Welcome back ya'll!
It's round two of our How to Buy a House in your 20s blog series!
Just joining us? No problem! You can catch up with our first post here.
Just to reiterate, these are tips and suggestions that helped us get into our first home at 22. This is what we did and for us, it worked. Hopefully, it'll provide some inspiration and creative thinking for some.
Note: I am not a financial professional in anyway. The advice presented in this article was gleaned from real-life experience and advice from our parents, financial professional and realtors.
Ditch the bank. Join a credit union.
When we merged our finances together, we decided to bank with Delta Community Credit Union. It offered lower interested rates on home and car loans as well as earning higher interest rates for our savings accounts.
Simply put, banks are for-profit organizations. Credit unions are non-profit. We picked the banking institution which we felt would most benefit us in the long run.
In all honesty, we did not get our home loan for our new house from Delta Community Credit Union. However, we feel as though it was a right step toward our financial future that impacted our ability to get our home. After all, we got an excellent interest rate on the car loan for our little Scion. We actually found the car through a car company the credit union works with and got a better deal than what we saw at the local dealerships.
Got student loans? Pay um!
I know, I know. You go to college, slave away, graduate and get to pay student loans until you are 100. Woohoo. However, they can really help you build some positive credit. If at all possible, do not default on a student loan. Don't be late on a payment either! By making late payments or defaulting, you'll build negative credit. Negative is bad. Positive is good.
Unfortunately, great credit is important in the real world. It'll help you not pay a deposit when you rent an apartment. More importantly, it'll help you get that loan for that house or car you want.
If push comes to shove and you can't pay those back just yet, see if your lender will allow you to defer or forebear your student loan. Deferring or forebearing your loan will not hurt your credit. [Read more here] Just remember: You do have to pay them back at some point so don't get in over your head.
When we first got married, our combined monthly payment for our student loans was what we were paying in rent. It was killing us. After doing some research, we are now paying our student loans back with the graduated payment plan. It reduced our monthly payment by half and is so much more feasible.
Side note: Our lender told us loans such as student, car or personal loans impact your ability to get a house more so than how much you owe on a credit card. Why? Because unless you have a gold card without a credit limit, chances are those loans are a higher denomination than what you owe on those credit cards. It's all about that debt to income ratio people!
Ask a bazillion questions.
Reap advice from anyone who is willing to give it. That's what we did. While we didn't follow every bit we received, we heard the same under lying advice.
This also applies to any realtor or mortgage broker you work with. I'm sure I drove our poor realtor nuts asking what probably seemed like the same question over and over again.
No lie. I spent an hour or more on the phone with our mortgage broker so they could explain the Good Faith Estimate to me line by line. (By doing this, I also caught a mistake they'd made that saved us a couple hundred dollars...)
Buying a house is a big deal. You are also spending a lot of money. Be wise and do everything you can to understand where you money is going and why.
Hunt for the perfect realtor.
Realtors do get a pay day when they sell you a home. Therefore, make them earn it. Don't settle for one that's letting you do all the house hunting. Don't settle for one who only answers their phone once in a blue moon.
It took us a couple months to find a realtor we liked. By the end of the process, we loved her! [If you are in the south metro Atlanta area, you can find her here. She comes very highly recommended. ;)] Our realtor fought tooth and nail for us. We firmly believe we wouldn't have this house without her. She even had to whip our mortgage broker into shape a few times!
So, there you have it. That is how we bought our house. It wasn't always a fun process by any means, but it was so worth. Planning my wedding was the most stressful thing I have ever done. Buying a home was the most frustrating - mostly because I have no patience. With buying a home, you've got to have patience. You will get there. I promise!
Do you have any tips to add?
See ya!
Miranda
I am 21 and my husband 20. I desperately want to buy a home. I don't want to be like my grandmother who just now at 57 bought her first house or my almost 40 year old mother who still lives at home! You have given me hope. All too often I am told what I can not do because I am young. You are solid proof that age has nothing to do with making dreams come true! THANK YOU A MILLION TIMES!
