Homeowner Bees… what should I do first?

posted 2 years ago in Home
Post # 2
2414 posts
Buzzing bee
  • Wedding: February 2015

weddedbliss2014:  I’d go in and ask the bank.  They’ll know what requirements you’ll need and when to do everything.  You can go in and talk about the process without actually starting it! 

One thing I wish we’d done is put our extra cash into our RRSP sooner (we’re Canadian, so we can pull it out under the first time home buyer’s plan but it has to be there for 90 days.)  And our mortgage company required proof that the down payment was in our accounts for 90 days as well (over and above our RRSP portion of the deposit.)  So definitely find out what requirements you’ll need and what kind of paperwork is needed as proof of deposit, if you have any.  

Post # 3
10453 posts
Sugar Beekeeper
  • Wedding: January 2011

Depending on where you are, I recommend getting pre-approved before doing a mortgage application.  Pre-approvals last for varying amounts of time, it would be worthwhile getting some info from lenders or brokers ahead of time.

Post # 4
308 posts
Helper bee
  • Wedding: May 2015

Our lease was up May 2011 and we got pre-approved and started looking for houses that January. You definitely want to know how much you qualify for before anything else and also to get an idea of what you like and don’t like, what your needs are, and how much you plan on paying, possible expenses to save for etc.

When we did finally find our home it took about 2 months to get all the paperwork signed and keys in our hands. We had a little over 2 weeks left in our condo by that time but it was really convenient because it allowed us to clean up our new home a little, paint how we wanted and slowing move our stuff in so we could throw things out and get organized.

It is definitly a tiring process but so much fun. My rule of thumb is keep an open mind, and don’t allow yourself to go over your budget. Set a budget that gives you wiggle room for unexpected finances and to be able to go out every once in a while.

  • This reply was modified 2 years ago by  Kendrao.
Post # 5
2007 posts
Buzzing bee
  • Wedding: October 2014

Make sure you have access to all of your W-2s and tax transcripts for the past few years, as well as paystubs for the past month or so (we had to provide 5 weeks worth), and bank statements for all accounts (we had to provide 2 months worth). Be prepared to explain any large deposits or withdrawls, or any overdrafts. Basically, you need to be as diligent with your bank accounts as you are with your credit. Also, don’t do anything to affect your work history (starting a new job, etc.), unless absolutely necessary.

We started house-searching in May, found the first house we put an offer in on in June. That deal ended up falling through after the inspection, and we found our current home in July. We had to extend the closing date by a month, so it was almost 2 months from the time the offer was accepted to when we moved in last month. I’d plan for it to take longer than you expect. Good luck with everything!

Post # 6
305 posts
Helper bee
  • Wedding: July 2014

The downpayment proof was a HUGE issue for us.  Get the cash in your account AS SOON AS POSSIBLE and leave it there.  My mortgage company went line by line through my bank statements and asked where every deposit came from.  If you can’t provide proof where it came from, they deduct it from your assets. So, you can’t just deposit $30k in your account right before closing for your down payment.  If your down payment IS a gift, you will be required to submit a gift letter with it and the person who gave you the gift will have to provide proof (bank statements) that they had available funds prior to giving you the money and that they did not finance it.

Also, make sure your income/pay stubs have a good solid history.  Don’t switch jobs two years prior to applying for a mortgage.  My company changed names and locations one year before I applied for a mortgage and it turned into a nightmare because they thought it was a new job.

If you have multiple bank accounts, don’t transfer money between them a bunch…it just raises red flags.

Get a pre approval letter.  Some homeowners require you to have one before they will let their home be shown.

I bought a shortsale and it took six months from initial offer to closing.  So if you’re thinking about that, make sure you give yourself plenty of time.

Post # 7
4649 posts
Honey bee
  • Wedding: May 2014

  weddedbliss2014:  When I bought my first house, I went to a mortgage guy and asked what do I do. I can’t remember if he ran our credit, actually he must have. And at the time I had too much debt to income. So he told me to pay my car way down and then we’d qualify, which we did. At any rate, I’d talk to a lender to see what you need to do to make sure you qualify when the time comes.

Post # 8
941 posts
Busy bee
  • Wedding: April 2015

You might also check your rental lease to see if you have an option to extend on a month to month basis after the expiration of your term (many offer this but at a higher rent rate). You may need this if you don’t find the house quickly or closing takes longer than anticipated. 

