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Wednesday, October 22, 2014

110. Advice When Buying a House - A Year Into Home Ownership

Buying a house is a big step. See this post about the pros and cons of buying verses renting. If possible this is what I'd recommend you do when or if you do buy eventually.

1. Make sure the house is what you both want. Make a list of what matters to you. Ask her to do the same. Compare lists and find something you both can live with. (Examples: 1 story or 2 story? pool or no pool? open area living room/kitchen or individual rooms? how many bedrooms? how many bathrooms? etc.)

2. Pay off all your debt before buying a house. This will help your family's financial health in building wealth. This has helped us tremendously after buying our house last year. Both vehicles are paid off, we carry no credit card debt, and we have no student loan debt.

3. Have 20% of the value of the house to put as a down payment. This will help you avoid PMI (private mortgage insurance) that would easily add $50-200 a month to your monthly payment.

4. Ideally the house is no more than 2-3 times your current yearly salary.

5. Ideally the house payment is 25% or less of your take home pay.                                                

6. Have an emergency fund set up to where you have 6-12 months of expenses in the bank. The roof will inevitably need repairs, the fence might need repairs, you might need a new AC or heating unit, etc. You seem pretty savvy financially. Expect the unexpected. Be prepared!

Was this helpful? For those who already have houses: What advice would you give yourself if you were purchasing a house for the first time? Leave a comment!


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