Countdown to closing: A first-time home buyer checklist and timeline

As in baseball, winter is the real estate off-season; if you’re a first-time home buyer who’s been scouting homes on Redfin or Trulia or Zillow, you probably noticed there wasn’t much coming up for sale the past few months, which can be really frustrating (or a great opportunity, since many other buyers put their search on hold for the holidays). But with the spring thaw comes the start of open house season – and a flood of new listings.

If you’re gearing up to buy your first home this year — or any home, really — now is the time to start getting your ducks in a row. And if you’ve never bought a home before, you’re going to be like, “OMG THERE ARE SO MANY #$%@! DUCKS!” So let’s get started.

First-time home buyer checklist

Beginning at that very first inkling that you might want to buy a house in the near future, here’s a helpful checklist of stuff you should do along the way, and a rough timeline of when you should be taking care of each item. Cue the ducks.

Step 1: Start your research (6-24 months before closing)

How long do you spend online looking for a good restaurant? How about planning your next vacation? How many reviews did you read on Amazon the last time you bought a coffee maker or a blender?

You probably spend plenty of time comparing your options. (That’s half the fun, isn’t it?) And all of that time combined should pale in comparison to the amount of research you put into purchasing your next home.

This isn’t a $40 coffee maker. It’s not even a $22,000 car (which I hope you researched the heck out of on Edmunds.com or Consumer Reports). In the Boston area, it’s usually a $300,000 purchase (at least) that will come to define just about every minor detail in your daily life, from the length of your commute to where your kids go to school to what your favorite restaurant is to your immediate surroundings for 12+ hours every day.

Not to freak you out, but to quote Joe Biden, this is a big f’ing deal! So here’s how to do your homework.

Know the neighborhoods

If you love where you rent and want to buy a home there, that’s awesome. You know the place, from the bustling street corners to the quiet side streets, from the nice blocks to the ones that just seem to smell bad for whatever reason. Awesome; definitely look for listings near home.

The trouble is, many of us spend our rental years in the city — a three-decker somewhere in Brighton or Cambridge or Somerville, or maybe even a one-bedroom or studio downtown or in the Fenway. You love it, but, well, I hate to break it to you, but it’s really hard for most people to afford a condo in some of these neighborhoods at this point.

What’s more, even if you can afford one, inventory is still low in the city — there may not be anything available that you love. And you really need to LOVE a home to commit all your worldly money to it. Believe me, I’ve been there.

So, it’s worth considering other neighborhoods and towns. We were dead set on buying in Jamaica Plain, and almost put an offer in on two different condos. The market was too hot though (and this was eight years ago; it’s only gotten hotter). With one of them, we called the listing agent two days after the open house, after we’d thoroughly talked it over and finally decided to put in an offer just below the asking price… the guy laughed and said, “Are you kidding? That sold for $20K over asking before the open house even ended.” Yikes.

We discovered, however, that in Quincy we could buy an entire house for the price of a J.P. condo. A two-family, in fact — so like, two condos — and we’d own the patch of ground all the way down to the center of the earth — which, I don’t know, holds a certain appeal to me for some reason!

But it wasn’t just like, “Hey look, cheaper houses, let’s buy there!” We researched every neighboring town religiously, going out to eat in their commercial districts, shopping at their grocery stores, and examining all their stats: the walkability, the distance to a T stop, the caliber of schools, the vibrancy of the town center, architectural beauty, everything.

We were really smitten with Salem — historic, by the ocean, great downtown vibe and restaurants, and on the commuter rail — but in the end it was a bit too far and the schools weren’t great. We liked Milton and Melrose a lot, but couldn’t find anything we wanted in our price range; Medford and Watertown felt like expensive versions of Quincy but without the ocean and, for the most part, without the subway.

We could have bought a nicer house in Weymouth for less money, but it would have meant the difference between a $70 monthly T pass and a $200+ commuter rail pass (x 2 people). That’s not insignificant — $260 a month in transit costs would have essentially wiped out any savings from the cheaper homes. These little things all vary from place to place, and they all matter.

Anyway, the point is: Get to know the other towns out there. You can research their property tax rates and demographic data in the community profiles available on Mass.gov. GreatSchools.org is a good, if imperfect, resource for measuring the caliber of nearby public schools — remember that Massachusetts public schools are the best in the country, so even an average school district is going to be pretty darn good in the grand scheme of things.

Narrow down your potential towns, and then take a day trip and spend some time there. Go out to eat, walk Main Street — does it feel like home?

Want to really, REALLY get to know a neighborhood? Book an Airbnb listing in your potential town and actually live your life there for a few weekdays. You’ll gain invaluable intel about what the commute is like, whether it’s loud and active at night or a silent ghost town, and whether it’s generally a place you’d want to call home.

