Zina Kumok and Sam Leffers knew they wanted to be homeowners. The married couple also knew they were up against the clock and fierce competition. So when a charming, three-bedroom brick home in Indianapolis hit their inbox on a Friday in late May, they jumped into action and put in an offer — sight unseen.
Kumok, 29, and Leffers, 30, are self-employed freelance writers who run the personal finance blog “Conscious Coins.” Today, they are relishing their newfound freedom as homeowners.
In this Q&A, Kumok shares lessons they learned buying their first place.
Taking the plunge, finding a mortgage
What motivated you to make the jump from renting to homeownership?
Kumok: We were living in Denver paying $1,525 a month for rent. We realized that buying a home would be cheaper and we’d build equity. I went to Indiana University, and we have a lot of friends who live in Indianapolis so we decided to relocate there. We were tired of renting. Now we have no downstairs neighbors and no landlord telling us we can’t do something. It’s a good feeling.
What was the experience of shopping for a mortgage for the first time like?
Kumok: We shopped with three different lenders and the rates were fairly similar. We went with the lender our agent recommended because he was super responsive and was willing to work with us as self-employed borrowers. We submitted everything online except for a Social Security verification form, so that was convenient.
Did you run into any issues applying for a mortgage as a self-employed borrower?
Kumok: We thought it would be much harder, but it was pretty simple. There were only two pieces of information I had to provide extra documentation for: a letter explaining that our income wouldn’t change because of the move, and sourcing some deposits in our bank account. One piece of advice if you’re self-employed: taking a lot of tax deductions when you’re buying a home isn’t a good idea because it lowers your income.
Down payment, home search
What were the terms of your loan and how hard was it to save for a down payment?
Kumok: We knew upfront we wanted to do a 30-year, fixed-rate mortgage, because we wanted to put more money into investments rather than tying it up in our house. We had a price range of $100,000 to $200,000, and we figured we’d spend near the top of our range to get what we wanted. We spent a few years saving for our down payment and we were able to put 5 percent down on a conventional loan. Our monthly mortgage payment, including principal, interest, property taxes and homeowner’s insurance, is $1,282.
How did you find “the one?”
Kumok: We began working with our Realtor back in late April. He sent us automated emails when new listings hit the market. We noticed listings were coming off the market quickly. We saw this house in an email on a Friday, and the deadline to send offers was 6 p.m. Saturday. We had already arranged for a three-month lease in Indianapolis, and we were moving there on the following Monday from Denver.
We put our offer in on Saturday with an escalation clause to go to our max budget of $185,000. We also wrote a letter to the sellers explaining why we liked the house and that we are personal finance experts with good credit. We also sent pictures. There were six other offers, but they accepted ours.
Advice for first-timers
How did the process go from there? Any challenges?
Kumok: We had a home inspection contingency in our offer. The inspection found a lot of items that needed to be fixed such as plumbing issues and cracked mortar. In all, it was going to cost $14,000 to fix the problems so the sellers gave us a $10,000 credit at closing to go toward those repairs. And, because everything was fixable, it wasn’t a deal-breaker for us. Also, the appraisal came in lower than expected at $180,000. The sellers accepted the lower purchase price and we didn’t have to make up the difference.
Many first-time buyers are struggling to find affordable homes and save for this big financial move. What words of wisdom do you have for them?
Kumok: The sooner you save for a down payment, the better. Also, you’ll have to pay closing costs and moving expenses; those add up really quickly.
Unless you have an unlimited budget, you’re going to have to compromise on some things. There are some things that aren’t perfect with our house. The hardwood flooring isn’t an ideal color and we’re a little farther from our friends’ neighborhoods. But our backyard is huge, there’s a built-in deck, and we got a third bedroom we weren’t expecting. You’ll always give up something but, hopefully, you’ll get some things, too.
[This is the first in a series about first-time homebuyers. This interview has been lightly edited and condensed for clarity.]