Purchasing a house isn’t a small thing to jump into. It’s one of the biggest purchases we’ll probably ever make and it will continue to accrue expenses (no landlords to fix anything). We’ve had a number in mind for our savings before we ever started looking. Billy would be in charge of the down payment and I would contribute by purchasing furniture.
We’re also big mint.com users. If you haven’t heard of it before, it’s a really a great tool. Mint shows all your accounts, balances and transactions in one place and categorizes them. You can also set up goals. For example, a goal to buy a house, pay off student loans, travel, etc. Mint’s features easily show you how much money you spend on food, gas and any other categories that month.
I mentioned that we housesat together; this was a good test to see how much we consumed in groceries. Since we lived with our parents for the last year we didn’t have an accurate take on what we were spending on food. But in those months we were able to see what we were spending normally, aka we didn’t go out of our way to be cheap. Despite our lack of budgeting, we were surprised to find we didn’t go out frequently—something we attributed to being content in our own space.
The first step to buying a house is shopping for a mortgage. Which means considering all of the above expenses, plus any outstanding debts. We still want to make progress in our debt reduction, but we also want to have a more balanced approach to it.
Billy handled the mortgage shopping. I wanted to go with a credit union like BECU but their interest rates for FHA were surprisingly high. Billy ended up going on a site and submitting some of our information for a quote. This was not the best idea. We were getting phone calls for weeks from banks. Not fun. But we did find a bank nearby and our broker was able to give us an unbelievable rate. SCORE.
We ended up pre-qualifying for a mortgage of up to $200,000. Now for the fun part: house shopping.
Other posts – How to Buy a House: Our Story