Let’s Buy A House They Said – Here’s How to Prep

As I stated in my This Road to Debt Free post, I sold my house 3 years ago. Which in turn means I have been through the house purchasing process. Let me tell you, it is a PROCESS. I loved my home, and it was perfect for what I needed at the time.

It was my first home purchase, and I learned so much about the process and myself along the way. With my own experience there are 6 pieces of advice I’d give you:

1. Pre-Approval Pre-Approval Pre-Approval.
   • Pre -Approval prior to house hunting does two things:
     • It shows the seller you are serious about your decision to purchase.
     • It shows you as the buyer how much house you can afford, DO NOT GO OVER THAT AMOUNT. Because some banks will approve you for MORE than you can truly afford.
   • Crunch your own numbers to avoid going house broke (where you can’t afford to do anything else because all your funds are allocated to your house).
     • Have a seat and really look at the numbers, because it is more than just the mortgage you are paying on with a house.
     • Some things include HOA fees, Escrow Fees, Property Taxes, Mortgage Insurance, all this can be charged on top of the monthly mortgage rate. So that ‘cheaper than rent’ idea can be crushed quickly.
2. Get all your documentation in hand EARLY.
   • Having all you ducks in a row with documentation can make or break your closing deadline. Your Realtor or Lending Officer should provide you with a list of all the documents they’ll need. Get those together ASAP and even a few extra to be safe. If they ask for your last 4 pay stubs, get the last 6. They’ll ask for your last W2 Tax Return, get the last 3.
   • Anything you can think of to avoid a delay in your paperwork, do it early.
     • Did you start a business in the last 3 years and quit your 9-5? They’ll need extra documents to show how much you made within that timeframe.
     • Did you switch jobs in the last 2 years? They’ll need paystubs for both jobs to show consistency.  
3. Have extra cash on hand for any appraisal value differences.
   • Even if you get a new build, the appraisal process can be a wake-up call on the value of your home versus the price you are purchasing it at.
   • In my case, the new build appraised lower than the asking price. Therefore, I was responsible for making up the difference because the loan would not go above the appraisal price. These extra funds were due at Closing.  
4. Do NOT Finance anything!
   • I mean it. No furniture, no car, no new line of credit, no personal loan, NOTHING. You see the bank you are getting your loan from does two credit/bank transaction checks, one at the beginning of the process, and another at the end for Closing. Anything that has hit your credit or any large cash transactions can raise red flags for the lender.
5. Pay your Realtor
   • As of August 2024 (National Association of Realtors) the closing costs no longer includes the realtor fee.
   • This means that you will need two separate checks at the closing, one for your regular closing costs and a second for your realtor fee payment.
     • This should be a separate contract that your Realtor will inform you of prior to looking at homes. Be prepared!
6. House Bank Account
   • My mom taught me this one; she’s a genius 😉.
   • Have a separate bank account that is only used for mandatory house things. This means repairs, Property Taxes, Escrow, and the like. Even for a new build, eventually you’ll need a new roof or have to repair settling cracks. (Yes that is what warranties are for, but I learned warranties do not cover everything.) So be prepared! It is better to have the cash and not need it than be stressed trying to scrape your coins together during an emergency.
     • This does not mean furniture, remodels, appliances (These are ‘optional’ and can come from a separate House Wants bank account if you like).

Now there are probably a few things I missed, but these have stuck with me and the advice I have given to those who have asked me what it was like. If you have any other things to mention, please feel free to comment below. Don’t let this list scare you from buying a home! These are just some good things to know and don’t forget items that I heard or have learned along my own process. Happy house hunting! 🙂

-Adele-