NTTGPR: Home Purchase

Wine&Cupcakes · May 2014

Hi Ladies,

DH and I just got pre-approved for a mortgage and are hoping to buy sometime over the next few months. We have purposely continued to live in a crappy little apartment to save money, but now the reality of home buying will have us paying $1,000-$1,500 more a month than we currently pay in rent (Northeast = crazy expensive).

When adding that to the fact that we will begin to TTC in July/August, I'm having a panic attack. We can afford all of this, I'm just mentally unprepared for the drastic hit in savings. My question is this: for those of you who own a home, how much do you save after all bills/spending, etc. etc. a month? Just curious.

CaveWmnInBrit · May 2014

I am in a completely different situation... We pay less than half in our mortgage (about £430) then a friend renting a similiar size house (£950/month)

This was the main reason we decided to pour all of our savings (including nest egg) into a down payment for the house- even if we sell it for for a few grand below what we bought it for we end up with more money in our pockets instead of some landlord's.

Right now with DH in school PhD and me in my qualifying year as a teacher in the UK we are not saving much (few hundred a month).. however in the next 6 months he should be getting a £5-10,000 raise and I should be getting another £2000 if I stay in teaching, more if I move to educational management. We just take comfort knowing if it went tits up there is a safety net in our small savings and family.

MrsMCBMar2014 · May 2014

We are in the process of buying our home. Right now we are just waiting for the mortgage commitment so that we can close in June. Anyhow. We did the math and our mortgage is significantly lower then the rent we are currently paying. I guesstimated the utilities (all electric house) and we'd be about 75.00 over the amount we pay for rent, so in reality we are saving a shit-ton of money with purchasing a home.

We are looking forward to owning a home because essentially, with renting you're just paying someone else's mortgage. We wanted to buy so we could do whatever we felt like doing to the house. Like knocking down walls, redoing the kitchen and/or bathroom(s)...we can just do it and WE'D benefit from it, not the landlord.

I'm in NJ and we found an awesome house with in our price range. Where in the Northeast are you?

suzysurparis · May 2014

We just bought our house and decided on going really short-term for the mortgage (9 years). DH had bought the apartment we were living in before, but sold it for the same amount as he had originally paid 3 years ago, but with closing costs and mortgage interest, it was essentially the same price as if we had rented, only we were able to change things and it feels better to own for us.

I'm not sure how much we're going to save each month since the monthly costs for the house will be higher and we need to buy a car and pay car insurance/gas that we didnt have in the apartment. Still, our payments are about 65% of my salary, and my husband makes quite a bit more than me, so we plan to pay-off early. But vacations and food and redecorating. There's lots of things that cost about $2000 that seem to come up. We're both neurotic enough to save anywhere from $1000-$2000/month if we try for the moment.

Ducktale · May 2014

LinnyDan12 said:

We essentially live off of DH's income while mine goes into saving and renovations. We bought a fixer so it's intimidating. Giving an actual figure wouldn't help because my income living in the midwest is probably less than a mortgage payment in the northeast. Even if you've been pre-approved for more it's recommended to keep your housing expense less than 25-30% of your income (though cost of living may change that for you). To help find where you're comfortable try "paying" the difference between rent and a mortgage payment into a savings account. It will give you an idea of what actually works and as a bonus you'll have more saved for a down payment or redecorating your new home. Good luck! It can be overwhelming but it's also an exciting change

This is great advice, pretty much exactly this. We also live off DH's income and save mine. If I decide to be a SAHM someday, I figure we'll save around $500 per month (much lower than now, but we have a pretty decent savings account)

JNCPro3130 · May 2014

I don't have much to add, but one thought I had was about your pre-approval. We bought our house a year ago. When we started the whole process, we decided what we were willing to spend on a house/ what we were willing to pay per month. The bank pre-approved us for more than we were willing to spend. We know our finances/bills best, so we didn't look for houses at the price point that the bank said we could afford. If the amount they pre-approved you for seems unreasonable and you are nervous about the amount you will be paying a month, would it be worth buying a house that is not as expensive that you feel more comfortable with? That's what worked for us. Just a thought. Good luck!

ImJessesGirl · May 2014

Wow!!! That is a big difference. I had the opposite experience. I was renting a tiny two bedroom apartment and the rent was $975 a month. I bought a 3 bedroom house on a quarter acre lot in a nice subdivision and my mortgage was only $915 a month.

I do understand the panic though.

chaysefaith · May 2014

I didn't read all the answers, so sorry if this has already been said.

As soon as we decided we were going to buy a house we started saving our money as if we already had one. Our rent at our previous place was $850/month, with the house we are spending $1500/month on mortgage plus paying an extra $1000/month on principle to pay it off quicker.

