During the summer of 2007, my wife and I purchased our first home. We spent tons of time doing homework and we are still very happy with our purchase, but as first time home buyers, there were simply some things that we didn’t fully understand that fell through the cracks during the process.
Hindsight is 20/20, after all, and now when I look back on that time, I see a lot of little things I wish we had done differently. Here are ten things that we overlooked or didn’t do quite right during our home buying process – and what we should have done instead. Hopefully, you won’t fall into these same traps.
Get serious about saving sooner. The earlier you start saving for that down payment, the easier it gets. We didn’t start worrying about it until it was too late and we had to get a mortgage over 80% of our home’s value (split up to avoid PMI). If we had been on the ball even two years earlier, we wouldn’t have had to do that.
Don’t rush things. We were somewhat forced into our situation. We had largely decided to stay in our apartment for another year until we found out that my wife was pregnant and we quickly realized that having the four of us in such tight quarters would have been untenable. So we rushed. We did manage to find a very nice house, but we didn’t really get to survey all of our options, especially outside of the two towns and surrounding country areas we decided to focus on. The more time you devote to looking, the more likely you are to find the perfect house for you and your budget.
Pad your emergency fund before the move. You’ll be shocked how many little things pop up when you’re moving. Utility fees, beer and pizza for the people helping you move, and countless other little things can eat right through your money before you blink. So, pad your emergency fund in the months while you’re looking and thinking about the move. Then, in the week before you move, put a big chunk of it right in your checking account so you can just pull out the debit card and deal with things.
Spend more time shopping around for a mortgage. I got a mortgage estimate from three different places. One place – the only credit union we tried – had a rate more than half a point lower than the two banks we looked at. So we went with that credit union. Knowing what I know now, I wish we had shopped around more, as saving just half a percentage point on a $200,000 house loan can save you $64 a month – or $23,000 over a 30 year mortgage.
Evaluate the house contents more carefully. During the home inspection process, we thought we did a very thorough job. We went through the house with the home inspector, looked at everything we could think of, and also followed the checklists in some home buying books we were reading. Another hour or two, though, would have been very useful. The big thing that we missed was the deplorable state of the hot water heater, not noticed because we simply didn’t leave the hot water running long enough. If you let the hot water run for about ten minutes, the hot water heater starts percolating madly – and even removing the entire plug fixture and draining the whole tank didn’t fix it. A hot water heater replacement is in our near future – and it’s something we could have asked for from the sellers had we been on the ball about it.
Have an additional set of friendly eyes look at a house with you. We trusted our own judgment on the house that we bought – and we were lucky. If I were to do it again, though, I would have called up one of my friends – likely the one who is so in tune with home construction he built his own as a hobby – and had him walk through the house with us. Different eyes spot different things, and friendly eyes will tell you the problems that they see.
Shop around for homeowners’ insurance. Also, don’t be afraid to move and bundle your auto insurance or other insurance with it. We initially packaged our insurance with our previously-existing auto insurance, but later moved everything to another provider who provided us a much less expensive package. Shop around – you’ll be surprised how much you can save each year with a strong package deal.
Evaluate the actual value of your contents and insure them appropriately. At first, we went with a default amount suggested by our home insurer, simply because we didn’t know. Later, having actually calculated the value of all contents, we adjusted downwards quite a bit. Remember, don’t count irreplaceable items – you wouldn’t replace them, anyway, and they have no real replacement value.
Don’t go furniture shopping the day after you move in. We had a bunch of cheap furniture from our college days at our old apartment that we didn’t bring with us. Again, by pure luck, we happened to stumble upon a liquidation sale at a furniture shop and outfitted our living room very cheaply, but it was really a mistake to decide that we needed new furniture for our new house. Upgrade it later on – you can have empty rooms for a while. Save up until you can afford what you actually want instead of buying furniture just to fill a room.
Offer to help others move for years in advance. How does this help you? Well, imagine over a three year period that you help ten different families move. When you move, you can call all of these people to help you move – five families can unload a truck and unpack boxes at an astounding rate. Our big mistake wasn’t the help we received, but how I managed it. Don’t have everyone come and help you at once. Ask two friends to come one day and two friends to come another day instead of having them all come at once – you’re far more productive that way.
The process of buying your first home is a wonderful experience. Do the readers have any more suggestions for things they’d do differently with their first home purchase?