Tips for Buying a House

So you have decided to be all adult-y and buy a house. Congrats! I have not regretted it (yet) and I love my house. Here are some tips to help you on your house buying experience. (There’s a tl;dr version at bottom)

1.      Be rich

  • OK, let’s be honest, no graduate student is, but this is what really helps the most. Once you can meet the magical 20% down payment, you can opt out of mortgage insurance and are more likely to obtain a mortgage.
  • But again, we’re not all rich, and as graduate students, it’s evermore unlikely, so… do you have rich relatives? Think any of them would consider giving you a loan to help you to that 20% amount? It is an easier way to get the money without taking out another loan, and relatives usually charge you less in interest (usually!). Family can gift you somewhere between $10,000-13,000. (look it up before asking) [This is what books suggest, not something I’ve had personal success with, FYI]
  • Not related to the Romneys? No worries, the majority of mortgage toting Americans are not. No worries! It is just going to be harder for you to get a mortgage – But not impossible.

2. Tips for getting the mortgage

  • If you have taken some time off between undergrad and grad school, you’re more likely to have a regular job record and some income, which will make it easier to obtain a mortgage.
  • If you are like me, having little money or work experience, it will be harder to obtain a mortgage – But not impossible. Here are some tips:
    i. Credit Unions or banks associated with the university are more likely to understand your situation.

    ii. Keep your acceptance letter &/or teaching/RA contract handy. Especially the one with the numbers ($$$) on it. Banks like proof of income (& enrollment).

3. Preapproval doesn’t mean you have a mortgage 

  • I would bold this twice if I could. This is what tripped up my process.
  • This probably goes under #2, but it is important. (MORE BOLDING)
  •  After a bank preapproves you, check with them and make sure everything is OK. Make sure they know you are a graduate student. Make sure all the t’s are crossed before you start looking for a house.
  • Trust me.

4. When you are absolutely, positively sure that you have a mortgage (See #3) – Feel free to start shopping for houses!!

5. Getting a realtor

  • If you can, get a recommendation from someone, but I’m not sure how important this is. I went in blind and had a positive experience.
  • As a buyer, you should not have to pay for their fees. These are covered in closing costs.

6. Things to keep in mind when shopping for a house:

  • Resale Potential – As a graduate student, your plan is to live there for a few years and GTFO. Make sure you buy somewhere where you expect to sell quickly and at least return your investment, if not grow.
  • “Needs some work”  — These are great properties to increase the value on your investment. But it takes time and effort. You’re not necessarily in the business to house flip – you are a graduate student. And likely buying a house because it’s cheaper than renting. If you want to flip it, that is fine with me, but remember your motivations for buying in the first place.
  • Location —  You probably do not need to hear this, but this was the most important thing for me when choosing a place after its condition. Keep an eye on bus routes and check your university’s parking situation. 

tl;dr Version:

Steps to buying a house

1. Consider your finances/life plan/responsibility level and decide you want to buy
2. Figure out your budget

  •  Use online calculators to determine estimated monthly mortgage
  •  How big of a loan you feel comfortable taking out
  • How much available for down payment

3. Apply for a mortgage

  •   Documents needed – W2s, bank statements, letters of enrollment/employment contracts

4. Double check preapprovals
5. Triple check preapproval
6. Contact a realtor/start looking at houses
7. Put an offer down/haggle/ start buying process

  • Get the seller to pay for closing costs (realtor will help decide how much)
  • And anything else that needs to be fixed (I didn’t have success with this)

8. Usually 45 days from agreeing on price to do following

  • Home inspection
  • Finalize mortgage information
  • Gather finances for down payment

7. Closing date

  • Lots of signing paperwork
  • Switching over utilities
  • Getting title of house

8. Celebrate.

  • I recommend champagne and donuts. 
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