He pays for our really awesome health insurance, so we factored that in when we decided how much we each contribute to the bills every month. That said, I contribute $1700/month and he contributes $1400/month. That leaves us enough to pay the mortgage, additional payment, pay utilities and cable/Internet, and buy groceries.

We each pay our cell phone bills and gas for our vehicles out of our own money AFTER we contributed to the bills.

Also, he and I have different savings styles when it comes to the bills. We are one month ahead (so the money that goes into our account in May is to pay June's bills). I put half of my monthly contribution into our joint account with each paycheck, he puts all of his in in one lump sum payment. Neither way is right or wrong, but I know that if I don't put that money aside each paycheck I won't have it all each month.

Hope that helped, sorry for WOT.

ETA: I went back and read everyone else's responses

I will mention that we have a good chunk of money in savings and both of our vehicles are paid off, so neither is factored into our budget. I also set aside money in an FSA to cover our medical bills, so they are not unexpected out of pocket expenses.

Pintobean39 · May 2014

We personally didn't want to be house poor so we bought a house for a lot less than we were pre approved. We try to put about 2k away every month but here lately with all this IF treatments it's been difficult.

I've also heard your house and all expenses related to that should be no more than 30% of your take home pay. You also want to make sure you are putting money away for retirement, 10% is a good amount but it depends on your age. Also make sure you have life insurance in place and a long term care policy. I highly recommend sitting down with a financial advisor before you buy a house just to make sure you have everything lined up.

BabyCowbell · May 2014

We use one salary to pay all our fixed costs, and the other for savings and fun money. We've intentionally bought in a price range that gave us that flexibility. We also share one car and do minimal clothes shopping. I also pretty much never get any mani/pedis or anything fancy like that. Basically we've chosen to try to spend our money on things that make life more fun, like big vacations and going out to eat whenever and wherever we want.

My advice, buy way less than they approve you for.

Wine&Cupcakes · May 2014

Thanks for all of the responses.

We're in Boston. We got approved for $600,000+ but I feel comfortable with a mortgage less than $400,000. That being said, $450,000 will be our max, but I'm hoping we wind up with something in the $300's...We have looked at many towns within an hour of DH's job and there are only a handful that even have inventory at the $450k level...many towns within 20-30 miles of us don't have anything until you get to $550-$600k+ its ridiculous.

I think I'm just a bit nervous about the house, plus TTC/child costs combined with the fact that I'm starting NP school around the same time as all of this (yea, apparently I'm crazy...) so I may need to cut down on work for a year while I'm in my clinicals...so we may have a tough year or so. So many balls in the air!

Did you shop around a lot for a mortgage? We spoke with Mortgage Master and got the pre-approval, but I'm also a member of a credit union so I'm thinking we should inquire with them.

As for savings, we will likely have $10k in savings upon purchase and then will begin putting all of the rest of our income into savings for an emergency fund after the house is bought. This should have us all set by the time a baby would come, even if we got pregnant the first month (very unlikely, but would rather plan like that to be safe). Then we'll attempt to max out retirement accts.

I'd like to quit being an adult now!

smg2302 · May 2014

Pre-DD we were putting away about $1200 a month in savings for a rainy day, plus a little more for home renos and big purchases. Now we put away about $200 a month in our rainy day savings. We are also putting away about $700 a month as practice expense for LO2 (anticipated cost of daycare, diapers, etc.), knowing that will be used for the next LO if/when that happens. Our rent for a 2/2 was a push with our mortgage on a house 3/2 down in Tampa. While we try to put any kind of windfalls like bonuses away in savings, it seems like there is always a new expense. We had to re-do our roof last year, and replace our kitchen cabinets this year. It's been an adjustment but definitely manageable.

Wine&Cupcakes · May 2014

Pintobean39 said:

We personally didn't want to be house poor so we bought a house for a lot less than we were pre approved. We try to put about 2k away every month but here lately with all this IF treatments it's been difficult. I've also heard your house and all expenses related to that should be no more than 30% of your take home pay. You also want to make sure you are putting money away for retirement, 10% is a good amount but it depends on your age. Also make sure you have life insurance in place and a long term care policy. I highly recommend sitting down with a financial advisor before you buy a house just to make sure you have everything lined up.

All good ideas. Plus we'd want to consider baby expenses like a savings/college fund, etc. Seems like a worthwhile thing to do. I told DH we need to sit down and really go over expenses and try to anticipate the house, life insurance, college/baby saving account, etc. and see where we wind up. Luckily I think my mom will provide childcare which is huge.

PinkRoses53 · May 2014

I think this varies by area. My H and I own a home. We live in NJ and pay about $1k a month just to taxes! Owning in our area isn't cheaper than renting but we see overall value in owning.

Between my H and I, we put about $2k a month in joint savings for our emergency fund, $200 pp in individual savings (used toward new cars, vacations, "fun money," etc), $300 in our son's college fund, and my H buys company stocks (I hate to say it but I have no clue how much he buys in stock each month). We also contribute to a 401k (my H) and pension fund (me).

