On the heels of our first-ever Agent Appreciation month, Inman is leaping into February with our Residential Finance theme month. Join us as we investigate how buying and selling a home is changing, from companies backing consumers in new ways to integrated services that handle the entire transaction.
The road to ownership has many steps: vetting and choosing an agent, finding the right neighborhood, narrowing down a list of potential homes, nailing down the perfect budget, getting financing, making bids and surviving closing. Although none of these steps is a cakewalk, navigating the loan process is often the most stressful and confusing step for buyers to overcome.
In honor of Residential Finance Month, six homebuyers sat down with Inman and shared the ins-and-outs of their journeys, from saving for a down payment to shopping for loans, and how they defeated financial roadblocks to achieve their goal: homeownership.
How an investor finally got the home of his dreams
Name: Joshua Drazin
Joshua Drazin is no stranger to the homebuying process — the multiple-home owner recently purchased his third property using Opendoor Home Loans. After five years of planning, which included scoping out potential properties, saving $60,000 for a 20 percent down payment, and refinancing for lower rates on his other homes, the native Coloradan was ready to purchase his dream home in Arizona.
During the final months of his search, Drazin began seeing ads for Opendoor and decided to research the iBuyer’s buying and home loan services. Although he’d decided to purchase his home through Opendoor, Drazin still wanted to use an Arizona-based loan officer who his best friend, who is also a loan officer, recommended.
“The loan officer I had said they couldn’t do a 45-day closing, and Opendoor said they had their own, in-house financing, and they could get it done in 45 days,” he added. “They offered me great terms. I was very skeptical, but amazingly, they came through above and beyond any of my expectations.”
Beyond a quick closing, Drazin received $6,500 back in closing costs, $1,000 of which was used to buy down points — a strategy where fees are paid to a lender in exchange for a lower interest rate.
“I typically don’t buy down points,” Drazin said, noting he prefers to refinance once rates drop. “I wasn’t going to buy any points, but the guy was like, ‘We’re giving you $1,000 extra dollars, so let me buy the points down for you.’”
“They gave me $1,000, got done within my allotted budget, and I still had $1,100 leftover. So, I used that to buy down my points even further,” he added.
Drazin is currently completing a $20,000 renovation and is looking forward to moving into his desert oasis soon. Although he’s still open to using traditional mortgage brokers for future purchases, Drazin said Opendoor “will be one of the first calls I make.”
Homeownership is for everyone
Name: Robyn Burnett
Unlike her first homebuying experience, Robyn Burnett’s recent purchase with her husband, Tyler, was a smooth ride.
“It was one of these things where all the stars aligned,” Burnett said regarding her new home in one of Omaha’s up-and-coming suburbs.
The Burnetts’ searched high and low for a potential home, and finally stumbled upon an online ‘For Sale by Owner’ listing that had no photos or specific description. However, curiosity took over, leading the couple to make an in-person visit.
“They originally posted [the listing] without pictures and I think that deterred a lot of potential buyers thinking it was probably a crappy house,” she explained. “Had they probably used an agent, there would have been pictures posted right away, and there probably would have been some sort of bidding war.”
Thankfully, Robyn and Tyler were able to get quickly approved for a VA loan and make an offer before other buyers could discover the hidden gem. The sellers were also flexible with the closing date, meaning the couple could perfectly time the sale of their previous home, which Robyn had purchased on her own.
“I remember it being kind of a weird feeling,” Robyn said while reminiscing about her first home. “In your head, as a woman, you always think you’re going make a big purchase like that with a significant other.”
“At the time, I felt kind of sad about it, but looking back, it was like, ‘No, that’s super cool,’” she added, noting she worked three jobs to qualify for a loan.
Now, Robyn and Tyler are settling into their new home, adjusting to their new neighborhood and learning lessons they’ll use during their next purchase.
“We really didn’t take into account that where we were moving from was a very urban area in Midtown Omaha where we had very low taxes,” she said. “Now we’re in the suburbs, and we had an enormous increase in taxes. I think it’s triple the amount. So, when figuring out what you can afford, you have to take into account taxes and insurance, too.”
Despite the ups and downs, Robyn has one message: “If you are doing it with a partner, you have to be on the same page. If you’re a single person, don’t believe you can’t afford it or do it on your own. I would encourage anyone to buy because it’s super empowering.”
Beating the competition with an iBuyer
Name: Josh and Alexia Uecker
Location: North Carolina
Like many homeowners, Josh and Alexia Uecker had simply outgrown their long-time Charlotte, North Carolina home. The addition of a new child and Alexia’s mother, along with Josh’s decision to work from home, made their once spacious abode feel cramped.
However, Charlotte’s housing market had dramatically changed since the Uecker’s last purchase.
“It was hard to find the right home, especially in a market where some homes are sold and listed the same day,” Josh said. “The challenge for us was that we couldn’t afford two mortgages, and we couldn’t figure out how to do it without it.”
After two years of bolstering savings by negotiating expensive car insurance, phone and cable bills, the Ueckers were ready to strike. However, they still hadn’t solved their mortgage dilemma until Josh discovered Knock, a trade-in platform that enables owners to buy and sell at the same time.
After doing some research, the Ueckers decided to move forward with Knock. They’d keep paying the mortgage on their previous property while Knock made an all-cash offer for their new home. Once the previous property sold, the Ueckers would pay Knock back with the proceeds from the sale.
Although they had to sacrifice potential perks on their loan by using one of Knock’s preferred lenders instead of Bank of America, where the Ueckers were longterm customers, Josh said the trade-off was worth it.