Post # 9
5222 posts
Bee Keeper

In addition to being pre-approved, start figuring out how much you’re willing to spend per month on a house payment. We were pre-approved for a larger amount than we were comfortable spending, so just take precautions when you’re going through that because just because the bank says you can afford something, doesn’t mean it is a good decision for you.

Post # 10
7281 posts
Busy Beekeeper
  • Wedding: October 2011 - Bed & Breakfast

You’ve received some great advice re. W2s and tax forms. You will need to provide the lender with 2-3 years of each for each of you. Also, if you anticipate having anything weird going on with your bank account any time soon (large, unexplaied deposits or withdrawls from a cash-paying side job or gift or whatnot), designate one account as your “official account” to hold your downpayment and then use a different account for the unusual stuff. That way you only have to disclose your official account and produce bank statements for it, and the weird stuff is in a different account that the bank never has to see. Pay down any credit lines you have open to help your debt to income ratio. But don’t close any open lines of credit, especially if they are old lines, as that will decrease your average account length. Pay all of your bills ontime. Save more money then yopu think you will need. It adds up quickly (downpayment + closing costs + emergency funds + moving costs + money for the random crap you will inevitably buy).

As for the question of when to start looking, that’s a very local answer. First you need to figure out your budget: how muchis your downpayment + how much can you comfortably afford to pay each month for the principal on the loan + interest on the loan + property taxes + home owners insurance + PMI if your downpayment is less that 20% of the total home value (aka your monthly payment). Then go onto a realestate website and see whether you even want to own a house in that price range. If not, you stop right there and work on saving a larger downpayment while reducing your other bills to allow for more budget space for a home. If so, are there a lot (100+) of homes for sale in your price range in your desired neighborhoods that you would be happy to own? Yes= shopping may be easier and faster for you. No= shopping may take you a bit longer because there isn’t a lot of inventory that interests you and you may have to wait for the right house to come onto the market. Also, just how picky are you and DH? So laid back that you are practically horizontal = shorter shopping time. Very picky= welcome to wait town.

If we were shopping right now, there are exactly 4 houses in our entire half of the county that would be within our price range, have the required number of bedrooms, and meet our minimum lot size requirements.aa and I wouldn’t buy any of them. So if I were looking to buy sometime soon, then I would know to start looking early because it may take a looong time to buy. Note, it took us 18 months of active house hunting and 3 failed deals before we finally closed.

Post # 11
2551 posts
Sugar bee
  • Wedding: September 2015

weddedbliss2014:  Get preapproved.  Figure out your own budget based on your income and what you want.. because it’s likely you’ll get preapproved more than you even think you can afford.  Stick to your smaller budget.

Browse homes in the meantime, but I advise against going to go tour homes before you get preapproved.  Also, find a great full-time realtor… someone that will literally be at your every beck and call.  ALSO!  Figure out your goals for a new home.  Do you want a finished home?  Or do you want a fixer-upper.  Are you going to be in the home for the next 5-7 years?  Or is this your forever home? This will actually help you decide on location… and help you narrow down your search.  

Post # 12
2642 posts
Sugar bee
  • Wedding: September 2012


1. Figure out your budget and what you can comfortablly afford monthly (mortgage + taxes + insurance).  Be sure to budget a few hundred dollars a month to home maintanence and/or an HOA.

2. Figure out how much money you have for a downpayment.  Ideal is 20% to avoid PMI, but you can go lower.  I definitely wouldn’t go lower than 10%.  Some lenders will let you, but putting <10% down strikes me as a poor financial decision..  Be sure to factor in money for closing costs (can be anywhere between $3-$10K) plus another $10K for random home repairs/upgrades/new stuff.  Then, after all that, you’ll still want several months of emergency savings.

3. Once you know what you can afford comfortably, then head to the bank or credit union and get a pre-approval letter.  These are usually good for several months and will give you an idea as to how much money you can get.  It also takes <24 hours to obtain.  Don’t get apply for a mortgage until you actually put an offer in on a house.  Also, many times the bank will approve you for a loan greater than what you can comfortably afford.  So just because you are approved for a certain amount, that doesn’t mean you should actually spend that amount.

4. Get yourself a realtor and start looking for houses!  You can start looking as early as you want. Some people find a house they love very fast, and others take months.  We started looking in December and close on a house in May.  If you start earlier, you’re able to get an idea of what the market is like and what you can afford in your price range.  Also, it allows you to be able to consider forclosures and short sales – both of which can take a long time to accept/reject offers and close on.  Also, closing typically takes 1 month and it’s nice to have a few weeks of overlap to move.  So just keep that in mind.

