"It might take a year it might take longer, but it's worth the wait."
During my last Whats Up With Shasha post, I mentioned how my husband and I are in the process of building our first home. Yay! We visit our lot every Sunday afternoon to keep track of the progress. It's exciting to see even the smallest change, as it makes us feel one step closer to home ownership. I never thought that we'd build a home, and I definitely didn't think we'd build one in Texas. Sometimes, I kick myself because we didn't make the decision sooner. Have you ever thought about building or buying a home? I always thought that home ownership was a far fetched goal for us.
Here's a few points to keep in mind if you're thinking about taking the jump.
1. Check Your FICO Scores. I've been a member of Credit Karma for awhile and had assumed that my TransUnion score was my actual score for everything. Wrong! I didn't realize that there are FICO scores tailored for select types of credit such as auto loans, or credit cards. Mortgage lenders look at different aspects of your credit then what an auto lender might look at if you were buying a car.
2. You Only Need a 580 to Qualify for a FHA Loan. There are various loan types available for home-buyers. For many first-time home buyers FHA loans are a great choice considering that they only require 3.5% down payment. If you don't have money saved up you can utilize your 401k or get help from family and friends. The great thing about building a home is that you have time to save up for the down payment while your home is being built.
3. Leave Yourself Some Wiggle Room. We made sure that our home price didn't exceed or wasn't too close to our pre-approval amount. Our real estate agent gave us a number not to exceed to ensure that we'd have some breathing room. You definitely want to leave yourself room to account for any upgrades you might want to add in addition to to the homes price.
After meeting with our real estate agent, we found out that we were pre-approved for our mortgage! We obtained financing from our builder as we received many perks in addition to not having to pay for closing costs. A few days later we met with the builder to select our lot. During this time you'll fill out the initial contract and put down whats called an earnest money deposit. This amount will vary depending on your builder. The earnest money also goes towards your down payment. After this we received an email from our Loan Processor and Underwriter.
4. Be Honest With Your Underwriter and Return Documentation Promptly. You'll have to provide documentation such as bank statements, tax returns, and pay stubs to your underwriter. Since, we won't lock in our interest rate until 60 days before closing, we'll have to submit more documents later on in the process. It's important to quickly return documents to your underwriter so you don't delay your closing. Although, your underwriter can feel like your enemy, it's important to keep the lines of communication open.
5. Avoid Opening any Unnecessary Lines of Credit. It's crucial to let your underwriter know of any financial changes. My husband totaled his car in an accident and we unexpectedly had to purchase another vehicle. I was worried that this would cause a snag in our mortgage approval. We notified our underwriter, who gave us a number not too exceed. Make sure that you run any big purchases by your underwriter. The smallest credit inquiry can raise a red flag.
6. Keep a Paper Trail. There are no financial secrets when it comes to buying a house. Do you have a side hustle that you receive extra cash from? Trust me, your underwriter is going to want to know all about it. Make sure that you have a paper trail for any large deposits that are entering your bank account. You'll also need a paper trail for any payments you make to the builder.
7. Don't Go Crazy At the Design Center. The design center is a lot of fun. During this appointment you put your personal touch on your home by choosing everything from your cabinet colors, sink size, carpet, tile color, and so much more. There's so much to choose from that it can feel overwhelming.
Keep in mind that a certain percentage of money you spend at the design center gets rolled into your mortgage. Ask yourself what are the necessities and what are your wants? We chose to keep our choices to a minimum and plan on doing some DIY projects when we move in. Thank you Pinterest! Since we decided to build a spec home (a home that the builder builds to appeal to most buyers) we didn't have to splurge on a lot of additions and many upgraded features came standard with our home. Definitely ask the builder what options come with a spec versus building from the ground up. You'll have slightly less customization over a spec home, but there are many benefits.
Next, we had one more appointment to discuss what type of security, sound, and wiring changes we wanted to make in our home. Our model comes with an outstanding wiring package so we didn't have to add on many extras.
That wraps up part one of where we are in the process. The trenches for our plumbing are dug out and we're currently waiting for them to install our plumbing. After that, the builder can pour our foundation once they've received our building permits. From that point on, the process should take around 155 days, but I expect that to change.
Have you ever built or purchased a home? What did you find stressful or exciting about the process? Do you have any words of wisdom for me?