Like I’ve said before, H and I bought a house (we have not closed yet, though). Needless to say, it was quite the process, and we didnt really know where to start and didnt anticipate all of the things that we would have to do. As I mentioned, this will delay my debt free date, but im OK with that – this isnt actually going to change my monthly costs that much. One of the first things that H and I did when we decided to start looking for a house was talk about what we like and dont like about where we live now, and what we thought would be important to have going forward (like a dishwasher). One of the most important things for me is to be able to walk to work – I did the long commute thing for a while and wasnt going to do it anymore, so I told her that I didnt really care about the number of bedrooms and bathrooms or square footage, but I did want it within a certain geographic area – which she thought was a good idea because the area I picked is close to friends and where we live now. I let her deal with all the number of bedrooms and bathrooms and all that crap, because it wasnt really important to me, so if it was important to her, I figured that would be the best.
After we figured out an idea of what we wanted, we started doing the fun stuff: talking numbers. Property in our area is fairly cheap (I think) and never really ran up from 05-08, but did get knocked down a bit. We kind of talked some rules of thumb financially speaking. Here’s a few that came up:
- don’t spend more than 3x our yearly income
- keep payment below 30% of our income
There’s a few more that we talked about but those were the main ones. Once we picked out that number, we went to and checked out a mortgage calculator from emortgagecalculator.co.uk like that one and plugged in our high number and saw if it returned a favorable monthly payment on a 15 year term (I refused to do a 30 year note and explained why to H and showed her the numbers, and she agreed with me).
Once we got back some numbers, it was time to find a realtor and look around. I wasnt sure what to expect here, but the process was smooth and our realtor told us a lot of stuff we didnt know, which was very cool. As for now, even though I’m sad my debt free date is pushed back, I’m going to be having tons of fun doing a bunch of sustainability projects around the house, and of course i’ll post them here.
Readers: How did you like shopping for a house and a mortgage? Did it boggle your mind when you looked at the amount of money you were about to spend?
I wish we would of looked at more homes when we were deciding where to purchase. Mainly because I want more land and a more open garden. We went with a bank that a friend had recommended, which turned out good at the time, but not so good when we decided to start a refinance. Turns out they didn’t do all the required paperwork and we never had the Title to our home.
It is amazing how much money goes to the interest and not the principle. We would have paid double the price of our home if we made minimum payments over the course of our original loan. That is crazy and just motivates me to pay it off that much quicker. Our refinance should help, which should be done in May, save about $90k over our original loan.
Yes! I just closed last week and seeing the date 2042 was mind blowing. (And thinking how old I would be then). Followed by how much in interest I’ll pay if I keep my mortgage for that long (almost the same amount as my loan!)
jenna – that is awesome – we actually got a 15 year note, mainly because of the interest being almost as much as the note over 30, like you mentioned.
I might switch in a couple of years. I just need to do some major remodeling for the first five years.
I have a 4 mile commute and it is AWESOME. To be able to walk to work must be all that more amazing. The quality of life part of it is just fantastic.
Paying for the house is almost nauseating lol
hahahahah! the commute is so awesome, esp after 49 mile commute (1 way)
You might want to reconsider the 15 versus 30 year mortgage. The 30 year mortgage will give you more flexibility in case one of you loses the job. With a lower required mortgage payment, it will be easier to pay if something bad happens.. You can always put an extra sum of money per month to shorten the years that you are paying your mortgage.
Hi SRT -
I know what you’re saying, but even considering all of those, we opted to go for a 15 year note, mainly because of the interest saved. We both aren’t at risk for losing our jobs (very stable) and the mortgage payment even at 15 years is such that even if 1 person did lose their job, it would still be around 30% of the other person’s wages after tax.
Congrats on the new home Jeff! I will have to come back to check on your sustainability projects. When we refinanced we chose a 30 year fixed but went with a bi-monthly payment to knock around 8 years and $45K in interest of the conventional mortgage.
Thanks paul – I think we will be going with a bi monthly payment as well – knocks off a lot of interest!
We unfortunately didn’t shop around when got our mortgage and that was pretty dumb. When our house was being built, the developer simply steered everyone to his mortgage buddy. Go figure – the mortgage buddy really screwed up our loan too. Oh, the mistakes you make when you’re young.
Create a simple list of your current income, assets, and debts. This is where you’ll start to understand how much you can afford. List your current income — not any hoped for. You’ll also want to list all of your current debts, like credit card debt, car loans, student loans, and other loans and debts. If you have assets, like savings, investments, or real estate, list those, too.