What I learned buying a house
Since buying a house two years ago, this list of lessons is probably the email I've sent friends the most. It's not everything you need to know, just things that surprised me and would have been helpful to learn in advance.
Know your must-haves—and forget about everything else. Just as Tinder gives you a seemingly infinite list of dating partners and Tiktok gives you a seemingly infinite set of videos, Zillow shows you an abundance of possible homes. This can make it feel like the perfect home might be only one more click away if you're patient enough. Don't fall into that trap.
You probably have a few must-haves, which you'll need anyway to filter down the overwhelming options (ours included a first-floor bathroom, which was surprisingly hard to find in this area, and walking distance to a commuter train). But as you see more houses and talk to other people, you'll hear about other features (one friend's priority was a garage they could park in; another needed a newer house that wouldn't require as much upkeep). If you're new to buying a house, you'll start to second-guess your priorities: maybe everyone else knows something I don't, and I need these things after all?
They don't; people genuinely have different priorities about where they want to live. No house has everything you could want—and if it does, you can't afford it. If a lot of people want something you don't, that's not necessarily a red flag; if anything, it's an opportunity to get a better deal on a house that others won't consider.
People will walk you through the process details. Even the most detailed how-to guides on the internet omit a bunch of steps, because there are just so many. I got stressed about the little things I didn't know, but it was totally fine, because the professionals were there to help. How do we come up with a price to offer? (Our broker gave us a local benchmark; beyond that there just isn't a "right" number, only what you're comfortable paying.) Will we run out of time to get an attorney? (After our offer was accepted, our broker referred us to one who they worked with regularly; they were happy to pick up the work on short notice, because that's how home contracts work.) Are there any weird conditions to look out for in the final contract? (Yes, but your lawyer will know about them.1)
This might be different if you're not working with a traditional broker or have some other unusual situation.
Once you have an offer accepted, make sure to shop around for mortgage rates. Since we had good credit and were looking for a standard mortgage, I expected everyone would offer basically the same rate. But the gap between the first lender's quote and the one we ultimately went with was at least 25 basis points of APR, which comes out to about 4% of the purchase price over the lifetime of the loan. I generally find price-shopping annoying, but this isn’t too hard easy—all you have to do is fill out a few more forms online—and the benefit was surprisingly large. (And it’s not as if different lenders compete on other services; at least in our case, the lender that initially underwrote the loan transferred it to one of the other lenders to service the loan every month, so all that mattered initially was getting the lowest rate.)
To be clear, this is not important for “pre-approval,” where the issuer just says how much they’ll be willing to write you a mortgage for eventually. You should do that before even seeing houses, but nothing is binding, so it doesn’t matter who you choose for that.
The mortgage rate you're offered expires after some time. Your mortgage rate depends partly on your credit rating, but it also depends on financial markets. Even if there's no risk that you'll default on your mortgage, the lender still has to give you a big chunk of money up front and get paid back over time, instead of investing that money elsewhere. So the rate you'll have to pay to make that worthwhile for the lender depends on the price of other assets like government or corporate bonds (which change based on monetary policy and economic growth expectations). As a result, mortgage rates can fluctuate every day.
It would be annoying if your mortgage payment changed every month, so (in the US) mortgages typically have a “fixed rate”—they don’t change even as markets move. Furthermore, the mortgage underwriting process takes a few weeks, and it would be annoying if you didn’t know your rate until the end of that process, so lenders typically lock in your rate once they approve you (before underwriting).
If you want to game the system, this gives you a free option: if market rates suddenly drop right after you're approved, you can shop around with other lenders for a better rate if you want; but if they rise instead, you can stick with your locked-in rate. So lenders don’t want to guarantee your rate forever, or else you could keep stalling the process to see if rates change a lot. For us, the rate expired after about six weeks.
We were not looking to game the system, so we didn’t even notice that the rate would expire; it was buried in some fine print that we were alerted to only when time was almost up. So we went from thinking we had all the time in the world to close on the house to trying to push the sellers to close as soon as possible to get our locked-in rate (because market rates had gone up in the meantime). We ultimately had to pay a couple hundred dollars to extend the rate a few days until the sellers could close, which was better than the alternative of starting over with a fresh rate, but something we might have been able to avoid if we'd been thinking about it sooner.
Moving is a great time to refinish wood floors, but expect to find floor dust on every other surface. I didn't think about the fact that sanding the floors would create dust, and even if I had, I would have expected the refinishers to take care of it somehow. Instead, we spent the first day of move-in cleaning dust off of shelves, closets, molding, and even somehow the entirely carpeted third floor. If I’d known, I would have come the day before to clean without delaying the move-in process.
Life insurance applications take a long time. Getting renters, auto, and home insurance online these days is incredibly easy—like, "I must have done something wrong here because I can't believe anybody would actually insure me for this much without speaking with me" easy. But life insurance was completely the opposite for us, involving an in-person physical, getting access to detailed medical records, thorough vetting, and occasionally follow-ups, ultimately taking more than one month and as many as several.
Why do I mention this as part of buying a home? Hopefully you're diligent and you have good life insurance already, but when I didn't have dependents or significant debt, I thought my small employer plan was good enough. Getting a mortgage, and taking on hundreds of thousands of debt as a couple, was the first time I really worried about it. We ended up shopping for life insurance and our mortgage at the same time, which I don't recommend—not only because there's so much stuff to do already, but also because (due to the long application time) you might end up taking on the debt before you have enough insurance coverage to protect you if the worst happens.
One from our area in New Jersey: older houses were originally heated with oil from underground tanks, but those were decommissioned for cleaner energy sources a few decades ago. At that time, they figured it was fine to just seal them up and leave them underground, but people have since learned that tanks can occasionally leak and contaminate the surrounding soil, which is apparently very costly to clean up. So our lawyer explicitly included a lot of language around oil tanks in the contract, and encouraged us to commission a scan for one even though the owners reported no knowledge of one, and sure enough they found one, which was dug up at their expense. (They had only been there for about a decade, so I'm assuming ignorance rather than deliberate misinformation.)