Home-buying Series, Resources + Tools

I’m in Student Loan Repayment and Still Bought a House | Part 2: Make a Plan

**Disclaimer: All of the information included in this series of posts are a personal account of my experiences and my personal opinions. I am not a real estate agent, mortgage broker, financial adviser, or attorney.

After you’ve researched mortgage brokers, spoken to a lender, gathered and submitted all of the paperwork on the planet, and are finally pre-approved (it’s really not that bad—our lender pre-approved us while we were sitting in his office and we didn’t even know anything happened until we got up to leave), where do you go from there?

Before you can start looking at houses, you need a plan! I would recommend nailing down your price range. If your lender offers to pre-approve you for a half-million dollar home, start there and specify how much of a monthly mortgage payment you are comfortable with and have them recalculate. That way, you can at least begin exploring what you can get for your ideal payment. Once you have a price point in mind, there are a few things you should consider before running out to showings.

GET. A. REALTOR.

I cannot stress this enough and I would argue that you could even start exploring this prior to getting pre-approved.

It costs $0 for you to use a realtor to buy a house. Their commission comes out of the sale of the home you purchase and is usually about 3%. If two realtors are involved in the home sale (one for the buyer and one for the seller), about 6% of the sale is split between the two of them. Since it costs the buyer nothing to use a realtor, why would you NOT??

It was invaluable (especially as a first-time buyer) to have a professional walking through the entire process with us. Realtors know what to look for, they know what to ask, and the good ones will save you from making huge mistakes. They will also be looking for houses on your behalf and coordinating your viewing schedule.

But don’t be afraid to be choosy. Meet with a few of them if you need to and decide who jives with you. It’s pretty easy to tell who is motivated to find you the RIGHT home and who just wants you to pick something so they can get their commission. You wouldn’t go to court without a lawyer (OK, so some people will, but you can probably guess how that will turn out), so why would you buy a home without a realtor?

What kind of timeline are you working with? 

This is a pretty important factor that can be overlooked amidst the excitement of deciding to purchase a home.

If you’re renting, do you need to vacate by a certain date? Are you able to pay rent month-to-month after one year? How much advance notice do you need to give before moving out?

Fortunately, we were paying rent month-to-month once we hit our one-year mark in June, so we weren’t under any time crunch to vacate our rental house. However, we have friends that came down to the wire, but were able to purchase a home before having to sign another 1-year lease.

Do whatever you can to avoid that kind of stress! You don’t want to purchase a home that’s not a good fit for you just because you’re out of time. Make sure you evaluate your current situation and plan how you’re going to coordinate the transition without having to buy out a lease or worry about not having anywhere to live during a gap between the end of a lease and closing on a house!

Make your list of wants/needs and prioritize it.

What kind of home do you want? How many bedrooms and bathrooms? What features are absolutely necessary in your book and which ones are you flexible with? Do you want a yard? What size garage? Do you want a basement? A basement was high on our list because we have a home gym and needed to be able to set up our equipment somewhere (with an 82″ inch ceiling to fit our power rack and lat tower).

Ultimately, we bought a house with a basement that’s already plumbed for a bathroom. Eventually, we’re going to finish the basement and install one, which will up the value when we sell it later.

What floor plans do you like? Depending on when the home was built, floor plans can vary dramatically. 1970s homes will almost always have two living rooms (a formal one in front and a family room in the back). 1990s homes begin to include more open floor plans with great rooms.

Initially, I didn’t mind looking at older homes, but the idea of two separate living rooms really got on my nerves. 1) We don’t have enough furniture for two living rooms, and 2) why have two living rooms when we would never use the “formal” one and pay utility costs for that wasted space?

These are things I never considered until we started exploring what kind of houses are available in Columbus. Depending on where you live, your selection of homes could be completely different. Get on Realtor.com and check out what kinds of houses are available and which ones fit into your price range.

What part of town do you want to live in?

Now, when you start perusing homes on a real estate website (which are amazing and super convenient, by the way), you’ll start to notice trends in home prices compared to their locations.

Some homes are SUPER cheap. Often, it’s because they’re also located in pretty unsavory areas of town. You’ll want to pay attention to this and gauge where your price point meets the area of town you’d like to be in. For us, one of our priorities was moving across town so I could be closer to work. Conveniently, this is also where a very desirable suburb is located. We were able to find a lot of houses in this area that fit into the price range we’d calculated with our lender.

