Heads up – this is a very long post. But if you are interested in reading about my housing story, keep reading. People have asked me how I was able to buy my first house nine years ago. Some of my friends and family members think I had a lot of help, but I didn’t. My parents didn’t give me any money and I didn’t ask them to either. I wanted to do this on my own and I did.
I was fortunate of being able to purchase my first home at the age of 30 and as a single mother. Though the home buying process wasn’t as heart wrenching for me as it was for others, there are some things I would have done differently. I want to share how I bought my first house, because if you are interested in buying your own home, know that it is well within your reach. Being educated about the process is going to be the most important factor in assuring you don’t come out on the losing end.
One night, in particular, my mom and I got into an argument. She had been in my purse and found evidence that I was dating someone she didn’t care for. Take in mind I was 30 years old and a parent nonetheless. Yes, I was living under her roof, but I was a grown woman. I went to college, I had a career as a teacher and I contributed to the household finances. There was no reason for my parents to treat me like a child.
Needless to say, I had enough.
How (and Why) I Bought My First House as a Single Mom
The next day I start looking to see if I could qualify for a home. I previously tried home buying programs but I was never disciplined enough to follow through. One gave me a month to save $3000, which was impossible considering how much I liked to shop. Two lenders got back with me within the day. One preapproved me for a loan for $75,000 and the other for $150,000.
I live in the Washington DC metropolitan area and let me tell you, those amounts wouldn’t even give me half of a condo. And when you consider this was during the seller’s market before the real estate crash, buying a home for that amount was impossible.
Getting Approved for a Loan
Giving up wasn’t an option because I needed my space and I needed it fast. So, kept looking. I don’t know how I came across it, but one day I saw an ad on Craigslist about easy qualification. I wasn’t hopeful, but I filled out the information anyway. The same day, the realtor called wanting to know when I would be ready to look for houses.
My preapproval amount, $210,000.
At that moment, I couldn’t believe I was actually approved for a loan to purchase a home. He wanted to go out that day and I was too shell shocked to say no. I kept asking him was he sure, because all the cards seemed to be stacked against me.
So I told my son to get ready because we were going to look for houses and I met my realtor face to face for the first time.
Looking for a House
My realtor was quick on his feet and he was quite personable. He seemed to know what he was talking about and all he wanted to know what type of house I wanted and where I wanted to live.
I decided I wanted to live in a townhouse. I didn’t think I could afford a single family home and I didn’t believe I would be able to afford the condo fees in my area. I had heard too many horror stories of condo fees rising higher than mortgages and on a $42,000 teacher’s salary, I knew I wouldn’t be able to do it.
Buying a townhouse, however, meant that I would have to travel a little further from my parents and outside of D.C. Even $210,000 wouldn’t get me much if I stayed where I was.
Most of the homes we looked at were okay but in neighborhoods, I didn’t particularly like. The neighbors seemed a little sketchy and some had too many people hanging out in the day time. As a single woman and mother, being safe was my first priority. Second was designated parking. I was not going to walk far in the dark to get to my house. I also wanted three bedrooms and at least two bathrooms.
The House I Wanted
We found a house that was in a decent neighborhood and I was immediately impressed with it. Even though the house was a center unit on a busy street, it had designated parking in the rear of the house. The owner was painting the home as we entered.
She had it listed at $210,000 and I told my agent I wanted to put an offer on it.
My agent called me back and told me that the owner had increased the price of the home. She also didn’t want to pay any closing costs. So, my agent suggested getting my loan amount increased. He said the lender could work the numbers and he did. The amount went to $220,000. We submitted another offer and the owner wouldn’t budge. My agent said he could try one more thing and resubmit the offer, but I told him not to.
As much as I wanted that house, the owner didn’t want me to have it. I don’t know if she was trying to make more money off of the house or she didn’t have the money to pay for closing costs. I did notice she was trying to sell the home on her own, so it was possible she spoke with an agent afterward and believed she wasn’t getting her money worth. (By the way, most people who try to sell their homes as a For Sale By Owner usually end up with an agent).
At the time I felt she didn’t want a person of color to move in. I really wanted that house, but I had pride and I wasn’t going to beg. When I look at it now, I realize there were probably a lot of factors for her to consider, like how much equity she had in the home, which didn’t have anything to do with me.
The House I Settled On
We finally came to a house that was an end unit townhouse, large backyard, parking, three bedrooms and two and a half baths. The house had great bones, but it looked a mess indoors. The house needed a lot of work. Most of it was cosmetic, but it was still a lot of work. I hesitated, but my agent swore it was a great deal.
The asking price was $240,000, but we put in an offer for $220,000. I was sure it would get declined, so I wasn’t really nervous. I really didn’t want the house.
Well to my dismay my offer was accepted, but our agents went back and forth on the particulars. What I didn’t know at the time, but what I think was the truth is that the house was a short sale. The owners were living in another part of the country and they were a little too happy to take my offer.
