Hubby and I are currently under contract to buy our first home—a modest 3 bedroom, 2 bath brick home on just over three acres. The land is lush, beautiful, fertile and fenced in. The home buying process has been an eye-opener, to be sure. Everything has been a surprise—from the cost to the number of people involved. It seems like a straight-forward process, right? You look for a house, you agree to buy a house, the sellers, realtor, bank person and you all sit down, exchange money and sign papers.
No. That little fantasy went out the window about two days into the process. This list may very well expand in the next few weeks as we approach closing, but—so far—here are the players involved in this little process and my understanding of what their jobs are:
Your realtor is a cross between a therapist and a salesperson. This is a complete stranger who you are expected to tell all the little intimate details of your life to. The minutiae of your morning routine, your future reproductive plans, how many outfits you own, the size of your marital bed and your preferences on if a shower is built for two or not, is this person’s business. You, as a highly stable and rational adult, will—at some point—cry in front of your realtor. For the service of showing you homes on the market—most of which you found yourself online—your realtor will be paid about 3% of the selling price of your new home. Sellers also have a realtor, and sometimes sellers and buyers end up sharing the same realtor. A good realtor is kind of like having a babysitter, but in a good way—they tell you what to do and what not to do so you don’t get in trouble, guide you through the process and answer all your incessant questions (I have, in fact, called my realtor to apologize for calling him so much).
The sellers are the people who own the house you want to own. They will simultaneously want to worship the ground you walk on and strangle your neck until you die. Their job is to take as much time as possible to “consider your offer” and to not get back with you until you’ve given up on any hope of ever owning your dream house. You may never actually meet or speak to these people—you communicate entirely through your realtors and various paperwork. To be fair, our sellers are very nice, reasonable people. We just got off to a really bad start.
Your lender is a person at a bank who might consider giving you money—buy it won’t be up to him. This is another complete stranger who will be all up in your personal business. You, as a very intelligent and educated person, are not going to understand the loan process. Your lender, as a very intelligent and educated person, will also have no clue how the loan process works. He will run through a checklist of thing he thinks might help in getting you a loan—you will gleefully provide this Enron-looking stranger with everything he needs to sell your identity to the highest bidder: your social security number, address—both physical and email, phone number, full name, citizenship status, bank account numbers and statements, employment status and exact income, tax returns and bill payment records. He will then turn around and verify all of this just in case you made it up. At some point your lender will inform you how much money you can afford to spend on a new house. This is, of course, is the most important piece of information related to you going to the bank in the first place. It is also the one thing the bank will not consult with you on.
Once you have an accepted contract with the sellers, your lender becomes the “go to person” for all questions regarding the details on your loan and the status of your loan application—which basically translates into “he’s the only person at the bank willing to give you his phone number”. He will never be in his office, and, like the guy you flirted with back in college, he will wait at least two-three days before calling you back. When he does call you back he will not know what is going on with your loan application.
Your lender will also provide you with something called a “Good Faith Estimate” on what your closing costs will be. As best as I can tell, these are numbers randomly selected by a computer, put into columns, labeled with random words like “escrow” and “MIP” with a dollar sign stamped in front. None of the numbers correspond to reality in any way. You will get at least three separate estimates of how much money you will need to have on your closing day. All will be different. None will be in the same ballpark as the others. Your lender will tell you that you won’t know the exact number until the day before closing. You will be reassured that—yes—this is all legal.
The “Initial Risk Assessment” Person
This is another person at the bank where your lender works. She is suppose to look over your application before it goes to Underwriting and make sure all the paperwork is correct. Her primary job is to go on vacation for two weeks the moment your application lands on her desk.
I have yet to be convinced that the underwriter is an actual person. I don’t think anyone at the bank has ever come face-to-face with the underwriter. I get an image of this mysterious computer down in the basement who everyone believes is an all-powerful deity which must be fed paperwork for appeasement. The underwriter seems to operate on the principle of dust acclimation. Your loan application will not be processed until it has accumulated a certain amount of dust. In the mean time, you must appease the underwriter by providing paperwork and sometimes by writing essays. My most recent submission to the underwriter was a 500-word double spaced essay entitled “How I Plan to Save Enough Money for my Closing Costs Even Though I Don’t Know How Much my Closing Costs Are Going to Be”.
The Home Inspector
So far, the home inspector has been the one guy whose role in all this was pretty much what I was expecting. His job is to go into the house and nitpick all the things wrong with it. He will take very detailed, up-close photographs of every defect found in the hell-hole you once thought of as your dream home. For this confidence shattering service, he will charge you several hundred dollars. It is at that point you will realize that a home inspection wasn’t on any of the three Good Faith Estimates you were provided with.
So far, our lawyers have been very behind-the-scenes. Like most lawyers, they do not like telephones or electronic equipment and communicate entirely through snail mail (and they get their paralegals to do that part). This, apparently, will make it much easier to sue you later for some made-up infraction. They will be responsible for hiring other people to do a title search on the property we are buying. A title search will ensure that the Sellers are in fact the owners of the property—just in case they made that up, forged a deed, and have been squatting illegally in the home for the last several years. We will be required to purchase title insurance—just in case the lawyers hired nitwits. Actually, we will have to purchase two title insurances—one for us, and one for the bank. The sellers will have their own set of lawyers to prepare the new deed. Apparently one set of lawyers just isn’t enough. You will be required to give your lawyers a very large sum of money for “safe keeping” to pay your closing costs. You will be reassured that—yes—this is all legal.
The appraiser is a person hired by the lender to take a wild guess at what your new home would sell for in the free market based on what other, similar houses have sold for in the free market. The fact that you have already established the price of what your house will sell for in the free market has no bearing on their decision.
The Well Inspector
If your new home has a private well, like ours does, you will need a well inspection. To test the well water, you drive down to the local DHEC office, pick up a kit that comes with paperwork and a sterile bottle, fill the bottle up with tap water from the house, fill out the form and drop it back off at DHEC. It’s really simple, a monkey could follow the instructions, and the test costs $ 25. However, your lender will not trust you to not screw this up. You must hire a person whose only job is to do this. The well inspector will drive to DHEC, pick up the kit, drive to your new house, fill up the bottle, fill out the form and drop it all off at DHEC. For this he will charge you several hundred dollars, and at no point will the well inspector actually inspect the well.
The Termite Inspector
Your lender will require that a termite inspection be done on the home. It’s pretty much what it sounds like—some guy will go to the house and check for termites. However, your lender will insist that the inspection occur within 30 days of you closing on the house. This means that if you had your termite inspection on the 13th of the month, and you don’t close until the 14th of the next month, you will need a whole new termite inspection. Because those little insects move fast.
The Homeowner’s Insurance People
You will be required to purchase a homeowner’s insurance policy for your new home. Your lender will give you very specific criteria on what the policy needs to cover and how much it needs to cover it. It will be entirely your responsibility, however, to find a policy that meets those criteria. Also, if your house is destroyed, you won’t get the money from the insurance policy—the lender will. The lender will then decide if they feel like giving you any of that money to rebuild your house. You will probably never speak directly with your insurance company during this process—you will hire an insurance finder company whose job it is to call the insurance company for you.
I think that’s all—so far. Hopefully within the next few weeks hubby and I will be closing on our new home. Maybe then we’ll figure out how much our closing costs will be.