Tag Archives: buying a house

House Hunting: Tips to Buy a Home in a Seller’s Market

It's house hunting season, which can be an exciting and yes, stressful time. Living in a sellers market, it can seem like an incredible challenge.

Today we'll go over how to financially prepare and give you a map on finding a place that you love that's still within your budget!

Home Buying Tips for a Hot Market

If you’re thinking of buying a house, you have to be prepared. Besides being a huge purchase, you have rising interest rates and hot markets that can make it difficult to find a place you love that’s still affordable.

If you’re a first-time homebuyer or it’s been awhile since you’ve had to house hunt, I want to lift some of the burden.

Today I’ll give you a high-level view of the buying process so you’ll have an idea of what to expect along with some tips and resources to keep you on track with your big financial picture. 

In this episode, we’ll dive into:

  • Ways you can prepare your finances 
  • What to look for during the house hunt so you’re finding a hidden gem and not a money pit
  • Explain what to consider with your offer and the closing process

We have a lot to cover, so let’s get started! 

Resources on Buying a House

If you’re looking to buy, here are some resources to help you find an affordable place you love!

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

See how Coastal can help you with your mortgage needs!

Rollover Your 401(k) Easily with Capitalize

We’re grateful for wonderful partners like Capitalize. Not only do they support the podcast, but they help make managing your money so much easier. 

Did you know that it’s estimated that there are currently over 24 million “forgotten” 401(k) accounts? In fact, the average American changes jobs every 4 years

And because of the Great Resignation, you or someone you know might be changing jobs even more 

It’s an extreme case of out of sight and out of mind. Is your old 401(k) in there somewhere, left behind at a job you're no longer with?

One huge benefit with an IRA is you get to choose how your money is invested, not your old employer. 

If you want to consolidate your old 401(k) and have more options with how you invest, it may be time to roll them over into an IRA.  

With Capitalize, they handle the process from start-to-finish – for FREE. They handle the process from start-to-finish, and yes that includes calling the 401(k) provider on your behalf. 

Find out how and get started today

Before You House Hunt, Get Your Finances in a Good Spot

Even before you start shopping around for a lender or real estate agent. Take some time to run the numbers and review your finances. Verify that you can handle this transition to homeownership.

I know interest rates are rising, so there's this temptation to jump in and get started as fast as possible, but it really does pay off for you to sit down and use those mortgage calculators online to get an idea of what you can comfortably afford.

Budget Beyond the Mortgage

Besides the mortgage, you need to include in your budget home insurance, property tax, and maintenance costs. Knowing those numbers puts you in a better spot when you do shop around for lenders.

So, how do you find lenders? The first time we bought a house, we used a mortgage broker who compared different lenders.

The second time we did a little more legwork on our own scouring online and we went with our credit union Coastal since they not only had great rates but they offered some discounts with their Daymark Realty team.

It is a bit of work upfront. But you can significantly save money.

As you're shopping around, make sure you're not just looking at the lenders, but that you also are looking at the right mortgage option for you. If you don't have a significant down payment.

There are different loan programs like FHA, VA, and USDA that can make it easier to buy. Weigh the pros and cons of each of these to make sure that you qualify for them and that they work for you.

Pre-approved Versus Getting Pre-qualified

I do want to clarify two terms. You want to get pre-approved versus getting pre-qualified. Pre-approval means the lender went over your numbers and told you how much you qualify for with borrowing. Versus a prequalification was, is just an estimate.

If you're in a seller's market where you have to move fast, you definitely want to have that preapproval letter.

As you talk with your lender, they're going to give you their rates and numbers. But you still want to make sure that what they say you qualify for is what you feel comfortable with.

You can also start shopping around for a real estate agent. Ask for recommendations from people who not only bought a home, but they're happy with it. Also interview your agents, see how knowledgeable they are about the area, the market, and how effective they've been for their clients.

Now, with those pieces in place, you have a lender. And you have your agent. You can now go house hunting, feeling comfortable that your finances are in a good spot.

