Post # 1
FI and I both just got some awesome new jobs after 4 years of searching that pay us both ALOT more than we were previously making. We were thinking about moving into an apartment since we were both still finishing up school, but after talking to some friends and doing some research we found that it would make so much more sense to just buy. It will only be $200 more.to own a 3 bedroom home than to rent a 1 bedroom apartment. Im so excited and nervous at the same time. There is so much information to take in and so much more research to be done. We have no idea what we are doing and as of right now neither of us can tell our parents we are house shopping (both our mothers will freak and try and talk us out of it). So now I have come here. Anyone have any advice for 2 people who are completely new at this? Any unexpected costs you encountered or anything? Just whatever advice you have.
Post # 3
@thefuturemrsD: While home buying is exciting, I would like to encourage you both to seriously consider the commitment given you both just got new jobs. Being in a job for 1-2 years lends to more financial security knowing that it will work out. Obviously it is impossible to be certain that unfortunate things won’t happen (i.e., layoffs, you hate it, etc), but sometimes being cautious doesn’t hurt. Personally, we waited until we were both in our respective jobs for at least two years.
I would also suggest making sure you have a sizeable savings amount (after the down payment/closing costs are made). Only $200 a month seems like nothing, but if you have to repair the roof, replace a water heater or make a large purchase, you could be in trouble pretty quickly.
Lastly, it is typically recommended that housing costs not exceed more than 28% of your monthly take home income. So be sure that your estimate includes home owners insurance, taxes, and monthly upkeep costs.
Otherwise, best of luck and enjoy the process!
ETA: If you are not planning on staying in the same area (city or neighborhood) for at least the next 5-7 years, you may want to reconsider buying. Also, having a sizeable downpayment is typically recommended too. 20% is ideal, and while you can possibly get an FHA loan with 3% down, you may end up paying more in the end due to pre-mortgage insurance and interest accruing over the years. Just some things to consider!
Post # 4
Why would your parents try to talk you out of it if it is a good financial decision for you guys to make right now?
Post # 5
@bmo88: Thanks fot the advice. We actually have over $20000 saved up for a down payment on a house which is why we decided to start looking now. While my job is actually a new job FI just got a promotion within his company so his job should be safe. We also did a whole calculations including taxes, utilities and what not to make sure we would definately be able to afford what we want. We arent planning on doing anything permenant for a few months though.
@peasantsong: Because his mom thinks we should live in her house forever and never leave, and gets angry anytime we entertain the idea of getting our own place. My mom cant afford a house right now so she likes to try and talk me out of the idea of buying a house.
Post # 6
Have you gotten preapproved from multiple lenders? That should give you more of an idea of what to expect as far as your approval amount, interest rate, closing costs (usually $5-10k upfront) etc. Are you including insurance and property taxes in your estimate that a 3-bedroom only costs $100 more a month? Have you factored in closing costs, appraisal fee ($400) and inspections ($500-800 usually) into your savings outside of a down payment? I think just talking to a bank about your employment history, credit scores, savings, etc is the first step.
Congrats! Buying a home is stressful but sooo worth it :-).
Post # 7
@thefuturemrsD: My FI and I just bought our first home and have had keys for 2 weeks today! It is so much fun house hunting, but the process of putting in offers, getting a counter offers, getting updated bank statements, waiting to close, and closing is a VERY stressful process. I never thought it would be that stressful, so just be prepared. There’s a lot of things you don’t know about things when your a first time home buyer.
I definitely recommend finding a great realtor. Ours was amazing and we couldn’t have asked for a better one. She’s been doing it for many many years and always had our best interest in mind at all times. Make sure you guys sit down and decide what you can and can’t live without in a house. You most likely will get pre-approved for more than your willing to spend. When we went to get pre-approved we told them a price we were comfortable spending and wanted to know if we were approved for that. We didn’t want to know what we were really approved for.