ReplyDeleteI'm so glad you found this inspiring! It seriously made my day. Just hang in there. It IS possible. I hope your dream of owning a home will come true in the near future. Always remember age is just a number. ;)
DeleteI love this post! And I am loving your blog! I have been searching for a blog about being a newlywed :) My husband and I bought our first house a year ago after being married for just 6 months at the ages of 24 and 25! It has been fantastic. We did, however, buy a foreclosed house and fix it up while our lease was still going on our apartment so we had somewhere to live. Since it was so cheap as a foreclosure it meant we could put over 20% as a down payment and that helped A LOT! I want to second on the student loans being helpful. I had been paying double on my student loans because I wanted them gone asap and it really helped my credit and I had no troubles when we got our credit checked for the home. I think my credit was even better than my hubby's since he had never lived in an apartment and didn't have student loans. Strange that paying for things outright can bite you in the butt later... Anyway, thanks for the tips!
ReplyDeleteI'm so glad you're digging the blog! I hope you stick around and visit back in the future. Student loans suck, but like you said, they REALLY help that credit score.
DeleteThis post came at such a good time! Me and my fiance are in the middle of planning our wedding, paying back student loans, and looking to buy our first house soon!! We currently live with his parents so we are able to save a lot of our money right now not paying city apartment rent. Thank you for giving me hope! We are both so stressed and people always look at us like we arw crazy when we say we want to try to buy rather than rent! I think we can do it and it will all work out! Thanks again!
ReplyDeleteFirst, congratulations on your upcoming nuptials! Smart move living with the 'rents for the moment. I can only IMAGINE how much ya'll are saving doing that! You guys can do it, I promise. Just keep up the hard work. It is possible!
DeleteWe are in a similar situation (young married, student loan payment more than our rent). I was wondering how y'all dealt with student loan payment/mortgage payment/down payment. You touched on it a bit but we are personally unsure what to do. We have saved up a small sum and we are unsure whether it is financially better to put it directly toward our large student loans or to use it as a down payment on a house and turn our rent into a mortgage in an area with a high cost of living. Just looking for tips from everyone and anyone who has been where we are!
ReplyDeleteHi Stephanie! Let's see if I can offer you some insight into what we did. Before we began applying for a mortgage, I switched to the graduated payment plan which cut what we had to pay each month in half. [It is important to note that none of our student loans were private loans. I'm not sure how those differ if at all from federal financial aid loans.) You can read more about payment plans here:
Deletehttp://www.direct.ed.gov/RepayCalc/dlindex2.html
Our loan is an FHA loan which allows you to pay a smaller down payment. That might be an option for you.
Ultimately, it is your decision as a couple as to what you should do. I hope it all works out for the best!
While I LOVED your posts about buying a home at a young age [Congratulations, by-the-way!!! You two obviously are mature beyond your years and it's paying off!], I can't help but notice that you left out the part about how much your home was and how much you paid as a down payment. Those two things can make a HUGE difference in an individuals/couples ability to purchase a home.
ReplyDeleteI also noticed that you live in the Austin area... and from what I've seen homes there are much less expensive per square foot than other areas. I don't mean to be a Debbie Downer, but I think it's only fair that you point out these things to people who are reading this, too.
Hi Rene!
DeleteYou make an excellent point! We actually live on the south of Atlanta, Georgia. What we could afford definitely played a role in where we bought a house. Homes within the city of Atlanta and on the north side of the city were a little too steep for us, but we found the perfect abode on the south side.
Thanks for commenting!
This isn't a tip for buying a house but for young adults. Buy your glasses off of zennioptical.com. I have purchased about 6 pairs of glasses for myself for the same price as a semi-inexpensive pair from my regular eye doctor's store. This website has saved me a fortune in glasses.
