…or what not to do
I have written a few times about the fact that although I dreamed of buying a house, I didn’t really plan on it happening until it did. The whirlwind of emotions, the hard work, and the sheer awe of achieving such a huge thing that I never thought was was possible is what inspired me to write about my experiences in the first place. And while I sit in my cozy living room with the sun flooding in through the big front window, my heart fills with the joy and peace that has come after all the difficulties of the past year. In life, they say the journey is more important than the destination, but in this case the destination is everything, and the journey was just a phase of life that was to be endured and gotten past as quickly as possible.
I was incredibly lucky to reach the finish line of this race, and I can assure you that mistakes were made that almost put my buying a house in jeopardy. I thought it would be fun to walk you through the timeline of events to both share all the many steps of this process with potential homebuyers, and give a bit of a “how not to” guide for buying a house.
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March Break – 2020:
This is when the Covid 19 pandemic started to affect our lives. As I’ve detailed in Paying off 10k during a pandemic, many variables affected my financial situation, allowing me to aggressively start paying down debt. Before this, every debt payment felt like throwing money away at a problem that was not going to go away, but seeing the balance actually go down each month was such a motivation to keep at it, and I felt like every dollar was going towards my family’s future.
September 1, 2020:
By this time I had paid off about $6000 in credit card debt. I was spending a lot of time researching everything I could about buying a home, and browsing Viewpoint.ca for new listings under $150,000. The market was moving fast, and every house I thought was a maybe was pending sale within a few days.
This was the day that my house was put on the market. When I saw it, I reached out to the mortgage specialist(here after referred to as Carol – not her real name) at my bank, because I thought it was the right time to get started on a pre-approval. I showed the pictures of my charming little house to my partner, and he seemed to like it too. The location was good, the price was amazing, it met our biggest needs and it was so cute!
September 3, 2020:
I had a phone call with Carol and she got the ball rolling. I didn’t know it would take several days to find out if we were approved, but I had seen how fast other houses were selling so I didn’t want to wait. I called my realtor in hopes of setting up a viewing that afternoon.
September 4, 2020:
Because there was a tenant in the house, 24 hours notice was required to view it, so we went the next day after work. It was a warm sunny day, which always puts me in a great mood. We saw this house along with 2 others, after which we stood outside, talking about the pros and cons of each. The second one was immediately ruled out, and the third one was a little bigger and slightly less expensive, but we kept coming back to the first house, because of the natural light flooding in, the airiness, and the modest charm that really suits my family. We decided right there to make an offer.
Several hours later, I was in my sisters hot tub, telling her all about this amazing little house, and how nervous and excited I was, when my realtor emailed my offer to review and sign. Wrapped in a bathrobe on her back deck, I read through all of it on my phone, signed digitally, and the offer was sent!
September 5, 2020:
I had to work this day, but I kept the volume on high on my phone, and luckily it wasn’t particularly busy. I received a counter offer by email, and took a break to read over it, call my partner so he could weigh in, then submitted my electronic signature to accept the offer! It was a mixed bag of emotions, because now we were under contract and no one else had the opportunity to outbid me, but without approved financing I could still very well lose it for myself. I had until the 23rd to clear all conditions, which included my mortgage, down payment loan, inspection and a $1000 deposit, and a closing day of December 1.
September 8, 2020:
I received confirmation of my pre-approval from the bank. What they offered was a cashback mortgage at a higher interest rate, because my debt ratios were higher than what they could work with, but they still wanted to make it work for me. We discussed that if I could lower my credit card balance another $2000, I could forgo the cashback in favour of a lower interest rate.
I sat down and worked out a very ugly but incredibly functional excel spreadsheet outlining all of my projected expenses, income, and cashflow and figured out that if we kept our expenses incredibly lean (we’re talking about a $100 grocery budget here) I would be able to put aside enough money for the deposit and inspection, the closing costs (which I still had only a very rough idea of) and probably also get my credit card balance down enough to get the lower interest rate, which would save me thousands in the long term.
September 9, 2020:
This was my day off so it was time to tackle the next big hurdle: The Down Payment Assistance Program loan from housing. I started by doing my (now many months late) 2019 income taxes, then printed all the required documentation, something like 25 pages, had someone stop by on their lunch break to sign an affidavit, and I headed to work to fax this monster of a document.
On my way home I called to arrange a lawyer. It was starting to feel very real.
September 16, 2020:
I received the approval for DPAP loan, so now the ball was back in my court. All of my financing was conditionally approved at this point, so only if I failed to complete my end of the bargain would I have a problem buying the house. It was a stressful day before the letter came, I was going back and forth with the bank, my realtor, housing, all while at work. When I finally got the email confirmation I went in to a room by myself, closed the door, and cried. I can only compare it to the feeling of giving birth: the hours of pain and just doing your best to keep coping, then the massive drop in hormones and the overwhelming joy of holding your new little person. Just like that all the stress melted away and a profound sense of relief set in, and I cried tears of joy in a way I never had before. I know that analogy isn’t going to resonate with everyone reading this, but those who know know 😉
Now that I knew my financing was in order, I was ready to book a home inspection. In the interest of not throwing away several hundred dollars if my financing didn’t work out, I had postponed this essential step.
September 17, 2020:
I called all the home inspectors that my realtor recommended, and none of them were available within my time frame. I had until September 23 to meet all the conditions of my mortgage, so I needed this step to move pretty quickly. I did a search for inspectors in my area, and after a few calls managed to book someone for the 20th! My partner and I discussed what potential issues we would consider deal breakers and decided that aside from major structural issues, we felt the value of this purchase would outweigh any repairs that would be needed.
September 20, 2020:
Just as we were getting dressed and ready to head to the house for the inspection, my realtor called with some bad news. Apparently there was a communications breakdown between the seller’s agent and the tenant, who claimed she had not received 24 hours notice of the inspection. I was so irritated with them for the mistake (emotions were still running pretty high on my end) that I cried in my partners arms before calling the inspector to reschedule. My realtor took care of getting me an extension on my conditions so we would still have time to review the report before signing off on buying the house.
September 21, 2020:
This was the day that the first money exchanged hands. I transferred a $1000 deposit to my realtor’s firm, which ultimately went to the lawyer to go towards closing costs. This deposit was outlined in my purchase agreement, but was something I was unaware of prior to starting this process.
September 24, 2020:
Home inspection take two. We arrived at the house on a warm, sunny morning. It had rained the day before, which I figured was a good thing, because any leaks would be more apparent. We tagged along as the inspector looked over the house, top to bottom, we asked questions, took many photos, and a few measurements. My final question for her was “have you found anything that would prevent you from buying this house?” She went over a few repairs and upgrades that we should prepare for, but there was nothing major, and she gave us a big thumbs up!
September 25, 2020:
Payment for the inspection was due before the report would be sent, so I e-transferred the inspector first thing in the morning. Later that day I received the (very lengthy and thorough) inspection report, which covered the things we had discussed the previous day, and a few minor recommendations that all seemed straightforward. My bank had let slip that there were multiple back-up offers in case my sale fell through (crazy pandemic market!) so I did not want to take a chance on negotiating with the seller over what seemed to be a fairly reasonable condition. I let me realtor know that I was ready to clear all conditions, and that was it, I now had nothing to do but wait.
Find out more about buying a house in part 2
I’m going to cut this off here, because the length is starting to get out of control. Part 2 will follow next week, so tune in then for the exciting conclusion to our story. Will Melissa’s dream of buying a house be dashed or will she live happily ever after. Find out in my next post: A Time-line of Home Ownership or What not to do (Part 2)