The House Hunt

While you're working with your lender on getting pre-approved and you're trying to find a real estate agent. This is also a good time to sit down and figure out. What are your priorities for the house that you want to buy?

What type of house, first of all, are you looking for. Are you going with a single-family, condo, or townhouse?

Do you want to live in a neighborhood with an HOA? What size house would make you most comfortable? If you have a yard, how big do you want it? Or do you even want a yard and have that maintenance?

What distance from work are you looking for? Or if you have kids, how far away do you want to be from their school?

Talking about and defining your must-haves is incredibly helpful for your real estate agent because then they can tailor their search for what you need. They can also temper your expectations about what you can find in the area for your budget. We have an entire episode where I interviewed Coastal's vice president of real estate, Louis gamma.

And he broke down how to go about your house hunt so that you can find neighborhoods that are hidden gems. And that checkoff a lot of things on your list while still keeping you on your budget. I'll include a link in the show notes.

As you're going through this house hunt. I just want to tell you. Sometimes that is an apt description, especially if you're in a hot market. It can be chaotic with other buyers competing for a limited amount of homes. As you're going through the houses and places and taking these tours. You'll start noticing. That certain things on your list are going to get adjusted.

There may be priorities you felt were must-haves. That moved down on that list and vice versa. Where there's something you thought that wasn't such a big deal, but when you're in that space, in that house, you realize that it's very important to you. That's normal.

This actually happened with my mom when she was buying a house here in Raleigh in 2020. She had a list. She had prepared her must haves and want to have, but as we were looking at different properties in the area, Things got adjusted and shifted.

It seemed a little stressful at the time, making these adjustments. But it worked out to her favor because now she's in a home that she loves and it has all the main features that she wanted.

Just make sure you're not sacrificing too much just to buy a house. I would hate for you to be in a home that you don't like with the 15 or 30 year mortgage. Ideally, you want to find a place that has all your must haves in a neighborhood that you love.

When you do find that spot. You can then put in your offer.

Putting In Your Offer and The Closing

All right. Let's talk a bit about the offer. You may include contingencies with your offer. Meaning certain things have to be fulfilled such as a home inspection. Financing selling your existing home or appraisal.

Depending on the market, you may decide to waive some of those contingencies, but please be aware of the potential downsides of that.

Personally with how large a purchase. This is, I'd keep the inspection and appraisal.

How much should you offer? This is where you want to work with your real estate agent and why it's so important to interview them beforehand. You want someone knowledgeable so that they'll have the information about what's selling in the area and give you recommendations on what's more likely to be accepted.

In a competitive market, it can be emotionally exhausting because you have so many sellers. Making multiple offers on a few homes. When I was helping my mom out with buying her house, that was the situation. We saw quite a bit of homes we put in offers and yes, there was a temptation at one point to break the budget because of the timing.

Of her going back to work in the fall. But with some patience and diligence, she thankfully found a wonderful home in a fantastic neighborhood. So if you're buying any sellers market, Please don't get discouraged. If your first offers aren't accepted.

When you put in an offer. You're also going to be putting in some money upfront. It's known as earnest money deposit. Some people call it good faith deposit.

Basically, you're signaling to the seller that you're serious about buying this money will be held in an escrow account and we'll go towards your down payment or closing costs.

It's there as a protection. If the buyer falls through on their end. The seller gets to keep that money. However, if one of the contingencies in your offer happens, let's say the home inspection failed. You'd get that earnest money back.

Now let's say the seller accepted your offer. Now, what? Typically, this is where things like your home inspection and appraisals happen.

A home inspection lets you see if there are any major issues with the house and an appraisal is for your lender to verify that home is worth the loan.

Some needed repairs may come up during inspection. Depending on that market and whether or not you waive those contingencies. You may or may not be able to negotiate on the price.

