We did it!
Finally, after downsizing for 3 years and paying off my student debt and two cars, we are back in a comfortable attending home, and MUCH better off for it. I’m hopeful that my boys can grow up in this place and consider it a home base as we walk through life together.
After so much preparation and saving, I anticipated that buying a house with basically no debt would be pretty painless. Plus, this was our third house purchase, so we felt pretty comfortable with the process. But, then COVID hit and things got more exciting than I anticipated.
Here's how buying a house usually goes:
Pre-approval: Having a pre-approval from a lender can help when you make and offer. Some states like mine (NY) actually require it. BTW you don’t have to go with the lender you get the preapproval from, in the end.
House Hunting. Fun! Time for some adventures and dreaming.
Make an offer. Negotiate the details back and forth for a little bit. Then, come to an agreement and congrats, you’re under contract!
Put down your earnest money and get to work. Now, the work really begins- time to get an inspection and find out what’s under the hood of the car. If there are any major issues, this is your time to negotiate it out or walk away.
Pick a lender and start the process of getting a loan. Provide all documentation to your lender in a timely manner. Some states, like NY, require an attorney to be involved in the whole process.
Lender orders an appraisal. The lender wants to know the house is worth what you’re asking them to lend you for it. If the house doesn’t appraise for what you agreed upon with the sellers, there might be more negotiating or walking away.
Title search– Usually the attorney does the title search to make sure no one else has rights to the house.
Shop around and get home insurance– Most banks will require proof of insurance prior to closing so make sure to do that prior to closing.
Finally, it’s time to do the final walk through to make sure the house is in the condition you thought it was going to be in, prior to closing.
Close– Sign a million documents. Go over the closing statement, pay the money due, and get your keys!
How the Coronavirus Pandemic Impacted Us
When we saw our house hit the market, we got excited. We had been house hunting for a bit and knew what we wanted and needed. This house had everything, so we were aggressive. We were able to get in to see the house a day or two after the house hit the MLS and we made an offer the same day for full price with an escalation clause (saying we’d pay $1000 more than any other offer up to a certain dollar amount). We were glad we did that since the house did get a couple of more offers within the next day, as we anticipated. But, our offer won out and we got the house!
We started house hunting sometime in January and went under contract at the very beginning of March. A few days later, the pandemic was declared.
COVID had both positive and negative effects on our house buying process.
Positives:
It made us more willing to walk away. The unknown of moving during a pandemic, what would happen to me at work since I was working with COVID patients, the potential of making money in the market by throwing our down payment there instead of a house, all made us drive a harder bargain. We’re VERY glad we didn’t walk away. But, being less emotionally invested in the buy was a plus.
We got amazing mortgage terms. Interest rates were ALL over the place during our purchase. We got lucky and locked in at the lowest rate I’ve seen so far 2.5% on a 15 year mortgage. The day after we locked, the rate jumped up to 3.5%. I was even able to get a conventional loan from our local credit union with only 10% down, without PMI (Private Mortgage Insurance) or points. I had the loan officer I worked with on for an interview! Check it out here.
Negatives
We weren’t able to do our due diligence as well prior to the purchase. I generally like to walk through the house with the inspector and learn about the house from him/her. But, we weren’t able to do that because we were quarantining. Also, at the final walk through, we weren’t able to pick up on the strong cat urine smell in the carpet because we were all wearing masks. Thankfully, a good shampooing took that out! Also, the appraiser couldn’t get inside the house to appraise. At least, we got a discount on the appraisal because of that.
We didn’t hire movers because we didn’t want the extra exposure. So, Josh and I did the whole move ourselves, with the help of a couple of awesome friends (thanks Jack and Kevin!). But doing our own move sucked a little, especially since we couldn’t even get a U-haul truck for long enough because they were so in demand from people doing home improvement projects.
10 Things I Learned About Buying a House During the Coronavirus Pandemic
Get preapproval but shop around for lenders and negotiate. Lenders are all over the place with requirements and interest rates right now. These are unprecedented times, so they are reacting as best as they can. That does give opportunity to work out a more custom deal for you, especially if you have a stable income, favorable debt to income ratio, and good credit scores.
Be aggressive. It is still a seller’s market in my region. The inventory is low right now and there are a lot of buyers in the market because of low interest rates. So, if you see what you want, go for it aggresively!
Look for a float down option on the interest rate. In case the rates fell more, my lender offered the option to buy down to a lower interest rate after locking the rate but before closing on the house. During these volatile times, that can be a nice reassurance that you’ll get the best deal.
Stay the course. It’s hard to stick to the plan of buying a house and taking on debt when it seems like the world is going to end. Thankfully, things are calming down now and society is opening up so hopefully this won’t be an issue again. But, when times were rough and there was a lot of unknown, it was somewhat difficult to take my own advice and stay the course. But, we’re sure glad we did.
Leverage technology. Use video technology to get an idea of the house.
The final walk through is important! Walk through individually, if you must. But, get a good sniff test!
Pay attention to the closing costs. This goes for whether you’re buying a house during COVID-19 or not. Don’t get so caught up in the excitement of closing day that you forget to go over the closing disclosure. That’s where all the costs are listed. Lenders are required to get that to you the day before closing. Get it as soon as you can and go over each line. Make sure everything is at it was discussed prior to walking in for closing.
Arrange for funds for the down payment well in advance. Everything is slower right now with things being closed and people working from home. Most banks require wired money or a bank check for closing. For us, USAA doesn’t have physical branches here, so we had to transfer money to our local bank, then go to the bank physically to get the check (via a drive through, contactless teller). It took a few days. Work out how you’re going to get the check prior to closing day.
Book your moving truck far in advance, as well. There are a lot of people renting U-hauls right now for home improvement projects, taking things out to the dump, etc. So, make sure you get your truck in advance.
Give yourself plenty of time to move. Since Josh and I are still working, we gave ourselves 3 weekends to move ourselves- one to clean up and touch up the new place, one to move our things, and one to unpack and clean up the old place. It’s a lot of work to do it all, but we’re glad we did to protect the family and minimize our exposure during the move.
I hope that helps! Next, I’ll have the loan officer whom I worked with on to answer a few questions for us and give us some tips!
Stay frugal, ya’ll!
Disha
Standard Disclaimer: Not meant as individualized financial or medical advice.
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