I am by no means an expert on this topic. However, my husband and I did learn a lot as first-time homebuyers as we closed on our home in May 2018.
I love sharing here on the blog and on Instagram all the projects we are tackling with our new-to-us home and being open to questions from anyone who finds their way to me.
Some of the questions I get asked most frequently are about buying a house, being a first-time buyer, the process Justin and I took, and how we budgeted/saved for our first home.
We recently did an in-home lifestyle photo session to capture our first home. We have a list of home renovation projects we plan to take on in the coming year (removing the wall and fireplace behind us in the picture above is at the top of it), so it was important to us to have photos to remember what our house looks like now before we drastically change it.
I get it. This time one year ago I was devouring any and all information I could about buying a house. I had so many questions (hell, I still have so many questions). Would it be smarter for us to do new construction? Where should we buy? What can we afford? How much money should we be saving? What about first-time homebuyer assistance?
My mind would race with thought after thought, and I had absolutely no idea where to start. I will let you in on a secret, though. You will never know where you are supposed to start until you jump in and do it.
When you are buying a house, there is no one-size-fits-all. Every person going through the process has different needs and a different experience. It is top priority that you do as much research as possible on your own before you even begin looking at buying, but also don’t let any fears you have deter you from pursuing homeownership. It truly is a wonderful thing if you are ready for it.
Since this is a topic that comes up often, I wanted to have one place where all this information could live so that when folks ask me questions, I can direct them here.
I hope this is helpful to those who need it, because I am as open and honest as possible about the process we took, our financial situation, why we bought where we did, and more. I feel that my husband and I made a smart decision with choosing the home we did, so I am excited to share our thought processes as well.
Do not max out your budget
This was the most valuable advice we received when we began shopping for a home, and it is the most important advice I can give to you.
As you begin the mortgage approval process, the lender will tell you how much money they are willing to give you to buy a house. That number will likely be much higher than you thought it would be, but that does not mean that you can actually afford that amount. Just because you are approved for that much does not mean that you have to buy a house that costs that much.
In fact, you should not buy a house at the highest amount the lender approves you for. As a first-time homebuyer, that is extremely risky for your financial well-being and leaves little to no room in your budget for unexpected life expenses when they happen.
The first thing you need to do is create a budget that includes all of your living expenses, your entertainment expenses, and how much you want to put in savings each pay period, and then figure out exactly what you are comfortable paying each month for your mortgage.
Justin and I are fortunate enough to be a dual-income household, however, we did not feel like we needed to buy our first home as if we are a dual-income household.
We actually bought a house that is well below our means so that we are not living at or above our means. And, God forbid, if one of us were to lose our job and we had to live only on the other’s income, we could still do so comfortably.
When we first moved in together in 2013, Justin lost his job about two weeks after we signed our one-year lease on the tiny one bedroom apartment that we were overpaying for.
I was still working at the newspaper at the time, making just enough money that I couldn’t even qualify for food stamps, and until Justin could find another job, we had to accept a lot of help from family just to have food to eat and keep our lights on.
This was humbling for both of us and once we got through that patch, we swore that we would never put ourselves at risk of being in that situation again. Therefore, finding a house that allows us to live below our means was crucial to our comfort level as we take on the responsibility of homeownership and to our longterm financial well-being.
As we began the buying process, we also recognized that we would want to start a family soon. I don’t know if you know this, but babies are expensive little things.
We knew that we will one day need to pay for childcare, so buying a home now that allows for us to comfortably pay for a quality daycare in the future was critical. FYI, childcare in our area costs as much as a mortgage on a small house. Yeah, at a minimum it is $900 per month (if you are lucky enough to find that), but the average is $1200 per month.
Buying a smaller home also allows us to still have money for things we enjoy doing — such as traveling, giving back to our community, going out to eat, shopping, drinking craft beer, adopting dogs (insert side eye emoji), and going out with friends.
Plus, because we are living below our means, we are able to pay more toward our mortgage principal each month, which reduces the amount of interest we pay over time and helps us build equity faster. That way, when we are ready to sell our house, we are (hopefully) in the best position to do so.
Those are just some things to keep in mind as you are thinking about what you want to spend on your first home.
Don’t forget that going from renting to owning is a big change — if something goes wrong with your AC, for example, you no longer have a landlord to call because you are the landlord.
Not maxing out your budget gives you the cushion you will need to save money for those unexpected expenses (and there will be plenty, trust me).
Your first home likely won’t be your forever home
Remember this as you’re shopping and constantly ask yourself, “How long do I realistically plan to live here?”
Seven years is the amount of time we estimate we will live in this house. Don’t get me wrong — we love our home, and it already makes me sad that we will one day leave it. But, it is small.