Know the market

The next key part of your preliminary research is to start getting familiar with the market in the towns you’re targeting. All this takes is visiting open houses to see what’s being offered at what price, and monitoring new listings and sales records to see what’s selling and for how much. Before long you’ll gain an intuitive feel for what a given property should fetch and whether you stand a chance.

This is important because some really nice houses will be intentionally priced low — sucking in buyers to inspire bidding wars. Others will be priced too high, scaring off potential buyers – but if you know that it’s too high, you won’t be afraid to make a low offer.

Of course, a good buyer’s agent can and should do all of this for you — they are indispensable, so find a good one who knows the area and will have your back. (In Quincy, I can’t say enough good things about Jim McGue at Granite Group.) But I’m a DIY guy, and I still like to be informed and know what I’m doing, too.

Step 2: Attend a first-time home buyer class (4-12 months before closing)

If you’re taking advantage of a first-time home buyer program, you’ll usually be required to take one of these classes. But even if you’re not required to, it’s an incredibly good investment. We took ours through Mass Affordable Housing Alliance, but there are several different options from town to town, and many offer versions online now.

As longtime renters, we had virtually NO CLUE about all the stuff that goes into home ownership. You don’t just pay one rent check and call it a day; there’s upkeep and repairs to be made, and you’re responsible for all of it. There’s more than the mortgage: You’ll have to pay homeowners insurance and the water bill and real estate taxes and other bills you’ve never given thought to.

And if you haven’t been forced to think about rotting wood or aging roof shingles or old wiring, you’re just not going to notice these things as you tour homes for sale, much less know why they matter or what you’ll need to do about them.

Our first-time home buyer class taught us SO MUCH about the guts of a house, and it was specific to the Boston area’s housing stock, too, which is helpful. (The rest of the country has decidedly newer housing than we do, so many resources online are nearly irrelevant to us.) We learned how a boiler works, how to maintain it, and how to spot whether a roof will need replacing soon. (That’s a $10,000 expense, so you’ll want to know upfront if you’ll be on the hook for it within the next few years.) They brought in a home inspector, a realtor, a home insurance guy, and a mortgage lender to walk us through these critical facets of the home buying process. It was easily worth the price.

Most importantly, we learned that, at the time we first took the class, we had no business buying a house just yet. We ended up saving our money for another year so we wouldn’t be bankrupt upon closing.

Step 3: Figure out your finances (6-12 months before closing)

I can’t stress this enough: Buying a home is SUPER expensive. Especially in Boston. I tend to think it’s a very good financial move for many – even most – people, if you plan to live in the same place for a number of years. But it’s not for everyone, at least not all the time.

You should honestly assess your financial situation, including your income, monthly expenses and debts, and job stability, and determine roughly what you can afford to pay each month. Use a home affordability calculator like Zillow’s to see how much home you could potentially afford — but don’t get too attached to the number.

There are some important things to note about home finances:

Your mortgage is not all you’ll owe.

If you’re paying $1,800 a month in rent, that doesn’t necessarily mean you can afford a house with an $1,800 monthly mortgage. There are other things lumped into your payment that renters don’t have to deal with, most notably homeowners insurance and property taxes, which will add a few hundred dollars to your monthly payment. Buyers who put down less than a 20% down payment may also owe private mortgage insurance (PMI).

There’s also water and sewer, for which your town will probably bill you quarterly – we pay about $75 a month for that. And as much as you hate to think about it now, you’ll also need to budget for the inevitable repairs and maintenance. As I mentioned earlier, if your house will need a new roof in five years, that’s going to cost about $10,000 — or $167 a month for the next five years.

You need savings. 

Forget the down payment for a minute — that’s important, but as a first-time home buyer it’s possible to secure a mortgage with a small or even no down payment. But even without a big down payment, you absolutely need to have some savings built up (and that means don’t use every last dollar on your down payment).

Just putting in an offer, as you’ll see below, requires a $1,000 good faith deposit. When we were struggling to cobble that together in time to make our first offer, we realized we were out of our league and decided to sit out for another year, saving up.

Plus, when you move in, there will be 100 things you want to fix or change, and they will all cost money. You might need new furniture – lots of it. And you don’t want to go into your first winter as a homeowner totally broke, because then the heating system or hot water heater is almost guaranteed to crap out on you.

A mortgage is relentless.

As a renter, if you lose your job or get a pay cut or simply want to skip town and bum around Europe, you can just move out at the end of your lease (or even break your lease and find a replacement tenant).

But when you buy a house, and you can’t or no longer want to make the monthly payments on it, there are really only three avenues available to you:

• Become a landlord and rent out your house to cover the mortgage.
• Sell the house.
• Or get foreclosed on.

