Home Buying for Beginners (Pt. 1) - The Surznick Common Room

Wednesday, September 28, 2016

Home Buying for Beginners (Pt. 1)

Floor champagne the day we closed on our house
We moved into our house about three months ago and now that we've settled in to a new groove, it almost feels like the stress of becoming homeowners didn't even happen. Is that weird? We are so happy and comfortable here in The Surznick Ranch, but we don't want to forget that getting here was quite a journey, especially for two 20-somethings that have never even purchased a new car, let alone a HOUSE.

So now that we've had time to reflect, we thought we would start a series of posts talking about our home buying process. We were total novices and obviously still don't know everything you could need to know about buying a house, but given our reading demographic falls into the same age range as us, we imagine some of you could be in a similar situation.

So Part 1 of our Home Buying for Beginners series: How do you know you're ready to buy a house and how do you prepare?

We're going to go deeper into our story more below, but here are a few steps in a nutshell:
1. Make a pro/con list or think about reasons you would want to buy a house. Talk about it with your partner, friends, and family. Are you ready to take on a larger responsibility? Do you love the area you live in? Are you ready for a space that's truly your own? If it seems like the best decision for you...
2. Save your money, hard. Save, save, save. Check your credit score and take steps to improve it, if necessary. Pinch pennies as much as you can.
3. Start thinking about where you want to live and what you're looking for in a house. Have an idea in mind because once you start looking it will be really helpful to eliminate potential houses.
4. Organize important documents like tax returns, pay stubs, bank statements, etc. You'll need these eventually and having quick access to them will make things way easier.

So how did we know we were ready? Let's take it back to summer 2015 for a second. Nick and I had just signed another year-long lease on our apartment, but were beginning to toss around the idea of buying a house. These were our thoughts:
1. Renting an apartment in the city can be expensive. We checked out some online mortgage calculators and realized that a mortgage on a house would likely be less than our rent.
2. We love Pittsburgh and know this is where we want to plant roots. With no plans of leaving the Burgh anytime soon, we'd rather put money towards something more permanent than an apartment.
3. We were in an uncomfortable situation with our apartment landlord that we were ready to break free from.
4. We were 100% ready for a space that we could renovate, paint, make changes to, etc. Apartment living can be very limiting in what you can do to make it your own.

Of course, these situations may not apply to you, but it's helpful to think about the criteria that would make you want to buy a house in order to decide if the timing is right.

So what did we do next? Well, never having done this before and all... the next thing we did was reach out to our bank for a loan pre-approval. Which wasn't necessarily bad, but the bank came back and told us, "Hey, great credit scores, guys! But... where's all the money you've been saving?"

Well, we hadn't been. It seems kind of silly to us now that we didn't think about that first, but even if you have great credit and will make all of your mortgage payments on time, you need cash money in the bank to buy a house. Like, a lot of it.

I don't think it's uncommon for people our age to not consciously save for the future. We don't feel embarrassed about not saving for a house from the minute we started working. But that meant we had to save a LOT for the next 6-8 months if we wanted to move within a year.

Time to prepare. From August 2015 to March 2016, this is what we did.
1. Saved, saved, saved. We set aside money from every paycheck and cut down on shopping, going out to eat, etc.
2. Determined our wish list house criteria (neighborhood, number of bedrooms, number of bathrooms, driveway, garage, yard, single-family, townhouse, old house, new house, etc.) We ranked them in order of most to least important so we knew what "flaws" we were willing to look past.
3. Researched loan types. We decided we were going to eventually pursue an FHA loan over a conventional loan, which helped us better determine how much money we should save.

So finally after many months, we were ready to start looking for our dream home! More on that in a future post...

If you've made it this far - bravo! Talking about buying a house was a lot wordier than I expected, but I hope you've found this post helpful!

Is there anything in particular you'd like us to talk about in this series? We'd love to share what you guys want to hear! Keep us posted.

Sarah & Nick


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