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How We Purchased Our First Home

Disclaimer: This post is not intended to serve as real estate advice, nor is it typical. Though this is an honest personal account of our experience, please consult with a professional, licensed realtor with any questions you may have.

When Nick and I were searching for our first home (winter 2011/2012), the housing market in the Twin Cities had hit its rock bottom. With the majority of the homes for sale listed as foreclosures or short sales, we took advantage of the potential to purchase a home at a much lower price than if it were a traditional sale.

We were in a good position. Our landlord was incredibly flexible and understanding, allowing us to go month-to-month in the event we weren’t under contract by the time our lease was up. We had plenty in savings for the required 3.5% down on an FHA “first time homebuyers” loan. Armed with our pre-approval and set budget, we hired an awesome realtor with whom we remain friends with to this day.

Here’s the portion of this memory that makes me giggle: I mentioned I had seen enough drama on HGTV’s House Hunters to expect this process to be long and drawn out. Like TV has any concept of reality, right?

Looking back on our own experiences however, it really wasn’t that bad.

We probably looked at houses for a few weeks or so, and I fell in love with a house that was inundated with plenty of Old World Charm (we walked away due to the power lines in the back yard – not very safe for a young family). We were exposed to some highly questionable design choices, and toured a foreclosure that left the homeowner quite bitter as he had completely destroyed the interior.

When we found The Split Level, however; I remember walking through the front door as we were marveling at the size of the ¾-acre lot. Then, I was greeted by the staircase which was clearly a focal point of the great room. I immediately began to imagine working in the kitchen while my children colored at the counter’s peninsula, or played in the lofted living room above the ground floor ...

And that night, we submitted an offer.

Our list of “must haves” was easy to work with – large yard, 3 bedrooms, attached garage – and The Split Level achieved each one. We had no grand visions for our first home, which I think is what gets people into trouble as they're first starting out. Once our realtor submitted our offer, The Foreclosure Game was set to begin.

First, the homeowner must approve the offer (which she did) before the financers can begin their review. The offer was approved by the first financer with ease, but got hung up when it was time for the final two to review.

Meanwhile, we had our inspection done on the property and we were reviewing the results with our parents. Though we were under contract, the inspection report potentially presents the opportunity to break it without consequence should we find something. It was while we were discussing our mutual satisfaction with the report that our realtor called with news.

The final two financers countered our offer, because they each wanted a larger piece of the pie. They wanted an additional $10,000.

Well, the counter pissed me off and I’ll tell you why – the inspection report had mentioned that the furnace, water heater and air conditioning units would need to be replaced over the tenure of homeownership. This update, though something typical albeit expensive for all homeowners, was estimated to cost approximately the same $10,000. I went with what my gut was telling me in that moment, which was to not accept that counter.

“You realize if we do this, we will lose the house,” Nick had said.

So be it, I replied. But if it’s meant to be, it will be. (See also, I am very stubborn.)

I called our realtor, and requested she share our inspection report with the final two financers and attach a note that read, “Here’s your $10,000, and I request you cover the closing costs too.”

The next day, we learned our counter was accepted by all three financers.

Our realtor told us my assertion likely sealed the deal, because she rarely sees the banks cover the closing costs on a short sale.

When it was all said and done, our final loan amount was for $5,000 less than the initial asking price, which our 3.5% down payment made even less.

Here’s what I learned from the experience:
1. Just because your credit rating qualifies you for a high loan amount, it is best to consider the mortgage payment you’re comfortable with each month. You do not want to be “house poor.”

2. Trust your intuition. I am so happy I stuck with my instinct to reject the final two financers’ counter because in the long run, we negotiated a better purchase price.

3. Be prepared for the long haul. Though looking back on our experience, I don’t think it was anywhere near the drama of an HGTV episode but; the process did take longer than had we purchased a traditional sale. We were able to time our move into the new house as our lease was ending so it all worked out for the best. (And we had instant equity on our property!) Moral of the story: it's never as bad as it seems.

4. Whatever you calculate your down payment to be, save an additional $10,000. This is something I wish we had done. When you move into a new place, you’ll want to paint and buy new furniture. Having that cushion will make the process so much easier.

April 2017 will be our 5th anniversary in The Split Level. And now that the market in the Twin Cities has bounced back, it is our goal to sell for a profit and move into what we see as Our Dream Home.
To Be Continued …

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