Buying a house is a stressful process for most people, when we bought our house one year ago we didn’t really know where to start since we were first time home buyers.

We figured things out on our own and we were able to successfully purchase our first home in 2017!

Why Buy A House?

Our decision to buy a house came down to the fact that the cost of renting was consistently rising in our area. If we didn’t buy soon, we’d be priced out of the housing and rental market for a larger place.

We also knew it was time to buy because:

• Our rent was going to increase by 10% but our income was only going to increase by 2.4%
• We would still be stationed in the same area for the foreseeable future
• Home ownership was a goal of ours

The argument of owning a home versus renting truly comes down to your personal situation. For us, it made perfect sense.

Preparing To Buy A House

After we made the decision to buy, we started preparing ourselves for that process. We continued paying off debt until the point where we were ~90% debt-free. This helped us out because our debt-to-income ratio played a big part in determining whether or not we could qualify for a mortgage.

For a purchase this big, we also wanted to secure the lowest interest rate possible. To do this, we continued working on improving our credit scores. The higher our credit score, the lower our interest rate would be – and that means a lower monthly payment.

The last thing we did was save as much money as we could towards all of the home buying costs we would have. This included:

• Down payment
• Closing costs
• Moving expenses
• Furnishing
• Home inspections
• Estimated repairs/improvements

We set a goal and then divided it by the number of months left until the end of our lease. That money was set aside each month and then completely left alone. We also fully funded our emergency fund during this time as well so that we could cover any additional expenses or repairs once we moved.

Finding A Realtor

When we first started actively looking for a house to buy, we thought that we needed a realtor to help us with the process. We chose a team based off of their Yelp reviews and marketing, but in hindsight, we should have done more research before hiring them.

We wish that we would have interviewed several realtors before making a decision on who we would use. The people that we ended up going with did nothing but tour the new home site with us and collect a commission.

Being that we chose a new-build home, we didn’t even need a realtor to assist us with the process at all. Had we known that beforehand, we would have skipped the realtor process altogether.

If you do choose to hire a realtor, continue to actively search for houses on your own and STAY involved even after you’ve put in an offer. Always advocate for yourself and be proactive throughout the process.

How Much House Can We Afford

When looking for a house, we wanted to make sure that the house we bought would be equivalent to (or less than) what we were currently paying monthly in rent. A typical mortgage includes the principal payment, interest, property taxes and home owner’s insurance (other loans could also include PMI and additional costs).

We asked our lender to print out written fee estimates (different mortgage cost scenarios) so we could get an idea of what price range we should look at. This allowed us to visually see how different base loan amounts and interest rates would affect our monthly mortgage payment. This also gave us an idea of what we would need for closing costs.

By doing this, we were able to be confident in the fact that we could actually afford the house we were looking at even after we added our HOA fees and various utilities into the mix.

Once we figured out what our budget was, we got pre-qualified by our lender for that amount. It’s recommended to do this because you can use a pre-qualification letter to put in an offer on a house. Getting pre-qualified early makes the entire process run smoother.

Choosing The Perfect Home To Buy

We considered a variety of things when we looked at houses we wanted to buy:

• Timeframe – We knew that we were definitely leaving our apartment when the lease was up. This meant we needed a house that was either move-in ready or very close to being complete.
• Age of home – We wanted a new house because honestly, people are nasty and we didn’t want to deal with that. Plus, having a new home meant we’d have added warranties and protections.
• Distance – Our new home would need to be within a reasonable distance of where we work.
• Preferences – We made a thorough list of everything we actually wanted and didn’t want in our first house. This helped tremendously when we toured houses or looked at them online because we were able to instantly say “This might work…” or “Next!”

* FREE Downloads: Home Preferences Worksheet & House Hunting Worksheet*

Getting A Mortgage Loan

There are several different types of loan options to consider when you’re buying a house. Depending on your circumstances you might qualify for more than one type so you’ll have to research and figure out which one will be best for you.

Since DJ is in the military we were able to take advantage of the VA Loan. This loan is available for veterans and allows them to purchase homes for 0% down.

Just be sure that you thoroughly research the type of loan that you want to use beforehand so that you can make sure your mortgage lender is willing and able to handle it.

FYI: If you decide to buy a new home, they will try to offer you incentives if you use their lender. If the lender is nationally recognized and offer great rates, go for it but make sure that you do ample research before making a decision. We chose a local lender because if anything went wrong I wanted to be able to show up on their doorstep lol.

Other Things To Consider

Of course, there are a million other things we could talk about when it comes to the home buying process, but we don’t want to keep you here all day. Just make sure you do plenty of research when you start the process.

One tip we can give is you should start shopping for home insurance at the place where you currently have your other insurances. You can usually find great deals and discounts by bundling different insurances together. Don’t stop there though, get quotes from 3 or 4 other insurance companies so that you get the best rate.

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That’s it! Buying a house has been one of the best decisions we’ve made. In a year, our house has appreciated by over $60k and is continuing to rise. Homeownership might not be the best route for everyone though, but if you’re considering it, keep what we’ve said in mind!

Do you own a home? What was your experience as a first time home buyer? Let us know in the comments below!

$tay Wealthy Friends,

— Dannie