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What We Learned While Buying Our First House

By Erik Folgate

My wife and I finally closed on our house today. It was a long, tedious process. Most real estate transactions are tough, and this one was no different. We never had a set closing date, the documentation we sent to the lender kept getting lost, and we had to juggle moving out of an apartment, storing our furniture until the closing, and moving it back out of storage and into our new home. But, it was all worth it, right? Please tell me it was worth it! This is our first house, but it’s not our first time owning real estate. We owned a condo a couple years back, and we actually ended up flipping it for a profit. We didn’t plan on leaving it after a year, but our career plans changed. When we bought the condo, everything was already set in place by the developer who had purchased the buildings and planned on remodeling them. The process went very smooth, and we weren’t in a rush to close on it, because our apartment lease had three months left. Buying this house was not as easy, and here are a few things we learned along the way.

Keep Your Documentation In Order

I thought that I was the most organized that I had ever been. I scanned all of our financial documentation into electronic versions and backed up the files. However, the lender had a problem opening .jpg picture formats, so the lesson learned is to convert all of your files into .pdf if you decide to keep them electronically. The other lesson learned is to send them in three different formats. Send the documentation by snail mail, email, and fax. Also, don’t rely on your home scanner unless it’s a really nice scanner. My scanner did a crummy job of scanning some of the forms to the file, and the lender had a hard time reading some of it.

Request To Choose The Title Company

Our seller was actually a relocation company that had purchased the property from a private seller a few months back. Their contract allowed them to choose the title company. Personally, I think the buyer should choose the title company, because the buyer typically pays for the title work, and the title company works faster if they have a buyer motivated to close as quickly as possible.

Negotiate Seller’s Credits

Our cash to close, the amount you are required to pay at the closing table, was significantly reduced, because we negotiated an $8,000 seller’s credit towards closing costs, pre-paid items, and down payment. Some lenders will allow seller’s credits to be applied to your down payment up to a certain percentage amount. In this market, you will be very surprised at how much the seller is willing to throw at you in order to get the deal done. They want the property off of their hands, and depending on their situation, many are willing to help you get the deal closed with a seller’s credit at closing.

Be Proactive In the Process

If the buyers and the sellers are not proactive in the process, very little will get done. If you have a strict timeline to get the transaction closed, you need to be on top of it every day. Don’t be annoying, just be diligent. Keep in close contact with your real estate agent and the lender. Don’t deal with the seller’s agent or title company. This is the job of your agent. Make sure they are pulling their weight on this deal, because they will be making a nice chunk of change at the closing table.

Now is the time to buy for first-time home buyers. The market is a weird thing. It is weeding out the people who can’t afford to be homeowners, but at the same time, the prices are dropping which is allowing younger people to become homeowners. This is the beauty of the free market. There is always a light at the end of a dark tunnel. If you’re going through buying a house, Contact me with any questions or comments.

Erik Folgate
Erik and his wife, Lindzee, live in Orlando, Florida with a baby boy on the way. Erik works as an account manager for a marketing company, and considers counseling friends, family and the readers of Money Crashers his personal ministry to others. Erik became passionate about personal finance and helping others make wise financial decisions after racking up over $20k in credit card and student loan debt within the first two years of college.

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  • Jacquelyn Hart-McCoy

    Congrats on your new home! Thanks for sharing your insight.

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