Planning for Unexpected Home Expenses
Join us to learn from new Vice President of Mortgages David Pendley on how to best plan for unexpected home expenses when you purchase a new home.
00:06 Lynne Jarman-Johnson: Money, I’m Home. Welcome in. I’m Lynne Jarman-Johnson with Consumers Credit Union. From finance to fitness, we have it all. And I’ll tell you what, today we do have it all. We have the most amazing guest today. David Pendley is our brand new … I can say still say brand new, can’t I David?
00:24 David Pendley: Sure, sure.
00:25 LJJ: Vice president of mortgages here at Consumers. Then I’ll tell you, we do have a wonderful mortgage program. We’re going to talk a little bit about that but we’re really going to focus today on something that it really hit a chord with our members. We did Winning Member Wednesday [on Facebook] and the question was, “Hey, what expenses did you get totally blown away, surprised about, when you bought that new home?” David, I’ll tell you, you’ve been in the industry for quite a long time. You’ve probably seen it all, heard it all?
00:51 DP: Yeah, I have. I’ve done this for many, many years, actually several decades. Yeah, buying a house; it’s interesting. I’ve bought multiple houses, and I still get surprised by the expenses and the unexpected expenses.
01:05 LJJ: Let’s first talk a little bit about you.
01:07 DP: Sure.
01:07 LJJ: You just came to Consumers Credit Union, but you do have a long history in the mortgage industry. You must have a passion for helping people get that dream home.
01:16 DP: Yeah, I do. I bought my first house in downtown Chicago when I was 23 years old. And I remember I couldn’t believe they actually lent me money to buy a house. But I walked out of that closing very enthusiastic, empowered, exhilarated, and I felt humbled that they would trust me to buy this house. And so, as I’ve seen families and individuals in all different stages of life buy a house, I love to walk alongside them. And you know my favorite people to work with are the people who want to learn about the process and gain an understanding. And so, it’s just a blast to teach people how to do this and walk them through it.
01:56 LJJ: Well, every week on our Facebook page, we have something that’s called Winning Member Wednesday. And this one really hit a chord with our members. And it was focusing on what was an unexpected expense that you just really hadn’t thought of when you purchased your home. I think the number one across the board, which was something that I know, I think after we purchased our home, the very first thing that went was two years later the roof. And that’s a big price ticket item.
02:26 DP: Yeah, that’s just not a fun thing to buy, it’s like tires for your car. You just need it, but people don’t compliment you on your tires or your roof. It’s expensive. When you’re buying a house, a great home inspection is so invaluable with things like that, the things that we just generally don’t understand. So, you can start setting aside money for those repairs that are going to be needed.
02:48 LJJ: When you talk about the inspection, I know that there’s many people who … On the buyer side, it’s so important to really read every single item that’s in that inspection. And on the seller side, you’re so proud of keeping your house up-to-date and then all of a sudden, something comes through. But truly, that does help in the sales process.
03:08 DP: It really does. It really does. When you go buy a house, I always encourage people to build a team. And that team consists of a great realtor, maybe an attorney if you’re in an area where you just want some guidance on the contract, of course some people who might have gone through the process before you. One of those people on your team is a home inspector, and a home inspector would be somebody maybe you found or was referred to you—maybe not by the realtors or somebody who has a vested interest in the transaction, but somebody who will be completely candid. And don’t use your Uncle Bob or whoever, to do the home inspection. Use a professional organization, somebody who’s been trained to do this, because they will find things that at least get you know what you’re buying. And sometimes the sellers will accommodate some of those repairs, and then sometimes they won’t, but at least you know down the road, “I’m going to need a $10,000 roof” or “Our furnace has got about five years, then it’s done.” But the home inspectors, there’s a lot of liability attached to what they do, so they do want to pull out any unknown or unforeseen expenses that are going to be coming up in the near future, hugely helpful.
04:14 LJJ: So, David, over the course of the years I know you have owned homes, but you’ve also helped individuals. It can be very daunting and also almost deflating if all of a sudden you find out, “Holy cow. This is an expense I didn’t expect that I was going to have prior to signing.” But how important is that to really not try to get emotionally attached?
04:37 DP: Yeah, it’s interesting. My brother just closed on his house two nights ago. He called me Sunday night, and he’s freaking out, and he’s bought multiple houses. And it’s like there will be a heightened sense of emotion—some post-purchase dissonance, if you will, about, “Am I doing the right thing?” or, “Is this crazy? Am I nuts?” You’ll get through it. Once again, lean on your team; don’t ask the realtor. Your friends that are working with you in the process, or your house seller, or whoever and just say, “Okay. Let’s talk this through.” But you will get through it; just have the right experts on our side so you can work through these issues.
05:15 LJJ: So what are some of the items that you think people don’t think about that are those expenses that just pop in? What are some that our members talked about?
05:24 DP: Yeah, some basic things that just come up when you buy a house. When you look at that house and first … You walk through the very first time, my guess is that house is probably the best it’s been in years. They’ve done the landscaping, they’ve just made it look meticulous, their furniture looks amazing there. But when they move out, all of a sudden, you see the fade marks, and the carpeting, and the walls are all marred up maybe that had been hidden by the furniture. And then when you get in the house and you see that they … “Wow, this landscaping is beautiful, but boy this is going to take some upkeep. So some of the expenses are, of course, furniture. Everybody forgets exterior furniture, like your patio. You’re going to want to sit on a deck on a day like today in the summer, but you’re going to need patio furniture, maybe a grill, interior furniture.
