Bought and Sold

Not in that order, exactly, but today we sold our house and bought another one. It's all official and on paper, and boy howdy was I glad to get that off my shoulders. Buying a house is jest a tad complicated, but thankfully since we had been through the process before (but only buying, not selling) it was a little easier. Henceforth, I've put together Bob's Little Handy Primer to Buying and Selling a House...

Firstly, your Real Estate Agent is there to make life a billion times easier on you. Many of you out there may have been tempted by the idea to try to sell or buy a home without using an agent, which is sort of like using thumbscrews on yourself. Granted, if you're super-duper cash-strapped it might possibly make sense, but even then I'd have second thoughts.

We used the same real estate agent that we used seven years ago when we bought our first home, who is a jewel of an agent. After going through several horrible agents (one stopped returning our calls because we didn't like the first house she showed us), we finally discovered Mary Beth and now we're afraid to use anyone else. The agent for the people whose house we purchased today forgot to tell them when closing was (he had other issues besides). Feel free to be very picky about your real estate agent.

The agent is all well and good until you've made an offer and its time to get da monies. If you're like me, you can't pay cash, so you'll need a loan (or two). In our case, we not only needed a loan, we needed a loan really fast, because the people that bought our home wanted to close in three weeks. Which ultimately gave us less than two weeks to get the loan through after we found a house, put in an offer, negotiated, and so forth.

At first I decided to go with Bank of America, which is who we bank with, but mostly because they have a nifty special running that they say can reduce your closing costs by up to $2,000 (I'm not convinced, but that's another story). But Bank of America is slow, because all of their loans have to be shipped down to Jacksonville to be processed, which would take over 30 days: way too long. Homebanc, howsomever, can process loans really quickly, and so we went with them. Specifically with this guy, who was just phenomenal. He actually came to the closing! Now when have you ever heard of a lender attending a closing?

Moving right along, here's a few handy hints and tips about getting a loan...

You may be surprised to learn that good credit is important when applying for a loan. If you don't have good credit, you may still be able to get a loan albeit with a rotten interest rate. The better credit you have, the better rate you can get, and the better rate you get, the lower your monthly payments will be. It's also not the greatest idea to get a new job right before applying for a loan, particularly if you've had ten jobs in the last two years.

Principal is the loan amount, while interest is the amount you're getting charged for the loan. The loan isn't free, you know.

An amortization schedule will show, for the lifetime of the loan, how much interest and principal you're paying every month. Initially you'll be paying mostly interest, but any extra payments will go towards the principal. Regular extra payments can almost cut in half the total number of payments you have to make, depending on how much your extra payments are (and save you a ton of money, besides).

PMI (Private Mortgage Insurance) is insurance you have to pay if you don't make a down payment of at least 20% of the total loan value. PMI is not good (because it makes your payment higher for no good reason), so to get around it (unless you can afford to pay 20% up front), most lenders will let you take out two loans, one to pay the 80%, and another to pay 10% so you don't have to pay PMI (you usually have to pay the other 10% or so up front). The second loan is often called a piggyback loan, and it will save you a ton of money.

Often the piggyback loan will be an Adjustable Rate Mortage (ARM), which means you pay only the interest of the piggyback for the first 5 years or so, and then you have to start making payments on principal and interest, and the interest rate can fluctuate (hence the name adjustable). In other words, if you don't have the piggyback paid off in 5 years, your monthly payment could suddenly increase $100-$150 or so. The benefit is that during the first 5 years the payments for the piggyback will be pretty low, hopefully giving you the chance to pay it all off before the 5 years are up.

You might could reduce your monthly payment by buying discount points, but that's usually not a good idea unless you expect to be in the house for a long time. But hey, what do I know? Talk to your lender, or fiddle with one of those little mortgage calculator thingys to figure out "what's right for you".

An escrow account is an account the mortgage company keeps to pay any bills that, if not paid on time, could cause the mortgage company to lose the right to be first in line to get your house if you default on any payments. For example, your real estate taxes are paid out of the escrow account. They're just making you pay your bills well in advance to make sure they'll get paid. The monthly escrow payment can add an additional $200 or so per month to your payment, depending on where you live and whatnot, so when you see on paper that your monthly mortgage payment will be, for example, $800, don't forget about escrow! The actual payment could be a good bit higher.

This all sounds pretty scary, but when you actually go through the motions it's less so. It's amazing how the system is fine-tuned to make it as easy as possible on both buyer and seller. For example, I was somewhat concerned how I would have time to take the money we earned from selling our house to the bank and get a cashier's check in time for the next closing where we would buy our new home, but all that was totally unnecessary. All I needed to do was just take the check from one attorney to the other, and they cut me a new check minus closing costs and all that. It really was a piece of cake.

But really it was less scary because we had prayed about it, and God worked everything out just fine. Buying a house is a huge decision, so pray before you make it, and God will move the right wheels at the right time. This last month we have truly watched God move, and I can't thank the Lord enough for all He's done for us.

Also, lest I forget, a million thanks to "Mimi and Poppy" for entertaining the kiddies this month, and for all the other things they've done to help us out. The real estate agents commented today about what great in-laws my wife has. Everybody knows it, I just wanted to say it.