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You hear it all the time. Don’t buy a house until your finances are in order. Don’t buy a house if you have debt. Don’t buy a house with no down payment. There are a million lists out there with hundreds of house-buying no-no’s. I’ve read them. I’ve heeded their words…
Coming from a family where every person buys a house by the age of 20, I was the anomaly. It made sense, as I was in college and couldn’t afford a house anyway. When Mike and I started getting serious, we briefly looked around on realtor sites, but at the time, we had very little income and a lot of debt (mostly my student loans), and renting was the cheaper option. In the back of my mind, I also knew I didn’t want to plant roots in St. Louis.
Our lives are completely different than what they were in 2014. I am in the military and make double what I made at my old job. Mike has secured a position at the postal office and making more than ever before. We have free health insurance (through the military) and only half of my income is taxed. I won’t say how much we make, but I’ll tell you that we are in a higher tax bracket now.
My income covers all of our bills at the minimum and allows us to save 10% of our income, even after putting 18% of it in my TSP. In that effect, I would say we’re doing really well compared to where we were in 2014. Everything Mike makes will go to paying down more of our debt and any extra expenses that may pop up.
If you’ve followed me for any length of time, you know that we have some pretty significant debt – mostly my student loans and two car loans. Our credit card debt rests around $7000 right now, but we plan on paying that off before the end of the year. With so much debt already, you may be asking yourself… WHY WOULD THEY WANT TO BUY A HOUSE and add six figures to their debt?!
5 Reasons We Want to Buy
While it may not make sense to most PF bloggers (and it may seem just plain stupid), we have many reasons for wanting to buy a home. Can you relate?
1. Emotions. The number one reason you should NEVER BUY, but one of ours — is simply the emotional factor. Mike and I are American Dream kind of people. We both grew up poor, so having nice vehicles and a nice home has always been on our dream list. Emotionally, we are attached to the idea of having a home and what it means for us as successful adults (even if we are in debt).
2. Space. You wouldn’t think one couple and a dog would need more space, but an apartment just isn’t doing it for us anymore. Since moving to Colorado, we have had friends and family stay with us at least once a month, and I don’t see that trend ending any time soon. Colorado is a vacationer’s paradise and we want to open our home to family and friends. While the extra spare bedroom has made that possible, we want to be able to accommodate more than two people. We want the yard, the garage – all for a more fun, comfortable life.
3. VA Loan. One of the beautiful benefits of being in the military is the VA loan. VA loans require no down payment and have no PMI (one of the main reasons people hold off on buying a home). Those are just two of the benefits of VA loans. There are several more, but needless to say, this is one huge reason we want to buy now rather than waiting.
4. Costs. Believe it or not, buying would be cheaper for us. I am a firm believer that renting vs. buying should be largely based on what the economy/cost of living is like in your area. In the Denver metro, renting is ridiculous Thank you marijuana legalization. Mike and I pay $1495 for an updated 2bed/2bath apartment with a little over 1,000 sq. ft. If we wanted to add a storage space and 1-car garage, that number would go up to about $1750. We do live in a nice area, but for a nice apartment in most neighborhoods, those numbers are pretty standard across the board.
If we bought a house in the upper $200’s (which is the going rate in a nice area), our payment would be about the same (this includes taxes and insurance, etc.) and we would have all the extras – a yard, 2 car garage, 3 bed, 2 bath, no little kids running around above us making our lives miserable, etc. If we were lucky enough to find a home for $250k, it would actually be less than our rent.
Another plus is that the larger size offers us the opportunity to rent out one of our rooms to one of my co-workers. I have already talked with some people and they are interested in this (as 1 bedroom apartments run about $1200). Even with the higher utility bills that come with another person, this would be super cost-effective and add to our ability to save money and continue paying off our debt.
5. Location. This is huge. We are in a great location now, but Mike has to commute 60 miles one way for work. The suburb we want to buy into is family-friendly, safe, reasonably priced, and would cut about 60 miles out of Mike’s daily commute. This would add to our savings because our gas budget would decrease, not to mention increase his morale, as he wouldn’t be spending 3 hours of his day fighting rush-hour traffic.
We are the exception, not the rule.
I know that our situation is the exception. Being in the military has offered us benefits that just aren’t available to other people. Our location also plays into this. In my mind, it isn’t smart to continue renting when we could save money on our living situation and increase our happiness. As the Denver market continues to rise, I know our rent will increase with a renewed lease. It’s now or never.
The Denver market is booming, and it’s definitely a seller’s market, but we’re hoping we can score a great deal since we’re going to be buying in the wintertime. I know that we MAY be buying at the top of the market too. That is my biggest fear. I do not want us to end up in an upside-down mortgage. Thankfully, I don’t see that happening in the near future either.
Still, it’s one of the reasons I want to start perusing listings now, keeping my eyes open for homes under our budget. My co-workers say it’s impossible to find a house at the price I want, but I think it’s possible with enough patience.
So, now that you know the story, as my friends, I ask for your advice on buying a first home and when I should start getting serious about finding a realtor, especially in a cut-throat market such as this one.
Please don’t tell me we are making a mistake in wanting to buy when we have debt, etc. That won’t change our minds. Rather, give me advice on how to effectively buy a home for a good deal, in a market where some homes are going for above asking price.
I thank you for all your help.