THIL: Buying Property

Photo by Jason D on Unsplash

Taking inspiration for Bill’s great blog post about buying his first, I wanted to share what my first home buying experience was like. I recently closed on my home in November 2019, so I’m a relatively new homeowner and let me tell you the process is enough to make your head spin right off. Here are some takeaways I have about the process and something I learned with the wisdom of hindsight.

You’re the boss:

The whole home buying process is based around your, the buyers desire to purchase a home. If it wasn’t for you, the realtor, loan company, and the seller would not have anything to work with. The realization dawned on me a little late in the process, so I had some wasted weekends looking at houses I didn’t love, but I didn’t want to impose on the realtor. This is the wrong attitude to have, don’t waste your time with properties you don’t want. You may be missing out on a place you will love by trying to please the realtor.

Know your budget, and know where it can flex:

My wife was very strategic when it came to our budget. We had planned on buying a house for about a year, and she had laid out a hard and set range of houses we were looking at. This was a huge help because it ensured we were not house poor. Our goal was not to spend more than 30% of our take-home pay on our house payments. This would give us enough extra cash to make extra payments if we wanted and allow us to pay our monthly bills and still work on our nest egg. I have had several friends tell me that they fell in love with a house that was outside of their price range, and now they are trapped in due to the amount they pay each month.

Don’t be afraid to negotiate:

When we were closing on our home there were some issues that needed to be fixed, and with us being new homeowners we didn’t want to deal with the issues just after we moved in. We requested the seller fix the problems before we closed. He responded with a counteroffer to knock $700 off the price. We thought about it, and we didn’t know the full extent of what needed to be fixed, do we countered saying that we need the issues fixed before we close. This was a deal that we felt the most comfortable with and it turned out to be in our favor because the seller had to call several people to resolve the issues and ended up paying around $600 for all repairs. Did we lose out on $100, yes, but we save the time and effort needed to hire people and wait around while they fixed it? It took a lot of stress off of an already stressful time.

Weight the benefit of first time home buyer credit:

There are several benefits to using first time home buyer programs. These programs can reduce the amount of down payment needed. These programs can also help if you have less than stellar credit. We initially thought that we were going to use the first time home buyer credit, but the more research we did the worse the deal sounded for us. While the program would have given us $5,000 towards our down payment, we would be locked into a higher rate loan that would switch to an adjustable rate after 3 years. We weighed the pros and cons an ultimately went with a fixed-rate loan and did not use the first time home buyer credit. The freedom of being able to refinance our loan and having a set rate for the term of the loan felt like a better deal in the long run.

There are so many factors that you need to weight when you are buying a house it is good to go in with a clear head and a plan. The best piece of advice I can give is don’t put money down on anything unless you are sure. If you have second thoughts on it, wait, there will always be another house.

I hope you found this blog helpful, and if you have any tips, please leave them in the comments.