Well, it is small for a family (which we hope to have someday soon). For Justin, me and our dogs, though, it is the perfect size.
We know that if we are able to have children, we will likely outgrow this house with baby No. 2.
That is fine, what we expect, and what we planned for.
Because we view this house as an investment, didn’t max out our budget, are making profitable upgrades and functional design changes, and we bought in an area with a large amount of expected growth over the next 10 years, we should have a decent amount of equity built up when we are ready to sell.
That equity will, in turn, allow us to put more money toward our next home.
Pay attention to schools and neighborhood expansion
The next thing I want to talk about (because I briefly mentioned it in the last section) is neighborhood expansion and town development.
Look into these things and the quality of the nearby schools when you are shopping for a home.
One of the main reasons we bought where we did is because the city has invested in a massive revitalization of the downtown area. This investment will bring new businesses, a sports and entertainment complex, a performing arts center, new infrastructure, public amenities, and a residential district to the historic downtown area of our sleepy old mill town. Phase I of this master plan (which includes the completed construction of the sports and entertainment complex) will be finished in 2020 and Phase II will be completed in stages over the next 10-20 years.
That is great news for us for when we are ready to put our house on the market. Because our home is located close to the downtown area where construction is taking place, we expect to have a solid return on investment as our town continues to grow and develop.
The other factor you want to consider is the schools zoned for the house you are looking at. You might not have children or plan to have children, so schools aren’t necessarily that important to you. However, if you plan to sell your home at some point in the future, the quality of the schools will likely be important to someone looking to buy your home. If the schools aren’t good, it could be a dealbreaker to a potential buyer.
Expect the unexpected if you are buying a “fixer upper”
Long before Chip and Joanna Gaines made it cool, it was my dream to own a fixer upper.
That is the type of house I grew up in and that is where I feel most comfortable and most at home — I adore the charm and character of older houses.
When my dad and mom bought our family home in 1993, they bought it as a fixer upper. My dad would always say, “I bought this one because it has good bones.”
He was constantly starting renovation projects and cleaning up messes my mom made.
One of my favorite stories of my mom is from shortly after we moved into that house on Stonewall Ave. She wanted new kitchen cabinets, but my dad had not started them yet. While he was away on a business trip, she took a sledgehammer and crowbar to our old kitchen and busted up all of the countertops and cabinets so that when my dad came home, he would have to fix it. And, he did.
After my husband and I closed on our house in May, I told Justin that I could not promise him I wouldn’t take the same route to a renovation project some day. And the more he drags his feet about knocking down the wall between our kitchen and living room, the more I consider buying a sledgehammer for myself.
All of that is to say, yes, we bought a mild fixer upper for our first home. On the fixer upper scale, it is on the low end of needing renovations, but it is exactly what we wanted to get our feet wet as homeowners.
Our house was built in 2005 and hasn’t been updated since then. It is a lovely home with lots of unique character, but if we want to profit from it when we sell it, we have to do some renovations.
I had grand ideas that we would start rolling through projects as soon as we moved in. I quickly learned, though, to expect the unexpected with a fixer upper.
So many of our projects have been delayed because, in the process of starting them, other (unexpected) issues arose that needed immediate attentions and derailed us.
First, it was our air conditioning. Just as we were starting to shop for new flooring for the house — and right in the middle of summer — our AC stopped working.
Luckily, we do have a home warranty and they covered the expenses for the multiple repairs, but we did have to pay out of pocket for refrigerant — and that was not cheap. It essentially drained the savings we had built up to buy new floors with.
We decided we could live with our floors for a little longer, though, and moved on to our next project: new landscaping in the front and back yards.
Our yard looked terrible when we bought the house, so aerating, seeding, and fertilizing were at the top of the to-do list right away. Once our fence was installed around our backyard, we were ready to tackle these yard projects.
Or, so we thought. Once we actually started doing the work and pulling weeds in the front of the house, we discovered that a previous owner or possibly even the builder had lined the entire yard with landscape tarp.
What we thought was going to be an easy weekend project spiraled into several weekends spent literally ripping up our front yard.
By the time we finished removing all of the landscape tarp from the front and had it professionally aerated, seeded, and fertilized, it was too late in the season to start on the backyard (which also is lined with landscape tarp). So, the back of the house will have to wait until spring.
This winter we have identified projects inside that, fingers crossed, should not be derailed. But, you truly never know what you will encounter until you start getting your hands dirty and doing the work. Which, I kind of love.
As a homeowner, though, there will always be something that comes up. So, just remember to expect the unexpected and be prepared for it.
Create a list of your must haves, could haves, don’t need, and definitely do not wants
We do not need a big house right now. We do not have children yet and even when we do, the house we’re in will be plenty big enough until it’s not anymore.
