House Expenditures

Do Not Purchase a House Until You Can Say YES to These 6 Things

Posted by on Jul 19, 2015 in House Expenditures | 2 comments

Do Not Purchase a House Until You Can Say YES to These 6 Things

I have been asked by a renter how we knew that it was time to become a house owner.  So I thought I would answer this question as a post since there may be several people wondering when is the right time to make that transition from rent to own.

We felt like as soon as we started creating a family that the next step was to purchase a house.  Everybody starts asking you when you’re going to buy a home and then you see all of your friends going out and buying one.

Looking back, I wish that we had continued renting a little longer because we did not realize how much work really goes into a house.

 

Today I created a list of questions that will hopefully cause you think and really pray over the decision of buying a house.  It’s a big decision!  These are questions that I have since asked myself but it was too late.  The papers were already signed and we were in it for the long haul.  So, here goes…

Do you have a lawnmower?  If not, then you’re going to need to one along with several other outdoor supplies to maintain your yard.  Remember…you do have a yard now.  (How do you like that one as a starter?)  Again, we learned this the hard way and I think we had to pay someone to mow our yard for a few months until we could cough up the money for a mower.

How much is the electric bill?  I remember asking this question and then I remember my mouth dropping when I actually saw the bill.  $300 in the Texas heat.  Ouch!  For a 1330 sq. ft. home, I was not expecting that.  But when you buy a house from 1982 and it has the original air conditioner, plus single pane windows, it’s going to be high.  I think I feel another question.

Have you asked about the appliances and are you ready to pay for more?  As a renter, you are probably living in a place where some appliances are furnished.  As a home owner, you are the furnisher.  You will be the one to replace the door on your new refrigerator/freezer because the ice maker has quit working.  Do I make it sound like this has happened to us?  Good.  Because it did not long after we moved into the house.  We have had ice problems ever since and the door is still not working correctly; even after having it replaced.

Do you have aspirations of becoming a landlord?  If you answered “No!” to this question then you are not prepared to become a homeowner.  You will be the landlord!  If something breaks, you will either need to watch a lot of Youtube videos to learn how to fix it or you will need to pay for a repairman.  Will you have the money set aside to do this?  Do you have a separate savings account just for emergencies or a house account like we do?  If not, then you are not ready to purchase a house because something is going to happen.  After we first moved in, our hot water heater was the first to go.  Remember…1982 house.  Luckily, we had some insurance that paid for most of this but then our yard exploded with water when some pipes burst.  Didn’t plan for that one.  You can’t plan for what’s going to go wrong with your house, but just know that something is going to go wrong!

 

Did you want to walk into your house and have nice furniture, a new table, new curtains, plus all the other furnishings a person could wish for?  Then do you have the money saved for this because these things will not be provided for you when you move into your home.  We were so house poor that we still don’t have curtains.  We have had this house for 10 years and we are just now getting around to fixing it up.  Curtains, at this point, are the last things on our mind.  Next time we move, I am going to have at least a $10K cash fund that I use only for furnishings.  I would rather just walk into a house and purchase everything new since I’ve never been able to do that before.

And have you done your homework?  Greg and I just moved into something that we liked.  But there has to be more with a house.  You need to make sure that you know the hidden costs like repairs around the home.  Do you know where your child would go to school if you bought a house in that particular neighborhood?  This was something we never thought of and now that’s all we talk about.  Are your neighbors nice?  Do they have a dog (a small one – this is very important)?  Do you see a lot of kids running around the neighborhood or if you’re an older couple, does it look like a quiet street?  Are you near a busy intersection?

Well, I hope I have created enough questions to really make your head spin but also to cause you to think.  I wish I had thought twice before purchasing our home, but we did it and now we’re trying to fix problems that are causing other problems.

Lastly, remember that a house is different from a home.  Our house is the building that we live in, but our home is what we make of it.  We make our house a home by sticking together as a family and having lots of laughs.  It has definitely gotten us through the hard times and I’m glad that our kids see what we have gone through so that they’ll make wiser choices than we have.

“Through wisdom a house is built, And by understanding it is established.”

Proverbs 24:3

 

I’m sure I forgot a question, so feel free to ask one.  What did I leave off the list?  

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How To Afford House Repairs When You’re Broke

Posted by on Jun 29, 2015 in House Expenditures | 0 comments

How To Afford House Repairs When You’re Broke

If you’ve been keeping up with my posts lately, then you know that Greg and I have been working on our house after all this flooding in Texas destroyed our carpet.

The best feeling was to throw that carpet outside, but then you’re left with this thought of “What do we do next?”

