The single most important thing that we did in order to afford a house was to live below our means. Owning a house was always a goal that my wife and I shared. And about a year ago, I realized that we needed to start diligently saving for one.
For a while, saving for a house wasn’t the top priority. We put our tax returns in a house fund, but we were primarily focused on paying off student loans. It was the original plan that Marisa and I made after we got married and we stuck to it. In the grand plan, it would be years before we got a house. A two bedroom apartment would fit two kids comfortably. Of course we didn’t expect them both to come at once! After paying off ~$35,000 worth of student loans, we pumped the brakes to start saving aggressively towards a house. Good thing we did, because a few months later our two bedroom apartment received an expiration date- little boy #3 is on his way into the world. That left us with two options- rent a bigger place or buy one of our own.
Rent or Buy?
The housing market is a mess. Interest rates are really high and prices still won’t come down. Buying a house right now (even if opportunities might be coming) isn’t fun! But, having a place with three bedrooms and a yard for the growing energetic lads is important to us. My wife and I made a plan that could end in buying a house or renting a three bedroom place. We would diligently search for a house that works for us and won’t overstress our budget. If need be, we would stay in our current apartment until boy #3 needs to be sleeping in his own bedroom. If at that point we couldn’t find a house, we’d rent. Setting a deadline for buying a house adds stress and increases the chance of making a wicked bad financial decision. If we said “we have to buy a house by August,” it’s likely that the only houses available come August are outside our price range or require a lot of work. This plan gave us the power to walk away from any bidding war and to not settle for something lousy because it’s all that was on the market.
The Two Open Houses
In our housing search, we only attended two open houses. I’ll profile both of them and try to imagine that we’re on house hunters. The first was a house in my hometown. It had a decent sized yard, three bedrooms, and was walking distance to our church. The open house was busy. And our realtor immediately started pointing out issues. Outside, the garage was in a sorry state (roof and door would need replacing). There were multiple things on the roof and exterior of the house that needed attention. Inside, the first floor was nice, but a wall would need to be taken down to make the kitchen bigger than a cramped hallway. The second floor was wonky and there was no railing on steep stairs (not good for toddlers). The laundry was in the basement, but it was so short that I couldn’t stand up straight down there. And it smelled sour with signs of recent flooding. We left the open house and did not make an offer.
We didn’t want to go to the second open house. The pictures showed a dark house with a lot of wood paneling. The kitchen looked small and other rooms didn’t look like they had much space either. But our agent (shout out Ray Gendreau) convinced us to take a look at the house. When we got to the open house, there was one other couple leaving. With nothing else to do, the seller’s agent followed us around and gave an impromptu tour of the place. To our surprise, the house was…good? It was much brighter than the pictures showed. There was a whole half of the kitchen that wasn’t shown in any pictures in the listing. And there was a great screened in porch! The house has three bedrooms, but there’s a large bonus room that isn’t connected to the heating system so it can’t count as living space. By adding a mini split, we could add a fourth bedroom to the house. From further poking around, we found that the house was well maintained and repairs were all done the right way. We walked out of there and thought it over. The next day, we made an offer on the house. It was accepted and we got it for $10k under asking.
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Our Lessons Learned from the Process
1) Get a realtor you can trust
Our realtor, Ray Gendreau if you’re in the southern MA/northern RI area, was recommended to us by some family members who worked with him previously. He walked us through the process and answered my dozens of questions that accompanied every step of the buying process. We never felt pressured into putting an offer on a house. And after the first open house, he told us that we could find something much better for the price. Having a realtor we trusted and who held our hands through the process made buying our house as painless as possible.
2) Don’t set a deadline, you can always rent
I already hit on this one, so I’ll pass on this advice from The First Time Homebuyer’s Guide (not an affiliate link): you can always rent. Before you go crazy and decide that you have to buy a house before your lease ends, tell yourself that you can always rent.
3) Reserve part of your house fund for aesthetic updates
Before you move in (or just after) there will be projects you want to do. It could be tearing down wood paneling, redoing a bathroom, lots of painting, or redoing the yard. Draining an emergency fund or taking out more debt to do these projects is a mistake. Instead, save enough in your house fund so that there’s money left for projects after paying the down payment and closing costs. We managed to do this and it means I don’t have to stress about all of the expensive paint. It’s being paid for by our house fund- we don’t need to replace it like an emergency fund. For bigger projects beyond what’s left in the house fund, an account dedicated to house maintenance or updates is a good practice.
4) Have your non-negotiables and negotiate on everything else
Going into the house search, my wife and I made a list of “must haves” and “would be nice to haves.” A yard for the lads was a must have, while a bigger years (0.5 acres or larger) was in the “would be nice” category. The kitchen needed to be big enough, but didn’t need to be huge and completely updated. With these and other requirements, we were able to narrow down which houses we want to look at. And by compromising the options that were completely necessary (like the 0.5 acre yard), we were able to feel happy with what we got. Plus the house has other, unexpected fun features that weren’t on our list, like a screened in porch and a dry bar in the basement.
5) Don’t be afraid of the nice areas of less desirable cities
One last thing that played in our favor is location. Our new house is in a nice neighborhood of a city that doesn’t have the best reputation. For example, we paid the same amount for this house as the much worse house in my hometown sold for. Fewer people went to the open house because of the city on the address line. I’m happy about this, since we got it for under asking and that first house we looked at sold for $20k over asking. We have some extra perks like being 2 minutes from Stop & Shop, walking distance to the new rail line to Boston, and within shouting distance of my favorite donut shop and Portuguese bakery. Don’t overpay for similar houses because of the status of living in a town with better name recognition.
I’m thrilled with how the process went for us. And we’re working towards move it (thankfully with a lot of family help!). Now, if you excuse me, I have some more painting to get done.
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