Buying a House


As you recover from the nuanced originality of the title, let me remind you of a few simple facts.

A. I am not an economist or a loan officer.

B. I am not giving you financial advice.

C. Renting sucks.

My family and I lived in a rented home for three years. 

Do you know what that means? It means we incinerated $37,500 of hard-earned money.

Yes, yes; we had a place to live. And I'm grateful for that.

And yes, we did not have to fork out money for repairs, etc.

But at the end of the day (or the years), we were left with nothing.

I don't know about you, but that pushed me to the brink of vomiting every time I thought about it.

I don't like vomiting, or cleaning it up; thus, we began searching for a home to buy. It's really quite simple.

Are you in a similar position? If so, follow these steps:

1. Save money.

Perhaps you already save money. Great. But this time, you need to save tens of thousands of dollars to make your down payment. 

And don't snort the magic fairy dust of 0% down. That will infect your nostrils and give you chronic encephalitis. It's nasty stuff. (Read more here.)

2. Shop smart.

Know what you want and go after it. 

Make lists. 

Do homework. 

Talk with (not at) realtors and listen to what they have to say. They do this literally every, single day.

You may think that you have to increase your price point to get what you want, but maybe you just haven't looked hard enough. Great deals are out there. 

I think we found one when we bought our house last year. It wasn't a foreclosure, but it was exactly what we wanted, and a little more, for exactly the dollar amount we had in mind. 

I call that a win.

Buying a house can make or break your financial future. Doing it whimsically or impulsively is akin to brushing your teeth with an unidentified brush that may or may not have been used to clean the underside of a toilet bowl. Good intentions without vigilance can lead to trouble. 

3. Get a good loan.

Technically, you'll need approval before you can really shop seriously; so maybe this should be #2. But let's not get lost in the details.

We locked in a 3.125% interest rate, which makes me smile. Our first mortgage was 7.0%, so cheers for giving less money to rich bankers! 

We also went to a local credit union instead of a giant conglomerate bank. They typically offer better rates.

We followed Step #1 pretty well, so we took a decent bite out of the home price with our down payment. This made the monthly payment manageable, and even eligible for paying over and above to kill that principle AFAP (as fast as possible, it's not a lisp).

We also opted for a 15-year loan because we want to own our home before we have gray hair. (Read more here.) And let's be honest, it's not a question of whether you can get a 15-year loan, it's whether you will get one. You may need to buy a less expensive home, but imagine all the money you could save/spend in 15 years of NOT having a mortgage payment. 

If that doesn't motivate you, I can't help you. 

This falls nicely in line with the famous (or infamous) line from Dave Ramsey: "If you live like no one else, some day you can live like no one else."

4. Double-check your new home's neighborhood.

In Step #2, you should have researched neighborhoods, home value trends, school districts, etc.

But before you pull the trigger, it might be is a good idea to go back and re-assess your analysis. Perhaps it was 1:45 AM when you were reading something on realtor.com, and double vision caused you to see five stars when there were only two. Maybe your kids were screaming at you when you were looking at comps in the neighborhood, and you were off by $50,000. 

Just go back and look. Have someone else look too. I mean, unless you're too cool for stuff like that. It's just the biggest financial investment of your life.

Let me speak from our experience. At least 50% of the reason we bought our house was the neighborhood. We liked the other houses, the yards, the people, the location, the parks, and the cul-de-sac. But more importantly, we liked that home values in this neighborhood had been increasing steadily over the previous 12 months.

Lastly, the home we bought was fairly close to the median home price for this neighborhood. (Read more here. See #12.) That means many of the houses in the neighborhood were selling for much higher prices than what we paid. That drives the price of our house upward when the next appraisal happens. As it turned out, three other homes on our cul-de-sac sold in the last seven months. The result? Our home value went up. 

Conclusion:

Buying a house is a big deal, so take time to lay a good foundation before you dive in head first.

I'm not telling you I'm an expert, or even that I take credit for the good things I mentioned in this post.

But following these simple guidelines will give you (and me) the best chance at success. 

I am learning as I go, and some of those lessons cost us lots of money! Our first home was purchased in 2008 (*cringe*), and it did half-a back flip, landed upside down on its head, and broke its face. We've been trying to stop the bleeding and repair its teeth ever since. 

If I learned one thing from that experience, it's that I am capable of making super bad financial decisions. And as much as I can help it, I plan to never let that happen again.

Image credit:
Image of sold home from http://record-transfer-services.com/buy-house/

3 comments:

  1. I agree, before buying the new home you need to make a cross check of your neighbor. Of course, there are some other things to consider while buying a house. My concern is to go for a good property management company; they can assist you with the house of your choice at an desired place and with an affordable price. You may check out Property Manager Greensboro, NC for more inquiry. Honestly, you should not take any risk while buying a house as fraud case may happen to you.

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