In the meantime, your agent's going to be assisting in getting the paperwork prepared for closing. This can include things like checking the property title. So make sure you're in contact with them. So if they need anything from you, you can quickly get that to them.

Assuming everything goes smoothly, you'll get a closing disclosure from your lender, telling you how much you need to have ready. You and your agent will do a final walkthrough of the house you're buying. Then it's closing day.

Just a heads up, expect a lot of paperwork. The good news though, is that your agent and the attorney there should be able to walk you through step-by-step with everything. Ask any questions you need to and have before you sign.

Finally, we get to the best part. Getting your keys and moving into your new home. There you have it.

If you're a first-time home buyer, it might seem a lot. But once you have a place that you love. You know, what's worth it.

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and becoming financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your review on AppleSpotify, or Audible.
  • Buy me a cup of coffee!

Photo by Daniel Frank

How to Comfortably Afford a House You Love

Want to buy a house that you love and still comfortably afford? Find out how you can run the numbers so you can become a homeowner while still pursuing other goals!

How Much House Can We Afford?

Even though buying a house is typically the biggest purchase you're going to make, we kind of snap into this passive mode during the process.

As you're getting a mortgage, part of it includes finding out how much of a house you can afford or what kind of mortgage you can take on.

You'll get a pre-approval letter from your lender based on their calculations, but that's not always the right number for you.

Why?

Because they're trying to find what's the most that you can afford.

If you're a part of the simplify and enjoy community, you're looking at what's going to give you the most flexibility and options for your other goals as well.

So today, Karen Ashley, the mortgage sales manager at Coastal Credit Union, is going to walk us through the process of finding that sweet spot where you can buy a home that you love while still having money to pursue your other dreams and goals.

You watch the below right here or read the notes below!

Figuring Out Your House Buying Budget

Karen: When a couple or a member is shopping for a house, one of the main things that they need to consider first and foremost is affordability.

What you can for is their comfort level.

We get the question so many times – what do I qualify for?

Well, we can run the numbers and tell you you qualify for, you know, four or five hundred thousand dollar house. But I never like to tell a borrower exactly what they qualify for.

My question to them is, where's your comfort level? Where is your comfort level with that payment? Where do you not want to go over?

Then I back into that payment, because the last thing you want to do is put someone in a home to where that's all that they're working for.

It's just that house payment because you are going to need some money for the incidentals, the maintenance, the care of the home.

So I always want to know where is your comfort level? And then from there, we just we back into what that sales price looks like.

Then we would talk about do they want to do the hundred percent financing? Do they qualify as a first time homebuyer? Does it make more sense to maybe keep your money in the bank with rates being so low right now?

Yeah. So we would just run some scenarios for them to just kind of show them. It makes more sense to do the hundred percent if they qualify or put 3 percent down with mortgage insurance versus 5 percent.

And then we just kind of back into what fits that member best financially, both money out of pocket and down payment and payment in for their comfort level is.

Why You Need to Run Your Own Numbers

Not sounds obvious to do this, but based on our experience, not all lenders go with that approach.

My husband and I, we've bought two houses, the first one (a townhouse) was with another lender and the second one actually was Coastal Credit Union.

There was a difference in how things were approached between the two lenders.

I don't think typically there are enough conversations between the lender and you about the affordability of a home.

We didn't get any of that the first time, so it was an instant difference went we sought a mortgage through Coastal for our current place.

With the first one, it was like ‘how much can you technically afford? What's your limit?

Owning a home can be a wonderful financial move, especially if you have kids for that stability. But there are other financial goals, right?

Like travel. Save retirement. If you want to help out with the kids, these are all things to think about.

With many lender's it's a bit too automated. There's no conversation. It's almost like a computer spits it out and that's your answer.

So while you certainly want to go over with your potential lender about your budget, it really does matter for you to run the numbers yourself.

Find The Best House (and Mortgage) for You

If you're in the Triangle area here in North Carolina, definitely check out Coastal, they have a wonderful team here that want you to live better by banking better.