ReplyDeleteHi My fiance and I are getting married next year. I am 20 he is 21. In the beginning of next year I plan to get a new-used car, this is what we are going to do to try to establish a better credit. Currently I am in college and will be graduating in december, I don't have any student loans and he never went to college he just works. We have $1000 rent and that's pretty common for the area I currently live in. We are having quite a difficult time figuring out how to save our money when I spend almost $100/ week in gas to get to school. We really wanna move into a home because that will certainly help cut cost. A mortgage is much cheaper then my rent. I also have no student loans. Any tips??
ReplyDeleteHi Jerri!
DeleteSo glad you stopped by the post! I'd recommend reading my first post in this series:
http://mrandmrswinslett.blogspot.com/2013/07/how-to-buy-house-in-your-20s-part-one.html
It breaks down what we did budget-wise and offers some money saving tips you might find helpful. Hope it helps!
Hi! I just wanted to comment because I am a young homeowner as well! I am 24 and just bought my first home. And people are the same way with me, either surprised or in disbelief. We did a lot of research on homes we could afford and also on getting a great realtor that was willing to push for what we wanted. We did the calculations and made sure that our mortgage payment would be similar to the rent we were paying (it ended up be $5 less a month! :) Also, I am glad you brought up the part about student loans!! My boyfriend has many that he needs to consolidate and this is perfect.
ReplyDeleteHere is my tip- I do not know how it is in other states (I am sure other states have something similar to this) but with our FHA loan in Ohio, since I have graduated from college and it has been less than two years after I got my diploma, I qualified for a first time home buyer grant, the recent graduate grant. The grant would give me 2.5% of the purchase price and as long as I live in my home for five years I do not have to pay any of it back! We got the sellers to pay the closing costs, so we only had to pay $500 dollars upfront! (which was the earnest money we had when we put in an offer and that paid for the 500 we owed leftover for the downpayment) The money we did save we used to buy new kitchen appliances and make little updates. I hope people know to do their research because there are always grants and tax credits available to first time homebuyers!! Ask your bank or credit union! Great article Miranda!
I was 20 years old when my husband and I purchased our first home (20 years ago, eek!). It was the best investment I ever made! I will tell you, don't look for the perfect house. For one thing, it doesn't exist. For another, you will end up spending more money than you need to for things you want and don't need. Our first home was a 1300 sq ft cosmetic fixer-upper that we got for a steal ($75,000 which was cheap even then). We qualified for a larger loan which would have gotten us a nicer home but we didn't want to struggle every month. We worked on and stayed in that first home for six years and then moved up. By making intermittent moves, we were able to build and move into a beautiful 5000 sq ft custom home several years ago. That was when I realized there is no such thing as a dream home. That place was a lot of work and cost a lot to maintain(outside of the mortgage)! We have since sold that monstrosity and are living in a nice but reasonable house.
ReplyDeleteThis was a great post! Thanks for making everything seem so feasible. I worked in financial aid for about three years and have some additional advice about the student loans if anyone needs it. Basically, you're right to say you can get a lower payment. Federal loans have several different repayment options depending on your circumstances. You just need to talk to your loan servicer (the company sending you mail and emails). If you aren't sure who that is, you can find out by logging onto nslds.ed.gov. This will also show the status of your loans, the interest rates, etc. Check every loan because some people have more than one servicer. After that you just need to call and talk someone through your situation and have them thoroughly review your options. Just bear in mind, the lower your payment, the more you'll pay in the long run because the loans continue to accumulate interest.
ReplyDeletePrivate loans are a little different. You basically need to call your lender and just ask about options. I hope this helps!
I agree with what you have said but would like to add some comments of my own. I have been there done that with cars, student loans and am in the process of seriously paying off my house loan in less than 5 years. I'm 26 and at one point I had student loans worth 1/2 of what my house is worth and a car. Within 3 years i was able to pay all of that off.
ReplyDeleteMy advise is this... If you can and both you and your spouse work Learn to live off of one income!!! If you can live off of one you can save the other, its hard, its not fun but it saves so much money.
