Buying a house has got to simultaneously be one of the most exciting things annnd one of the most stressful! I can still vividly remember when we closed on our first house. We'd been married about a year and I was all in and what I thought fully versed in the process. Scot meanwhile, was overly practical. Is that a surprise to anyone? In my defense, I was fully immersed in the industry so I thought I knew all the ins and outs. In hindsight, I'm incredibly grateful for Scot's pragmatism. We bought in the hay day of 2005...when all you had to do to qualify for a loan was be alive and breathing. Truly.
Thankfully, Scot ensured we didn't get in over our heads, which required some considerable restraint when a bank is wanting to give you more money than you need. While we were both working full-time at the time, we knew kids would be on the horizon and little did we know at the time, that I'd continue working throughout all our child-bearing years. Back then, we both thought I'd hang up my work wardrobe and exclusively stay home with the kids. So when we went to talk to the lender, we ran numbers solely on Scot's income and based our purchase on that. In all honesty, we still operate our finances this way and it's probably one of the better decisions we've ever made.
So before YOU get to buying, here are a few questions to ask yourself:
1. If your employment were to change, would you be able to cover the cost of your mortgage for 6 months? If the answer is no, you might want to hold tight. I say might because there are conditions where this doesn't apply. If you're a physician just finishing residency for example. you probably won't have a lot of reserves, but once you get working, you can probably accumulate them quickly. In that case, I'd recommend you purchase at a price that will allow you to accumulate those reserves. I realize that in addition to saving up for a down payment, adding this cushion might feel overwhelming, but the peace of mind it brings you is immeasurable. If you're under 30, you didn't adult through the Great Recession of 2008 and let me tell you, you'd be shocked how quickly it can all turn and that cushy job can be gone in an instant. If both Scot and I were out of work tomorrow, we could feasibly pay our mortgage for over a year. That probably didn't matter when it was just me and him, but when you've got 4 kids in the mix, it's a game changer.
2. Is the mortgage amount more than 1/3 of your take home pay? If the answer is yes, you're over buying. We personally have always shot for this number to be about 1/4 of our take home pay. Again, there are some exceptions to this, so you've got to crunch the numbers in relation to the trajectory of your career. If you're 30 and still have a ton of growth in your employment and you've found what could be your 'forever home,' you might stretch this number a bit, but I wouldn't suggest much. We've always run this number solely on Scot's career so that I can hang up my work wardrobe at any time without consequences on our mortgage.
3. Do you like the location, lot and layout of the home? You can change out floors, countertops and even cabinets if you want, but if you've got a wonky floor plan, a lot that backs up to a busy road, or a location that requires a far commute, consider carefully. If the location, lot and layout are questionable to you, they will also be questionable on resale. Do not compromise on these unchangeable aspects of a home, instead, be patient and save a little more in the meantime. Something that works will come soon enough and if you've planned accordingly, you'll be in the perfect position to snatch it up when it hits the market.
If you're actively looking for properties, you can search them on my personal website here, this is updated in real time with the MLS, giving you the most accurate info there is!
If you've got more questions about buying or selling a home, schedule a call and I'd love to talk through them with you.
Hi, I'm Amy. When I'm not scouring the valley for the perfect new house, you can usually find me in the kitchen with a gaggle of kids. Chips, salsa and a Diet Coke are usually in hand.