Yes, they are sponsoring the podcast, but we have been members for years and we are so happy with the house we're in and the mortgage we got.

We can afford that and take vacations and some other goals!

I hope this helps you out with finding a budget that gives you the flexibility of pursuing your other goals while finding a home that you love.

How to Snag a Great Deal When Buying a House

We've heard how you can snag a deal by going with a fixer-upper, but is that really true? Today we’re digging in on the dos and don’ts with house hunting!

Finding and Buying a Fixer-Upper, Not a Money Pit

Buying a house – – it’s probably the biggest purchase you’ll make. 

And depending on where you live, it can be a crazy market. I know here in Raleigh everyone is saying it’s a seller’s market. And I believe it. I’ve seen houses get listed and that sold sticker put on the sign in less than a week. 

Which is great if you’re a homeowner – property values are going up. 

But not so much when you’re trying to buy a house, which is what my mom wants to do. 

She’s recently accepted a job here in Raleigh and after she’s sold her current home, she’s looking to buy.

She's asked me to tag along and help.  And I‘m happy to. 

It’s just this means we’re going to have to really hunt for a deal. 

A fixer-upper would work for her. 

And maybe you’re in the same boat – you’re looking for a diamond in the rough that you can buy a great price and then you can fix it up the way that you want. 

The tricky part is making sure you don’t get stuck with a money pit. 

Which is why I’m glad Louis Guillama is on today to offer his expertise.  He's the Vice President of Real Estate Operations at Coastal Credit Union.

He has three decades of experience with the real estate agent side as well as home renovations. 

In this episode we’ll discuss: 

  • Differences Between buying a house that’s new construction vs resale
  • Spotting great and still affordable neighborhoods
  • Finding a fixer-upper (instead of being stuck with a money pit)

Let’s get started! 

Resources on Buying a House

If you’re looking to buy, here are some resources to help you find an affordable place you love!

Thank You to Our Sponsor Coastal!

Support for this podcast comes from Coastal Credit Union! If you’re living in the Raleigh Durham area and looking to bank better, come check out Coastal today.

If you need an agent, Daymark Realty has a fantastic team ready to help find the perfect house for you in the Triangle area! 

Buying a House in a Seller's Market

Elle Martinez: I don't know how things are in your area, but here in Raleigh, if there is a strip of land, they will build on it. We have new developments coming up around our neighborhood, across the city, and we've noticed that our home property value is rising and that can be a good thing.

But it also means that if you're buying new, the prices are going to be much higher than when we first got in the first time we went house hunting.

My husband and I went with a new construction. It was in a townhouse on the north side of the city.

The second time around we went with an older home a little bit closer to downtown, more convenient for how we live now.

And there are noticeable differences with buying new vs. a resale. So if you're hunting, you may be wondering what's the best option for you? And Lewis was sharing that with the new construction there's going to be an additional expense.

Louis Guillama: Obviously, when you buy something that's new. You got to pay a slight premium on that as opposed to buying something resale.

And there are quite a few differences between new construction and resale home when it comes to the pricing, character development of the property and the neighborhood in general. So there definite considerations of any home buyer should make.

Buying a Home with an HOA

Elle Martinez: And also with new developments, you're looking at potentially having an HOA. While some may have very strong feelings about them, particularly negative. Lewis pointed out how they can work to your benefit.

Louis Guillama: And so historically, HOAs will be enforced when a new development forms and then they may tend to expire after a period of time. And that tends to be 20 to 30 years unless they're renewed by covenants.

Most every new development will have an age away. And that's not necessarily a bad thing that really aids the neighborhood and its development and the culture that it forms. Because, you know, you have all these different personalities and, you know, moving into the neighborhood so it can go in any of any number of different directions.

It kind of put rails on it and kind of guide the development, the neighborhood. The city can't change colors. This has to be uniformity and a structure. You can't park commercial cars in front of the house. So you're are not necessarily a bad thing. You can help.

