Preface: In case you are unaware, my boyfriend and I purchased our first home in March this year. We’ve done a good amount of renovations and handy work since the purchase and are loving our new home. Because we are pretty young to be homeowners, I thought it might be interesting to put together my thoughts and advice on the process! I know a lot of people my age are clueless (I certainly was) with where to start to buy a house, and I don’t know about you guys, but both my and Tucker’s parents bought their homes like 30 years ago and were not so helpful on the nitty gritty details haha. SO, I’m gonna LAY IT ALL OUT THERE in millennial-speak for you to enjoy. Here is part two of this series: WHAT DO YOU WANT? If you’d like to read part one, PREPARE, click here.
Full disclosure: Tucker and I are two years out of undergrad. We both have engineering degrees and both work full time in high paying jobs in our fields. Obviously, we are extremely lucky and work hard to be in the position we’re in, but I recognize that this is not true for most people, especially at our age. However, I think that most of this advice applies to anyone who wants to buy a house.
WHAT DO YOU WANT?
So you’re already getting ready to buy a house, you’re saving and getting your credit in shape, you’re excited and dreaming of hardwood floors and french doors. Time to reign it all in and really define what you want (and need) in a home in order to make concrete goals and set a timeline. I highly suggest having a good idea of what you can afford and the basics of what you’re looking for before you apply for a mortgage or find a realtor.
HOW MUCH CAN YOU AFFORD?
This is the biggest question, right? Take a good, hard look at your monthly budget right now. Assess how much you spend on groceries, clothing, transportation, your other debts, etc. compared to your income. Think about how much you want to be saving or investing each month. By knowing your monthly income and how much you want to spend and save, you can deduce what you are comfortable paying for a mortgage. This number is the biggest determining factor of what you will buy. This is the number you will take to your mortgage broker and determine how much “mortgage” you need, given the amount you plan to put down. Super useful: NerdWallet has a handy calculator to give you a rough idea of what to expect.
There are two major things that we also considered when determining our “number”. First, we knew that our utility bills were going to change a lot. We previously lived in an apartment that was near to the same amount of square footage we have now, but naturally our utilities bills are way higher in the house. Just for reference, at our apartment we paid ~$120/month in utilities, and now we’ve been paying around $250/month.
The other thing that had the biggest effect on our mortgage goal was the fact that I was going back to school this fall. It’s critical that you plan for major life changes that are upcoming. We knew that I would be leaving my job and going back to school full time, so we made sure that we could afford the mortgage on just Tucker’s salary. Are you planning on changing careers or going back to school? Having a baby or need to pay for a wedding? Or have a parent that you may need care for in the future? Obviously you can’t plan for everything – that’s what emergency funds are for – but if you do have an idea that in 3 years you want to have a kid, or your significant other wants to go back to school full time (sorry Tucker lol), having a mortgage you don’t have to worry about during that time can be a great relief.
Just a note, generally speaking, your mortgage will include insurance and property taxes. Yes, you do have the option to take these out of the mortgage and pay them on your own, but it was easier for us as first time homeowners to roll it into one. If you do decide to break these out of the loan payment, make sure you consider that in your monthly budget!
Alright, we’re starting to get to the fun part now 🙂 Before you really start looking, create a list of wants and needs for your future home. Do you need a certain number of bedrooms/bathrooms? A two car garage? Condo or apartment? Commute time to work or family? How we did this was to create a list in three categories:
- Bare minimum: monthly payment < our dollar amount, Tucker’s commute < 30 minutes, a safe neighborhood, closing date timeline
- Other things to consider: # of bedrooms, particular neighborhood/school district, condo vs. house
- Must haves: Washer/dryer in unit (we didn’t care if it was a house or condo), dishwasher, parking for 1 car, 7′ foot clearance in the basement (Tucker’s a giant…), air conditioning, and a “move in ready” property (our apartment lease was ending)
- Nice to haves: central A/C, recently renovated kitchen and bathroom, hardwoods, walk in closets, a view (we had a great view of downtown in our apartment), second bedroom/den, parking for 2 cars, a gas stove, master bedroom not on the ground floor, finished basement, attached garage, grocery store within walking distance…
Having these kinds of lists are helpful for you to have before you start touring properties – it’s easy to get swept up with a beautiful house even though it doesn’t really meet your needs. It’s also helpful for your realtor; they will be your guide in your search so helping them get a great idea of what you want and need can make the whole process less painful.
We were relatively flexible, we didn’t care if it was a house or condo or even what city we were in, but we had a pretty tight budget and timeline. Almost all the properties we ended up touring met our bare minimum and all the must haves, and the nice to haves basically became “bonus points” for that house. We ended up with central A/C, two bedrooms, a renovated bathroom, a one car detached garage plus a carport for the other car, a gas stove, and a grocery store within biking distance – and with our construction efforts after the purchase, we ended up with hardwood floors and will have a renovated kitchen in the future. I’m really happy with what we ended up with, and I think having these goals defined before we really “dug in” was super helpful.
SET REALISTIC GOALS
Throughout this entire exercise, it’s critical that you keep your goals realistic. We knew that we had a tight budget so we probably were not going to end up in a super trendy or fancy neighborhood, but we ended up in a very nice and safe neighborhood that’s just outside the city. Location drives so much of the price of a house, so really take that into consideration when you’re making your needs list. Is it more important for your to be in X neighborhood or have an extra bedroom or new kitchen? Having some predetermined “trade offs” can be really helpful when you’re making final decisions.
My last piece of advice is to always consider what YOU can do in the house. We were getting pretty desperate towards the end of our search, so we changed our criteria. The house we ended up buying fit almost all of our “nice to haves”, but frankly, it was pretty ugly. It was (and still is…) an odd green color with yellow trim on the outside… we’ll paint it eventually. It had old ugly trim and carpet everywhere, and the walls were a boring beige color in the whole house. It also only had one closet for two bedrooms (lol WHAT?!). Instead of nixing it immediately, Tucker’s dad was able to help us envision the things we could do to the house (and how much it would cost) to make it what we really wanted. We pulled up the carpet in one corner and saw that there were hardwoods hiding underneath. Painting is always an option, and you can paint the whole interior of a house for less than $1000 easily. We replaced all of the trim and doors in the house, which was about $1500 because of the great deal we got on doors (shoutout to Building Materials Outlet), and because Tucker’s dad is a construction extraordinaire, we were able to build out two additional closets for the cost of materials alone – and 2’x4’s and sheet rock are cheap! We are less than $10k into the house and have totally changed what it looks like.
Basically, what I’m trying to say, is always look at the “bones” of the house first. Those are the things you aren’t going to want to spend money on. We had a new roof, and all the major appliances were less than 3 years old. It was ugly, but it’s more fun to pick out paint and trim than replace a water heater. We were able to compromise to put in some cash and (a lot of) work to get exactly what we wanted and needed. Obviously, not everyone is going to be in a situation that allows them to completely remodel a house when they move in (we had almost all free labor and between my and Tucker’s dad, we didn’t really have to buy any tools), but it’s always something to consider. Putting up a new backsplash in a kitchen or bathroom, painting a room, changing out light fixtures, etc. are all really easy things that you can do for not very much money.
Alright, I’m getting off my soap box now. Until next time. 🙂