Hello all! Been reading the blog for a few years now but this is my first time writing in the forum. My husband and I are trying to buy our first home but having a few hiccups and I needed to reach out to financially sane people.
The monthly mortgage payment, including taxes, will be just under 1/3 of our take home pay. It is slightly higher than we were anticipating, however (taxes are a bit higher than we thought initially, but personally I think it is worth it to live "in town" and not have the commutes, especially as we live in an area with harsh winters). The mortgage plus utilities will be less than half of the take home. I should note that we are on the lower income side. This, and the fact that this house will need some work down the road- a new roof within the next five years and some other updates that can be done over time, the house is completely livable as is- has seriously freaked out my husband. He's starting to question if we should go through with buying it or not. And it's contagious- I'm now questioning it, as well.
I guess what I'm asking is, do you think this sounds reasonable for a first time home buying situation?
(Btw, we want to get into having rental properties within the next few years for more income. We already live pretty frugally but there is one area in particular we are working on bringing down costs).
Thank you!
My general advise is to hold off as long as possible. I wish we had held off a few more years, as our house soaked up a lot of our free time and money in our early 30's compared to staying in rentals.
Job: Make sure your job is pretty stable or that you can easily change employers within a short commute of your new house. Stable sure fire jobs are an increasing rarity these days. If you are just getting started in life you won't have much of a cushion leftover. Having to sell a house in a couple years to chase a new job can leave you upside down in the transaction and without a good cushion you can be stuck between a rock and a hard place. You would likely have to replace the roof and do other work found at inspection on top of 6% realtor fees. I did not have as much flexibility to leave the area when one of my jobs became seriously un-fun, beware of becoming trapped.
Maintenance: Make sure the bones are good. If the roof is due within 5 years, require it get replaced before you buy. In fact, your bank or insurance company is likely to require it be replaced if the inspection says the roof is at the end of its life. Do a gut check on the furnace, AC, appliances, flooring/carpet, and paint. The house can easily become a money hole when you could be saving like mad. If nothing else have the discipline to set aside at least a few thousand a year to handle the usual big ticket items (roof, paint, fence, tree trimming/removal, furnace, etc). Maintenance can easily add 15-25% of your payment to your average annual cost, often when you least expect it. Our roof this year cost $14k, our friends spent over $25k.
Timing: Mostly the housing market is a sellers market right now. Expect to have all cash buyers competing with you for good properties. Things are still crazy enough that it feels frothy to me. We messed up and bought near the peak in 2006, and it took 7 years before were were no longer upside down. Thankfully we didn't need to leave the area and bought within our means, but it is worth doing a gut check and renting for another year or three if your area feels overly exuberant.
Time: Keeping a house maintained and nice can be a major time sink depending on the details of the house, HOA, and climate. If you really enjoy mowing the lawn, pulling weeds, spreading bark dust, removing roof moss, cleaning gutters, fixing plumbing, painting walls, and general tinkering then you are set. If you prefer relaxing on the couch after work and spending your weekends playing with the kids, well, consider renting.