Home Ownership Goals

I've spent a lot of brain power recently trying to wrap my head around the process of buying a home. So of course I also wanted to write a blog post about it. I wrote one at the beginning of the month but it was pretty long and boring. In order to make it a little more interesting, I decided to try this question and answer format. :)

So, why do you want to buy a house anyway?

I wasn't that interested in buying a house until we moved to Seattle and settled into our rental house. Bradley and I both like projects and we are homebodies to a large degree. We'd like to be able to create our own space, that actually belongs to us. We feel inclined to do projects at our rental house, but ultimately that feels like a waste of money since we will eventually have to leave.

Won't it be expensive to buy a house in Seattle?

Yes, very expensive. I doubt we will find anything decent for less than $300,000. But we wouldn't mind a fixer-up-er. However, we are also not set on necessarily buying in the city. We might be willing to look in cheaper areas, especially ones that are near the train which goes downtown.

So what is your time frame?

We'd like to be looking by January 2016, so that we could get into a house by May 2016, which would likely correspond to the end of a lease.

How much money do you need to buy a house in two years?

This is the hard part. We have only a vague idea of how expensive a house we would want would be because we aren't sure what area we are going to move to. But our initial goal (with the help of this calculator Brad's mom sent us from CNN Money) is to save $20,000 for a down payment (with the hopes that we could get a loan for a $300,000 house).

In order to save up, we are going to move out of our lovely rental house when our lease is up in May. Though moving here was the best choice for us when we had VERY limited time to look (Brad only had two days in Seattle to find us a place to live), we could now find a place that is cheaper. It will definitely be a downgrade, but I think we could easily find somewhere livable for a savings of $300-$600/month. We may have to downsize and sell some of our crap to make it work, but it will be worth it to have the extra money. We are already fairly frugal, so there aren't many expenses other than rent that we could cut down on to allow us to save more (besides cancelling Netflix/Spotify accounts and eating only dried beans every day, which may be a tactic we turn to when our deadline gets closer).

So, are you just socking the money away in a savings account or something?

Actually, no. A few months ago we set up an investment account with Betterment.com (this could probably be a whole other post, but I highly recommend this site for newbie investors like us; it makes things easy and the fees are very low). In order to get to $20,000 by 2016, given what we already have saved, we need to save $583/month. If we move, that will be easy, given how much less we will owe in rent. Actually, I think we could far overshoot this goal if we put our minds to it (and if we funnel extra money to this saving and not to paying down our massive student loan debt). I don't have a sense of how many other closing fees will be associated with buying the house, but I know we will need more than just what we have for the down payment.

So that's it then? 

I think we should talk to our credit union and revisit the goal periodically to make sure we are still on base with our expectations. I want our first house to be a small one, 2 bedrooms (maybe also with a bonus room or den that could serve as a guest room), 1-1.5 bathrooms, off-street parking (preferably with a garage but carport is ok), and enough of a yard to have a at least some garden. But I question whether or not it is worth it to dish out the money for a house in the city. Living in the city has its benefits. Its nice to be close to things we want to do and to be able to utilize public transportation.

But is it worth it to spend all of our extra money to live in the city? I wish we had more money leftover for vacations, to pay down our loans faster, and to save more for retirement (so we can retire sooner and live in an RV traveling the continent). Sometimes I feel our loan debt is crippling. If it wasn't for our monthly loan payments (between us they total ~$1,600 per month), we'd be rolling in dough. But I guess if it wasn't for my loans I wouldn't have gotten the education that got me the job I currently have. But if I didn't get this job maybe we'd still live in a cheap area like Durham, NC. I guess its all a trade off. And there isn't much I can do now besides try to make the best choices I can with what I have.