Dave Ramsey says to pay off the highest paying interest loan first- But if you have a small student loan of like 3,000 and another of 20,000. Pay off the smaller one and then use that money you were making on a monthly payment to pay off the next payment. Those will snowball and help you pay off more debt.
When Buying a home GO WITH A 15 YEAR MORTGAGE!!!! For the love (as long as you can afford it) 1st- you will be paying more every month Yes but, the money extra is going right back into your pocket back into your house which is yours if you ever sell it. 2nd you save more then 1/2 of the money on a 15 year loan than a 30 if you took the full term paying it off. 3rd more of your money goes to pay off the principle instead of the interest (some will say you can make extra payments on a 30 year but that extra money that you're paying on top of your monthly payment isn't even covering what your 15 year monthly principle payment would be. 4th regardless of paying more on a 15 year or not you're still done in 15 years- But with a 30 year loan you have to pay more every single month otherwise you won't finish paying off your house in less than 30 years.
20's isn't too young to start thinking and planning and stashing away from retirement, get engaged in IRA's if your employer offers them. (Its free money), invest, get high interest yielding CD's, start planning now not later.
And I really think this is one of the most important. Set financial goals and REWARD yourself when you hit those financial goals. When i paid off my student loans it took 3 years of working and my husband and I went to Europe. If you don't have those goals there is nothing to look forward to. Positive reinforcement is a HUGE motivator. Get something (within range and budget) that you really want and wait, plan, search, drool over and the moment you hit your goal get it!!! you deserve it..
- That is just some of the lessons I've learned
Great tips, Miranda! The idea of buying a house may be pretty exciting but the process itself can be quite stressful, especially if you don't have your finances in order. Getting advice from reliable people about mortgage plans, taxes, and whatnot can help you breathe easier. It's a good lesson to share with people looking to buy their own homes. -Fred @ M.R.S. Commercial Real Estate Consulting
ReplyDeleteThis is very noce. Buying a house is always a difficult and time taking task. I like your blogs about houses. Thanks First home buyer
ReplyDeleteThanks for the tips, Miranda! The last was one of the most important things to consider when buying a new house. While you're preparing your finances for the purchase, it's best to talk to trustworthy and reliable brokers who can give you a great house in a favorable deal. Through their expertise and presentable house listings, you'll be able to get your new home without much stress.
ReplyDeleteMarian @ Heritage Realty Brokers
So glad I read this. My husband and I are currently living like very poor people, every month all our savings go into our debt of student and personal loans, which will hopefully only be for another 4 or 5 months(plus the year that has already past). Thereafter we are going to start house hunting:) I am 22 now so will be a home owner by 23. Well done to you and your husband and thanks for reminding me that I can do it:)
ReplyDeleteIt's a lot of work but your tips are great! It's better to start investing in your new house as early as possible. Thanks to your post, I'll have some guidelines on what's the first step in buying my new house. Good thing my parents suggested their reliable mortgage company to help me with the whole process. :)
ReplyDeleteCarmen Monrovia @ Houston.ChurchillMortgage.com
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My now husband and I purchased our first home when we were both 19. Best move of our lives. My advice, do not get a credit card, do not buy a fancy new car with a big payment or any payment for that matter if you can swing it, and when you do buy your first home don't shoot for the stars, dream home right off the bat. Buy something small as soon as you can, don't waste your money renting and paying someone else's mortgage. Our first home was a 864 sq. ft. ranch with a small backyard (completely opposite of our "dream home") BUT it was small enough that it was not overwhelming to renovate or maintain. We put money into it here and there when we could, painting the walls and changing the curtains can make a world of difference! Don't get me wrong we also put big improvements into the home as well but we did 90% of the work ourselves. That equity in our first home is what got us into our dream home without a struggle. We planted flowers that would come back every year and grow bigger and more beautiful over time, we pulled up old carpet and refinished the hardwood floors underneath, we painted the kitchen cabinets and countertops instead of buying all new, we stained the old deck and front porch and countless other things in the few years we were there. Not only did we save money by living in our small affordable home, we made improvements and made our mortgage payments on time. We gained credit and gained $30,000 in equity in 3 years. That's a $30,000 check you have in your hand at the closing table when you sell that sweet little "first home-fixer upper"!!!! That $30k gave us a nice downpayment on our next home plus a little extra cha ching to pay off a few bills we had (school loans, Ect.) In the end it was worth the jump start in life to drive the crummy cars for awhile. Anyone can make it happen you just have to have the drive to do it and can't make excuses!!!