They were developed to where it was intended to go. That can be problematic for some people, you know, if they have a larger number of pets than is typical.

Now, I just met someone and they had six dogs. So that may not be permissible, but the most age ways. But there are some areas that they can find a nice home.

Elle Martinez: So if you're considering buying a home with an HOA, take some time, do the research and better understanding not just with the costs, but what you're getting out of it.

Louis Guillama: Those covenants are recorded at the inception of the neighborhood. They get recorded at the Register of Deeds so anybody can go into the public records at the Register of Deeds of County and then do a search by the name of the HLA. And if you look at the names the way whether it's Wakefield Plantation or Brian Creek searching there and you'll see the provenance come up and then just read the covenants that are that apply your property.

How to Spot an Up-and-Coming Neighborhood Before It's Popular

Elle Martinez: It's very tempting to buy into a trendy or popular neighborhood.

It seems like only a few spots have the best restaurants, fantastic parks and incredible schools. But if you're determined to live in a particular neighborhood that's really popular right now. Expect to pay a premium in something to keep in mind is when you buy into a popular neighborhood.

It's not always going to be the best move for you or your finances.

Louis Guillama: The best thing that I can recommend to finding homes with good value and good neighborhoods is to look at at a longer track record than what's trending today.

You know what I have seen in my experience and we're talking 20 years in the real estate business, is that neighborhoods and areas so that everything operates on a cycle. So, for example, here in the Raleigh area back in 2005, the Wakefield location neighborhood was immensely popular.

Everybody wanted to live in that neighborhood. Homes were selling for up to two hundred dollars a square foot today.

Now we're almost 15 years removed from that. And we encounter people that aren't able to sell their homes because of the price that they paid moving into it. It was they who I actually bought at the peak of the market in a really bad neighborhood. And so they paid a price. Now, obviously, there is value in use and value and trade. Right. So we got a lot of enjoyment out of it with a great neighborhood. Got some prestige and cachet out of it. But now value in trade is not as high as they'd want it to be.

Elle Martinez: So what do you do? How do you find these gems are hit in spots and neighborhoods?

Louis Guillama: What I always recommend to people is pick an area that's convenient to you that supports your your particular lifestyle is close, close proximity to your work into the places that you normally visit, and then don't buy the most expensive home in the neighborhood. Don't buy the prettiest home in the neighborhood. I always recommend look for the home that has. No, that's not the shiny new coin in the neighborhood.

Finding a Fixer-Upper (and Not a Money Pit)

Elle Martinez: Finding those diamonds in the rough or another way they say them fixer uppers. If you ever watched House Hunters, you've probably seen this, a couple looks at a home and they start making comments about the place and sometimes it's a legit complaint. They notice maybe the AC unit isn't in good working condition. Most times they complain or compliment all those surface finishes, the appliances, the countertops, the flooring in my favorites definitely have to be the couples who hate the paint. When I spoke with Lewis, he told me that time and again people buy based on what they see, which is understandable. But if you're trying to get a great deal, you need to focus deeper on the crucial areas of the home.

Louis Guillama: Everyone's maintenance issues is predicated upon your purchase decision. You have to look past your first initial or your emotional response to the property because we're all visual, right? And so people will walk into the property and they're basing their opinion, they're forming their opinion on the property based on what they see. But they're not really looking at the details behind the property. So the three key components to every home, there's the foundation and structure. Yeah, mechanicals and plumbing is like your air conditioner to your hot water heater as well as the plumbing pipe itself. And then you have the surface finishes, which is what we're really responding to when we enter a home. Look at the wood floors, look at the quality, the cabinets, the paint surfaces, etc. And I encourage buyers to take a close look at the foundation and the structure, make sure that that is sound and that'll be determined by any competent home inspector. I always recommend doing a home inspection, even in new construction homes.

Elle Martinez: So this I can tell you from personal experience, he is absolutely right.

