Our house-hunting process started back in October 2015 and while it was, by no means, a totally smooth road from start to finish, we definitely feel like we hit the jackpot with the house we ended up with. We’ve got a major crush on our new digs and feel like God brought us to the exact right place to call home. Plus, we learned a lot along the way! Like how to sell your house by yourself (without a real estate agent). And how to show your home to potential buyers. And what the heck to do when it comes to negotiating for the best deals.
All of those posts are coming your way in the next few weeks, but TODAY we’re talking all about the steps we took to find the right house and the tips we would give to anyone looking to buy a new house themselves. Let me start by saying that the original title of this post was going to be “How to Find Your Dream House”. But then I thought about it. And dream houses are rarely attainable, realistic, or the best financial purchases. I really believe that if you start with the right house, it can definitely become your dream house with a little hard work. Something that we’ve learned after buying two houses is that there is rarely a house that has it all. Every single last “wish list” item. So to hunt far and wide for the perfect dream house might be for naught, whereas the search for the right house can be so rewarding when you find it. So let’s get to it!
Tip #1: Know Your Budget. Trust me when I say, it’s a really REALLY bad idea to get on Zillow or Trulia and go “dream house” shopping without first having the “money talk”. It’s like going wedding dress shopping and falling head over heels in love with one before even thinking about how much you have to spend. Sure, you might love it, but the price tag might induce serious sticker shock if you’re not thinking about the cost side of things. And worse, we all know that it’s not the hardest thing in the world to convince ourselves and make excuses for why something is a good idea, all the while walking straight into what could be a terrible financial mistake. So, bottom line… KNOW YOUR BUDGET before you start shopping!
How do you do this? Start at the end and work backward. It all comes down to what leaves your pocket on a monthly basis. What you can afford to shell out every month for a house payment. We could talk all day about how to make a monthly budget and what Mitch and I have found that works best for us, but that’s a completely different post. If a post like that interests you, though, let me know in the comments below and maybe we can get it in the line-up soon! The basics are this: figure out how much income you bring in each month and make a list of everything you spend your money on in a month. This will give you a better idea of how much you can realistically afford to put toward a mortgage payment.
Once you have an understanding of how much you can afford per month, now it’s time to translate that into house prices. My advice is to spend some time playing around with an amortization calculator (here is a link to a free online one). Amortization is essentially the process of paying off debt in regular installments (ex. a monthly payment) over a set period of time. An amortization calculator is a tool you can use to plug in a series of numbers and it will spit out a monthly payment amount, depending on the numbers you plug in. It will ask you the loan amount (for simplicity’s sake, just plug in the cost of a house you find on Zillow), the interest rate (just do a quick Google search to see where the general interest rate currently is), the length of time you’ll be paying off the loan (the standard for a mortgage is usually 30 years), and the zip code of where you’ll be looking. Once you get all of that plugged in, the calculator will give you a guesstimate of your monthly payment based on that specific scenario. After tweaking things around and you find a monthly payment that will work for your budget, that will tell you the general pricing of houses to start your search with.
As we looked through listing after listing, the cost was our biggest priority. If it was out of budget, it was out of the running. We didn’t want to get into a situation where we fell in love with something that would get us into a dangerous financial situation.
Tip #2: Think About Your Goals. What is the purpose for your move? What are you trying to accomplish by buying a house? These are good questions to think about before you start looking because I’m telling you right now, the house-buying process is not easy. It’s long, involves a lot of paperwork, and anything can happen along the way. When you get mid-way through the process and are ready to pull your hair out, having the goals you set out beforehand will help to keep you in the game when the going gets rough.
Our goals were pretty simple… with our first house, we wanted the equivalent of an apartment without shelling out the money for rent. Something to start us off that we could earn some equity on. Skipping the renting step all together was a huge game changer in our finances and that was our main goal with House #1. For our second house, our goals were a little bit different. Still simple… we wanted a little more space, a little more storage, a little more land, and to be close to our families. That’s really it.
Tip #3: Make A List. I have a list saved in the “Notes” on my phone that Mitch and I made way back in the beginning of our search process. We made two lists regarding our future house: one list of things we “needed”, another of things that would be additional perks, but not necessary. This is important because throughout your search, you are going to see A LOT of houses with A LOT of features and it important to think through which are a high priority for you and which are not ahead of time. It’s easy to get swept up in what a house has to offer when you initially walk through it. Stay focused and remember your list. What can you live with out or add yourself later (that could potentially save you big bucks on the actual sale) and what things are non-negotiable (that you may forget about in the excitement of a double kitchen sink)? See where I’m going here?
