It’s #MoneyMonday here on the blog and I thought I would talk about home-ownership! I kind of hate that term because how many people TRULY own their home? Very few! Having a mortgage means that the BANK owns your home, not you. Nonetheless, I want to be transparent and share some of the things we did wrong when we purchased our home:
1. We did not put 20% down. I know, I know. Dave Ramsey just set a flame to my blog. It was a bad choice. I totally had baby fever and thought I NEEDED a house or we couldn’t have a baby. That was silly. Babies don’t know where they live! 🙂 We did put about 7% down but that’s not a great excuse.
When you don’t put 20% down and have a conventional mortgage, you’ll end up paying PMI, or Private Mortgage Insurance. Ours was about $70 a month. Luckily, we got smart about 2 years into living here and saved up enough to pay down the remaining amount so our loan to value ratio was 80% and the PMI dropped off. We figured that having $70 extra a month to put towards other things (i.e. having control of our own money) was better than paying some insurance company to protect our bank in the chance we defaulted.
2. We didn’t pay attention enough to old doors and an old porch. The one thing I wanted in a house was an older home with newer windows, paint, etc. We looked a quite a few older homes, but most of them were still in the age of grandma and we weren’t quite up to the task of stripping wallpaper, refinishing floors and the like. So when we found our house that had been flipped by someone, we were happy. Most of the cosmetic work was done and there were new windows, we just needed to add our own flavor.
However, we didn’t pay enough attention to some of the bones. The side door was beginning to rot (it may have been the original 1920s door) and the porch was newly painted but also was looking a little rough. Replacing these things on an old home is not easy, because NOTHING is standard size. You can not walk in to Home Depot or Lowe’s and pick out a door and come home. Oh, no. The doors are skinnier and taller and require special order and special installation. In other words, it is not cheap (or quick!). Our front porch is going to be replaced next summer and that’s another massive job. If you want to stick with the 1920s style of the home you have to shell out the big bucks. I’m really excited to have a new porch, but I’m here to warn you to really inspect the little things because they can become the BIG things.
3. We didn’t consider our future family. Ok, so I just wrote a post about how my house isn’t too small so I’m not going to say that at all. Because we were planning on starting a family ASAP, here is what I wish I would have considered : A downstairs bathroom for pregnancy and potty training! A dishwasher! An attached garage (nearly non-existent in old homes though). These are definitely wants more than needs, but they also make a difference when you’re trying to sell the home. I guess we’ll find out someday.
The one thing we did RIGHT (and it’s a biggee):
We were approved for a much higher mortgage, but we ran the numbers and only bought what we could afford on one income. It was similar to what we were paying in rent for a 2-bedroom apartment. Looking back we would have tried to go even lower because our utilities are more. I’m always sad when someone I know has a baby on the way, or even just a health issue, and they can’t afford to quit working because they can’t afford their home on one income! Ladies, even if you think you will ALWAYS want to work, speak to your husband about building your expenses around one income. Life happens! Once that baby (or illness, or sick family member) is in your life, things may change! Even if you think those things won’t happen, your husband may lose HIS job and you don’t want to be strapped for making a house payment when he’s trying to find a new way to support his family. Don’t make yourself house-poor. The Jones’ won’t make your payment for you, so there is no need to care what they think. 🙂
That’s my thoughts on home-buying for this week! Would you add anything? Something you did right or wrong? Maybe you jumped a little soon and didn’t put 20% down? Maybe you didn’t realize what a pain it would to trek up a flight of stairs to go to the bathroom? I’d love to hear!
Next week I plan to talk about if buying a home is really worth it- or how long you should rent for! The answer may surprise you!