06:09 DP: The other thing people always forget about, and they’re expensive, is blinds and curtains and things like that. It looked great with their stuff, but it doesn’t look so great with your stuff. Today everybody has flat-screen TVs, and some people are mechanically inclined, and they can install those on a wall. Some can’t. I mentioned my brother. He had to have a company called AVT come in and put in all the flat screens, because they had to wire electricity. He wasn’t expecting to spend $2,200 for that. Appliances, sometimes people, for some reason they take their refrigerators with them, or you just want a new refrigerator or things like that. Appliances can be surprises.
06:46 DP: Usually when you get a house, maybe it’s your first house, you don’t have all the equipment, like the lawn care and maybe the mower, or maybe you’re going to have to have somebody mow your lawn. So those are some of expenses that, “Man, I got to take care of this lawn. I want my landscaping to look as good as it did when we viewed the house.” Snow removal. What am I going to do? I live in Michigan. I have a big driveway. Shoveling gets not fun real quick, so maybe you want a snowblower, or maybe you’re going to have to pay somebody to do that. I just talked to a young person here who works for us, and I said, ‘Tell me about the surprises,” and she goes, “Surprises?” She bought her first house when she was 20; it’s amazing. She goes, “Gutters. Nobody told me about gutters.”
07:23 DP: “You’ve got to clean gutters.” She goes, “I didn’t even know how to clean a gutter.” But to get on a ladder, a two-story ladder, to clean your gutters, who would have thought, you know? It’s a minor thing, but boy, you don’t clean your gutters you’re going to have problems. Dog fence. You have dogs, and you’re like, “Okay, what am I going to do with my dog?” You know? Things like that, those are expensive. Air filters for your furnace, maintenance, tools. There are quite a few things, nothing to be afraid of.
07:50 LJJ: The list just goes on and on.
07:52 DP: Exactly. Don’t be afraid of it. Just talk to people and just start budgeting, but you don’t want to walk into that house, day one, flat broke. You want to have a little bit of a cushion for those surprises. It’ll just give you a peace of mind.
08:03 LJJ: Well, and that is a really good point, David, because I know a lot of people they get so excited, they were pre-approved for an “x” amount, but really what you’re saying is look at that amount that you’re pre-approved for, and also think about the things that are going to be coming down the pike when you purchase your home—whether it’s your first one or your seventh.
08:21 DP: Absolutely, absolutely. It always makes me nervous, especially we’re seeing so many new construction deals come through right now, and the day after closing I’m like, “How are they going to pay for anything extra?”, because in new construction, especially, you have a lot more than maybe even an existing house. But yeah, have a cushion. I promise you you’re going to need it. You know?
08:42 LJJ: Right. Well, you know, especially with new construction, the landscaping. I remember Rick Vice from Fruit Basket Flowerland, who has always said to me, “Your landscaping is your outdoor living room.” And if you don’t think about it that way, you literally will be so sad, because the money runs out really fast.
09:03 DP: Yeah, it sure does. It sure does. I was talking to this young person about her house, and she said, “The other thing I wasn’t anticipating is time.” I’m like, “What do you mean, time?” She goes, “It takes a lot of time to own a house.” She’s a single woman, and she said, “On weekends I’ve got things to do. I’ve got to weed my beds. I’ve got to clean my windows, because they’re gross.” and things like that. So, there’s an allocation of time when you buy a house, not just money.
09:30 LJJ: Absolutely. Well, David, tell us a little bit about our Fast App. We have had lots of people who absolutely love it. It’s a new mobile app that allows you to connect with everybody that is in the process of you buying that home.
09:45 DP: The buzz in most industries right now is POS, or “Point Of Sale”. It’s like the most important thing everybody is trying to be successful at. Amazon is so far ahead of everybody. They’ve learned how to get people who aren’t technically savvy to buy a whole bunch of stuff on their website. The mortgage industry has caught up to that, and they realize that people want to apply for mortgages sometimes at midnight, sometimes at 1:00 a.m. Maybe there’s two people, or three people, doing the mortgage, and they can’t all meet in an office at 3:00 on a Tuesday afternoon at some bank. So they all do the Fast App, and it’s a very personal way where you can fill out your own application, the questions are very user-friendly and very simple. It will literally authorize you, or you will be giving it authorization if you so choose, to have it run your credit, check your bank accounts at times, or your income. And it’s a great, clean, neat way to apply for a mortgage on your own time. Once we receive a Fast App, our team jumps on it, and our whole job is, A, to make connection with you and to verify the information, and then to get you pre-approved and give you real peace of mind. I look at ourselves as not just loan officers, but mortgage counselors. We want to help walk it just fit for you, try to find the right financial situation for you when you buy that house.
11:11 DP: So Fast App is a tool where we’ll send you a link, and it’ll allow you to apply online. If you ever want to come in, you’re always welcome to come in, or we’ll come there to actually write your application, but I think you’ll find this is a very user-friendly experience.
11:24 LJJ: Well, David, thank you so much. I know that, for me as a mom, I’ve had two of my children go through Fast App, and they never had to ask me a question, so there you go.
11:33 DP: Absolutely.
11:34 LJJ: David Pendley, he is our vice president of mortgages here at Consumers Credit Union. If you have any questions about your mortgage, please feel free to reach out to us. We’d love to chat. And if you have an idea for a topic, or someone you’d like to listen to, give us a shout out. “Money, I’m Home” with Consumers Credit Union. Thank you so much Jake Esselink for your production skills, and I hope everybody has a wonderful week.