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I’m going to admit something that I haven’t told a lot of people (so why not tell the whole internet?)…my husband and I bought our first house before we were ready. Not only were we newly married (we closed on our house on our one year wedding anniversary), but we also had over $100,000 worth of debt. And did I forget to mention that we also had a newborn?
Yeah, overwhelmed is an understatement.
But I wanted a house. I wanted a place to call our own and a mantle to decorate. I figured that since we would be paying just $200 more each month for a mortgage that it would be perfectly okay. And truthfully, it did all end up being okay. But that doesn’t mean that it was the best decision we’ve ever had.
I want to make sure that you don’t follow in our footsteps. I want you to make sure that you are ready financially when it comes to buying a house because we weren’t! And if your family or friends have asked you these same questions and you’ve waved them off…I GET IT. Sometimes it’s easier for a stranger on the internet to ask you these questions. Just promise me that you’ll answer them honestly, okay? Good!
1. How much can you really afford when it comes to your mortgage?
One thing I never expected when it came to buying a home was that the mortgage company approved us for WAY MORE than we could afford. It’s almost comical! Instead of relying on the mortgage company to tell you how much you can afford, you need to decide for yourself. I recommend that you don’t spend more than 25% of your take-home pay on your mortgage payment. This means that if you take home $5,000 each month then your mortgage (including your insurance and taxes) should not exceed $1,250 each month. You might even want to spend less than that because as your home becomes more valuable, chances are likely your taxes will go up each year!
2. Do you have enough room in your budget for utilities?
I’ll never forget the first time we got our electricity bill when we bought our first home. We owed over $200 and I was in shock. Why did it cost so much? I quickly walked around the house and turned off all the lights and shut the A/C off. I honestly had no idea how much our utility bills would be, but I was blown away by the difference from how much we spent when we lived in an apartment. Chances are likely your utility bills will increase, so make sure there’s extra money in your budget for those costs before buying a house!
3. Is there room in your budget to save money for house repairs?
The true joy of renting is that when something major breaks, you don’t have to fix it! A/C went out? No worries for you. Dishwasher needs repair? It’s not your problem! Homeownership is the complete opposite. No one is going to fly in and fix your house problems. And let me tell you that SOMETHING will break (yes, even if you bought a brand new home). If you’re going to commit to owning a home, then you’ll need a separate savings account for house repairs. I recommend putting money in a savings account each month so that you have cash when the inevitable happens. Need more help with setting up sinking funds? Read all about them HERE.
4. Will you be able to afford this house later?
Not only will your house likely appreciate in value each year (causing your taxes to rise), but your standard of living might increase as well. For example, we went from being a young married couple to parents of a little one. Daycare expenses cost us about $800 each month. Within 2 ½ years, we had another baby and our daycare expenses increased to $1,500 each month! That’s a mortgage payment where I live! If you’re buying a house BEFORE you have children, make sure there is some wiggle room for added costs like daycare!
5. Is what you want reasonable? Are you willing to compromise?
We recently bought a new home and I want to be upfront with you. This house needs a little work. It wasn’t the perfect home and it definitely has some updates that will need to be made (I’m looking at you wall-papered half bath!!), but it’s in a fabulous neighborhood. It sits on a cul-de-sac with large trees in both the front and backyard. It’s walking distance to the elementary school and only 1 mile from the nearest Target (priorities, people!). This house was priced on the lower side in the neighborhood because it has some minor updates that need to be made.
But hear me clearly…we are willing to compromise. I’m willing to compromise on an outdated bathroom to get the amazing and quiet cul de sac. I’m willing to buy an older home so that I have the beautiful large trees in my backyard. I’m willing to buy a house that had missing blinds and ceiling fans because it was IN. OUR. BUDGET. Take a look again at your “must haves” when it comes to the house you want. Is your list reasonable when you compare it to your budget? If not, what are you willing to compromise on?
6. Know what you don’t want.
There are some things that you probably aren’t willing to compromise on. Before you start house shopping, sit down and list out your non-negotiables. For our family we knew for sure we didn’t want a small backyard or a house on a super busy street. We also knew that we wanted a house in a certain school district. Make sure your realtor knows your non-negotiables so they can find houses that will fit your unique needs.
I know that buying a house can be overwhelming. You might feel like you have to get it right the first time because it’s such a large purchase. But, I bet if you’re willing to put forth the work now then you’ll be prepared to find the house that not only fits your needs but one that you’ll be able to afford long-term!