At first, we didn’t think much of school districts, but this eventually changed. Currently, we aren’t planning on staying in our home for more than 5-7 years. BUT, what happens if we move into really awesome positions with our jobs, the housing market sucks, or something unforeseeable happens? We can make all the plans we want, but what if we end up staying here longer? We want to start a family and don’t want to be caught in a sub-par school district just because our plans changed.

Start with a plan and prioritize your list, but be prepared to add and/or subtract different things as you move through the home-buying process.

Are you OK with Homeowners Associations?

Initially, we were staunchly against HOAs. The idea of purchasing a home only for a neighborhood organization to tell us what we can and can’t do with our own property for the sake of conformity goes against everything Stu and I stand for.

The idea of lawns and the lengths people go to keep manicured plots of grass is a bizarre American practice in itself. There’s a really great X-Files episode that takes place in a planned community where Mulder and Scully go undercover to find out why various residents have disappeared without a trace. They find out that the president of the HOA summoned a ghoul to murder residents who didn’t abide by the rules and regulations. But I digress…

No matter what you think of HOAs, a lot of neighborhoods have them. What we learned while house hunting was that HOAs can also very greatly. Some are expensive and resemble totalitarian regimes. Others, however, are super cheap and don’t monitor much even though they have a few rules and regulations.

Our HOA costs $60 per year for the association to maintain the common areas and, from the looks of some homes in our subdivision, you’d have to really let your property go for anyone to say anything (and even then, I’m not so sure). The idea of prohibiting people from parking on the street would never fly because there so many garage-hoarders in our neighborhood. We found out, right after we moved in, that the HOA tried to raise the annual dues, but the older residents who’d lived there since the subdivision was built told them to go to hell, so that never went anywhere.

But in our case, I think there’s something to be said for these little neighborhoods. The dues are cheap and our subdivision seems to have a really good sense of community. For example, we have a neighborhood Facebook page where people can post information about items or services they’re selling or giving away. A few times, they’ve even notified everyone about suspicious activity to keep an eye out for. It’s unfortunate when we see posts about criminal activity, but it shows our neighbors are watching each other’s backs when they alert others about unfamiliar vehicles in the area or making sure we know if our garage doors are accidentally left open.

Check out the property taxes. 

Property taxes are based on the value of the property and land you own, which is assessed by the local government. These will be listed on real estate websites with the rest of a home’s information and are a great tool for evaluating the “intangible” aspects of a home.

Very desirable locations will have higher property taxes while less desirable locations will likely have much lower property taxes. Basically, if you want to live in a ritzy area of town, it’s not just the house you’ll be paying for, but the value of the land there.

On the flip-side, property taxes might be insanely low in some areas, but you risk high-crime or deteriorating neighborhoods. However, there is also the chance you might find a house that’s not the most fancy, but it’s in an up-and-coming neighborhood that is becoming a hot area (this often occurs in growing cities that are seeing an influx of young professionals).

The value of your property should also be taken into consideration when you’re planning certain home improvements. If you are making said improvements, you want to make sure they are relative to the value of your property. For example, if you remodel a home and completely turn it around, but it’s in a terrible area, you might end up losing money in the end because no one will pay you what you put into it. Instead, they’re going to look at the  surrounding property values and make an offer based on those.

Even if you’re planning on staying in a house long-term, it doesn’t hurt to consider the potential re-sale value. Basically, property taxes can help with your research on the neighborhoods you’re looking at and will help you decide if you’re getting a good deal or if there are underlying issues with a property you’re interested in.

These are a few things to consider when you start making your initial plan for house-hunting. But don’t think everything must be set in stone! In all likelihood, your plan and your list of home requirements will change, whether you add more to it or decide that some things aren’t as important as you initially thought.

Our realtor (seriously, GET. A. REALTOR.) told us that we should make a plan so we had somewhere to start, but when we found our home, we would know it. And she was right! We saw quite a few houses that looked great on paper and checked all of our boxes, but we didn’t get “that feeling” when we walked through them. Hell, some of them ended up being downright terrifying!

In the meantime, sit down, make your list, put anything you want on it, and prepare for the journey!

 

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2 thoughts on “I’m in Student Loan Repayment and Still Bought a House | Part 2: Make a Plan

  1. Omg I can’t imagine buying a house without a realtor! So many people think you have to pay a buyers realtor. I was relieved to find out you don’t. And I totally second the location thing. That was our #1 concern-and we compromised on our second bathroom to get a better location.

    1. Yaaaassss! Seriously. The realtor. I’ll probably make at LEAST 30 more statements throughout this series about how realtors are a must. 🙂

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