I had no clue when I bought a house at 22: learn from my mistakes

Guest post by Shelly G
candy house

One of my first paying jobs was helping my father clean and fix up his rental property each time renters moved out. I learned about the nature of people from rental agreements — lots of renters see a damage deposit as a free pass to do whatever they want to the place. I’d fixed a lot of damage in that house, so I figured I knew what to expect when my father decided he wanted to sell the house and I convinced him to sell it to me.

We hammered out the details over dinner — he’d put my name on the mortgage along with his so I could keep the 2.8% fixed rate, he wouldn’t help me financially with paying the mortgage or making repairs, and he would let me have the house for the remainder of the mortgage. His exact words, after we sealed the deal with a handshake and a hug, were “That house is your problem now.”

I moved in November of ’07 at age 22, armed to the teeth with cleaning supplies and air fresheners, with money set aside to start on all the renovations I wanted to make. A month of cleaning and airing the place out, and I was ready to start those renovations.

Then the pipes in the attic froze and burst — three times — until we found a good, honest plumber. Then I ran out of propane and needed to fill the 300 gallon tank; turns out that’s much more expensive in the winter. Then the septic tank overflowed and needed pumping. Then the pump to the well broke. Then I learned the term “property tax,” and finally accepted that I was not prepared for what I had undertaken.

Since that rocky start, I have become extremely organized. I fill up the propane tank every July and keep my eye on the gauge throughout the year. I have a date in 2012 to pump the septic tank. I’ve started a “shit happens” savings account. I even got a filing cabinet. And, despite his desire to see me deal with the house problems on my own, I am very grateful to my dad for answering every stupid question I’ve had and giving me a heads up on the property tax thing — even if he still makes fun of me for sputtering out the words, “Property tax? Doesn’t the government know how much money I’ve spent on this place already?”

Of course, if you’re not the type that thoroughly enjoys learning by trial and error, I recommend doing research before committing yourself to buying a home. Here’s what I needed to hear prior to getting my house:

Get a non-romanticized view of the home.

In other words, before getting caught up in what you can do, understand what needs to be done.

  • Are there foundation cracks or leaky windows? In my case, the plumbing/propane/septic issues drained what I had saved for the fun stuff.
  • Are the heaters and stove electric or propane? Is it running on a well or city water? It makes a difference with how you budget.
  • When was the last time the pipes or water heater were replaced? Is this an expense you should be prepared to cover?
  • How new are other features of the home? Is the roof old? What condition is the siding in?
  • Can you deal with the ugly tile in the bathroom until you can definitely afford to renovate?

Look into the area

  • What are the property taxes in the area?
  • How much are utilities and what’s available in the area? (We are still waiting for super high speed internet.)
  • How’s the neighborhood? Will the neighbor’s dog chase after you when you go on your morning jog? Do they have loud parties?
  • Is there a home owner’s association? If so, what are their rules and regulations?

And, for your own sanity, start up a “shit happens” fund. Now.

Homies, when you bought your first place, what would have been helpful to know?

Comments on I had no clue when I bought a house at 22: learn from my mistakes

  1. A full inspection from a really good inspector that comes highly recommended, someone you can trust is VITAL – one of the most important steps before purchasing a house.

    Title insurance is also important. Some friends lost their house because of title and lien problems – going through the process to purchase title insurance would have revealed those problems in advance and they would have been able to correct them or allow them to move on and purchase a different home.

    Don’t forget to apply for homestead exemption if the house will be your primary residence. Depending on when you buy the house and your county’s homestead deadline, and if the house was someone else’s primary residence or not, you may have to pay higher property taxes the first year (we bought a rental – not fun to find out that the taxes would be higher the first year!).

    Other things I ran into “oh yeah, I’m responsible for this” once we moved into our first house:

    – Pest control (whether its 2-3x/year or only annually – don’t forget or you could be overrun with ants/termite/roaches!)
    – Having working fire extinguishers in the right places
    – Making sure all the smoke alarms/ carbon monoxide alarms work
    – It’s definitely worth having a good handyman/repair guy to call (get recommendations!)
    – The lawn! Yard work is not fun but mowing can be expensive to hire out.