We’re landlords, and it’s a pretty good deal – but it’s also a lot more work than you think, and full of random headaches, even with great tenants. Selling a house is easy in Boston right now, but it wasn’t always (and won’t always be). And it still means uprooting your life, moving, and paying 5% or more in sales commissions to a realtor. Meanwhile, foreclosure isn’t the end of the world, but it will really tarnish your credit for years to come, which has all kinds of impacts on your financial life.

I don’t mean to freak you out, it’s just the truth. And thinking this stuff through actually helped my wife and I come to grips with the commitment of buying a house.

We figured out the market rent we could charge for both units in our two-family and realized that if we were ever in a real jam (or wanted to spend another summer in Ireland), we could rent out both apartments and pretty much cover the mortgage. That made us feel like we had an escape plan — just in case.

Step 4: Get pre-approved for a mortgage (4-8 months before closing)

Right about now you should get pre-approved through your bank. This isn’t the same as “pre-qualification,” which is essentially a nonsense thing you can do by running your numbers through a calculator online. Pre-approval means the lender will examine all your tax forms and W-2s, recent pay stubs, savings, retirement accounts, and debt obligations in the context of current interest rates and tell you exactly how big of a mortgage you qualify for.

This step is crucial for two reasons:

First of all, you need to know that you can actually qualify for a mortgage before you make an offer on your dream house. You might as well find out sooner than later that your credit score is lower than you realized, or that your debt-to-income levels are too high. (Lenders want your total monthly debt payments – including student loans, car payments, credit cards, plus your potential mortgage – to be no more than 43% of your gross monthly income, and ideally much lower than that.)

Second, in a cutthroat real estate market like Boston, where you’re competing with all-cash offers and dozens of other desperate buyers, your offer simply won’t even be considered if it’s not backed up by a pre-approval letter. It’s is a prerequisite these days.

When you’re done with this, keep all those financial forms in a special folder (and keep updating them with new pay stubs or more recent bank statements), because you’ll need them again for the final mortgage. A pre-approval letter is usually valid for 60 or 90 days; if it expires before you find your home, simply resubmit this paperwork.

Step 5: Go full throttle (3-8 months before closing)

Financing squared away, pre-approval letter in hand? Now you’ve got your ducks in a row. Time to hit the market hard.

Once we honed in on Quincy, it wasn’t the whole town we were interested in: It was about a square mile of Wollaston, the area wedged between the Red Line and Wollaston Beach. THAT’s where we wanted to be, and so we obsessed over every new listing, went to every open house, and even drove around looking for For Sale by Owner signs just in case. Because there just wasn’t a lot up for sale in this little patch of Quincy.

Our realtor sent us MLS listings that he knew we might like, but I hit the boards harder, searching Craigslist, Redfin, Trulia, Zillow, and every other listing site imaginable — and mixing up my search criteria.

This is an important but often overlooked tactic for anyone researching stuff online and trying to get an edge: Try searching with different keywords and price points — you could be missing something.

For example, some listings in our neighborhood don’t appear as Quincy — they call it Wollaston, like it’s a separate town, so the listing doesn’t turn up in a search of Quincy. Crazy, right? If you can find that hidden listing, you’ve got a minor edge because a lot of other people won’t – at least, not at first.

Or take our two-family: It had originally been listed at $449K, too high for us; we hadn’t even seen it in our searches because it was over $400K, which was an unreasonably high ceiling already. But then they re-listed it at 399K, and it popped up for us — and for a bunch of other prospective buyers. We later adjusted our upper limits to be a bit higher so we could track those out-of-reach properties in the back of our minds in case they trickled down in price.  (Of course, this has a painful side effect: You start to see all the beautiful houses you can’t afford, and that can tempt you to overspend. Don’t do it!)

Step 6: Submit an offer (1-2 months before closing)

By now, if you’ve done your research, you’ll know when you find the right home. You’ll recognize if it has most of the features you want, and if its flaws are the types of things you can live with or don’t mind fixing. You’ll know whether it’s fairly priced and falls within your price range (or could be bargained down toward it). Ideally, you’ll even be able to imagine your life in this house.

That means it’s time to make an offer. Your agent can help you decide on the exact amount — whether to go above or below the asking price — but know your own limits, and don’t overreach. Your agent will prepare all the paperwork for you to sign, and then submit the offer on your behalf, accompanied by your pre-approval letter and a good faith deposit of $1,000 or thereabouts. (You’ll get this back if they don’t accept your offer.)

It’s a big step, and unfortunately it’s sometimes a really quick one, because a good deal doesn’t last long. If you see a really attractive new listing, you’ll probably want to get an offer in by Monday or Tuesday at the latest. (See why you want to be pre-approved ahead of time?)

Because the tricky thing is, in Boston anyway, a lot of other buyers may have come to the same conclusions about this home. Bidding wars have made a comeback in the past couple of years, and they can break your heart and stress out everybody involved.