For a FHA Loan we were told that whatever didn’t pass inspection we would have to get permission from the sellers for us to fix. Chipped paint, bad roof etc Just because you fix it doesn’t mean it will be yours either. You could put thousands of dollars into it and something happen to where you can’t buy it. So we went conventional because it made more sense for us. If you don’t have at least 20% down for a down payment then you will have to PMI which is insurance. It’s about an extra $80 a month for the next 3-5 years depending how much extra we can pay and then it will come off. You will have to pay for the inspection and the application fee out of pocket. We also had to get someone to look at the furnace so we had to pay half for that. There’s defiantly more expenses than I had originally thought before, during, and after buying a house.
We looked at 13 houses total in about 3 months. Some houses were okay and a few were just awful and disgusting. I thought we would never find one worth buying. I always thought how do you know your choosing the right house. Well you really just know. When we walked in, it just felt like home. I could imagine this being our first home. There really wasn’t nothing we disliked about it. This was the first house FI and I really liked which was surprising we agreed on it. Lol Sorry so long. I could go on and on. Lol Hopefully this helped. If you have any other questions just let me know! 🙂
Post # 8
I would advise buying something cheap for your first house.
Mine was a 900sqft mobile home! My mortgage payments were like $400/month (2br, 1ba). Now that we’ve sold it, we’re using the 40K as a downpayment on our (hopefully) “forever” home!
Post # 9
- Wedding: October 2011 - Bed & Breakfast
I just want to echo a pp…. is your $20k down payment savings in addition to your 6 month emergency fund and your closing cost fund and your settling into your new home fund? I don’t want to be a downer, but you need to have more than just a downpayment. If the water heater busts a week after you move in, you are responsible for buying a new one, paying someone to install it, and cleaning up all of the water that leaked out of the old one all over your basment and stuff. You need money on hand for those sorts of emergencies. You are also going to need money for trash cans, lawn equipment, ladders, tools, and all of the random items that come with home ownership. Those expenses add up really quickly. Also, make sure your budget calculations allow you to save 3-5% of your home’s value every year so that you are ready for big repairs and maintenance items (new roof, deck replacement, new HVAC system, etc.).
On another level, make sure that you want the lifestyle that comes with home ownership. Make sure that you really want to be responsible for investigating and calling lots of contractors for quotes, that you want to do yard upkeep every single weekend, that you are cool with doing your own snow removal (if appropriate), that you don’t mind raking and bagging leaves multiple times each fall, etc. Not everyone actually likes owning a home.
Post # 10
Thanks so much everyone for all the wonderful advice!
@lovekiss: Actually yes, FI just got a large inheritance and we decided to split it up between home downpayment, emergency fund, and wedding. We are also looking at new construction homes and they said at least 6 months before we would be able to move in so we plan on putting away whatever we would be paying for mortgage, utilities and what not before we move so we have an emergency fund in case (godforbid) someone ever got laid off or what not we would still be able to pay the mortgage. We decided to look at townhomes because they are relatively low maintence for our first home and also the builders we are looking at are offering 5-10 year warranties on the house covering everything (even a tile coming loose)
@MrsHotPink: Thanks so much for the excellent advice and congratulations on your new home!
@crayfish: I actually did a google search on everything we would have to pay and the property tax rates in the areas we are looking so I think I got almost everything covered. The cost of apartments here is ridiculously high unless you want to live in a really bad area. We haven’t gotten pre-approved yet. Right now we are still researching what would be best and what we would be able to comfortable afford, and we are also paying off all our credit cards so we have no debt. Then after all that is figured out we will start trying to get approved for the mortgage.
Post # 11
- Wedding: October 2011 - Bed & Breakfast
@thefuturemrsD: Going with a new build town home will definitely help minimize the hassles. 🙂 I’m sorry for your loss, but glad that you have your bases covered. If I may offer one word of advice about dealing with builders (and this comes from the experience of a good friend, so it’s not firsthand)…. choose wisely AND have your own real estate attorney look over everything. Our friends purchased a new build and were told all of these wonderful things would be coverend by the warranty and such, and our friends just believed the builder. Well, they got screwed. Things that were verbally promised mysteriously never made their way into the contract or warranty, and now our friends are stuck with repairs they never anticipated paying for. It really sucks for them. I think it would have been well worth their money to have their own real estate attorney look over all of the paperwork and explain it in plain english. Just something for you to think about. 🙂 Good luck!