How to Buy a House as You Pursue Financial Independence
After two months at our new house, we're still excited about buying it. We love living her and we're happy with how well it fits.
While the actual process of going from seeing houses to signing the papers seemed fairly quick, the process that got us to the point took much longer.
I know this is the ‘season' for buying a house, so I thought it would be fun to review how we decided this was the right place for us.
Defining What We Needed vs Wanted
Between the two girls and us, we were looking for three bedrooms. The girls will share a room for now, but once they're older they can have separate spaces.
We also needed a third bedroom for home office. Like the last place, the room would also serve as our guest space.
As far as size, we kept our options opened. The townhouse was just under 1700 sq ft and we thought that was more than enough. Because it was a three story townhouse, we felt that the layout was a inefficient for us and it had wasted space.
We figured we could go smaller on square footage if the layout was flowed right. When we gave our search parameters we had our minimum square footage at 1200.
Figuring Out Our House Budget
Since this house would be the most expensive thing we've ever bought, we were super careful with our budget.
We based on our budget on one income for a few reasons:
- keep our housing costs well within 25% range: Besides the mortgage payment, there are other expenses homeowners need to stay on top of, including insurance, property, tax , maintenance ,and in some cases, home association fees. All of that can push things over the recommended 30% of take home pay, so keeping this low gives us wiggle room.
- peace of mind: My income has fluctuated over the last few years as I work from home with the little little ones. Not taking it into account when calculating our budget makes things less stressful.
- buffer for other goals: Besides wanting to provide a place for our girls, we also have other goals. Keeping our housing expenses in check allows us to have more time and money for other things that matter to us.
- budget to renovate: We knew with the price rage and neighborhoods we were looking at meant we'd probably be owning an older home. Besides maintenance we also figured there would be some renovation projects we'd need to do.
We did this one income budget with our first place and loved it. We had some bumps with finances, but getting an affordable mortgage meant we could weather a little easier.
Narrowing Down the Neighborhood
After taking into consideration our budget and the types of home we're looking for, we also wanted to nail down which locations to focus our search.
While the town house was in a good neighborhood, it wasn't conveniently located for us. This time we looked at where we spent most of our time.
We decided that we were going to closer to downtown, on the East side. This location brought us closer to our congregation, friends, and still allowed my husband to make his commute fairly quickly.
This is The One
Our house meets all of of needs and has a few of our wants. It's on a quiet street well within our target neighborhood.
The listed priced was just at our budget limit, but our agent was able to negotiate it into a much more manageable price.
Most houses we were looking at had about 1/4 of an acre, but this one is on a 1/2 acre lot.
We got the 3 bedrooms and the perfect layout upstairs and a spacious basement below. It's half done, but if we finish it (a future project), it'll add another 900 sqft of living space.
It's certainly dated (hello 60s!) and will be getting some updates, but we can live and relax in it as is so there's no need to rush.
That functionality allows us to save for projects so we can take them on without incurring debt. A huge win!
Thoughts on Buying an FI Friendly House
I'd love to hear from you. How many of you have bought a home? How did you find the right place for you and your family?
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Finding the right neighborhood is half the battle. Even if you find the right house, the wrong location can make it much less enjoyable. We didn’t realize how close we were to a race track when we bought our place. While it wasn’t a deal breaker, it is something we would have thought more about when we bought our place.
Good points! Yes, we looked at locations, especially with traffic on certain streets. Some neighborhoods had roads with too many cars speeding through. That was a dealbreaker for us. Our current place is fairly quiet.