What’s more, a lot of buyers are making all-cash offers, which are more enticing to a seller because there’s no chance that the sale gets held up by financing hiccups. (Even a pre-approval isn’t bulletproof if interest rates suddenly shoot up or the bank finds something fishy in your finances.)

As I said, there wasn’t much available in our desired neighborhood. So we waited, and waited, and waited. We made offers on three houses over the course of about 10 months — each one a heartbreak when it didn’t get accepted — before we finally landed our hulking two-family.

Step 7: Sign purchase and sale (1-2 months before closing)

The buyer may accept, reject, or counter your offer — our offer was lower than asking, and so we ended up going back and forth a couple of times over a few thousand bucks. Once your offer is accepted, it’s time to sign the purchase and sale agreement (P&S).

Your agent can walk you through this form and any disclosures or exceptions the seller stipulates, but it’s pretty standard. You’ll include your own ifs and buts — for example, the deal is contingent on the home inspection and your ability to secure financing — and then decide on the official closing date, which might be 30 or 45 or 60 days in the future.

Step 7a: At this point you’ll, want to call your lender, finalize your financing, and lock in your mortgage rate for the corresponding time frame (e.g., 60 days).

Basically, this is where you legally agree to buy the house, assuming everything goes OK with…

Step 8: Get a home inspection (1-2 months before closing)

You have about 10 days after signing the P&S agreement to get the home inspected, and YOU ABSOLUTELY SHOULD DO THIS.

Especially with your first home, which could be a fixer-upper since you’re just starting out, and especially in the Boston area, where most houses are 50 years old or more and have weathered some brutal winters, you need an experienced pro to give your biggest-ever purchase a thorough once-over. (Imagine buying a used car for $300,000 — it’s a Rolls Royce, I guess? — and not taking it to a mechanic first!)

Your inspection should take a solid couple of hours, and if at all possible you should be there in person. This isn’t just to make sure they do a thorough job, but to learn about any trouble spots in the house and to ask questions about how big a deal any given problem might be. You can even ask the inspector whether he’d be comfortable letting his own kid buy the house.

Some stuff that sounds scary or looks bad really isn’t a big deal in the grand scheme of things: For example, we had old asbestos insulation on the pipes in our basement, but it only cost about $1,600 to get all of it carefully removed by a pro. Meanwhile, other stuff you can’t even see could spell big trouble, like rot or termite damage. Your inspector can spot warning signs and help you determine the difference between cosmetic issues and major problems.

There’s another big plus to having a home inspection: If your inspector finds some problems with the house, you can use that as an escape clause to get out of the purchase — or you can sometimes even use it as leverage to bargain down the price a bit.

For example, if the inspection shows that the deck or the roof will need to be replaced very soon, you could ask the seller to lower the price by the cost of a new deck, or half the cost, or whatever you can agree to.

If there are bigger, intractable problems — like a badly cracked foundation or termites — you can wriggle out of a potentially disastrous sale. (You’ll lose your $1,000 deposit, and the cost of the inspection, but that’s a small price to pay to avoid getting stuck with a lemon of a house.)

Either way, it puts some pressure on the seller to get the deal done, even at a discount — because once a home inspection turns up a problem, it has to be disclosed in the home listing if it goes back on the market.

Step 9: Line up a lawyer and insurance (1 month before closing)

Before your closing date, find a local real estate attorney (your agent can probably recommend one) to review the paperwork and contracts on your behalf and attend the closing with you. It’s another $400 or $500, but it’s the biggest purchase of your life. Don’t skimp here.

You’ll also need to line up homeowners insurance — the bank won’t cut you a check until it knows the house is properly insured, in case it catches it on fire the minute you buy it. Try getting coverage through your existing car insurance company if you’re happy with them, since most companies offer a discount if you bundle services. But it’s not a bad time to shop around for both services.

Step 10: Closing time

Here it is, the big day. You might do a walk-through at the house to make sure it’s still standing and that any contingencies in the P&S were met (for example, if the seller agreed to fix something as a condition of the sale).

Then it’s time for the closing ceremonies, if you will. Your agent and your attorney will be there, as will the seller and their agent. Our closing was at the attorney’s offices; it took about an hour or more.

I’ll warn you: Closing is cray-cray. It can be tense, depending on how the negotiations went. You’ll have to get a bank check from the teller for like several hundred thousand dollars and carry it around with you, which is nerve-wracking — at least for me, I can barely handle carrying a $100 bill. (Buying a house was like the first and last time in years that I needed to go to the teller in person!)

And you’ll have to sign about five hundred pieces of paper (not exaggerating) that look and sound pretty scary. But most of it is very standard stuff that everyone else in the world has signed. Your realtor does this like once a week, so he’ll let you know if anything seems off.

At the end of it all, you’ll get the keys to your new house. YOUR. NEW. HOUSE. For reals!

And that’s it. It’s yours. Congratulations!

Now it’s time to get started on this first-time homeowner’s checklist!