What I Paid for My House
By the end of the process, we settled on $220,000, closing costs paid and $2,600 to buy appliances for the kitchen. I can’t remember what that was called, but I received a check at the table for it.
My father came with me during the home inspection and he was impressed with the house. He said it had a lot of potential and he fell in love with the large back yard. The home inspector said that there was nothing wrong with the home and most of the work needed to be done, was in fact cosmetic. I was responsible for paying the home inspector $350 on the spot.
I felt a little better, but I still didn’t want the house. I knew if I walked away, I would lose my $1000 earnest deposit and as a non-saver, I didn’t have an extra $1000 sitting around. I also didn’t want to ask my parents for anything. Like I stated before, I wanted to do this by myself. That stubbornness is what usually gets me in trouble.
How Did I Get Approved
Getting to the settlement table wasn’t a walk in the park by any means. The lender asked a lot of questions, required me to submit a lot of documents and at times I wanted to give up.
My credit wasn’t the best, but I knew my credit score was at least high enough to get a loan. I regret not checking it before I went looking for a home. I didn’t think I was going to be approved for a home, so I never bothered. I wasn’t really serious about moving and was just blowing smoke. Once I was approved, I felt this was a great opportunity for me.
My biggest issues were charged off accounts and medical bills. I had to have emergency surgery when I was working as a per diem teacher. The money was good, but I didn’t receive benefits. The charge-offs were pretty old that many had started falling off of my credit report and the program I qualified for ignored all medical related bills anyway.
Anything else under $250, I had to pay off and write a letter (I can’t remember if I wrote them to my creditors or to the lender.).
When I buy my next house, I will make sure to shop around for a mortgage. I don’t even know if I had the best rate, I just took what they offered me. I highly recommend shopping around.
Lenders will check to see if you have a job. They want to know how long you’ve been there and how long you’re expected to remain there. I was a little nervous because my school was closing so I had to look for another job. I ended up moving to another school within the same district because I wanted to show continuity.
I learned later that it really didn’t matter if I left one school district to move to another. As long as I remained a teacher or within the education field, I was good. They wanted to see stability in employment and in the same field. I think if were to go from teaching to some other field, there would have been a problem.
I can’t remember the specifics of my loan, but I do know that I had two. One was fixed at 6% and the other one was a variable one. The first loan was for $175,000 and the second was for the remainder. Why did I have two loans? Well, I purchased my home right before the real estate market crashed and people were handing out loans like candy. Lenders were very creative when handing out mortgages.
I probably could have been approved for a higher amount, but I had a lot of student loan debt so that played a big part in the amount I was approved for. But, just because they approve you for a $300,000 loan doesn’t mean you should accept it.
My mortgage (which included principal, interest, taxes, and homeowners insurance – or PITI) payment was around $1700 a month. When I look back at it, I don’t know why I even agreed to that amount, because that was pretty expensive. If it wasn’t for the fact that I used the $2600 to keep me afloat, I would have missed my first few payments.
Check out my post on Things to Consider When You Purchase Your First House
Closing on My First House
Closing or settlement is the process where the title of the house switches from the seller to the buyer. It is done differently depending on where you live in the country. I live in the state of Maryland, so my closing may have been different than someone who lives in Texas. Closing is usually done in the title company’s office with the buyer, seller, and their agents. A representative from the title company leads the meeting and gives a lot of forms for you to fill out.
You could try to read all of it, but you won’t be able to. There are literally hundreds of papers. I recommend reading the most important parts which include the figures. Make sure the loan amounts, percentages, and terms are what you agreed upon. Make sure anything the seller promised is included and make sure you know which papers you are signing.
Some people don’t bother to read these forms, which is crazy. You’re signing on for something that may affect you for the next 30 years. So, don’t take this lightly. Also, do not be afraid to ask questions. There were some things I was confused about, so I asked for clarification.
Let me honest upfront that before I bought my house I was a licensed real estate agent. I only sold a few houses, but I went through the course and was pretty familiar with the entire process. No matter how prepared you are, however, things can happen at the settlement table and the deal can fall through right before your eyes. I personally witnessed horror stories, so I didn’t feel like a homebuyer until I had the keys in my hand.
Call me superstitious, but I didn’t want to jinx myself. I didn’t want to tell everyone about the house until I had actually bought the house. This is why the only people who knew about this were my parents. My mom was pretty cool with it, but my dad was another story. Even though he was proud of me, he did tell me the night before closing that I didn’t have to go through with it and that I would always have a home.
My response, “Dad, I have to go. If I don’t, I’ll lose my deposit!”. I laugh now, but that was really my biggest concern at the time.
So, there you have it. My housing story. Was it perfect? No, but if you want to know what I would’ve changed if I could do it all over again, check out my post here.