    • a home inspector is the BEST thing you can do before you buy a house second only to actually, you know, seeing the house.

      and title insurance is probably the best thing some people can get. totally agree.

      one caveat is that it is OK to admit that not everything can be DIY. a relatively simple project can sometimes snowball with the discovery of many other little problems nearby and it can be tough to step back and realize that it might be out of your league.
      that being said, im totally for DIY as it saves a ton of money.

  2. A month of cleaning an ex-rental? Yeesh. I thought it was bad that it took me 6 hours to clean our old place when we moved out. I thought it was pretty clean already and could not believe the amount of dust that came out the carpets once the furniture was out the way. But that does go a long way towards explaining why landlords have always seemed strangely happy when they returned my deposit.

    I haven’t yet made the move into ownership, but this list will come in super-useful when I do.

    One thing I’d add is to check how your utilities are measured and billed as well. I’m not sure about America but in the UK it can either be a pre-payment meter or a standard one where they send you monthly bills and pre-payment is MUCH more expensive. That was the deal-breaker on one place last time we moved – wonderful little house, great price, but we would have been paying 25% more for electricity and it made it too expensive.

    • i’ve been used to leaving houses in a reasonable state when i left them aswell. but when we bought our house 6 months ago it took us a week to get the bedroom into a state that we felt comfortable sleeping in, before we moved into the house. we spent a further two weeks ripping out carpets scrubbing walls and floors and ceilings before we could walk into the house without feeling nauseated from the smell… my mother, sister and i spent two days trying to clean the kitchen before we finally gave up and resolved that it was unable to be used and all the cabinets would have to be ripped out and replaced. we didn’t even try to clean the oven, as the door was being held shut with a gate-latch…. after about two months i began to feel comfortable that the inside of the house was clean, although i still refuse to use the bath-tub, and i don’t feel entirely clean after using the shower…. we’re still working on cleaning up the yard, there have been a few very nasty surprises out there….

      I’m sure ours is not even close to worst case scenario either, so all in all, i think a month of cleaning and airing out is not so bad…..

  3. “Can you deal with the ugly tile in the bathroom until you can definitely afford to renovate?”
    ha, so true.

    also, *beware!* wood paneling! i mean, sure, we knew it was ugly when we moved in, but it is also easy to take off of the wall. however, the things that wood paneling can hide are endless!

    in one room it was slapped over an old doorway (instead of sheetrocking) in a remodel. it made the project that much harder, but wasn’t really a big deal.

    in another room, a small puddle led us to remove the panel, only to have the foot or water sealed in the wall gush out and the sheetrock literally crumble off of the wall. we still haven’t managed to fully fix the leaks or the wall. there was not a single sign of water damage on the paneling.

    if we ever buy another house, paneling is going to be a deal-breaker unless they’ll let us take it off and look behind.

    • Wood paneling is teh suck. Our first house had it all over. We thought new carpet would get out the decades-old chain smoking smell, but no. We peeled off the wood paneling and discovered literally crusted-on nicotine in the drywall. It took multiple scrubbings and three coats (THREE) of Kilz before we could even paint. *shudder*

      I totally agree about getting a home inspector. That’s $250 or so that is very well spent. You can get the prior owners to fix any issues that you can’t accept before you own the place, and you also have a project list for future work as you have money available.

    • I HATE the wood paneling here – it covers the bottom half of our kitchen walls (underneath is a poor job removing very, very retro lime green tile), and the outer walls of our living room (underneath is nothing but insulation).

      We had the chain-smoking previous tenants problem with this place… Behr paint actually covered up the stains rather well with just one coat.

      • In re: prior smokeing tenants, beware of high humidity situations. We have tons of horror stories not just from cleaning our current house, but also countless apartments prior to owning our own home. Lesson being that Killz may hide the stains, but with enough humidity (ie, rainy days, weeks of using a humidifier during cold season) can actually leech tar out of the underlaying coats of paint and leave it dripping down the walls. The best way to remove it is to actually scrub with simple green or some sort of paint friendly cleaner before painting.

        • YES. We had tons of nicotine leaching out of the walls in our bathroom and it would leave orange stripes on the walls in high humidity. I finally gave up and just painted the whole bathroom orange.

          • Oh man, maybe this is what’s happening in my apartment’s bathroom! I thought maybe my red hair dye was somehow vaporizing every time I showered, but then why would it happen when the dude showered too? Thanks for solving that mystery!

