Home Buying Tips
Lessons From a First-Time Home Buyer: Two Years Since
It has come to my attention that I’ve reached a bit of a milestone. This week marks two years since my wife and I put in an offer on a house. Funny enough, shortly after we made that offer and it was accepted, we caught a flight to Hong Kong and continued the process of moving toward closing from the other side of the world. Shortly after our return home in early November, we’d have the keys to our first house in hand and, then, we’d finish moving in by Christmas of 2023.
Obviously, considering that this was indeed the first time we’d purchased a home (or even come close to doing so), I’ve learned a lot in the past two years. But, today, I wanted to just highlight a few specific things that stick our in my mind when I reflect on the experience of buying and owning a house.
Earnest Money
After we submitted our offer, we were countered. However, the only difference was that the seller requested $1,000 in earnest money — which is a concept we had never heard of until that moment.
As it turns out, earnest money is basically just a gesture to show that you’re serious about buying the property. The money is held in escrow and is then applied at closing. In other words, it’s almost like a down payment for your down payment.
We were definitely excited that this was the only adendum that they made to our offer and figured it would be easy to make this payment. Unfortunately, it did turn out to be complicated by the fact that 1) we only have three calendar days to make the deposit 2) we accepted the offer at 5 p.m. on a Friday heading into a holiday weekend and 3) as I mentioned, we were leaving town. Thankfully, we were able to overcome this once we discovered that my Ally account offered wire transfers. While this cost us an extra $25, it ensured that our earnest money made it in time and set us up to continue our homebuying transaction.
Your Payments Can Go Up
Okay, this is something I was aware of beforehand, but I do still think it’s worth noting. One of the advantages of buying a home versus renting is that (assuming you have a fixed-rate mortgage) your interest and principal payments are pretty much locked in. That said, the property taxes and homeowners’ insurance that get bundled into your monthly payments can increase.
Last year, both our insurance and tax payments increased, leading to a payment increase of about $65 per month. Much to our dismay, our insurance rose once again this time around, tacking on a total of $600 for the policy year. But, I should note that our policy includes our home and our two vehicles, so I’m not yet sure how much our housing payments will rise. Regardless, this is a reality you’ll want to keep in mind when setting your homebuying budget.
Don’t Get Too Attached to Your Lender or Servicer
Imagine our surprise when, within weeks of closing our house, we got a letter telling us that our mortgage had been sold to another company. This development was largely inconsequential at the time, but it did make me wonder just what we had done to deserve this banishment. In reality, this is apparently a common practice. That doesn’t mean that I really understand why it’s a common practice, but it is.
Then, a few months later, we were told that our servicer was changing as well. This move did impact us as it meant that we’d need to register for and start using a different portal for our payments, which is kind of a pain in the butt. Incidentally, our new servicer was just acquired by Rocket Mortgage, so perhaps we’re in for even more changes ahead.
By the way, given this experience, I’m a bit concerned about Bilt’s plans to offer points on mortgage payments by working directly with servicers. After all, our loan started with United Whole Mortgages (which is the company Bilt is partnering with intially), before being moved. Anyway, I do hope that this set-up doesn’t lead to frustration when Bilt members find themselves in similar situations to mine.
My House Isn’t in City Limits
Lastly, I’ll admit that this one is very specific to me, but I still can’t believe it. As I explained previously, when we were looking at this house, the seller’s agent said that it was in city limits — this despite the fact that we passed a sign that says “now leaving city limits” just before turning onto the street. Nevertheless, we figured they’d know better than us and just accepted it. Cut to us going to vote in our first municipal election and realizing we are, indeed, not technically in Springfield.
Aside from not being able to vote for the city council or mayor, we haven’t actually encountered too many downsides to this odd arrangement. In fact, we actually save a bit of money as we don’t have city tax to pay. Still, it would have been nice to have the correct information from the jump.
From putting in our offer two years ago to living the life of a homeowner since then, I’ve had my eyes opened in numerous ways. Some of these are negative but others are actually good — and yet others are just plain odd (seriously, we don’t live in the city?!). I’d also be remiss if I didn’t not just how quickly the past 24 months have gone by. I’ll take that as a sign that our homeowner experience is going well overall. And, hey, only 28 more years until we own the house outright!
P.S. For much more on my homebuying and homeowning experiences as well as what I’ve learned from them, you can check out my free eBook.
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