As the end of their lease approached, Dave and Mari Gottlieb prepared to move… again. The Gottliebs knew they wanted to stay in the best school district in the Chicago area, since their child was approaching school age, but the district was not renter-friendly.
Area landlords had a history of selling their houses out from under renters, and moving every 12 months had high costs.
“Right out of college, I could fit all my stuff in six trash bags,” Dave explained. “I loaded up a Mazda and moved with ease. But now moving is the worst. [There are] the direct financial costs, [and] the emotional costs like yelling at your spouse. For us, the costs weren’t worth it anymore.”
They knew that they wanted to stay in the Chicago area. Seeing that rental and mortgage costs were on par with each other, Dave and Mari decided it was the right time to buy.
Both home and rental prices in their market were moving up steadily. But Dave and Mari didn’t view homeownership primarily as an investment. For them, buying a home was buying peace of mind. In the long run, homeownership may save them money or allow them to make money from the sale, but that’s not exactly what they wanted. They wanted a place to call home.
Dave and Mari started casually looking for houses in the summer of 2015. But they needed to get their finances in order before they got too serious.
Dave asked a friend who worked with a loan company what he should be looking for in a mortgage, and the friend’s immediate response was, “Look out for the fees.” His friend outlined a few of the legitimate fees – including application and origination fees and private mortgage insurance (when you don’t have at least 20 percent equity, most banks require that you pay for extra insurance to protect the bank) – but told Dave to avoid other fees at all costs.
With that in mind, Dave began to research his loan options.
He learned about SoFi, a modern finance company. SoFi doesn’t charge application fees or loan origination fees, and they don’t charge for PMI (Private Mortgage Insurance), even with less than 20 percent down. Dave was thrilled to find interest rates lower than the competition, especially in combination with no lender fees (apart from typical third party closing costs), but he worried that SoFi might just be a few guys trying to lend money from their parents basement.
Once again, Dave turned to his friend in the industry. After looking into it, he discovered that the company has lent over $10 billion dollars since it was founded in 2011. Dave and his friend felt confident that SoFi was a legitimate company under government oversight.
After a quick pre-approval process with SoFi, Dave and Mari started house hunting with intention. As they started house hunting, they were surprised by how many things can make an offer fall through.
Their real estate agent warned them that financing woes, low appraisals, and inspection surprises might delay a deal or cause them to lose the house.
With this in mind, Dave kept in close touch with his loan officer, even though he had a straightforward case. “I might have been annoying,” Dave said. “I mean, I wasn’t calling between midnight and six in the morning. But outside of that, I contacted my loan officer a lot. […] He was really easy to get in touch with, especially near the beginning of process, and as we started the closing process.”
Having their finances in order ended up being critical for the Gottliebs. They put in four offers before a seller finally accepted one.
To make themselves more competitive in their bids, Mari came up with a strategy to include a letter about their family in each of their offers. The letter had some information and conveyed the things that the family stood for.
In one case, a seller gave the Gottliebs the first opportunity to increase their bid on the home. And in the case where their offer was accepted, the seller chose the Gottliebs because of their letter. In hot markets, things like having your finances in order and appealing directly to sellers can make a huge difference.
The Gottliebs closed on their house on May 23, 2016. They are thrilled to have a house to call their home. They couldn’t be happier about the decision to buy. Their final tip for people looking to buy their first home?
“Hire movers. People to pack and unpack. It’s worth the price!”
(Sofi loans are originated by SoFi Lending Corp. NMLS 1121636. Terms and conditions apply. See SoFi.com/legal for details)