        • Any hints on how to get rid of it permanently when it’s already been painted over? Our entire stairwell gets brown streaks whenever I take a hot shower.

  4. Save up for the “shit happens” stuff AND save up for furniture/lawn mower/cookware. Keep those accounts separate if you can. After having several pipes burst, a leaky toilet and a leaky roof I spent all of my emergency fund and realized I had zero money left for furniture. I too was 22, single and doing it all on my own. And to top it off, property taxes were due (who knew?!?). I lived with some very crappy hand-me-downs, and a partially empty house, for a very long time. So I felt like I was constantly trying to keep up with the house, and any extra money I had was on furnishing the place or buying cookware. It took years to finally feel like I owned the place.

    I know starting out you’ll never have everything you need, but it would have been nice to at least feel like something was acoomplished instead of constantly trying to catch up.

  5. Oh and knowing basic “home skills” is SO helpful. Like repairing a toilet, rewiring a light fixture, replacing a sprinkler. I luckily know these from my dad and old apartment roomies, but if I didn’t I would have had to call someone to help me and that’s just more money.

      • yay for learning your own electric work!

        that being said be sure that before you underake any project your sources of info are legit. my husband is an electrician and i cant tell you how many times he has been called in to fix things where people saw it on the internet and the instructions were incorrect or incomplete.

        electricity is dangerous and instructions should emphasize safety and fire/electricity codes, and always double check your sources. 🙂

  6. This could have been written almost word for word by me! My parents helped me buy a house when I graduated from college at 22. Ironically it’s the same time my now boyfriend bought a house. We actually bonded over the “HOLY FUCK THIS IS HARD AND EXPENSIVE!”

    There are definitely times when I wanted to just say fuck it and move into an apartment. But that whole mortgage thing made me stick.

    Financially buying a cheap fixer upper for both of us was a great idea. We are now 26 and 27 and managed to pay off all of our debt (car and student loans) with the profit from the boy selling his house to move into mine. My house is also appraised much higher than when I bought it because I’ve learned how to do things like re-do plumbing (not by choice) and electrical (not by choice) and also do a kitchen renovation for less than $6,000 (TOTALLY by choice!)

    So I would say to any youngsters out there if you can swing it buy a house young! I only managed to do it because I had a support net similar to the OP’s dad in my parents. The boy only managed because he had been deployed and came home with a chunk of change.

    It’ll make you feel crazy but buy a house!

    • Wow, it’s so awesome you’ve learned to do all these things yourself! Do you have a blog or anything? My husband and I are buying a house and we really want to try to learn how to keep up with a house before we’re in the middle of a disaster. It would be super cool if there could be a home improvement day every week where OBH posted a story about someone who did their own home improvement work, their successes and failures, what they learned, and valuable information sources they found!

  7. My hubby and I are just starting to think about buying our first house, and this is exactly the sort of stuff we need to hear! Keep it coming!

  8. Preface: The following $ numbers are for San Francisco, so remove all liquids and solid from your mouth before reading less you might spray your screen in shock (unless you also live in one of the other top 5% cost-of-living areas, then feel free to eat and drink freely).

    My hubs and I bought our first home 6 months ago. We’d saved, we’d researched, we had a great agent. But that was certainly not enough to prepare us for all the nitty gritty to come. We were looking for a single family home, hopefully 1200+ sqft, well maintained or tastefully renovated.

    In SF, under $500K will get you a sh*t-shack, undesirable neighborhood, and/or a postage stamp. $500-$650K you might remove 2 of those items, but unlikely all 3. Over $650K is a mixed bag, sometimes you’ll get plenty of space but in need of major freshening, or a slap-n-dash renovation, and occasionally a very nice home. We thought we could get a nice home in the $500-650 range, that maybe we could live in and reno eventually. What we came to realize was that we had the down payment and the money you must hold according to the terms of the mortgage, but we didn’t have the $50+K to reno a kitchen and 2 bathrooms, let alone repair major issues. We wound up having to spend more than we were initially comfortable with because we could get and afford the loan for $700K. We lucked out and got a house that had been fully reno’ed (electrical, plumbing and all), versus the mere facelifts we had seen. That’s the wonder of first time home buying, you can have a great nest egg, but you don’t have equity, so good luck in getting more money to make major changes.

    Some of the other financials we could have never known:

    -A random property reassessment bill from the city that we had to pay, versus our escrow account. Bye-bye $750.