Unfortunately, our carpet was not the only thing wrong with our house.  We also have water damage on our siding, single paned windows, and several other little repairs.

 

We asked my dad if thought we should take out a small loan and he had the best advice ever.  He said to just wait and pay in cash buying just a little at a time.

So, that’s our plan.  Every budget we set aside a little money for the house and we are planning on staying focused on paying for one task at a time.

We are always doing a lot of the work ourselves.  Since we’ve ripped up the carpet we are going to go ahead and just tear out the laminate as well.  We are renting a machine from Home Depot to help us conquer this task.

So instead of paying someone to take out our old flooring for us, we are just going to pay someone to lay down our tile.  I’m hoping to pay no more than $1,000 for new flooring on our downstairs.

Do you think we can stay within $1,000 flooring budget?  Feel free to comment and let us know what you think…

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How Do I Know When I’m Ready to Buy a House?

Posted by on Jun 11, 2015 in House Expenditures | 0 comments

How Do I Know When I’m Ready to Buy a House?

I have heard many people talk about the possibility of buying a home so I thought this might be a good time to tell you what little I know about purchasing a house.  I am telling you some of these things to help you prevent the mistakes that Greg and I made.  Although, it’s hard for me to say that purchasing a home is a mistake because it is still an investment – just not in liquid form.   Still, there are some things that you need to be aware of before purchasing a home of your own.

WHEN YOU…

 

HAVE A 20% DOWN PAYMENT

One reason you will want to have at least a 20% down payment on your home is so that you can receive the best interest rate.  Remember that this is an investment you will be making over the next 15-30 years (depending on which loan you take out) and you don’t want to be stuck with a high interest rate for 30 years.  www.washingtonpost.com

Also, if you have your 20% down payment, you will avoid paying for PMI – Private Mortgage Insurance.  PMI is an insurance policy that protects lenders if the borrower defaults on the loan agreement.  (www.ehow.com)  We did not have much of a down payment when we bought our house so we pay $36.21 per month for this insurance.  If we had saved for a higher down payment, then we would be saving $434.52 a year.

CAN AFFORD PAYING HIGHER BILLS

You need to ask a lot of questions before purchasing any home.  One of the questions that we asked is what the owners paid for utilities.  Since we live in Texas, then I would probably ask how much the utilities cost in August (hottest part of the year) and how much they cost in February (coldest part of the year – sometimes).  Remember to keep in mind your square footage when you think about heating/cooling.  We moved from a 1/1 apartment where we paid very little for utilities to a house where sometimes our bill can exceed $300 a month.  You might also ask if the utilities are run on gas or electric.  Everything in our home is electric, but I have heard that gas is usually cheaper and more efficient.  Don’t ever be afraid to ask questions!

You also need to consider what other bills may be coming in now that you have a house.  Included in our house payment is homeowner’s insurance and taxes.  You don’t pay these things when living in an apartment.  We also have cable and internet bundled, but I’m sure most of you already pay some kind of cable bill while renting.  Just make sure to consider all of these extra amenities in your monthly costs.

CAN BUY ITEMS TO UPKEEP YOUR HOME

Buy a lawn mower!  Don’t forget that along with a house usually comes a yard.  You will need yard maintenance equipment to help take care of your yard.  Remember that in some cities you can be fined if your yard is not kept up to code.

Also, make sure to plan for things like curtains and furniture.  Again, these are not things that we really planned for when buying our home.  We barely had enough to put paint on the walls.  Look around the house to see what it will need.  I am not saying that your new house needs to be fully furnished, but you want your house to feel like a home.

 

HAVE EXTRA CASH ON HAND FOR THE UNEXPECTED

Within the first year that we bought our home, our garbage disposal and hot water heater both went out.  On top of that, we had a huge water leak in the front yard which was a complete disaster.  Fortunately, our sellers paid for the first year of our home-owner’s insurance so we were able to pay for those items at a very low cost.  All I can say is, “Be prepared for the worst!”.

I don’t want to scare you in any way, but just remember that your landlord will not be there to bail you out.  You are the new landlord!  Anything that goes wrong, will come out of your pocket.  Our next big purchase will be a new air conditioner which will cost somewhere in the vicinity of $6,000.  We are saving up now to prepare for the inevitable.

Did this help you in your decision to purchase a home or will you wait and think it over a little more?

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Is Renting Really So Bad?

Posted by on Sep 10, 2012 in House Expenditures | 0 comments

Is Renting Really So Bad?

Today as I was hanging up my laundry, I was thinking back to the days when all my laundry was done in a laundromat.  Greg and I rented an apartment several years before buying a house.

 

Then I started thinking…was it really so horrible to rent?