I would write out a detailed budget and see how much you could comfortably spend. Remember that owning a home comes with a LOT of extra expenses-- home repairs, renovations, more furniture, higher utilities, etc. We had a significant down payment/ emergency fund saved before owning a home and were able to put down 20% and maintain 6 months emergency fund money. I would not have been comfortable living without that emergency fund cushion. We had a unexpected home repair of $2k last summer and it was nice to be able to not stress about where we were getting the money from.

klburke88 · May 2014

Interesting discussion. You guys are focusing more on budgeting and the cost of renting vs owning. I work in the mortgage industry, but if anyone has questions about loan programs, credit, or the mortgage process, I'd be more than happy to share my opinion

klburke88 · May 2014

@Joy2611 I think everyone here has a great mindset when it comes to budgeting and living within their means. I was just trying to say that my comment wasn't totally related to the discussion, but wanted to throw my experience out there.

PinkRoses53 · May 2014

WhoCanItBeNow said:

PinkRoses53 said:

I think this varies by area. My H and I own a home. We live in NJ and pay about $1k a month just to taxes! Owning in our area isn't cheaper than renting but we see overall value in owning.
_______________________
Stuck in the box!

Holy fuck. We have 2 houses and the mortages for them barely totals what you pay in taxes. Score for lower COL. And I can't imagine what some banks are thinking with the amounts they preapprove people for, except that they want them to default. We were preapproved for 3 times the amount of our combined mortgages from one. Fuck that noise.

Haha I tell my H often that we should move to a LCOL area and buy a house all cash! I watch house hunters and see houses that are way larger than ours that we could put 50% down on. Plus, I'm sure the taxes are not NJ taxes crazy.

That being said, we were preapproved for more than we spent. We didn't want to be house poor by any means.

Wine&Cupcakes · May 2014

The amount we got pre-approved for was nuts. We could afford it...if we chose not to have kids...

We are looking at single family homes. Unfortunately, where we live, we aren't likely to find something cheaper than rent...and in all likelihood we will have to do some cosmetic work..which is all I'm willing to do. I don't have it in me to gut a house. Plus, if I walk into another home that hasn't been renovated since 1950, I will kill myself.

I'm all for some cosmetic work...or updating a kitchen so long as it already has workable cabinets that can be painted but the outlook is a bit grim here!

themrsJRD · May 2014

I'm shuddering at the numbers being thrown around here... 600K, or even 300K, would buy a mansion where I live!!

We save a couple hundred dollars a month in owning vs. renting. However, we did an FHA loan (back before they changed their PMI rules) and only put 3.5% down. If we had done a conventional loan with 20% down, we probably would have cut our mortgage down another couple hundred. I will second keeping your housing costs around 1/3 of your monthly income. That rule of thumb works well for us- our house is 1/3 of just my income so we will soon start paying more on principal.

ToryKate · May 2014

Depending on where you live you might want to talk to your real estate agent about property taxes. In OH it can be $4k for property taxes in the county and $7k for the exact same priced home in the city limits. $3k a year will add up over time. In some cases that makes sense if there is a better school system or service you rely on, but sometimes the schools are not much different and the services are about the same.

namara5532 · May 2014

We pay more for our mortgage than we did renting, so we're obviously not saving as much as we did before. It's a scary step, but I'm glad we did it. Financially, I know we're building equity with every payment. I love the feeling of being able to do whatever we want with the house/yard because it's actually ours.

Our mortgage takes an escrow payment with our mortgage that takes care of all property taxes and mortgage interest. As long as mortgage payments (including principal, interest, and escrow for taxes) doesn't exceed 1/3 your income, you should be able to live there comfortably.

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NTTGPR: Home Purchase

DX (me): Inborn error of metabolism - protein restriction, metabolic formula & weekly blood tests

DNA Results (7/1): DH is NOT a carrier for my genetic disorder!

7/3: Metabolic clinic gave the green light to TTC - holy crap!

Re: NTTGPR: Home Purchase

DX (me): Inborn error of metabolism - protein restriction, metabolic formula & weekly blood tests

DNA Results (7/1): DH is NOT a carrier for my genetic disorder!

7/3: Metabolic clinic gave the green light to TTC - holy crap!

DX (me): Inborn error of metabolism - protein restriction, metabolic formula & weekly blood tests

DNA Results (7/1): DH is NOT a carrier for my genetic disorder!

7/3: Metabolic clinic gave the green light to TTC - holy crap!

DX (me): Inborn error of metabolism - protein restriction, metabolic formula & weekly blood tests

DNA Results (7/1): DH is NOT a carrier for my genetic disorder!

7/3: Metabolic clinic gave the green light to TTC - holy crap!

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