Just for fun, here were our two lists…
Tip #4: Decide Your Priorities. These are different than your goals from Tip #2. Goals are the reason for buying a house, priorities are the road map for buying a house. To do this, take that wish list you just made and choose a few that will drive your search. For example, a few of our major priorities were proximity to our families, not on a main road, number of bedrooms, and some sort of outdoor space. Everything else we focused on later. Just remember, not everything can be a priority! Your priorities will help you quickly weed out the properties that are non-contenders.
When we were looking, any listing we came across, we looked at three main things first and foremost and if the house didn’t have one of those three, we kept moving and didn’t even consider it. Those three things were:
- COST- First and foremost. If it was out of budget, we didn’t even bother because why get attached to something that is unrealistic or could get you into financial trouble down the road?
- BEDROOMS- Did it have the amount of bedrooms (and to some degree, baths) that we were looking for? Yes, additions are possible, but that is something that would have to be waaaaayyyy down the road, so we wanted to make sure that the house we chose at least had a footprint that would be functional for us right away.
- LOCATION- Was it in the area we were looking for? Was it next to any major highways or roads (a big turn-off for us)? You can change a lot of things about a house. Location is not one of them.
A word to the wise… for the most part, your priorities should be things that are impossible to add or take away yourself from the house. For example, a dishwasher can be installed with a little bit of saving and maybe some re-working of the kitchen layout. On the other hand, if the house does not have a backyard, it will never have a backyard. Some things you can’t DIY… location, lot size, and school district. Just keep that in mind as you decide what is paramount and what can flex!
Tip #5: Use A Map! Thank GOODNESS we did this because otherwise, we might have ended up in a place that was not at all in line with our goals and priorities. When we first started, we had heard of a cute little up-and-coming town that was only about 45 minutes from all of our families. For awhile, we were focused on that as our primary search area. That is, until we pulled out a map and went back to the goals we had set out before, realizing that “somewhere 45 minutes” from our families was pretty much what we had before! The whole point was to move closer, so we took a good long look at the map to see exactly what towns would fit the bill. Chances are, you’ll find pockets of neighborhoods and properties that you did not even think were possibilities… no matter how well you know the area!
Tip #6: Go For A Drive! While sites like Zillow and Trulia are great, it can’t hurt to jump in the car and take a drive around the town you’re hoping to buy a house in. For one, it gives you an idea of the area and you can get a handle on which neighborhoods you like and which are not really your style. Also, you just never know… you might find a hidden gem! Our house was listed on ZERO websites… it was just a faded For Sale sign that my parents happened to drive past as they were out looking one Sunday. They followed the sign, knocked on the door to get some more information, and the rest is history! If you don’t live close enough to drive out yourself (this was us), try and recruit a local friend or family member to take a spin around town for you.
Tip #6: Buy Beneath Your Means. You will probably be approved for a loan that is way more than you’ll need for the right house for you. That’s just the way it goes a lot of the time. And guess what? Your mortgage company will probably encourage you to shop according to what you’ve been approved for. HOWEVER, keep in mind that whatever the loan amount, is what you eventually have to PAY! This takes us back to Tip #1 of knowing your budget and what you can realistically afford to pay per month. Just because you are approved for a loan of a certain amount does NOT mean that you need (or should!) buy a house for that amount. Make sure the property you are buying aligns with your monthly available income, not necessarily the loan you qualify for.
Buying beneath your means is a good general-life practice. If you max out your budget, there will be very little wiggle room when it’s time to shell out the cash needed for random life pop-ups. For example, right out of the gate, we’ve had to purchase a lawn mower (a backyard comes with grass, apparently!) and a new hot water heater. If your budget is totally used up on the purchase of the house, this could be a dangerous financial game to play if you were to need emergency funds in a pinch.
Tip #6: Look For the Potential. We all know that Mitch and I are big fans of a house that needs a little TLC. It helps us stay in budget when house-shopping and snag opportunities to get more bang for our buck. If you’re willing to use a little imagination throughout your search, you’ll be more apt to find the diamond in the rough that just needs a little fixing up before it shines again. As you tour houses, keep an open mind. Most things can be changed and updated. We already talked about the things that are pretty permanent, but stuff like flooring, wall color, and even the house layout can always be changed. Being able to see past the not-so-great, straight to the potential is a beneficial skill to hone as you look at properties. It might end up helping you grab a great deal with most of what is (or can be) on your “wish list”! After all, our house was no pristine beauty (it was marketed to us as a fixer upper, so I don’t feel bad saying that on the blog) and we have all of the confidence that, eventually, it will be the dream house we have in our mind!
And THAT, my friends, wraps us up for the day! Wow, can you say wordy?! As I said, we’ve learned a lot from this process- both through what we’ve done well and what we’ve totally screwed up along the way. It makes my heart happy to think that some of the lessons we’ve learned could help the next home-buyer! SO, if you have any tips to add to the list, comment below so we can all benefit from the good advice! And until next time, have a great evening everyone.
PS. Want to Pin this post to look back on later? Here’s a helpful graphic you can use!