Hilary Hodge: Housing in Nevada County, Part 3: Buying
Editor’s note: This is the third in a three-part series looking at housing in Nevada County. Today’s column focuses on buying, while parts one and two discuss relocating and renting, respectively. To read all three parts of the series, see this story at TheUnion.com.
A few months ago, I started scanning my phone each night before going to sleep. I would swipe left and right, trying to find something that might suit us. I installed several apps, but most of the prospects were the same. I wanted something perfect.
Some were too small for my taste, some too unkempt. Let’s face it — many were out of our league, something I knew we couldn’t afford.
Buying a home feels a lot like online dating. With today’s modern online access and with applications like Zillow and Trullia, a person can check the market long before making an offer. Ambitious dreams start long before reality sets in. Longing and wishing happens before any real paperwork.
When I first saw my dream house, I thought, “I know we’ve only just met but I really like you.”
When we toured the house, I thought, “I feel like we might have a future together.”
And then, after we made an offer, I thought, “We are meant to be together.”
I wish it were that simple. Buying a house is a mess.
It is important to work with a real estate agent or realtor you trust. For us, the most important thing was to find someone we knew would be smart and fair about the process, someone who would represent our interests. Because the person representing the buyer is paid by the seller, upon sale of the home, the buyer needs to be certain they are working with someone trustworthy. We found someone who has guided us through the process and helped us make an appropriate offer.
Our offer was countered by the seller, who didn’t want to pay for a survey to determine the exact property lines. The property lines are fairly straightforward and not contested, so we agreed to the counter offer’s terms and can have our own survey conducted later.
We quickly learned that even if your offer is accepted, there are several hurdles that could cause escrow to fall through.
The most common reason escrow falls through is when the buyer doesn’t qualify for a loan. Most sellers today won’t entertain any offers unless the buyer has a pre-approval letter from a lender or mortgage broker. But a pre-approval is not a guarantee that a loan will be funded.
Lending has gotten fairly rigid since the 2008 housing crisis. It is much more difficult to get a loan today than it was 10 years ago. There are certain ratios of debt to income that must be met before a loan will be approved. Certain loans come with regulations that your house may not meet, and a loan can be denied for not meeting certain guidelines. The paperwork is massive and the verification process is grueling. My desk currently looks like a tornado blew through the room.
Even after getting approved for a loan, there are still other hurdles. A formal appraisal of the property and dwelling is conducted. In a tight housing market, many homes may sell at prices above their appraisal value. Without a large down payment to off-set the loan amount needed, the value of the home may not be worth what the borrower needs to make a purchase. If the house appraises for less than the asking price and needed loan amount, the loan won’t get funded and escrow falls through.
Then there’s the pest inspection. For us, our adorable dream home came back with a report giving instructions like, “Remove fungus damaged material or portion of material. If no additional damage is found, replace and/or repair using similar material.” Extreme damage or a termite infestation is a deal breaker for most people and even if someone is willing to take on a fixer-upper, damage and pests could affect the appraisal.
We are deep in the process and I’m still hesitant to let myself dream about moving in. It is such a weird feeling to be so excited about something and yet, at the same time, so careful with that excitement.
We keep driving by the home, dreaming about planting flowers. I picked out a few paint chips from the hardware store and have thought about what color to paint the living room. I have started making boards on Pinterest, an online collaging website, strategizing about decorating and furniture placement. I impulsively bought a chandelier from a local person selling it online.
Still unsure, still sending paperwork to our mortgage broker, we have started to pack our books and things we don’t use regularly.
If all goes as planned, we will get the keys at the end of July.
Hilary Hodge lives in Grass Valley. Her column is published by The Union on Tuesdays. Contact her at firstname.lastname@example.org.
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