I know whenever I read about other bloggers buying homes, I want to know the financials.
It helps me better understand and see how much different the home buying landscape is in other states.
I will say that our area–Southern California– is still a very strong sellers’ market. I wish that Eric and I had been able to buy back in 2010 when the prices dipped for the first time in like 20 years, but alas, we had just gotten married and were $45K in debt.
Even now, it is completely crazy to me that Eric and I decided to buy a home. It was not our plan at all to buy right now, but when do things ever go according to plan?
Originally, we thought we would sit tight, keep saving money, and start looking next year, but when you find a house you love…
I honestly don’t know if we would ever feel financially secure enough to buy a house. It is just such a big investment—both financially and emotionally. And frankly, I hope every person that signs into a half-a-million-dollar contract has at least some hesitation.
The Cost of Buying a Home in Southern California
We ended up going with a full-price offer of $559,000 for a two-bed, two-bath on a 5,500 sq.ft. lot in a desirable neighborhood.
We received $6,000 in credits from the seller, plus an additional $2,000 credit from the lender.
Essentially, this is what we paid:
House Inspection Fee: $350
Wire Fee: $25
10% Down Payment and Closing Costs: $55,425
And we did it all on our own!
I can’t tell you how badly Eric and I considered withdrawing all those funds from the bank and doing this with it:
But we just didn’t have time.. Those damn loan officers were on us like white on rice. One day…
While I don’t feel comfortable sharing the exact amount of our mortgage, I will say that it is less than the very first home we were looking at.
How Buying a Home Affected Our Finances
When we first decided to put an offer on a home, Eric and I were willing to go all in and put every last penny toward the house.
1) Luckily, we didn’t have to and 2) I am SO grateful that we didn’t have to!
Not only is buying a home expensive, but the process of moving and setting up house is expensive too.
Even if the house is move-in ready–which ours was–there are always a million little things you want to do to make it yours.
We’ve been living in the house about 18 days, and we’ve been to Home Depot about 15 times. We’ve paid for paint, painters, landscapers, curtains, a couple of pieces of furniture, house supplies…
I would say that you should always have at least about $5,000 extra laying around for all that miscellaneous house stuff. I feel lucky that we have managed incredibly well, that we never had to drain our savings accounts, and that we still have a comfortable amount of money in our savings account.
The Terms of our First-Time Home Buyer Loan
Because we had less than 20% for a down payment (and a lot of first-time home buyers in Southern California don’t have 20%), we had two options for loans:
- Pay PMI of $398 per month, which will automatically drop off when we reach 20% equity (PMI cannot be written off in taxes)
- Pay an extra .25% in interest over the life of the loan. This .25% can only be removed if you refinance. This interest is tax write-off.
We chose to go with the higher interest rate for the life of the loan. Any way you sliced it, this was the cheaper option.
The Benefits of Good Credit
Of course, Eric and I both received our credit scores during this process, and we were both in the excellent category. This helps us in a variety of ways.
- The loan company actually ended up giving us a $2,000 credit because we turned out to be a much smaller risk than originally anticipated.
- We qualified for the best rate available.
- Having excellent credit scores and solid jobs made the loan process the easiest part!
Thought About Selling Your Property?
As much as you need to know the do’s and don’ts in buying a home, you must also take into consideration the things you need to know in case you think about selling it. A well-constructed grant deed that is customized according to your state and specific situation will give you confidence in the propertly you are selling. You need to manage and check that these requirements are prepared first before transferring it to another owner to manage the risk on your end.
I cannot emphasize enough how much having good credit helped. I am really proud of ourselves for how far we’ve come!