|My palace at last|
Continued from part 1. Although I was nervous to think about buying a home alone, the thought of continuing on my present track was unbearable. My thought track went something like this: I am turning 40 years old. I'm a working professional. I can't keep living like this. I had managed to pay off all of my school loans, and I knew plenty of other people who were now home owners and somehow managed, even though they made less money than me. But much of my block was mental. I always thought of buying a home as something you do when you are married and ready to settle down. I had heard you should not even think of buying a house if you weren't prepared to stay in it at least 5 years. I had never lived anywhere longer than 2 1/2 years.
At this point, a friend of mine gave me the name of a realtor. I called him and started asking questions, and the impossible began to seem possible. My real question, though, was how much was it going to cost? Let's be real here. We all know a home that is yours is much more comfortable than renting a space that is temporary, but often people choose that route because it's more affordable or easier to maintain. It was actually talking to a mortgage broker -- not a realtor -- that made the difference for me. This very patient person never acted like I was bothering him. He well earned his fee from me. We had an in-person appointment where he showed me a very detailed example of how the mortgage costs would be determined. He then went through each line and explained what it meant. After that, as I would find a home of interest, I would email him the address, and he would very quickly create a workup spreadsheet, detailing what that home would cost each month, using the the type of loan we had selected. No matter how many times I emailed him, he was always there. I went through 3 different realtors and five different home offers, but my mortgage broker was a solid rock as things shifted.
When it came to fill out the paperwork for the mortgage, because he had prepared me well, I could fill out this very scary application with confidence.
Altogether, I had four contracts fall through before the 5th home finally worked out. And there was plenty of drama in that time. My search took 8 months before my home became mine. I won't lie, it has been difficult.
|one living room setup; there have been several!|
- Find a good team. You need a lot of people to make this work. Finding the right realtor, mortgage broker, home inspector, surveyor, and real estate attorney are key. Ask for recommendations and listen carefully to people's stories. Don't be afraid to fire someone if you don't feel you are getting good service. As I said, I went through three realtors before I found the right one.
- Ask for help. Talk to your friends and your co-workers. If you identify as a particular faith, and you aren't in a faith community, you are doing it wrong. Find people who have traveled the path before you. Ask questions. You may be surprised at how people will help you.
- Don't go house poor. When house shopping, it can be tempting to pay more than you can afford because you want particular things. You will be approved for far more than you need to spend. David Ramsey recommends never paying more than 25% of your net income for housing (that includes insurance, taxes, etc.). Choose a budget and stick with it, no matter what anyone says. Some of my realtors tried to encourage me to spend more, saying I could rent a room to make income but I didn't want to have to need a tenant to make bank. The whole reason I wanted to buy in the first place is to have a space that's mine.
- Think about the whole cost. Again, while it's tempting to just look at the amount you are paying each month, don't forget that unless you can pay cash, you are paying interest. While your house may cost only $200,000, your loan interest will come to around $100,000. Try to eliminate some of that interest by making extra payments. One extra payment each year will take 8 years off a 30 year loan.
- Be prepared for repairs. By keeping your housing affordable (only 25% of your net monthly income) you will build a threshold for paying for needed repairs. Don't pay for repairs on loan if at all possible. If you need to pay for a necessary large repair (like replacing the HVAC), look for a contractor that offers 0% financing. Normally these last 2-3 years. Pay as much in cash upfront as you can afford. Finance the rest. Pay the loan promptly each month and pay more when you can afford it, even at 0% financing. Loans are to avoided at all cost. Life without loans is a life of peace. Debt is slavery. Avoid it all cost.
- Pace yourself with renovations and upgrades. Once you buy your home, it's natural that you will want it to be perfect with the perfect flooring, paint colors, and furniture. But take it easy, you just locked yourself into a 15-30 year contract. Take your time and pace yourself. You don't have to fix everything at once, and you need to save up money when things break.
- If needing to choose, focus on the big five. There are five essential systems to the house: foundation, roof, electrical systems, HVAC, and plumbing. Keep these five things updated and working. Everything else is dressing. You can live without wood floors -- you can't live without a roof.
|home is where you lay your cat|
Buying a house is like any challenging task. You take it one step at a time. Don't move to the next step until you are comfortable. It's a big commitment to buying a house, and no one else can decide for you, but there's no need to wait until you are married. You can do it.