Home ownership eluded me longer than I hoped due to the fact that the cost of living and home prices in northern California are astronomical. After years of looking at homes, only to watch our jaws subsequently slam the floor due to sticker shock, we decided to look outside the city of San Francisco, away from the suburbs of the peninsula, and into the grape growing countryside of Napa valley. Interestingly enough, the cost of homes dropped in half. After a bit of difficulty and a hearty struggle, we are now proud home owners. For now it's a weekend/vacation home as it's too far from our jobs to be a feasible permanent residence, but one day I hope to move there permanently.
I wanted to share my experiences for other potential home buyers. Perhaps there's something you can glean from my difficulties so that if and when you purchase a home for yourself, you can be more prepared.
The first step is to find a great real estate agent. Not a good one, not a decent one, a great one. A good real estate agent will not only help you find a home that fits your price range and makes you happy more quickly, but they'll have your back and help you solve the incredibly difficult problems when they emerge. And they will! We worked with Michael Lawrence and he continues to be an absolutely fantastic help to us. If you are looking at a home anywhere near Napa, give him a call.
Secondly, and this may be the most important advice I can give, is to NOT hire Bank of America for your mortgage. Do not. Do not. Do not. I may have had the misfortune of working with a particularly bad mortgage broker, but Bank of America's process and bureaucracy is slow, unwieldy, and the customer service rendered was awful. I'm not sure if it was always this way, but as a result of Bank of America's last few year's worth of business, not to mention recent government regulation, they are absolutely not someone you should go with. They missed a few of my closing deadlines, would frequently not return calls or emails, and seemed to try desperately to find a reason to not give me a loan.
Similar to the real estate agent, I recommend someone who is eager and trustworthy for your mortgage. If I could do it all over, I would have taken the higher interest rate and gone with a small, local Napa mortgage broker. The rendered service would have been superior, they would have worked more quickly to provide me with a loan, and we wouldn't have required 3 extensions on the escrow process.
One thing that I encountered throughout the process time and time again is that you're told to sit tight and wait with no instruction. Weeks and months may pass, when suddenly you receive a phone call and are expected to provide dozens of documents within hours. Here are some things you should be ready to provide or have at the forefront of your mind:
Proof of having paid rent for 12 months. For me, this meant gathering my old rent check copies from my bank. A few things that will cause hiccups including having multiple apartments. We've had 3 in the past four years, which caused eyebrows to be raised, despite no wrongdoing on our part.
This was further complicated by the fact that I typically write a rent check to my girlfriend, who cashes it and writes a single, combined check for the full amount. Another hiccup is that some of my checks were written with an old check book of mine that displayed a residence of mine from 5+ years ago. Basically, the more streamlined and simple your renter's past, the better.
|Peaches is a fan of the new mattress and bed frame.|
Have money for the down payment and don't move it. I had a portion of my down payment in a savings account, the other portion in an investment portfolio. After I moved the funds from the investment portfolio, I had to provide an absurd amount of documentation showing which stock was sold, evidence the check went from one account to the other, and more. I was up to my neck in affidavits. The lesson? Put the money in one place and leave it there.
Provide your bank statements. I sure hope you have these online! I had to provide many bank statements, then provide detailed explanations for any charge that seemed remotely irregular. I once had to sign an affidavit explaining why my rent differed by $100 between two months. I also had to explain why I had multiple cards for the same account, as a result of card cancellations. They will get nitpicky, so have the documents and be ready to explain everything.
You'll need insurance. You'll need to have your insurance setup to close escrow. Luckily, my real estate agent provided me with a fantastic insurance agent. If your house has anything quirky about its location, be prepared to pay more and deal with more process. For example, there's a river near my house, which means I require flood insurance. Double bonus is that Congress failed to approve some recurring measure, which meant I had to pay for the costs ahead of time. Had the deal fallen through, I would have eaten $1000.
Have funds ready when crap goes wrong. No matter how good the condition of your home, it will need some work. Something will break. Something will be wrong. We bought a house that's in fantastic condition, yet my chimney has approximately $4000 worth of earthquake damage, I had a rotted fence, and my air conditioning unit is kaput. I also have a reverse polarity (whatever that means) between two plugs and a few other fun things. You need to have money set aside for a down payment, closing costs, fixing the home, and, of course, the mortgage.
|Bad fence? No sweat for me and dad.|