Good luck!

Post # 13
22124 posts
Honey Beekeeper
  • Wedding: July 2011

Congratulations on your wedding and congratulations on starting to think about your first house! We recently purchased our first home this is all pretty fresh to me, too.

We started the homebuying process about six months before our apartment lease ended. The first thing we did was a pre-approval to find out what our buying power was from a bank’s perspective. Obviously, what you can afford is not necessarily the same as what the bank will approve you for. But it allowed us to know what was feasible in terms of a final home price — and it was up to us to determine what we could afford and were comfortable with spending.

A pre-approval is different than being pre-qualified. A pre-approval runs your credit and is taken much more seriously when it comes to putting an offer on a house. A pre-approval isn’t a guarantee of a mortgage loan — you will still have to apply for a mortgage — but it’s a great indicator that you’re financially stable enough handle the house purchase and pay the bank back.

Getting a pre-approval is also helpful for when you DO find a house you like because it shows the buyer that you’re serious, and it means you’re much more likely to get financing than a buyer who hasn’t already been approved by a bank/credit union/etc.

Our preapproval was good for 60 days I think? Some are good for 90. Make sure to ask what happens if you get pre-approved but don’t find a house within that window. (The bank we went through would have just extended the pre-approval window.)

From a paperwork perspective, get a hold of your pay stubs, bank statements, tax returns, and any proof of any other assets — retirement accounts, mutual funds, anything that shows additional assets in your name. It took me hours to pull up and make copies of this info (I kept originals for me and provided copies to the bank).

And I agree with the tips on your downpayment. Know where that money is coming from, and be ready to show that you have the funds available. If you get a windfall of money in your account too close to applying for your actual mortgage (which you’ll have to do in addition to being pre-approved), the bank is going to need to know where it came from.

And I agree with making sure you know what’s comfortable for your monthly payments. Don’t forget about taxes and homeowners’ insurance — that can add significantly to your monthly payment. If you don’t put 20% down, you’ll likely have to pay private mortgage insurance each month as well, so 20% is preferable but obviously not everyone can swing that. You will still have options, but just be aware that there will be some other costs and factors involved.

Find a realtor you trust. Have any of your friends recently bought homes and might recommend their realtors? From personal experience, I’d say go through someone who you can trust to be good at the job, and not just someone you know. I had to do a lot of legwork that my realtor should have been doing.

And the most fun and yet also frustrating part — get on the same page as your husband with your priorities: location, number of beds and baths. What is a dealbreaker and what can you be flexible on? What are you willing and not willing to take on or give up?

And like someone else said, know what your options are should housebuying take longer than you expect. Can you go month-to-month on your apartment lease? Or, can you afford to go month-to-month? (The month-to-month rates at our place were as much as our mortgage + insurances + taxes on our house!)

It sounds silly, but I totally bought the Home Buying Kit for Dummies. I really wanted to know what was going on every step of the way, and it helped enormously, along with a ton of online research so I always knew what we should be doing.

I’ll let you know if I think of anything else! I know it’s a lot to take in, but so worth it. Good luck!

Post # 14
1532 posts
Bumble bee
  • Wedding: August 2013

I agree with sostobe:  

Put all your money where it needs to be on the closing date.

I was hoarding money in an online-only interest bearing account and didn’t realize that transferring it to my brick-and-mortar bank so that I could go there to get the certified check for closing would be this huge catastrophe. I mean – everything turned out perfectly in the end, but there was all this nonsense paperwork that had to be filled out because I did that.

So make sure your money is where it needs to be before even applying. You can explain the transfers at application time very easily. Moving money after the deal is in motion is bad.

Also – never let anyone (such as a banker or realtor) tell you how much house you can afford. That’s the most important thing you can be doing right now. Figuring out what youre comfortable with.

Post # 15
1606 posts
Bumble bee
  • Wedding: October 2013

It depends with the timeline for house hunting, as a PP said it depends if you are picky or not and also how many houses are on the market in your price range. We got pre-approved before we looked at houses so that we knew what price range we were looking at. I suggest NOT going to the top of the amount the bank is willing to lend you – we were pre-approved for a hefty amount and stayed almost $200,000 under it – they basically approve you for the maximum you could afford (which doesn’t account for unexpected expenses or emergencies).

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