This first time home buyer process is no joke! This month marks the 12th month that we have officially been on the house hunt. Well… this is our second time house hunting since we have been married. But you get what I mean!
A lot has changed over the last year of our house hunt. The location where we are house hunting. Our priorities for the home have changed. Most importantly, our budget has changed. We have learned a lot about being a first time home buyer!
It feels like there is not enough information easily available to have a realistic expectation of how much cash it is going to cost to buy a home! That is exactly why we are documenting the entire process, so we can share it with you!
Here are all the article we have shared so far:
- Our Plan to Buy a House on a Small Budget
- House Hunt Update #1 – Finding an Awesome Realtor
- House Hunt Update #2 – Putting in an Offer on a House for the First Time
Once the process is completed, I will have posts and videos sharing ALL THE NUMBERS and all the steps that went into buying our first house.
FREE Budgeting Workbook for Couples!
Getting Out-Bid Again and Again
Over the past year we had a really hard time finding a house in our price range in a safe neighborhood. Period! There was literally nothing popping up for sale.
We weren’t being picky! Pretty much the only qualifications were it needed to keep us dry, safe, and warm. We were looking for potential!
There were two times that we put in offers (below asking) on homes that were anything but beautiful. The land was amazing but the homes themselves needed a lot of love. We were okay with that. We put our offers in and were quickly out bid by all cash and over asking priced offers from investors. We can’t compete with those guys!
This left us feeling defeated and wondering if we were going to have to wait several MORE years before we would find something we could afford.
Bumping up the Budget as a First Time Home Buyer
It was time to do something drastic! Even thoughts of converting an old school bus into a mobile home were thrown around. It sounded like a good idea in our heads but the reality of “where would we park it?” didn’t work out on paper.
We also toyed with the idea of seeing if it was a possibility to live with our parents temporarily to save money. (They don’t know we were even thinking about this! haha) When we sat down and figured out how much this would save us monthly, we figured we would need to live with them for three years! That was just way too long for us to ask of our parents.
Neither hubbie’s nor my parents have a basement. We would all be living in very close quarters. This option was then ruled out due to the potential stress and inconvenience we would be imposing on our parents and our own family.
What we needed to do was to find a way to increase our purchasing power! As we saw it, there were two options.
Pray that we could continue to live in our rental for an additional four years until we could save $86,000 to use as our 20% down payment on a $430,000 house. This would eliminate about $300 in PMI each month.
In this scenario we would also need to pray that interest rates didn’t go up but they most likely will because they are currently at record breaking lows
With these numbers considered (4.5% interest rate) our monthly payments would be around $2,630 (including taxes, insurance, & interest). Don’t forget to take into consideration the $57,600 that we will never get back that we paid into rent over the four year period.
The benefit of this option however, is that there is little risk other than market changes.
Moving forward right now using a FHA loan with 3.5% down ($7,879 down payment) and at a 3.75% interest rate is the other option we saw. We already have all the cash we would need for this option. Going forward with this option would mean that our monthly payment (including taxes, insurance, PMI, & interest) would be $2,865.
In six years from the day we buy the home, we will have paid 21% of the loan and can refinance in order to get rid of the PMI, bringing the numbers back down to the monthly payment discussed in Option #1.
Option #2 is the option we ultimately decided to go with. There are other benefits as well as risks associated with this option. I will go into detail what those are in another post. There is just so much I want to share with you guys!
We made the executive decision to bump our max purchase price up to $430,000.
We FINALLY Had Our Offer Accepted! Kinda…
Whew! So once that decision was made, it opened up some options! We immediately were able to go look at four properties in our new price range. I found one online that I thought I might fall in love with and saved that home to be seen last.
I was right! I fell in love the moment we walked on the property!
And that is where the video picks up!
We are now two and a half month’s past the day we first looked at the house we are currently trying to buy and it looks like we have at least another 30 days before we sign the closing papers for escrow.
But the good news is that it looks like all of the liens will be taken care of and that the house WILL be ours! We just need to continue to be patient!
I will say that finding our amazing realtor has made all the difference! She has been amazing! She isn’t afraid to fight for us. To make sure we are getting a good deal and sticking with our budget.
Even when the current market says there is no way we will find what we are looking for. She helped us with that! If you are looking for a realtor in San Diego County, definitely contact Samantha and tell her Brittany Cooper sent you!
Hopefully my next House Hunt Update will be me walking you through our new home!
We are in the thick of the process and are learning a lot, like I said! So make sure to leave me any and all of your first time home buyer questions in the comments!
Thanks for stopping in and I will talk to you again soon! xoxo