This is one of those things that they do not teach you in school and you’re scratching your head like WHY NOT. Its wasn’t until I was out of college and working my first “real” job that I was told to start saving for a house. Which I was grateful for the advice but also shocked by the amount they were asking me to save and assuming how easy that would be for a broke college grad. Even though I was making very little I knew that this was a goal that I wanted down the line so did my research and started saving. It’s definitely daunting at first and mistakes we’re definitely make along the way so here are 6 steps I wish I knew when I first started prioritizing that I wanted to buy a home.
We saved 20% for a down payment to avoid PMI
While there are a lot of loan programs out there for first time homebuyers that don’t require 20% down it does save you money in the long run to put this amount down because you won’t have to pay PMI (private mortgage insurance), which is normally about $200/mo. more on top of your mortgage. Having 20% down was a main goal of ours when we initially had the goal in mind of buying a house. We put a certain amount away into an investment account that would gain interest over the years to help us reach out goal quicker.
We moved out of the big city and bought with resale in mind
Once we had our down payment and knew we wanted to start looking at houses, we originally had the idea in mind that we wanted to stay in the big city of Seattle because that’s where we had been renting and where our jobs, friends, and family were. This quickly because unrealistic because of the market at the time, and the houses that were on the market in our budget were not great for resale purposes. They were either in an underdeveloped neighborhood or needed a LOT of extra work which would put us above our budget in the long run. This made us start to look outside of the city in the suburbs and at neighborhoods that we knew would be a good resale property.
We were patient
This was a crucial tip. One that we didn’t know at the time we were utilizing until we were about a year into the search process and still hadn’t found the house that was right for us. It’s also important to have in mind that your first house will most likely not be your last. Have a list of must haves and keep in mind that not every house is going to be the perfect one. When it comes to the real estate side of what makes a good house, it’s always the location. You want to buy somewhere where you’ll be able to sell it down the road and make a profit.
We didn’t max out our budget at the top of the loan pre-approval amount
When applying for a mortgage the lender will give you the max amount you can afford with your debt to income ratio. You do not need to go up to this max amount, and you might not even be able to with your current situation. Make sure you ask for the monthly cost breakdown and plug those numbers into your own budget sheet to make sure you can afford the new payment. Owning a house is more expensive than renting because you might have unexpected expenses come up out of nowhere that you’ll need to address right away so make sure you are prepared with an emergency fund.
We shopped around for mortgages
When you first start this process it may seem a little daunting and honestly may sound like another language. Make sure you lean on your friends and family and ask who they have worked with in the past. It’s also important from a real estate side to use a local lender. This helps tremendously throughout the process and will help win offers over others who use bigger corporations. All lenders have different fees, loan programs, and timelines so make sure you get quotes from a variety of them to make sure you’re getting the best deal for your situation.
We leaned on our parents for support
This might be entirely new to you and that’s totally okay. It’s exciting! Lean on your friends and family for support and ask them all the ridiculous questions. You can also ask your realtor to help and they would be happy to provide you with anything you need.
Good luck!
Mel & Zack Durham
PNW Homes Group | EXP Realty
360.481.2073
melandzack@pnwhomesgroup.com
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