If all goes according to plan, Johnny and I would like to become home owners in the next year or two. And that would mean we’d be shelling out thousands and thousands and signing away 15-30 years of our lives. No big deal. Gulp.
Home buying is a big, big deal, people. Johnny and I have almost checked off every single adulthood-bucket-list item: start a full-time job, move, buy a car, get married, have a kid, wear Snuggies — you name it, we’ve done it. But we’ve yet to do the deed, or rather have a deed. The idea of owning a home is downright frightening, a decision we don’t take lightly.
So how do you prepare for such an event? Well, that’s up to you. But we’ll share how we’re preparing for home ownership, aka bona-fide adulthood.
Calculate What You Can Afford
What we can afford is a different calculation than the amount a bank will lend us. For each person, the calculations will be different. But a mortgage shouldn’t be a stressful monthly expense. Johnny and I plan to keep our mortgage within the range of the amount of rent we would be willing to pay. With rent and and taxes and HOA, the ideal lucky number for our mortgage would be under $1500/month.
In order to avoid paying private mortgage insurance (PMI), Johnny and I are planning to save up at least 20% for a down payment. Why do we want to avoid PMI? Well, it means more money out of pocket for us. Until the equity of the home is at 20%, we would have an extra expense each month. Of course, paying PMI isn’t the end of the world, and it is tax deductible if you make less than $110,000/year as a couple. But Johnny and I would like to avoid throwing away extra money when we’ll already be paying so much for a home.
Adjust Your Emergency Fund
Before we sign our lives away on a home, Johnny and I are going to reevaluate our six-month emergency fund and add to it if necessary. We’ll calculate what our new monthly expenses will be with a home, adding in a category for home maintenance, as well as a category for the actual mortgage, HOA, etc. We’ve got to make sure our emergency fund stays spiffy!
Calculate the Monthly Cost
The cost of a mortgage seems pretty cut and dry at first glance. But, nope. Additional expenses piggy back onto the monthly mortgage, and hold on tight, swearing to never let go. The cost of a 30-year mortgage might be $1300/month. But then there’s a property tax to add to that number. And home-owner’s insurance. And HOA. And suddenly you’re looking at a $1700 monthly expense. Boooo.
Consider Other Expenses
And if all that wasn’t enough to wrap our heads around, Johnny and I are also taking into consideration the other additional costs that come with home ownership. If we have a lawn, we’ll need to maintain it, which means owning a lawn mower and such. And if our microwave suddenly starts making zaps and pops and glowing from the inside every time we try to cook something, we’ll won’t have a landlord to run to for a replacement.
Also, the initial costs of moving in are sure to add up. We may want to paint this, or redo that. Or maybe we’ll need to buy a washer and dryer. Or a “Beware of Vicious Kitty” sign to put up in our front yard. You never know what you’ll have to get. But you’ve gots to make sure the money’s there for it.
I make home ownership sound like one big ball of fun, don’t I? You’re all probably giddy with excitement about owning one. All those extra expenses, just for me? Where do I sign?! Okay, so maybe it’s the exact opposite. I’m sorry! I’m like your best friend. The one who tells you the truth when you ask if your shirt makes you look pregnant. And it kind of does from certain angles or when the wind is blowing, so don’t wear it ever again. Or until you actually are pregnant. In all seriousness, I’m just trying to get real about owning a home and tell it to you straight.
Johnny and I try to remember that no one is forcing us to become homeowners. We’re going to take all the time we need for us to be ready. And we won’t buy unless we’re certain we’ll be in an area long enough to do more than just pay the principle on our loan (which usually means sticking around at least 3-5 years). And despite all the extra expense and responsibility that comes with home ownership, we’re still very excited for when we’re ready to take the plunge! It will be great to have a place to call our own.