When my boyfriend and I finally decided it was the right time to buy a house, we had saved up $20,000 for our down payment. No one told me about all of the other expenses that would come up once we started our search.
Closing Costs. This was the first surprise. We learned about closing costs after we got our pre-approval letter. The estimated closing costs were 5% of the sale price. We hadn’t been told about paying closing costs, which seems obvious now. Closing costs include document fees, taxes and insurance. Our plan after learning about closing costs was to reduce our down payment amount. We got lucky though and our sellers were willing to pay our closing costs. The home had been on the market for 8 months, which was rare in the neighborhood we were looking.
Rent/Storage/Moving. We were 4 months in to a 12 month lease when we found our dream home. We had to break our lease and to get a written termination agreement from our landlord we agreed to forfeit our deposit and an extra months rent. Another part of this agreement was to be out by the 28th of the month. That turned out to be two days before our closing date. We planned to move out of our rental home, into storage and then into our new home a week later. Again, we got super lucky and were able to move our closing date up to the 28th. We moved out of our rental and in to our home immediately after closing. If we had to do it again, I would be a lot more careful choosing a closing date.
Repairs. Our home needed some repairs prior to closing. In Florida a 4-point inspection is required to get homeowners insurance. The home has to pass the inspection before you can get a policy. Without a proof of policy, the lender won’t be willing to close on the loan. In this case our seller was a contractor and did the repairs himself.
Low appraisal. This is an unlikely scenario, but if your appraisal comes back lower than your offer price, you could end up paying the difference. Hopefully the seller will lower their price if this happens. If they aren’t willing to lower their price you will have to pay the difference. The lender won’t likely fund the loan if the appraisal is low.
We really winged the homebuying process from beginning to end. We just got really lucky time after time. We never consciously saved for our deposit. We never thought through our lease. We didn’t correctly budget for unexpected expenses. We WILL do better next time.