Our first home, that new construction. Yeah, we thought we could save some money because it was brand new and not have a home inspection. Well, sometimes when you see these builders come in and have developments go up quickly, the quality isn't what you expect. We saw things here in there that weren't done right the first time. And when it came time to sell. Another issue was evident. The window seals were broken.

We pretty much had replace all but one window, which is kind of ridiculous because at that point the home was about five years old. So you better believe that the next time around we did have a home inspector and we followed him closely with this house. When we came in, we immediately loved it. He loved the layout. The natural light in overall location. But the basement. There was so much potential. But between with the home inspector found in ourselves comfort level. We saw we needed to make a pretty major repair if we planned on finishing and using it. If we bought as is, while we technically could have still afforded it, money would have been really tight for a while. Instead, we took that information we got from the home inspector and our agent negotiated a lower price. It allowed us to get the basement properly fixed, keep the mortgage affordable, and now have an awesome home office space for both of us, which is a huge win in our book. So if you looking for a fixer upper, it pays well to well pay someone to dig into your potential home so you can avoid a money pit.

Louis Guillama: Then if you don't want a you know and trap yourself in a money pit, you want to make sure that the mechanical systems of the property have been updated to make sure that the air conditioning is in good shape and in working order. And that is one key component that a lot of people allow their home inspector to test. I always like a man to get an H bag or air conditioning specialist. Take a look at it, because they, unlike a home inspector, was just going to measure the temperature of the air that's going into and out of the system will actually just take off the top or connect all the gauges and make sure that it's functioning the way it was intended. That's where you really encounter the money pit situations where you purchase a house because it looks cosmetically, it looks fantastic, but the underlying support systems are old and not functioning properly and you're constantly putting money into them. And air conditioning in particular can be very expensive. I mean, your typical HD back service call is about 300 hours, so you're not going to get away from from a cheap service call when it comes to HIV problems and you'll normally go to three or four of them before you decide ultimately to replace it.

Elle Martinez: And so that's a sure way to avoid the money that you're really hammering in on this, because how you buy a home will have a huge effect when you go to sell your home.

Louis Guillama: I recommend for people is not to be attracted to the prettiest looking house in the neighborhood. You have a lot of investors that go into the, you know, trendy neighborhoods and they will do cosmetic updates to replace kitchen cabinets so that they'll be finished the floors they've given. Yup, it looks really beautiful, but the underlying portions of the house, the foundation, the plumbing system, the mechanical are not in the best condition. And so people are paying a premium because it looks great. But over time, it creates maintenance problems for them and they're really not going to derive as much benefit for them because when they go to resale, it's not going to be looking like that because they're not going to spend the money updating it. And so you pay a premium for looking great. But then when it comes to resale, the prices drop a little bit because now it's more used. Right. The same thing happens with new construction properties. A lot of people think that they'll buy a brand new home and then maybe in three to five years they'll sell it and move somewhere else. Well, in reality of new construction, there is a very large premium between new construction and resale properties, and that could be as high as 20 percent. And so what happens is within the first three years, at least in most areas, your property is actually declined in value from what you paid for it. You have to wait until the resale market comes up as it appreciates and reaches your price point, your entry point in that new construction home.

And then it will continue appreciating along with the rest of the market, because the day after you move into a brand new home, now you're in a resale property because you're the only people that can sell new construction or builders. And that's it no matter what you do to it. Even if you completely renovate your home, you're still in there compared to the resale market. And that market is selling at a slight discount from new construction. So, you know, I work with a lot of buyers that we would go look at houses and then we'd simply fall in love with the houses that investors, the savvy investors have just clean them up, made them look nice and shiny, and they're willing to pay top dollar for those. But if they look past that, look at their house in the same neighborhood, that maybe hasn't been updated. The structure is the same as the shiny new one, that maybe the flooring has to be replaced or the paint needs to be redone. You could save a considerable amount of money in that mine in my 20 years or actually now 30 years of homeownership. I have never bought the prettiest or nicest home in the neighborhood. I will look for a quality neighborhood and I'll buy the ugliest property that I can find in that neighborhood. This suits my lifestyle and then we'll go ahead and fix it up and you can recover so much wealth that way. Just five minor updating and just improving the presentation of the problem.

