent to determine the availability and affordability of insurance for the property


3. Once you have a contract on the property, realtor takes contract to lender


4. Home needs to be inspected before appraisal - Home inspection #1 and termite report #2 $350-400 (this is not the home value appraisal)


5. Lender processes contract and orders appraisal which takes a few weeks - Appraisal runs about $450 usually paid to the lender up front after finding a house (but may only be due at closing)

Establishing Credit for My Wife Who Has None

I have added my wife as a cardholder to 2 of my credit cards. Some banks charge a fee for this, some don't and some simply don't allow it. My 2 cards allow it and charge no fee.

She will get the benefit of my history with these two cards that report every 30 days.

90 days later we will set up a card account with Macy's who also report every 30 days.

The key to all of these cards is to charge 10% of limit and pay off each month.

Finally, we will establish an additional type of credit by opening an account with a store like Conn's and follow the same concept. I was told with a place like Conn's to carry the debt for about 6 months, 10% of limit and there will be no fee within that time frame.

The chances are small that any of this will be considered in our house hunt. I'm documenting it in the event that we don't buy for 6 months or more.

Pre-Qualification Letter, Disputing Credit, Additional Documentation

I wrote a letter of explanation on why I was out of work for a few months in 2012 and submitted that along with copies of my wife's ID to the lender as requested.

The lender sent us a pre-qualification letter and introduced us by email to a realtor. The realtor happens to be the wife of the realtor I spoke to in the beginning of our journey.

Additionally, today I set up an account with TransUnion, but didn't see a place to set up an account with Equifax or Experian. I opened disputes for an account that shows a zero balance but is still negatively affecting my credit score. I'm not disputing that it's mine, I'm disputing the balance, the validity, the lack of supporting documentation. Since their is nothing to collect, no one will pay to send someone to hunt down documentation on the collector's behalf. After they have neglected to respond within 30 days, it will have to be deleted. We shall see.

First Proper Lender Meeting with the Family

Today, my family had a proper meeting with the Senior Loan Originator. A lot was covered. (See notes below)



In short, we have a bit of homework to do, some time needs to pass and we'll meet again perhaps in a few weeks. I have to write a 'Letter of Explanation' why I was out of work for a few months back in 2012, provide some of my wife's ID to move the paperwork along.



Additionally, I have to take additional steps to get something removed from my credit history. It's a paid off account that needs to be deleted. The original owner will not delete it. I will document that process as well.


NOTES

Let the realtor locate a house

The lender does a conventional loan with a minimum of 5% down.

The lender will ask seller to pay 3% toward closing costs and negotiate that into the lender's price (we would have to pick up the remaining balance)

Get into a house sooner than later because the after tax benefit of owning a home outweighs waiting and saving more money.

Any additional funds that you have after putting 5% down that you want to apply toward the mortgage, do that until you can get to 80% of the original sales price then the mortgage insurance piece will fall off and then your payment will even be lower. Then, take the portion that you were paying towards PMI and start paying down on the ‘principle’ (the snowball effect). The sooner you get to a balance of 80% of the original sales price, the sooner you can start applying the PMI fee toward the ‘principle’.

Establish accounts with Equifax, Experian, and TransUnion if anything needs to be disputed on all three bureaus.

Future Process:

1) Lender will get us a Pre-Approval Letter

2) We will locate a property

3) Negotiate contract/negotiate terms

            a) negotiate seller willing to pay closing cost

4) Give Lender a copy of negotiated contracts

5) Lender will work up the numbers and determine if they want to lock in an interest rate

6) Property Inspection, and condition of property is acceptable by your terms

7) Lender will order the appraisal

8) Once appraisal is completed, it will be sent to underwriting (72 hour process)

9) After underwriting approves, lender draws the closing documents and send them to the title company here in town

10) Title company will prepare the settlement statement and all of the numbers

11) Seller and buyer will sign papers

12) Lender will send a wire to fund the loan

13) Exchange of keys

**Lender guarantees a 25 day closing from the time you have your contract

 

Lender needs to have a credit card on file for appraisal $400 fee is charged at closing or upon cancelation

Winter months are historically better rates (research online if you want)