Catching The House Bug

I caught the house bug. It was inevitable. After seeing everyone talk about their homes, remodeling, and building equity, I finally caught it. Let’s rewind a little bit…

While I was knocked out on pain meds this weekend due to the extraction of four bicuspids to make room for my crowded teeth, my husband popped the question. He asked “if we should be thinking about buying a home. Houses are really cheap right now, especially in Texas, and we should be able to save up the 20% down payment in the next eighteen months.” I know it most places, buying a house is almost an impossibility (hmm Canada, California, Seattle, etc.), but in Dallas, Texas homes are “affordable.”

Right now we are paying $900 a month for a 700 sq. foot 1 bedroom apartment + $80 in water + $80 in electricity + $100 in cable/internet. I did some research and figured out that if we got a really good interest rate (possible, my hubby has a 750 credit score right now, car debt will be gone in August, no student loans, 20% down payment), our mortgage will be equivalent to our rent, that’s including insurance and taxes probably. And that’s our mortgage at the 15 year loan. No 30 years for us. Only 15 years.

The house we can buy is a starter home. 3 bedroom/2bath = 1500 sq. feet = fixer upper. Houses in our area for these type of homes range between $100K to $150K depending on the location, neighborhood, condition, and age of the home. The max we could afford is a $150K house. In order to buy a $150K house, we would need $30K ($150k*20%) down payment. $150K is really our max budget and that’s accounting for closing costs, and everything else you have to pay for in order to buy a home. I know the house will be a fixer upper, I mentioned this to my husband and he said good thing your dad’s an electrician and my parents love remodeling.

The plunge into home ownership is definitely a big one. But financially it will be better in the long term. Once our lease is up, rent will likely jump to almost a $1000. We have time right now, and are only considering home ownership. Once we finish funding our emergency fund savings ($20,000), we will start saving for our down payment fund ($30,000), a home improvement fund ($10,000), & furnishing fund ($10,000).

So if you see any tweets related to homes, it’s just me researching. If you have any advice please let me know 🙂 This home ownership thing is so scary and exciting!

31 responses to “Catching The House Bug

    • Look at all my cheerleaders!! 🙂 House buying won’t happen until 2014, but I’m going to start saving now, and researching. You could move to Texas Erika? Of course, it’s extremely hot, and it’s not very pretty.

  1. Look at Fort Worth for even cheaper houses. Bought mine in 2006 for 118k. 2300 sq ft in a gated community. It was a foreclosure, but it didn’t need too much fixing up. I also believe that the property taxes are a little cheaper than they are in Dallas too.

    • Fort Worth is not an option for us. We both work in North Dallas, and would like a short commute. I would rather pay more money to have a better location. Plus, I really like our area, our friends are close, and so is my hubby’s family.

      However, I do know Fort Worth is really cheap.

  2. Oh good for you! We’ve bought 3 properties since 2009, so definitely caught the bug =)

    For your first house, I’d recommend looking outside of tract-type developments where all the houses are the same. In general those are a bit harder to value, so you are somewhat more inclined to find a better deal on a house there.

  3. If I may add my two cents to buying a home that I find most people tend to overlook (althought you may not have): have you considered that if you don’t plan on staying in the home for the rest of your life, would you consider renting it out since to really build equity in real estate is a long-term approach. Also, how long do you realistically plan on staying in the home? And do you think a 15 year mortgage is best? I’m not against it, but it’s always good to allow for flexibility. You can choose a 30 year mortgage and pay on it like you would a 15 year mortgage, but if ever you needed extra cash flow (for whatever reason) you could reduce your pay to a 30 year mortgage payment, then resume back to the 15 year mortgage payment.

    Of course, I don’t know your personal circumstance and these are things you may have considered, so please excuse me if I sound redundant. Good luck! I hear Dallas is awesome!

    • If we do decide to move, we will probably rent it or my parents would move in. One of my goals in life is to provide a nice home to my parents, and this would be a way to do it.

      As far as realistically staying in the home. I am not sure. However, both of us work in the area, and Dallas is growing, so I don’t think we will be moving from the area in the next five years.

      First, we will end up paying more interest in the long run with a 30 year term even if we paid it faster. Second, it’s psychological. If we didn’t spend that money on the mortgage, we would probably spend the money on food or something else. Houses are so affordable in Texas as it is.

      The point of buying a house for us is to build equity. A lot of people want their dream home, and want to raise their families, etc. We just realized we are paying almost $1000 in rent for an apartment, and our mortgage at the 15 year rate would end up being the same if not less. We wouldn’t even own the apartment at the end of the day.

      However, let me say something else. This is all wish list items. I am not even sure how much our house would end up costing, or what our monthly payment mortgage payment would be. I would really like to have a 15 year mortgage. I will definitely work to get to a point where we can get a 15 year mortgage and still afford it. But who knows I might end up with a 30 year mortgage. I still have to consider homeowner’s insurance, etc.

      Thanks so much for stopping by Ornella. I haven’t considered everything and the questions that you brought up were definitely challenging.

  4. I say go for it. My wife and I bought our first house five years ago, although I wish we would’ve waited a while longer to take advantage of the better prices. If you’re able to put 20% down plus keep it close to your current rent payment that would be a steal.

  5. I have a house and I think its wise that you are saving up a seperate fund for house repairs. Its amazing how many people don’t think about that when they buy. And I promise you that things WILL break down or stop working. Housing costs in your area seem similar to what is available in my area. The only thing I would suggest is that you try and put down 30% or more on your down payment. It may seem like a lot but it really will help with minimizing interest later down the line. You def. don’t want to put down less than 20% or you run the risk of PMI (Grrr…don’t get me started). Good luck in your research!

    • We are definitely going to aim to put more down, but it’s going to depend how much we save in 2013. By the end of 2012 we should have our EF funded at $20K. We will definitely not put less than 20% down. PMI is just wasting money.
      Things breaking down is what worries me. Now, we just call maintenance and they come fix it.
      How much did you put down?

  6. Pingback: The Race to the $30,000 Down Payment | Savvy Financial Latina·

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