When I found out that I "matched" into the child and adolescent psychiatry residency at UMass in March, my husband and I decided that since we would be in the same place for at least 5 years (and probably much longer), we should take the plunge and buy our first house. I've always pictured this process as something that would be nothing but insanely fun, but it's been WAAAY more frustrating than we ever imagined. Hopefully I can share about our experience in order to help YOU buy your first home! :)
First off, everyone will tell you to get pre-approved for a mortgage before you start shopping. This can take awhile, and if you're like me, you want to start looking right away! We had a good enough idea of our budget thanks to a online mortgage calculator- don't forget to include the monthly home owners insurance and property taxes, which you can usually find towards the bottom of the listing. I then took my monthly salary, subtracted an overestimate of taxes (state and federal) to find out my take home. This helped me find a rough range so that I could start searching before the pre-approval.
The pre-approval itself is really misleading! I thought the bank wouldn't let us have a loan for anything we couldn't afford, but they were willing to put pretty much anything as the amount on our letter :| so, again, I would recommend using the above strategy so you know how much of your paycheck you'll have left after the house payment. What the letter IS good for is making an offer. Most sellers these days won't accept an offer without a pre-approval. You'll also have to put around $1000 in escrow at this time, which is applied to your downpayment.
Once you make an offer, then you wait (lots of this) for the seller to either accept, counter or decline. This took about a week of back and forth, but can take a lot longer just depending on what you're asking for. Once both parties have signed the offer, then you'll forward that contract to your bank so they can get rolling on their side of everything and you'll head to the inspection.
The inspection had to be scheduled and can take anywhere from a few days to weeks depending on the inspectors schedule (our realtor found the inspector for us). The inspection was another $500 (not part of closing costs). The inspector generate a huge report of absolutely everything thats not perfect with the house. You then get with your realtor and decide what you can live with and what you can't. The seller with either agree to fix what you ask them to on their dime or decline to fix anything. At this point you can walk away or continue to proceed to the Purchase and Sale (P&S).
This is where both you and the sellers will hire an attorney to draft and perfect the P&S. Our realtor found the attorney as well, but you can find your own. Any demands made after the inspection will get finalized and signed here. At this point, the bank will also be asking you for additional documents, like your bank statements, in order to proceed to the appraisal.
The appraisal to me is crazy! So, this is where the bank has someone come to the property and decide how much the home is worth. So, no matter what price you and the seller agree on, the bank will not let you get a mortgage for more than they say the house is worth. So, either the sellers agree to come down on the price, or you have to make up the difference in cash.
This is where we're sitting right now, the appraisal is happening today, and after this step, I'm told we get a commitment from the bank and then head to closing! Our official date is June 30th. Wish us luck!