This list is something your realtor should request from you so they know what you’re interested in and what you can live without.
For us, three bedrooms and two bathrooms were necessary and nonnegotiable. I was adamant about finding a ranch style home since I loathe stairs. We preferred to have a fenced in yard, but if we couldn’t find something in our price range, we recognized that we could install a fence after closing on the house. We were flexible on have a garage, too. It would have been nice to have one, but wasn’t a requirement. We also didn’t need or really want a formal dining room. To us, it seemed like wasted space that we would rarely ever use.
Find a realtor you trust
And one who will go to bat for you.
Our realtor is a family friend and she negotiated her tail off for us. She was even able to get the sellers to pay for a new roof on our house before closing.
Having a realtor you know and trust is essential to making your process go smoothly and ensuring that you get the best deal. You are going to spend a lot of time with this person and they need to understand exactly what you are looking for.
If you don’t know a realtor, ask friends and/or family who recently bought or sold a house who their realtor was. If they liked them and the realtor has a solid reputation, consider hiring them.
Talk to a mortgage officer early
Full disclosure, like a lot of young couples, Justin and I had some credit problems that we needed to resolve before buying a house — most of which stemmed from what I told you about earlier when Justin lost his job right after we moved in together in 2013 and we were basically robbing Peter to pay Paul.
We weren’t even sure if we would qualify for a mortgage, but the lease on our townhouse was coming up and we knew that we did not want to continue renting. So, we had to try.
Because we started conversations with a mortgage officer early on, she was able to put together a realistic and doable list of things to increase our credit score and make us look more desirable to the lender.
We tackled her list over the course of about three months and were pre-approved for a mortgage in March (on my 28th birthday, actually).
Because we started working with a loan officer early, we were also able to get a pre-qualification — an estimate of how much the lender would give us. With this pre-qual, our mortgage officer told us an estimate of how much we should save for a downpayment, closing costs, and all of the out-of-pocket expenses that come with buying a home.
Having that information early in our buying process was incredibly helpful to someone like me who has to plan out everything.
Like your realtor, you will want to work with a loan officer you trust.
Our realtor referred us to the mortgage officer we used, which worked out amazingly. They worked well together and were prompt and communicative with each other and with us.
Your mortgage officer should be the one holding your hand through the entire process, so it is important that you feel comfortable asking them questions — and lots of them.
{You might also like: “What I Didn’t Expect with Buying a House.”}
Read everything
This ties in with what I mentioned about asking questions at the end of the previous section.
You should have a ton of questions as you’re going through the home buying process — from the mortgage pre-approval stage through closing day and beyond, all of this is new to you, and you need to fully understand what is happening. If you have questions, ask your realtor or mortgage officer.
Most of the questions we had came up in reading the hundreds of pages of documents you have to sign throughout the process.
In short, read everything your realtor and mortgage officer give you and don’t sign anything if you don’t understand what it means.
Save, save, save
Saving for a home is one of the most popular topics of conversation for potential first-time homebuyers.
As we were going through the buying process, I became obsessed with saving and how much we should be saving for closing and all of the other expenses that come up during your due diligence period after your offered is accepted on a house.
I talk more about what we shelled out during our due diligence period in a previous blog post, but to sum it up, you are going to want to be prepared to pay about $500 a week (or more) for various expenses between the day you go under contract to the day you close.
Oh, and you of course will also need cash up front for your due diligence & earnest money when you put in an offer on a house. If I remember correctly, we put $1,000 up for due diligence and $1,000 up for earnest money. There are no hard and fast rules on what due diligence and earnest money costs are, that is something your realtor will work with you to determine based on how aggressive the home-buying market is.
For your down payment, I am going to stress this again, talk to a mortgage officer early and let them estimate how much you will need for a downpayment based on your pre-qualification. They will also be able to tell you if there are any first-time homebuyer downpayment assistance programs available to you. These can be incredibly helpful, but make sure to read and understand all of the fine print before opting for DPA.
To help us save money for our downpayment, we cut out all unnecessary expenses (Hulu, Netflix, cable, and monthly subscription boxes are great places to start). I put together a strict budget for us and we stuck to it as much as we could.
Food costs were another thing we cut back on during this time. We limited the number of times we ate out and only bought groceries that were on sale each week. No lie, our grocery budget was $75 per week. Looking back on it, I have no idea how we did that. But, we did.
Another way to save money for your first home is by living with family for a few months (if possible). This wasn’t an option for us, but we have had several friends do this and it put them in a great place financially. Because they didn’t have a living expense, they were able to quickly pay off any debt they had and save money at the same time.
OK, friends, I feel like that is a solid brain dump of first-time homebuyer advice. I hope you find it helpful and your dreams of homeownership come true soon.
Questions? Let me know in the comments below!
