first time homebuyer recap

intro

I was extremely lucky to find and close on a house we loved this April. Owning my own home was a five year goal for 26 year-old me and I stuck the landing just over four years later. It was a bit of a hectic process start to finish considering gesturing to everything but with some perseverance and luck we got it done. After aspirationally scrolling zillow and redfin listings for two years of the pandemic and seeing prices rise and rise and rise, I FOMO’d in and found a realtor to start my search in earnest.

That was near the middle of February. We spent 4 weekends looking at various houses all around the Portland metro area, I think ultimately looking at 15-20 houses. Most would go on to sell within a week or two. It was literally that fast. Houses would get listed on a Wednesday or Thursday and have pending sales by Sunday. I submitted offers for three houses in total, and was significantly outbid with cash offers on two of them. Like these were $180,000 homes in 2013 listing for $400,000 in 2022. And selling to cash buyers for anywhere between 50-100k over asking, with another 7-10 offers waiting in the wings. Insane! How does anyone compete with that?

We found this absolute gem of a property (3b/1ba, central air, skylights, large covered deck, mature fruit trees and raised garden beds, roses of every color) right on the cusp of the city limits, and thanks to some divine intervention our offer was accepted. The previous owners were an orthodox denomination and did no work on the Sabbath, which they observe from Friday sundown to Sunday sunrise. So in a stroke of pure luck/realtor savvy, we saw the house Friday afternoon before the cutoff and submitted our offer that night. It was nerve-wracking waiting until Sunday (when they had an open house planned already!), but we got the news later that morning— We were the highest of three offers… and we beat the second highest offer by only four grand! They still held the open house, which also was a bit stressful… what if a higher offer came in? Our offer of $444,000 held, and the real process could begin.

buying process

So our offer was accepted. Next came the inspections and the financing. I’ll cover the latter in a bit. We had two inspections, a full inspection and a follow-up electrical inspection because the previous owners had a ton of their stuff in the garage at the time of the first one that blocked the electrical panel. The house was in great shape, obviously well-loved with a few miscellaneous things here and there and just a tiny bit of mold in the attic because the bathroom wasn’t vented properly. They call it “potential growth” because no one wants to say the m-word during this process. That’s a whole other can of worms. We got a quote for fixing that and the sellers credited us that much of our offer. Our realtor went back and forth with their realtor on some of the random tasks, getting contractors scheduled to fix stuff our inspector found, drafting documents and agreements etc. This is where having a great realtor (and/or lawyer) shines, I didn’t have to do much during all of this, just a few phone calls with my realtor as she wrangled all the finer details. Which was great, because all of this took about a month and was happening concurrently with the financing side… which is where I had to do a lot more.

financing process

This is where I made probably my biggest mistake of the whole process, I didn’t shop around terribly hard to find a lender / the best rate available. I googled a few banks and checked my credit union but ultimately I went with the lender my realtor recommended, because the first house we offered on needed a “fast close” and she said they could do it in two weeks. Crazy town. We were outbid on that house by at least 75k in cash and there were 10 offers total, so it didn’t matter in the slightest anyway. But when we got to the next houses, they said the numbers would work out similarly (actually better, we ended up buying a cheaper house than the one we missed on) and it seemed reasonable enough to me and my budget, so I didn’t search too hard to see what other rates I might have gotten. I’d already submitted documents and my realtor had worked with them before, so I went with it.

I had to submit a bunch of documents showing my finances, various bank account statements, credit check, tax forms, etc. It was a lot. But we got through it, everything checked out and financing was approved. I ultimately locked in a 4.49% rate on a 30 year fixed for $416,000. Definitely nothing to sneeze at, but it works out to ~2600/month PITI… Just slightly higher than the rent we were paying, for a much worse living situation. Absolutely worth it in my mind to be building equity and not having to ask a landlord permission to do all the projects we’ve been dreaming up over the past few years… like putting in rain barrels, or getting chickens. This house has so many small quality of life improvements in various areas it truly adds up to a monumental shift. It’s so much brighter, better ventilated & less drafty, no leaks, quieter neighborhood, cleaner, etc. In hindsight it’s wild I rented at the location I did as long as I did. My mental health has improved so drastically in such a short time I almost don’t believe it. As I write this, 30 year fixed rates are now hovering around 6.0% so I feel like I beat the buzzer a little bit, even if I wasn’t ready to purchase when rates were bottoming out in the 2s and low 3s earlier in the pandemic.

While everything described above is ongoing, you submit “earnest money” early on, which basically signals that you are serious about moving forward in the process. This counts towards your down payment, and transferring that money is when it started to feel “real” for me. I put 5% down which means I have PMI (private mortgage insurance) for a little while, adds about $100/mo until I get to 20% equity. That’s fine, I wanted to get into the house ASAP.

All in all, between the down payment (including earnest money) and closing costs, I paid $29,916.99 up front to get the keys.

all the other things

Cool! So I’m out 30 grand and I have a monthly payment of 2600 hanging over my head for the next 30 years. But I have a south-facing house that gets tons of sun with a tranquil yard with four mature fruit trees. I’m stoked. But what else? Well, there have been a good deal of other “initial” costs with this home purchase. The sellers took all the appliances except for the dishwasher, so I needed to buy a fridge, washer, and dryer. I’ve also ordered a chest freezer for the garage, but it hasn’t arrived yet. Moving costs… I helped enough people move in my life I was happy to pay someone else to do it this time. Mostly smooth, but still a long day. There were also a ton of trips to hardware stores to get tools and various other items for around the house. The contractors who came and fixed our attic issue. Re-keying the locks. The list goes on and on. We haven’t painted yet but that is on the list. Wanted to before we moved in but the timing of it all just didn’t allow for it.

total cost (so far)

Some of the following numbers are surely juiced by inflation / supply chain costs / corporate greed / etc. but still hopefully a decent estimate of additional costs a first time home buyer may have outside of closing costs and mortgage payments themselves!

So, your initial expenses may be quite a bit higher than “just” the down payment and other closing costs. Granted, we probably could have done this significantly cheaper by not upgrading our bed right away, choosing smaller or older appliance models, more time spent thrifting for deals, moving on our own/with friends’ help, etc. This spending fit into our budget (if a little high initially, knowing it should smooth out as these large longer-term purchases fall off) and the benefits have been worth every penny.

Good luck in your first time home-buyer search(es), hope this was helpful!