Recently I have had the pleasure to call myself a proud American homeowner. Paying off a 30-year mortgage/death sentence is well worth the sacrifice to owning a home. No more rent. No more elephants walking above. No more can’t grill outside. Truly a joyful feeling.
My wife and I have been talking about purchasing a home since we got married but haven’t been stable enough geographically to settle down. In October 2016 we started saving and in November decided all the money we have saved will pay down for a home. Our main reasons to purchase a home were to move towards future ownership and more stability.
In the process I learned a few lessons and surprisingly the process was not difficult. I expected headaches galore but was pleasantly surprised to an easy process. Here are my lessons learned and hope it helps you with your first or next home purchase.
Buy During the Off Season
We started looking for a new home officially in December 2016. After looking at four different homes we put in an offer on our 1st choice. The offer went through even though two other parties put offers on the home the same day. Still not sure to this day how ours came out on top but that’s history now. With shopping during the winter we avoided multiple buyers in the field but gave up additional homes that will be on the market in the spring. In the neighborhood during the springtime it is common to see bidding wars over a property. To avoid the extra headaches and cash being spent, buying during the off-season was a smart move for us. The lesson to be learned is buying in the off-season gives the distinct pleasure of less competition.
The budget was $125,000 starting out and we knew which area/neighborhood we wanted to move in. The budget matched our wants, which were at least 3 bedrooms and 1 bathroom. Another bathroom would be amazing, however that would require our budget to increase at least by an extra $15,000. We ended up going over budget and I realized the importance to have a range. Often times a home may be a short reach out of budget and the cost of stretching the budget is only an extra $5 monthly. Sometimes the cost is not worth it in the long run. Lesson to be learned is to have a budget range with a max amount. Also, don’t forget to include closing costs in your budget just in case you get stuck with the bill.
Save More Money
Purchasing the house happened quickly, literally no more than four months from deciding we wanted to buy a home and grabbing the keys. We lived majority off of one income with the other income going straight to savings with the occasional payments for miscellaneous expenses. At the time of closing we put up $6,600 and that ended up being way higher than what was needed. Here is the breakdown of the loan.
Price of Property – $137,879.09 (includes closing cost and other miscellaneous costs)
Borrower Credit – $133,179.58 (the total amount we are borrowing at a 4.25% interest rate)
Balance Due from Borrower – $4,699.51
We overpaid by over $1,900 and received a check refund for the amount. But why do I wish we saved more? Simple, just to have more cushion for the “wants” in a home. The day we closed the home we visited the house and it was bare, empty and naked. In my head all the projects started adding up and I wished we had more money to hire help. Most projects are just time consuming and tedious at first glance but having a bigger cushion would make me feel more at ease. Lesson learned is that no one will ever complain if you save too much money.
Find a Super Star Team
Pick an amazing team when purchasing a home. You will typically need a realtor, lender, closing attorney and contractor for a fixer upper. We dealt with our superstar realtor Julian Jackson and Prime lending. Unfortunately the lender was not ideal for us as he was short on words and to be real the hardest part of the process. We were recommended to the lender as he was one of the few people who provided 203(k) loans and in the end it was not needed. Either way the big lesson learned is to pick a team that you feel comfortable with. Having good communication will be needed throughout the whole process.
Don’t Be Picky
If you take nothing from this post then make this the point you take home. Do not be picky when it comes to a home. No home will be perfect. There will always be something wrong with the home or location. Buying a home is about compromising and seeing the vision. The main reason our process was fast is we were not picky. Looked at four homes and though the home was not ideal we have a vision for the future. Lesson to be learned is to not be tied down to a perfect home; it doesn’t exist.
I’m no expert in home buying…..yet. The most important lesson I learned is to save as much cash as you can. The money can be used in multiple ventures during the process and having the cushion for mishaps is imperative. Best of luck and hope these lessons find you well.
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