Support the Podcast!

Thank you so much for listening to the podcast! If you enjoyed this episode and found it helpful, here are some ways to support it.

  • Spread the word! If you enjoyed this episode and think it can help a buddy get on the path to dumping debt and become financially free, please share.
  • Leave a review. Honest feedback and reviews make a big difference and gets the word out about the podcast. Leave your review on Apple or Stitcher.
  • Grab a copy of Jumpstart Your Marriage and Your Money. My book is designed for a busy couple to set up their finances in 4 weeks. Get tips and tools that have worked for other couples on their journey of building their marriage and wealth together!

Music Credit

Like the music in this episode? Music is by Lee Rosevere and Music for Makers.

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?

Finding the Right House for You

While there seems to be no shortage of posts on how to buy a house (Google has over a billion results last time I checked!), there are only a relatively few on the more important process – how to find the right place for you.

How to Buy a House (That's Right For You)

If you're looking to simplifying your life (including finances), where you live can either be a tremendous help or hinderance. With so much on the line, doing some work upfront can pay off big time.

Looking for ideas on where to start? Here are the discussions we had and process we went through to find our next place.

Define Our Why

The decision to move began with understanding and defining exactly what we wanted and why.

When we bought our townhouse years ago it was pretty good fit for our lives. Now, however, it not working (you'll see the details below).

Before we even put the townhouse up for sale we talked extensively about what we wanted this time around.

Our listed included a place that:

  • was more centrally located where we're spending most of our time already,
  • suited our needs with two little ones,
  • and was within our budget.

With that in mind, it made it easier to come up with a list of details to give to an agent later.

Location

Once we pin-pointed where we wanted to live, we scoped out the neighborhoods around it.

It takes some planning for sure, but you'll come out ahead if you can keep your home base close to most of your activities.

Commutes can drain not only your time, but they can harm your finances.

My husband's commute would go down by third distance wise, saving us some gas money, which is nice. More importantly it will shave off time giving him more time to enjoy, recharge, and relax at home.

Layout

We need a more open layout for both our day-to-day activities (working from home with little ones) and for how we like to entertain.

When we bought the two house having three floors was a big plus. Each floor had its purpose and we could easy have one of us work in the office and not hear a peep from the living room. With our kids, though, that separation is no longer a benefit.

I'd like them to play in their room while I work, but I want to be able to dip in easily if need be.

When we were exploring homes, we were very conscious with the spaces to see if they were a good fit.

We realized that as long as a minimal square footage was met, there was quite a bit of leeway on size. There were 1800 sq ft houses that felt more cramped than the 1300 sqft we found.

Basement Bonus

Though not a necessary item, having a basement was on our nice to have list.

Depending on the house, it can be a versatile space. For us we saw some wonderful uses.

  • Entertaining: We love have people over time to time so having a basement would give a nice sized space for gatherings.
  • Work Space: Since I work from home, having a dedicated space would be wonderful as we can take advantage of some more tax deductions.
  • Apartment Potential: Eventually we'd like to convert a basement into an apartment. The main reason is for family, but it would also be a nice way to earn some income.

The basement will take years to get to where we want things to be, but we're okay. We have some time to figure out how we're going to transform it into a space we can use.

Budget

Finally to keep things affordable, we based our home search on 25% of my husband's take home income.

It may seem really conservative, but we've found that this guideline has been a tremendous help for when things get tight.

Being self-employed my income varies (and adjusting with two littles at home has taken longer than planned). Basing it on one income gives us a little more peace of mind.

Thoughts on Buying a House

It's not a perfect system, but we're happy with the general process. Since you have a peek at how we did our search, I'd love to hear about your home search.

How did you find your current place? If you had to do it again, would you change anything?