ReplyDeleteThanks for the advice! My husband and I are both 23, and while I've been graduated/working for the last year and a half he is still working on his degree and only making money here and there...I'm desperate to buy a house, and HATE throwing money away renting! I realize it's not practical to buy now until we know where we will end up in the long run, but I want to start saving so when the time comes we can be ready! Even though I have a good career, my part-time salary for a soon-to-be family of 4 doesn't allow us much room to actually save. Starting this new year, I'm going to do my best to keep us on a budget! Thanks again!
ReplyDeleteMy husband and I purchased our home in June 2013. This is our first home purchase together (I purchased my first home when I was 19). It was definitely different for us this time. First, I knew the basics of what to expect and I was able to help my husband through the process as well. Second, we have 5 children that we had to get excited about moving (again). Third, it was very difficult for us to decrease our living expenses because we have such a large family. Fourth, our requirements for our home were very different than my requirements for my first home. Fifth, the real estate market was very, very different this time around.
ReplyDeleteI actually blogged quite a bit about purchasing a home, what to expect, and even the after-the-fact things that some don’t think about (usually because we’re so excited about owning our own home). Here are a couple of my posts. Please feel free to browse my blog for other posts at www.kristymlopez.com.
5 Reasons To Be a Homeowner, Plus Some: http://www.kristymlopez.com/2013/07/5-reasons-to-be-a-homeowner-plus-some/
Home Buying – Musts Vs. Wants: http://www.kristymlopez.com/2013/04/home-buying-musts-vs-wants/
Home Inspections – What To Expect: http://www.kristymlopez.com/2013/04/home-inspections-what-to-expect/
4 Types Of Homeowner Projects And How To Prioritize Them: http://www.kristymlopez.com/2013/08/4-types-of-homeowner-projects-and-how-to-prioritize-them/
Thanks for this post..
ReplyDeleteThis is more helpful for people who are suffering from financial problem, Homestead Road is the best way to buy and sell houses for cash, and also provides financing to family that can't get bank loans. It'll help you get that loan for that house you want.
I have read your blog .Hope more people reaching your blog . I read your article properly you are guide to me some important and beneficial information. Excellent choice for the first time home buyer. We also provided these service Buying A House .
ReplyDeleteThanks for this post! My boyfriend and I are looking at buying a townhouse on the north side of Atlanta. It is so nice to hear a story about people who sound a lot like us being able to buy a house!
ReplyDeleteIf I may add :
ReplyDeleteHave realistic expectation.
I plan to buy a house in a few years, and my friends think I'm crazy. The thing is, they can't imagine buying a house that is'nt a new, big construction.
I'll go with an old home, and make some reno myself.
(Sry if I made a few mistakes, french is my first langage)
(:
What percent down do you suggest saving up for?
ReplyDeleteJust curious how much you guys saved for a down payment and what price range you looked for houses in to be able to stick to budget? Im soon to be 24 and my fiance just turned 25. We've been together 7 years now and are planning to get married this coming Sept. We got an apartment together and lived there for a year (until our lease was up) during that year we got engaged and we wanted to save every penny we could to put towards our wedding. Luckily his grandma offered for us to move in with her in her condo..rent free..we buy our own groceries and pay for cable/internet. Its hard to save money for a house and save for the wedding at the same time.We're sticking to budget for our wedding in hopes that any cash gifts we get can be put directly into our "first home fund".
ReplyDelete