Adam and I have officially closed on our new condo as of today! It was always a goal of mine to be a homeowner before I turned thirty and I’m so excited to say I achieved that, just three months shy! It’s an amazing feeling to know that we actually own something in the beautiful city of Chicago and will be staying here for at least a few more years. As I mentioned in this post, this city has so much to offer and we weren’t ready to give that all up yet for the suburbs!
Throughout our entire home buying journey, I chose to forgo documenting the process, as I didn’t want to jinx anything. But, to give you some background now, once we determined we were confident in buying in the city, the process to buy seemed to happen in a blink of an eye. We saw about ten condos in our target neighborhoods (open houses are so fun!), but fell in love with the one we ended up purchasing. Once we put in our offer, things moved quickly and it all just seems like a whirlwind now. We ended up getting into a bidding war, which kept things interesting (because does anything ever just go smoothly for me? Nope!). And obviously, we won and we were ecstatic!
There’s been a lot we’ve learned through all of this these last few months. So, I thought it’d be fun to share some tips and tricks we’ve learned that that can benefit those who are starting the process soon or who are planning for it down the road. These tips are solely my own, so just remember that I am not a loan or financial expert 🙂
#1 – Start Saving ASAP
The moment you have any additional income flowing into your checking account, make sure to transfer it to a savings account. Adam and I in particular opened up a joint account, (as I shared in this post) specifically for our wedding and then used it a downpayment fund after the wedding. We made an effort to save an agreed upon amount each month to ensure we met our goal. We wanted to make sure we had a large enough amount in our savings to pay for the downpayment, as well as closing costs and furniture to fill the condo. It was also important to us that we have some left over for emergency savings.
#2 – Create a Budget
This is an obvious one and everyone is going to have their own way of how they put together and monitor their budget. My Type A personality loves Google docs, as it keeps us super organized (my fave). We created a budget and documented it in our doc, where we included our monthly income and expenses to determine how much we could afford for a new home. We made sure to take into account the estimated mortgage, taxes, homeowner’s insurance and HOA fees, given that we were looking at condos.
#3 – Do Your Research
It’s good to keep tabs on the market and area you are looking to buy so you can stay realistic with your budget and how much you can afford. We did this by looking at condos around the city on sites like Redfin to determine what neighborhoods we were interested in, the style of condo we liked, and the estimated monthly payment we could be expecting. Adam and I took advantage of talking to both sets of our parents and other friends who have previously bought homes to get their take on the home buying process. This way, we could get the full scope of what to expect through each step of the process.
We also decided to meet with a financial planner so she could take a look at our finances and determine subjectively if it made sense for us to buy in the city or even buy in general this year. It was good to get that level of expertise from a professional as it gave us the confidence we needed to move forward.
#4 – Make a Wish List
Once you have a budget in mind, it’s always good to put together a wish list. What we personally did was created a list of must haves and nice to haves. Those must haves were non-negotiables and then nice to haves were things we preferred to have, but they weren’t necessarily deal breakers. This came in handy when it came time to meet with our broker so he knew exactly what we were looking for.
#5 – Choose a Reputable Realtor/Broker
We sort of got handed a broker in a sense, as we decided to move forward with the broker our landlord was using (as she is selling the apartment we currently live in). However, before we jumped in, we wanted to ensure our broker was reputable, knowledgeable, and recommended. We did our research and read reviews before we moved forward and felt confident in our choosing. Always make sure your realtor/broker is someone you can trust and who you know will be on your side throughout the entire process. In my opinion too, it seems to be better to go with a realtor or broker who has been in the field for a few years and knows what they’re doing. As I mentioned, we ran into a bidding war and our broker gave us some tips of advice on how we could win and luckily we did, all thanks to him!
Pro tip: If you ever get into a bidding war situation, we highly recommend writing the sellers a genuine letter – and include a picture of yourself to put a face to a name! It works!
#6 – Get Pre-Approved & Reassess Your Budget
It’s important to get a loan pre-approval before you actively start the house hunt. Reason being, if you find a house you love, you don’t want to have to slow the process down by waiting and having to get pre-approved. It’s good to have that out of the way and know exactly how much you can afford, too. Also don’t just look at the house cost – definitely make sure to factor in HOA and taxes, as those can vary drastically.
Pro tip: Be careful to not apply and get pre-approved by too many lenders as this will take a hit to your credit score, which you want to be mindful of.
Another good thing to do once you get the pre-approval loan rating is to plug that in with your down payment into an amortization schedule. What the amortization schedule then does is breaks down your estimated principal and interest of the loan over a certain period of time. This came in handy particularly for us as we won’t live in our condo likely more than six or seven years, so we could see how much equity we’d have after that period of time in our amortization schedule. It helped us make a few financial decisions that ultimately benefited us in the end. Thanks to our financial advisor for sharing that with us!
#7 – Stay Smart During the House Hunt!
Ah, the fun part! Adam and I had a lot of fun going to open houses and scheduling showings at condos we were interested in. We saw some amazing ones but one that really sticks out to me during the process is one we went to twice. The first time we saw this condo at an open house, it was perfect. It had three bedrooms and two bathrooms, crown molding throughout the house, a big living room, two huge decks, you name it. We decided it was a definite contender so we scheduled a separate showing to see it again. The second go around, I started looking closer at things and began noticing things that needed to be fixed. Because it was near the top of our budget, I realized it wouldn’t make sense for us to buy if we had to put the amount of work it needed into it. We noticed the windows were in bad shape and would need to be fully replaced, the crown molding was falling apart, and the stairway to the condo smelled really funky.
I have two main points here: 1) keep your eyes open to the actual bones of the house and don’t get distracted in how it’s staged and 2) don’t make any impulse decisions. If we hadn’t waited and just put in an offer on that condo, we could be in a very different place than we are right now. I’m glad we were smart and went for a second look. It’s good to always ask questions too, no matter if you think the question is dumb or not. We also recommend scoping out the neighborhood the house you’re looking at is in and request a market analysis on the homes you are really serious about.
The last point here is be prepared to act quickly if necessary, especially in a seller’s market. Unfortunately, everything that has been going on the market in Chicago this year has sold within a matter of days. Once we found our condo, we knew we had to act fast, which gave us a bit of anxiety. I’m usually an impulsive person in general, but when you’re spending the kind of money you do on a house, you want to make sure you have all the information at hand and are making an informed decision. So act fast, but still stay smart.
#8 – Pay Attention to Paperwork
As you begin putting your offer in and receiving a bunch of paperwork from your lender, your broker and your lawyer, it’s easy to overlook the minute details to check off a to-do. However, I became overly cautious in reading everything I was receiving and signing. I’m glad I was, because there were a few times I caught mistakes in the paperwork and had to go back to the person who sent it to us to revise. Don’t put all of your trust in those preparing the paperwork and assume that they’re going to have everything 100% right. Always ensure you’re doing your due diligence to review any and all paperwork thoroughly before you sign anything.
#9 – Enjoy the Process
Despite all the paperwork and figuring out your finances, at the end of the day, you will (hopefully) find your new home. Seeing and choosing your new home is such a great feeling. The process is truly all worth it once you get the keys to your new place that you actually own. I’m so excited to start our next chapter in our new home and in our new neighborhood and hope you are on your way there!
Feel free to ask me any questions you may have on the home buying process in the comments!