Buying A Home
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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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Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
FREAKING OUT about buying our first home
My husband (sorry, still don't have the abbreviations down) and I are in the process of buying our first home. We found the home we want, got pre-approved--for a lot more than we're actually going to borrow, I should add, and we're putting in an offer this week. Maybe I just need someone to commiserate, but I'm SUPER nervous. Like I said, our mortgage people told us we could borrow a lot more than we're going to, but I'm still afraid of being "house poor." Right off the bat, we'll have to buy a fridge and washer/dryer (it's a new construction), new living room, dining room, and bedroom furniture, and paint/decorate. I'm so afraid of getting in over my head. Is this normal? What can I do to put myself at ease?
My new running blog: middleofthepackrunner.blogspot.com
Re: FREAKING OUT about buying our first home
Congrats. Hopefully it will be just a little bigger than your rent, so it won't feel so terrible when you start paying. Aside from the fridge and washer/dryer, I would wait on the other items. Take your time furnishing and it's okay to buy used or borrow something until you can afford new furniture that you love.
Oh and if you time it right, you will have one month without a payment (rent ends at your place and then the payment for a mortgage is in arrears) so use that money to buy the appliances and your budget will hardly feel it. Good luck and I hope you get a good deal on your house.
Are you united with the CCOKCs?
No amount of education could convince Betty to be nice to possums
OK so, while I was in law school, my DH (I learned it!)--then fiancee--supported us both on his income alone, and our rent is $770/mo. Now, our mortgage (including taxes, PMI, fees, etc.) will be $1117/mo. Now that I'm working, our income has literally doubled, and the only new expense is my student loan payment. We budgeted everything out, and even after estimating high (as in, he thought $200 a month for insurance and it's actually going to be $450 a YEAR), we'll have slightly over $1,000 left at the end of every month. That's even after figuring in $400 a month for our dog, which i'm pretty sure no dog costs that much, gas money, $500 per month for "miscellaneous" stuff, like birthday gifts, race fees (we're both runners), etc.
As for the emergency fund, we're basically draining our savings for the down payment and costs, but my plan was to commit that $1000 a month for the first few months to rebuilding our savings.
Sorry to ramble. I'm just nervous about this huge commitment!
You'll feel more comfortable if you live on your future budget for a bit. So, track your expenses, pay your mortgage to savings (minus rent), etc. Make sure your budget has enough going to savings. I'm not sure what you mean when you say you have 1k left over each month- is that after things like groceries, gifts, going to the movies, etc?
Spending all of your money on a down payment is risky and you should feel nervous about that! I would consider putting less money down. Also, you don't know 100% yet what your total closing costs are, so you need to be prepared for them to go up.
No amount of education could convince Betty to be nice to possums
I think you should keep some "emergency fund" that is separate from the closing costs. We'll be going down to 6 months' expenses left in savings -- which is the bare minimum I need to be comfortable -- and that has me a little nervous. My brother bought a house, got the inspection and everything, and then a few weeks later, had a huge problem with the water lines/septic system/something like that. Thousands of dollars. So, those sorts of $$$ catastrophes really do happen.
We had a really great loan officer who walked us through all kinds of scenarios ... if we put 3.5% down, if we got a conventional loan instead, etc., what would our payments be, etc. That helped me budget a lot and decide how much house I was comfortable buying.
Also, definitely prioritize the furniture and fixing up. I'm trying to do this myself -- it's hard because I want to do it all, but I'm budgeting only $10k to spend right away. And like you, we need absolutely everything (we've been renting a furnished place) and the house has a bunch of out-of-date cosmetic issues. But, we'll get what we absolutely need, in the order of priority, and when the designated money is gone ... we wait until we have more saved up.
Keep your monthly housing expenses (mortgage+insurance+taxes+PMI+ HOA + utilities) to no more than 25-28% of your TAKEHOME pay.
Have a 6 month expenses emergency fund in place before buying.
Have moving costs , start up costs, repair/renovation costs, decorating/furniture costs as well as all the small things you need with a house (ladders, hoses, shovels, snow blower, tools, etc) saved.
Pay off your cc debt prior to buying.
You do NOT have to fully furnish or decorate your house immediately. You can do one room at a time. Craigs list is your friend.
What a breath of fresh air! We have definitely done all the budgeting, and on paper, everything looks great, and we'll still be putting $1000 into savings per month, even after extra costs. We are only putting 5% down--just enough to get a conventional loan--but that's still draining our savings/emergency fund for the most part, because I just graduated from law school in the spring and only got a job in August, got married in October. It just makes sense to buy a house right now because our costs aren't going up much compared to what they are now with renting.
To me, it seems truly unrealistic to have 6 months of ALL your expenses put away if you're buying a house. House costs--mortgage, PMI, HOA, utilities, etc., will only add up to roughly 25%, maybe less, of monthly takehome. We're fortunate that our buyer's broker is a family friend and will be giving that 3% right back to us, which will be a few thousand right back into savings. We're also fortunate that, like katpolka, we have family who would help if something comes up. I'm still super nervous, but I suppose that comes with the territory!