Monday, July 31, 2017

Buying Our House, Part I: Before We Talked to Anyone Else

I think that having a record about our home buying will be good for me at some point in the future, so I'm going to do a series on the process we went through - I think it will be three parts, but I reserve the right to change my mind. I also think it will be helpful for people who are looking who stumble on these entries. I also want everyone to tell me exactly what we did wrong because that's helpful to know, too. I'm going to use actual numbers because I think that's helpful, so you're going to know a lot about our personal finances.

So, Dr. BB and I have been actively saving for a 20% down payment for the last four years with a real emphasis on it for the last two. I've essentially been putting all of my money from my second job in our savings account for the last two years and we've only rarely pulled money out. We also have not traveled unless it was absolutely necessary, we don't eat out (although I grant myself coffee at a shop twice a week because life must be lived), and I am literally wearing a dress I wore in high school right now, so we are somewhat frugal.  Buying our house did not come overnight.

I also wanted enough money in our savings account so that we wouldn't have to sweat other moving-related expenses, so we took our 20% number (our budget was 225K, so 45,000 for 20% down) and tacked on another 10K for things that come up and 10K for our standard emergency fund.  We told ourselves that we couldn't look at a house until we had that 65K in the bank. We talked about our savings a lot in 2015 and 2016.

Our budget was our budget and we knew we should be able to get a nice home in our area in that price range. Yes, we live in the Midwest and it's less expensive here than on the coasts. We are within an hour drive of Madison and Milwaukee and two hours from Chicago, so our location is generally thought of as a desirable location.

We also really worked hard on building up our credit scores during this time. We both had credit scores of over 800 by the time we started applying for mortgages.

During this period of saving, we were also actively making lists.  We have lived in a number of places, watched family members purchases houses, and essentially knew what we wanted. Your absolute necessities and things you'll be more flexible on will be different than ours were, but here were our lists. Make sure, if you're buying with a partner, that you talk about these things! We wanted to agree on priorities so we presented a united front. We wanted to make sure we had reasonable expectations given our budget and we did manage to do that, I think.

Must have requirements
Next to Nowhere, WI location
Single-family dwelling
No HSA
At least 2 bedrooms plus an office space
At least 1.5 bathrooms
Washer and dryer on site
Turnkey - we wanted to move in pretty
quickly
Detached garage
Central air
Southern/western exposure 



Highly desirable elements
2 bathrooms
Some character (I was not going to okay a
home in a suburban McMansion-filled tract)y
Neighborhood with sidewalks
Wood/tile over carpet
Paint over wallpaper
Fenced in yard
Somewhere for Dr. BB to work on
bicycles
Fenced yard
Mud room
Gas range
Some yard, but one we can maintain fairly easily
You know why I can write it out that way? Because we had all these things written down on a spreadsheet like the nerds we are. Dr. BB and I tend to agree on architectural styles, so we won't worried that we would disagree about what "character" actually meant because we have watched House Hunters together enough to know exactly what the other thinks.
What I mean by character!

Our house technically is north-facing, but there is a gorgeous sun porch/mud room on the south side of the house that means I don't feel terrible about having that particular element technically not meant. All the other requirements were meant. We did not get a gas range and our yard is immense and wild (I have taken to calling it "the jungle"), but we have both agreed that it is worth it to us to spend some of the moving-related expenses on a landscaper.

Okay, so we had all this. We stalked Zillow and Redfin for months. There wasn't much on the market.

During Spring Break in March, we told ourselves we'd get started in earnest, so we collected recommendations from our local friends about a good buyer's realtor and we talked to our sister-in-law the banker about which bank we should go with for our mortgage. We ended up getting a loan through our credit union, UW Credit Union. We went with a 30-year fixed rate, bought half a point for $1185, and ended up with a 4.000% APR.  Our sister-in-law really recommended we buy that half a point because it would save us a lot of money in the end, so there you have it.

That is a lot already, but I'll be back in Part II with more on the mortgage process.

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