 

AMERICAN DREAM

 

I think we all get really caught up in this whole American Dream idea.  Who started that?  How can one possibly say that just because your dream is to have a nice fancy car, live in a high-end neighborhood is the same dream that I have?

 

My dream is to live without the worry of money.  That’s my dream!  There will come a day when we will move and get a bigger house, but I don’t care to live in a mansion.  I’ve already been promised one of those, so I can wait.

 

Somewhere along the lines, someone put it in our heads that we have to get married, make babies, buy a house, have (2) car payments, use credit cards, eat out until we feel like we’re going to bust, etc.  That’s the real American Dream.  It’s no dream at all…it’s a nightmare!

 

Sorry, I’m chasing rabbits.  But this dream is expensive.  I don’t think people realize that when you buy a house you’re not just purchasing a home.  There are more things that come with the territory that you may have never planned for.  We sure didn’t!

RENTING vs. BUYING

When Greg and I were first married, we were bringing home around $50K per year.  Let’s think about this for a minute.

 

Married couple, no kids.  Rent would have been our biggest expense.  When we started budgeting, we realized that we had 1,000 extra dollars per month.  This included rent, groceries, gas, spending money, etc.  We didn’t go without any of these things.

 

If we put that $1,000 into a savings account marked “House Fund” we could have had $12,000 over the span of 1 year (not counting interest).

 

Think about if we saved for 5 years.  We could have dumped that money into a money market (our bank asks for $2,500 down) which might have helped a little with the compound interest.

 

In 5 years we would have had at least $60,000 to apply towards a home.  This would not have paid for our home fully, but it would have been 2/3 of the total payment.

 

WOW!

 

Also, I had my summer’s off as a teacher.  If I had been really smart, I could have used this time to get a small part-time job during the summer to help save for a house which would have made the process go even faster.

 

So, is renting really all that bad?  Will you consider staying a renter after reading this post?  



 

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“To Refinance or Not To Refinance?” That is the Question!

Posted by on Jul 26, 2012 in House Expenditures | 9 comments

“To Refinance or Not To Refinance?”  That is the Question!

Okay, let me just say before I get started that this is not a picture of our house.  Wish it were, but it’s not.

 

Actually I really enjoy our house, but I would just enjoy it more if it were paid off!  So, that’s where I’m at today.

 

We are trying to decide whether or not we should refinance our home and I’m looking for your financial advice.

 

Usually I give the advice, but today I want to hear from some of you to see what you think about refinancing a home.

 

WHAT IS REFINANCING?

 

I believe it’s just how it sounds.  You’re financing your house again.  It’s replacing the mortgage that is already on the home in hopes of getting a lower interest rate (in our case).

 

People who are under financial stress can also refinance in hopes of lowering their monthly payment.  We’re not concerned about our monthly payment at this point.

 

WHY WE WANT TO REFINANCE

 

As I stated earlier, we are just hoping to put more down on our principal.

 

When we bought this house we were drowning in debt and could barely cover our closing costs.  We did not put down the 20% so we are still paying PMI at this point.  Ouch!

 

We thought we were doing really good just to get a down payment.  Little did know that we were in way over our heads.

 

Anyways, that being said now we are ready to make things right!

 

OUR MORTGAGE

 

We currently have about $79,600 left on our home.  We are under a 30 year mortgage.  We are currently paying 6% interest.

 

What we would really like to do is lower that interest rate and put our note on a 15 year mortgage.

 

We currently pay our mortgage twice a month which allows us to pay an extra mortgage payment every year through the little bit of extra that we pay.

 

Here’s what we’re thinking…

 

What if we took out a loan for $85,000 to help cover the closing costs?

 

The credit union that we called today said that they could possibly get us an interest rate of 2.625% up to 2.75%.  This was better than we were hoping!  We were hoping for at least 3%.

 

Now, we were just talking over the phone and she just ran some numbers.  We’re not real sure of our credit score, but we have no other debts besides this mortgage so I’m hoping it’s going to look pretty good on her report.

 

She also told us that we would not have to put any money down unless we wanted to pay for closing costs (which is why we would be taking out $85K and not $79.6K).

 

Since we are currently making 2 payments/month we are also putting about $80 extra towards our loan.  The problem is that our interest exceeds our mortgage.  So, it seems like it is just barely chipping away at the loan.

 

MY CALCULATIONS

I found an online mortgage calculator to see if this was well worth it.  It said that with the extra $80 per month, 2.625% interest rate for $85K loan we could have our house paid for in 12 years with nothing extra.

 

That would be awesome!

 

So, what about you?  Are you looking into refinancing?

 

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How Do I Know When I’m Ready To Buy a House

 

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