Achievement Unlocked: Survived Your Wedding!
Buying A Home
MegEn1
member
Dear Community,
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Newbies Looking to Buy - Any Advice?
Hello Nesties!
FI and I have been flirting with the idea of buying a house for a few months. We're pulling the trigger - prequalified, getting our preapproval next week, signed with a Realtor.
It's a starter home we're in the market for - room for us and perhaps a baby over the next five to eight years.
I wanted to reach out to the community, for those who have been where we are. I know NOTHING about home-buying (lucky for me FI is much better about these things).
What do you wish someone had told you when you were first starting out?
Re: Newbies Looking to Buy - Any Advice?
DIY & Home Decor Blog
Have a GOOD emergency fund of a minimum of 6 months EXPENSES.
Read - Home Buying for Dummies
Read - Mortgages for Dummies
Save 20% downpayment, closing costs, moving and start up costs, renovations/repairs, decorating/additional furniture, tools and yard items.----AND still have your emergency fund in place.
Keep your housing costs to no more than 25-28% of your TAKEHOME pay (mortgage+PMI+insurnce+taxes+utilities+HOA) Lenders will allow much more --- but you will mostlikely find yourself house poor. Make sure you will still be able to afford your payment should you have a child, lose a job, have a serious illness -- stuff happens.
Don't be in a hurry - get ALL your ducks in a row first.
Then make a list of your NEEDS (on which you will not compromise) and also a list of WANTS (and prioritize them as you will have to compromise on some of these)
Many people have bought homes with the idea it would be short term, and then life's circumstances or outside events get in the way. Be prepared to live in the house longer than expected.
When you make your budget - allow for children (will you SAH? or use daycare - add that cost into your budget)
We decided to make this move because we do have 20% and then some, enough for closing costs, furnishing and some upgrades based on the price range we're looking in. It'll leave us with an untouched emergency fund. As for the wedding, we're saving up for that so it's about a year away - we knew going into it that we would NOT be going into debt over it and that we would not be touching our savings for it.
We are VERY nervous about getting stuck in a house - it's happened to friends of ours. So while this house is too small to raise three teenagers in it, it does have enough space for us to manage two young children, three if we get really stuck. It would be cramped and entirely not ideal, but if something absolutely terrible should happen we could make it work. If we got INSANELY stuck for some weird reason ... well, we'd be living on top of each other but everyone would have a bed.
That is fabulous advice about the daycare - I hadn't thought of that! Ideally I would be a SAH but we aren't planning on that. Fortunately the nature of my work offers lots of teleworking opportunities, even if I stay with my current job for the next five years. Again, not something that can be depended on, that we know.
When we got pre-qualified our eyeballs almost exploded at the amount they said we could afford. We plan on taking less than half of what we could potentially get - the whole point of buying now is to have more space for less than we pay in rent for our apartment.
As for marriage, I agree that buying a house together before marriage is strange. For me, moving in with him before we were married was questionable. But we had spent our relationship traveling 2 hours to see each other, and we knew we wanted to save for the wedding. It made more sense to pool our resources and move in together both emotionally and financially. Morally I'm not thrilled with it, but it is a choice we made and we will live with it.
If we should split before the wedding, there's a few options. I don't like to think about them (naturally) but that portion of things would be 'simple' to manage - as simple as such things usually are.
I think the reason we really want to buy now is that we want to take advantage of interest rates. It's not just moving in to a house that is ours, although we are beyond excited for that. It is an investment in our future that we want to make.
My advice is to find an AWESOME realtor, look at local credit unions for your mortgage, and ask homeowner friends from your area about typical utility bills. Also, if there's a large appliance in the house you'd like, it doesn't hurt to include that in your offer. Our seller was willing to leave the lawnmower, which has been a great perk.
No. No. No. The amount the bank says you can AFFORD is the amount you can be approved for, it's not the amount you can afford. Those two words are often confused by newbies in this process. Only you and your future DH can know how much you can afford based on future spending and savings plans, current income, and expenses.
The bank can only see expenses listed on your credit reports. No cell phones, utilities, day care, private loans, gas, groceries, insurance payments, medical deductibles, etc. show up to them. You could be sending your kid to a $20k per year prep school and the bank won't know it if it's not on your credit report. The point of figuring out what you can afford is your responsibility, not the bank's.
The amount they quoted to you is the amount they may be willing to lend you based on what they see on your credit and on your pay stub. It factors in nothing else. This is why so many buyers have gotten to be mortgage poor.
Put on the brakes and read Home Buying for Dummies before proceeding. There will be a few chapters you can skip, but I guarantee that you will learn a few things.