“It was easy once it started, but we had fewer options,” Uecker continued. “For example, I’m a Bank of America customer and we could’ve gotten some perks if I’d done a mortgage with Bank of America. At the end of the day, we weighed our pros and cons considering the fact we didn’t want to do two mortgages.”
The Ueckers plan to stay in their home until they “get old and it’s time to downsize,” when they’ll likely choose a traditional buying and loan process. However, Josh doesn’t regret giving Knock a try.
“Knock gave us an edge,” he said. “Knock was able to help us get the home we wanted because we were in a competitive offer situation. Because we were able to use Knock’s all-cash offer instead of a traditional mortgage, we won the bid.”
What to do when your dream property requires 2 loans
Name: Tempal Hitt
Tempal Hitt and her husband, Nick, thought they’d built their forever home last year — that was until they discovered a nearby farm with two homes, one of which would go to Tempal’s aging father.
“We decided to take this major leap of faith because you should decide to wait a few years before you sell a brand new home,” she said.
The Hitts began searching for a mortgage company that would approve them for two loans totaling $1 million, but their self-employed status held them back since Nick’s new business was only a year old.
“I’d gotten so discouraged,” Tempal told Inman. “You have to find a [loan officer] that is very passionate and very creative. Being self-employed, my experience has been that a lot of lenders don’t look outside the box.”
However, the tides turned once the Hitts’ Realtor, Andrea Johnson, introduced them to Breon Price, a loan officer with Motto Mortgage Apex in Cincinnati.
Price reviewed the couple’s finances and presented a few options, including renting their home until they could find a seller and potentially adding a traditionally employed cosigner to the loan application. He also found a loan option that only required 5 percent down, meaning they could keep part of the $100,000 they’d saved.
Lastly, Price argued that Nick’s one-year-old business shouldn’t hold the couple back; Nick had a successful, 15-year track record and only started a new LLC after selling his first venture.
“I’m not even 100 percent sure of all he did to make it work for us,” Tempal said.
The Hitts moved into their new home in January, and are still working on selling their old property.
“If there is a will, there is a way,” she concluded.
Overcoming first-time jitters and tax drama
Name: Cynthia Cacho
An experienced homebuyer, Cynthia Cacho quickly zeroed in on a new home for her and her husband — the first they’d purchase together. As Cacho began shopping for the best loan option in Houston, Texas, her sister, who is a real estate agent, pushed her to consider using Opendoor, which offers a trade-in program for sellers.
Cacho was slightly hesitant, but her sister promised to help her through the process. However, after a chat with an Opendoor representative who explained the buying and selling process along with the benefits of using Opendoor Home Loans, Cacho was sold.
“I had already been pre-approved by another lender, but I got a lower rate from Opendoor,” she said. “I also explained I didn’t want to go with a [Federal Housing Administration] loan because I didn’t want to pay the mortgage insurance, and I told them I wanted to pay the house off in a faster timeframe, like 15 years instead of 30.”
Opendoor was able to find a loan that met Cacho’s needs, but a federal tax lien temporarily put the deal in jeopardy.
“My husband had a lien with the Internal Revenue Service,” she explained. “But they were so good about telling me what I needed to do to reach out to the IRS. We had to get a Certificate of Release from the IRS because that lien had already been lifted.”
In addition to a bit of tax drama, Cacho had to walk her husband, who was a first-time homebuyer, through each step of the process.
“I’ve bought several houses, but this was my husband’s first time buying a house, and so it was overwhelming for him,” she said.
Despite a few lingering side-effects from a stroke that impaired his reaction time, Cacho’s husband was committed to learning about homebuying and participated in every conversation.
“You might have to explain things to him a few times,” Cacho said, “but, he’s a very smart guy. Our Opendoor representative was so patient with him.”
Although this purchase will likely be Cacho’s last, she’s recommended Opendoor to family and friends looking to purchase a home.
“I loved the entire process,” she said.
Preparation is key
Name: Robert Shipman
Tired of his 15-year-old home, Robert Shipman was anxious to find the perfect abode for his family, complete with a luxurious backyard pool. However, after years of searching, Shipman still hadn’t found the right property or the right real estate agent to help him and his wife, Candice, out.
“I was watching MSNBC on my iPad, and I saw an ad for Knock,” he explained. “I’d heard of Opendoor and other platforms, but after doing some research, we decided to go with Knock.”
The Shipmans, who are experienced real estate investors with two rental properties, had extensively planned for a new purchase, by building their credit score and creating a cushy savings account to cover the down payment and closing costs. Plus, the couple was able to use a VA loan, which enables buyers to put as little as zero down on a home.
“I’ve been through the mortgage process more than a few times,” he said with a laugh. “So it was nothing new.”
The Shipmans finally found the home they wanted, but it was missing the one feature they so desperately wanted: a pool.
“The house was perfect, but it didn’t have a pool,” he lamented, noting Ft. Worth’s competitive market pushed the couple to make a sacrifice. “I said, ‘Let’s bid for $50,000 less and see what they say.’ They accepted it.”
As Robert and Candice prepare for closing next week, Robert said he’s glad he gave Knock a chance, noting that the all-digital process helped streamline communication, reduced the stress of submitting paperwork and alleviated the logistics of buying and selling a home at the same time.
“I’ve already suggested Knock to family and friends,” he said. “I’d definitely use them again.”
If you have a client with a unique story to share about his or her financial journey to ownership, drop us a line at Homebuyer@Inman.com.