This article, written by Dorothy Robinson, originally appeared on Betterment.
Our first-house story is an age-old tale: My husband and I were priced out of Brooklyn after the birth of our son. By the time he was 2 years old, we desperately needed to move from our one-bedroom apartment to something larger.
But here was the rub: The average listing price for a two-bedroom in New York City is more than $2 million.¹ Nice--if you've got that kind of cash. We needed something more affordable. Move 20 miles west to the suburbs and you get twice the space, for one-fifth of the cost.
Buying my first home was not exactly a fun project. It was stressful and confusing. I kept telling my husband throughout the process "This is crazy! How do people do this all the time?"
But after several months of nerve-wracking searching, let-downs, and negotiating, we found a home that is perfect for us. It's not fancy, but my son has a backyard, we have a tolerable work commute, and we are able to stick to our financial plan, including the ability to pay for our new home on one salary if necessary.
Here are the biggest "whoas" I learned as a first-time home buyer:
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Mortgage Brokers Can Always Find a Better Deal
Before I bought a house, I thought you called your bank, asked them what their mortgage rate was that day, and then signed up for it. Today, I laugh at my six-months-ago naiveté. To get the best mortgage rate, you need to channel your inner Gordon Gecko and wheel and deal to the bloody death.
At one point during my negotiations, I had three mortgage brokers on the line, pitting their deals against one another. I would call one, get his best offer, call the other, and tell him I wanted a counteroffer. This went on for days. As it turns out, mortgage brokers can always find a better deal. There is always some sort of hidden plan they "just remembered." Or, they "talked to their boss and they agreed to this offer." Once you finally get to where the other mortgage broker can go no lower, seal the deal as soon as you can, as mortgage rates do change.
But, don't let your mortgage broker use the "fluctuating mortgage rates" rationale into forcing you into one that makes you feel uncomfortable. They don't change that quickly. Trust your gut and do your research.
You Don't Actually Need That Extra Bedroom
During the house-buying process, you will start to focus more on the trivial aspects of what you want in a house--like skylights or the types of flooring or the type of shower head. This is silly. Look deep, deep down at the basics of what you need in life to make you sleep well at night. For us, it was a decent school system, a commute short enough that we could actually see our child, a mortgage we could float on one salary for a while if we needed to, and affordable enough so we could keep extra cash in our emergency fund.
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We started our search looking for a three-bedroom house, but we ended up buying one with two bedrooms and with only one bath. Why? The difference between two and three bedrooms was about $100,000. Of course, that means our resale value won't be as high as if we had multiple bedrooms, but we didn't buy a house to make money or impress friends--we bought it to live in.
Don't Buy Something You Don't Know How to Fix Yourself
You may want to save some scratch on a house that needs a lot of TLC, but first ask yourself these questions:
Is your significant other a contractor?
Do your family and friends love dropping everything to help you do major renovations over their weekends?
Do you have nothing but time and money at your disposal with no small children?
If you answered "Yes" to any of these, you have my approval to buy something that needs renovating. If not, I would run far, far away. Unlike the homes on HGTV, there's no team of strapping handymen waiting to fix your house.
The reality is, I've been calling contractors for months to try to tackle some basic aesthetic repairs. And if they even call me back--a big "if"--the prices they quote are so outrageous, I figure I can just live with a few dings and scratches, and our appliances, importantly, are brand new. Our little house will never get me a photo spread in Architectural Digest, but it's not a money pit because it has a smaller footprint, the taxes are lower, it keeps us warm and dry, and it doesn't cost us too much overhead.
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It's All Worth It
I could go on and on about the annoying nuances of buying a house, but please know that all of the trials, tribulations, and expenses have been worth it.
For years, we longed for space and a home of our own, not to mention somewhere to put our wedding gifts. And now, thankfully, we have one. It is helping us grow as a family. I'm learning how to do things like handle a drill (how people bought a house before the advent of YouTube tutorials, I have no idea). Our son helped us plant our first-ever vegetable garden. This is what matters to us, not whether we have granite countertops or not (for the record, we don't, and that is just fine).
Today, we are house rich, not house poor, and while cash rich might be an overstatement, we still have our savings plan on track.