Jonathan and I are documenting our home-buying journey here on the blog for all the Dave Ramsey followers out there wanting to see someone follow his guidelines. Yes, it can be done! 🙂 In case you didn’t read part one of this series, you can catch up here.
Last time we discussed all our preparatory steps as we geared up to purchase a home. In this post, we will explore the actual house hunt, which in some ways can be the most exciting part! This is how many people look when they get to start actually looking at houses.
But it can quickly turn to this.
Our realtor told us that we shouldn’t go looking for any home until we have our pre-qualification done and ready to go. Who knows when you will find “the” house, right? She wanted us ready to offer if we loved it, especially since we were looking in the foothills – an area where properties are gone within hours.
You read about the snafu of getting Jonathan’s credit cleaned up in post one. Once that was done, we wanted two quotes on mortgage interest rates. We first asked a local broker recommended by our realtor. We were blown away by her customer service, dedication, swiftness, and that heart of a teacher quality that is so rare. She wanted to help us meet our goals by getting a 15-year fixed rate mortgage with as much down as we could save up.
The second quote was from our credit union. First they told us that we could “afford” a house $200K over what we were considering. Then he said, “Since you have no debt, most of your income is available for a mortgage payment.” To which I replied, “Yea, if we wanna be house poor, never adopt, send our kids to college, or retire!”
Sigh. Yes, we are weird. No we are not putting 40% take home pay towards a house payment. Geesh!
He couldn’t understand my concerns and thought we were rather odd for wanting a 15-year fixed rate loan and for the payment to be less than 25% of our take home pay, as this puts conservative limits on our “buying power”. Now I understand WHY the housing market crash of 2008 happened! People (and banks) were taking way too much risk and way too high of mortgage payments compared to their income. I would MUCH rather live in a modest home well below our means than live in a house that sucked my income dry every single month.
Not. Gonna. Do. It.
We dropped the bank lender like a bad habit and decided to move forward with the local mortgage broker recommended by our realtor. Between those two, we are in as good of hands as we can get.
Last Friday was our first time looking at homes. We hopped in our agent’s car and she had waters and treats waiting for us – so sweet and thoughtful! Another way I could tell she goes above and beyond in her work. That afternoon we looked at seven houses and in each one, our agent was continuing to provide an education:
“Look, this is how water damage can occur.”
“Ranches will be the most expensive homes we see because they take up more land.”
“I can feel this house is slightly tilting because of the bentonite in the soil…common near the mountains.”
I loved how she wasn’t going to hold her opinion back. She wanted us in the right house and that’s all there was too it. Anything that needed to be said, she said. She truly is a “real-estate mom!”
That day we learned a few things. First – photos always look better online. Second – you can’t smell the house in photos! Smoke, cats, mildew. Gross. Third – location, location, location. I saw a “deal” online only to pull up in front of the house to find it across the street from a ginormous construction thing/highway. Four – if the price is too good to be true (in this market at least) it’s too good to be true.
We didn’t find anything we loved that day and quickly found ourselves going from excited and pumped up down to discouraged and exhausted. Does “our” home even exist?!?!
On Sunday afternoon we got picked up again…this time with Starbucks and she even went way above and beyond by getting delicious gluten-free chocolate dipped almond horns at a specialty bakery in town. YUMMY!!! We saw a couple different properties on Sunday and fell in love with BOTH! The first property was a town house that was beautifully remodeled inside and the second was a mostly updated brick ranch with an immaculate yard and cozy sunroom.
Now we were just confused.
You couldn’t have found more opposite properties for us to fall in love with. Sure both were beautiful and had charm. The town house would be a 3-5-year strategy since it’s 3 bed/2 bath, 1,300 square feet, and no garage. The ranch would be where we’d raise a family at 5 bed/2bath with a 2 car garage and nearly 2,700 square feet.
We could see ourselves in both homes…BUT we had to sit down and look at the facts…and filter them through the Dave Ramsey lens.
The town house was a no brainer. We can afford it (since it’s basically the same cost as we pay in rent monthly…so no budget impact) and keep saving for things like adoption, retirement, and future home purchases. We could do a 15-year fixed rate mortgage with more than 10% down and the payments would not be greater than 25% takehome pay. Easy-peasy-lemon-squeezy.
The house (with it’s plantation shutters…sigh) was actually out of our price range on a 15-year fixed rate mortgage. Ruh Roh!
I wanted to see…JUST ONE potential dream home. Even upon pulling up, our realtor looked at me and said, “Are you sure you want to go in there?” She knew it was a temptation in the making even by seeing the exterior alone. I allowed my heart to be tempted though…bigtime. The dream house would require us to do a 30-year mortgage and even at that, the payments would be 35% of our takehome pay.
Jonathan and I got dropped off and needed to talk strategy. Were we going to follow Dave’s advice and take off a modest bite as we incrementally work towards the dream home someday? Or would we jump into the dream home and sacrifice other lifestyle/savings in order to have that now…while violating Dave’s principles and knowing it.
The decision about our strategy wasn’t actually that hard. In five minutes I realized that talking about the town house, we were just excited and happy. A team. In talking about the dream house, we fought. Argued. Lost our peace. I turned to Jonathan and said, “If this is what life looks like in the dream home, I don’t want it!” I refuse to have money fights. We don’t have money fights ever and I don’t want to start. The entire Dave Ramsey program is designed for FINANCIAL PEACE. I will not trade that in for anything.
Drum roll please……
We chose the town home!
This past Sunday afternoon we began the buying process by putting in an offer…knowing there were at least seven others on the table. We will get into all of that in part three.
For those wanting some nice bullet points to wrap this post up:
- Compare mortgage interest rates with at least two lenders
- Do your homework on how quickly each lender could close (Our bank would take 30 days where the local broker could pull it off in 7 days.)
- Don’t look at homes outside your price range. (Of course the more expensive one will be better, that is why it’s more expensive!)
- Stay objective while touring a property.
- Don’t overlook things like deep smells, location, sunlight, or any other quality that you can’t really change. It’s not all about the resale value but keep it in mind.
- Have an open mind and be willing to look past changeable qualities that aren’t to your taste – you can change them!