Something big quietly happened in our household last week.
Remember a few months ago, I shared why we don’t play the credit card game? And that I know a big reason people reluctantly play the credit card game is because they want a good FICO score in order to buy a house? But that it just isn’t worth it to us?
Well…. We did it. We bought a house. And with almost no credit score. Today, we hold the keys to a modest fixer-upper that’s already seen our drops of sweat, and it’s not because of stress from a high interest rate, challenging paperwork, or biting off more than we can chew.
I hesitate to call this a “how-to” post, because I know every family’s situation is different. But I’d love to tell you how we bought our house by swimming upstream.
Grab yourself a cup—I’ve made this post as short as I can while still keeping in the essential details.
1. The early stage: contacting a realtor.
The first step was to find a trustworthy realtor we’d enjoy working with, so I went straight to Dave Ramsey’s ELP program and requested info.
One woman called us within 24 hours, and right away, we could tell she was a firecracker. She totally knew the market and the process of home buying. She didn’t care that we wanted a modest home with a small price tag. She didn’t laugh at our stupid questions.
In short—Sarah became our partner. We loved every minute of working with her. Quite honestly, we already miss her! She’ll be one of the first people we invite over for dinner once we’ve settled in.
Run, don’t walk, to Dave’s ELP program if you’re searching for a good realtor. Or insurance agent, or financial planner—because that’s where we’ve gone for those people, too, and it hasn’t disappointed us. Great, great people.
2. The search began.
The market is really picking up here in Bend, Oregon, so it was tough to find our house. We’d find something in our price range, only for it to be snagged by an investor within a few hours of its listing.
We made our list of essentials, made a second list of would-be-nice-but-aren’t-willing-to-die-overs, and searched patiently. It was hard, to be honest, because we just wanted to cut to the chase already.
But we waited and watched.
3. The money stuff happened simultaneously.
Behind the scenes, we were also looking for a mortgage provider. We knew this part would be tricky, because we’re an unusual case—we have almost no FICO scores, and we’re not willing to open lines of credit just to have one. But we also knew this is how the game is played 99 percent of the time.
We contacted Churchill Mortgage to see if they had any leads in our area, and they pointed us to a particular company. Well, they couldn’t help us, but they pointed us to Wells Fargo, and said they sometimes offer mortgages with “traditional underwriting.”
Wells Fargo? A big bank? Really? It surprised us, but we were running out of ideas, so we called anyway.
Turns out we didn’t scare them off. More than a few people laughed at us and told us we were screwed, but Wells Fargo didn’t bat an eye. They wanted to work with us—hooray! But now the real work began.
Our soon to be non-ugly front door.
4. We went the traditional, untraditional route.
So there’s something called traditional, or manual, underwriting. This is basically the same way they approved people for mortgages back in the day before the almighty FICO score. The lender looks at your credit history, and if there’s not enough information, they create a “manual credit report” by gathering details about your financial history outside of debt.
We’ve been debt-free since early 2009, and even then, we only had my student loans. We hadn’t had open credit card accounts since 2005. So began the process of creating enough of a financial history to replace a credit history.
We had to write out our bill paying information—everything from health insurance to cell phone plans to utility services. And then Wells Fargo called each and every company—with me on the other line—to verify all this information.
Needless to say, it took awhile.
They also asked for our tax statements, employment history, and references so they could call them and verify that we weren’t in the mafia. In short…. They went way out of their way to make sure we, in all our debt-freeness, were upstanding citizens who would pay off their mortgage.
Ironic, isn’t it? Because we’re debt-free, we have enough money for a sizable down payment, plus plenty to make hefty monthly payments. But because we’re debt-free, we have to jump through hoops to prove our financial stability. I laugh at the way things work these days.
5. We saved our money.
All along, we had been saving money with a specific, reachable financial plan. After we became debt-free, we saved up for an emergency fund. Then we had to use most of that emergency fund, so we saved up for it again.
We set aside funds for smaller things, like a vacation, buying a family car, and moving (okay, so those things aren’t smaller). But all along, we threw any extra money to our down payment fund.
It took awhile, but we were persistent. And close to the end, every little dime went to that fund. And sure enough… by closing date, we had more than 20 percent of our house’s purchase price saved. Enough for a sizable down payment.
It has really helped us to have separate savings accounts for each of these savings goals. We love Capital One 360 because they allow as many savings accounts as you want, you can change their names, and it’s easy-peasy to transfer money around. Highly recommended.
6. We found our house!
Honestly, we saw our future house in the MLS a few times and didn’t think much of it. We thought it was pretty, but the price didn’t seem right for the size and location, so we assumed something was wrong with it. Plus, it was a little outside the location we preferred.
But once we saw it, we really, really liked it. The layout was good, it had amazing natural light, and best of all—it had potential. We wanted a fixer-upper because we wanted to put our stamp on a place, and Kyle used to be a contractor, so he has mad skills.
Finn is as shocked about the natural light as I am.
I’ll spare you the details behind the price negotiation, because it went back and forth for awhile. Offers, counter offers, counter counter offers, counter counter counter offers…. you get the idea. We walked away for awhile. But we eventually came back. Our rockstar realtor was unbelievably patient and persistent.
It really helped that I stayed emotionally unattached until we actually signed. Up until closing, I was willing to walk away if it didn’t work out. We also didn’t talk it up too much in front of the kids, because they really liked the house (hey, it came with a clubhouse in the backyard), and we didn’t want their hearts to break.
7. …And then one day, we signed.
Signing day was fun, but it was also a bit uneventful. Our stack of paper really wasn’t that high. The title representative joked that she had never seen so much blank paper listing the liabilities—paper we still had to sign to acknowledge that yep, we really, honestly, truly don’t have debt.
We got a great deal—a 15-year, fixed-rate mortgage with a 3.5 percent interest rate. According to Kyle’s hardcore spreadsheets, we should have it paid off in three years.
So now we’re cash flowing renovations. Be prepared—you’ll probably see lots of before and after pics in the coming months! I’m excited to share how we’re saving money and making this house into our home.
It’s a week of celebration for us—a milestone for this very nomadic family (which, in case you’re wondering, this home purchase actually helps us travel more). We are humbled at God’s goodness.
I don’t want to run this topic into the ground, but I’m also happy to go into more detail, if you like. Do you have any specific questions about our experience? Anything else you’d like me to write about?