A Lot Can Go Wrong When Buying a House

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(This article was originally published in NextMove, our weekly newsletter on the housing market. Sign up for it using the box below.)

My colleague Dashia Milden wants to share some advice she wishes she had on her homebuying journey: Read the fine print carefully and ask questions. It could help you avoid an expensive surprise at closing.

Milden’s story has to do with discount points. When your lender says they’re including “discounts,” that doesn’t mean 10% off. A discount point is actually a fee you pay to lower your interest rate, but it usually means paying thousands of dollars upfront. These points can make sense if you’re planning on staying and not refinancing for a while, but your lender should explain what you’re getting into and what it means.

In Milden’s case, she and her husband were surprised when these points added $14,000 to their expected closing costs. In the world of closing day surprises, that’s a big one. Read Milden’s story to find out what happened, along with some expert advice on how to avoid a similar situation. 

This is Jon Reed with NextAdvisor. I’m also a homeowner, so I too have a story about things going wrong while buying. One major mistake my partner and I made was that we didn’t think about how we were going to get our “cash to close” – that’s a sum you need when you sign all the papers that usually includes your down payment and other costs that aren’t rolled into the mortgage. The catch: You can’t just write a personal check.

We learned too late that the money you bring to the closing table can be done either through a wire transfer, which often takes a few business days, or  with a certified check, which you can get at any bank branch.

The problem? It was Friday evening, and closing was scheduled for Monday. Our down payment money was in an account at a major national financial institution that didn’t have branches in our city. The nearest branch was 125 miles away, and it just happened to be open until noon on Saturday. 

So we got up early the next morning, drove through snow to a small town near the Ohio-Indiana border (stopping once for a beaver crossing the road), and  got a certified check. And we held onto it for dear life until we got home.

Two days later we had the keys.

Buying a house can be a pain, and it seldom goes smoothly. Any minor thing can turn into a headache. But in the end, usually, everyone is eager to do what’s necessary to get the whole thing over with. And then you own a house.