    -We bought in December, which means we didn’t start paying our mortgage until February, which means we didn’t pay any interest to reduce our tax bill. This years taxes hurt in a way I hope to never know again. We can’t wait for next year.

    -The house won’t be perfect, not even if it’s new. We have termite damage that will have to be taken care of soon-ish, there’s a lack of insulation in the bedrooms, very little storage. We’ll do what we can when we can.

    -We’re not handy, but we’re trying. Admit to yourself what you are willing to DIY. If you really believe you can knock out a wall and build out an archway, you are my hero, but maybe have a recommendation for a contractor just in case.

    • Yep, this is why I am so glad I live in the Midwest, where things are affordable (my house was $120,000, move-in ready!) and that, equally important, I’m happy living the rural life. I know it’s not for everyone, but sheesh, you’re not kidding about the ridiculous prices.

    • Ohhhh I feel you. We live in Vancouver, BC and could NEVER afford to buy a house here.
      To get anything that isn’t a condo, you’re looking at a million dollars. This city is NOT family friendly… unless you’re pulling in six figures.

  9. – get a home inspector
    – have a “shit happens” fund
    – make a list of WANT and DO NOT WANT conditions when house hunting. Makes it easy to weed out things like Fixeruppers, loud neighbourhoods, etc.
    – research your options for property tax. Some people buy a home (like the OP and myself), with no concept of the property tax. There are usually payment plans for it. My fiance and I pay monthly so we don’t have a big bill when property taxes are due.
    – get a good mortgage guy. We had a crappy one and experienced many troubles.
    – get a good lawyer.

    • Yeah, our property tax and city utilities (trash, sewer) is dispersed by our mortgage company so it’s included in our monthly mortgage payment and we never have to worry about it.

      • Having your property tax and home owner’s insurance lumped into your mortgage payment and paid out by your mortgage company is a good idea for some people but it’s not the only option. If you don’t have the discipline to save up that money and not touch it or if you don’t want to keep track of those details, definitely set up payment through your mortgage company. If you like to keep control of your money and exact financial details, are able to save and make on-time payments, then keep the money in a savings account and make a little interest on it by paying it out yourself.

        Home loans do get sold and escrow accounts for property tax and insurance can get screwed up when your loan is transferred to the new company. Also if the mortgage company improperly estimates your property taxes, you’ll be stuck with an unexpected large payment to catch up the property taxes one month. (Both of these things have happened to people I know.) So just so you know, having the mortgage company do it for you doesn’t guarantee no screw ups.

        • Yeah, we got a nasty surprise when the mortgage company sent us a letter saying “Oh wow we totally underestimated your tax. We’re gonna need like four thousand bucks now, kthx.”

          Was NOT thrilled about that.

  10. Thing we didn’t know that ended up costing us a $50 fine:

    You are legally required to cut your grass. We didn’t care how our lawn looked so we just ignored it. Apparently you can’t do this. So now we hire someone to come out and mow it and it is a notable expense in our monthly summer budget.

    • That’s what I mean with check out the area! Thankfully, this property is in the Sandia mountains in New Mexico, so they don’t care so much about a lack of grass getting cut. But, as it turns out, our neighbors find a great weekend time to consist of blasting mariachi music and heavy metal alternating into the wee hours of the morning. And another currently unlocated neighbor has two peacocks — those things are annoying.

      • SNAKES??? Omg. I live in Canada, and have never seen an actual snake outside the zoo. We have to keep our lawns mowed here for the sake of the neighborhood looking nice. Not SNAKES. Yay, there is a reason to live in the stupidly-cold North!!!

        • Yeah, ours is apparently a vermin ordinance. Not snakes, but rodents. Which makes sense now that I’ve realized that the bramble in our backyard gets filled with bunnies every spring and a *really* high percentage of our neighbors have vegetable gardens.

  11. We got really lucky on our house. We live in an area where mortgage is cheaper than rent because of the economy. House hunting was a pain however because everyone was swiping up houses and our measly FHA loan didn’t stand up to the cash buyers who would pay more.

    The most important thing:Get a good agent. Ours was amazing, and I don’t think we would have gotten the house without her contacts.

    Sure, we live on a busy corner, which I think also played a part on it. But you get used to the traffic.

    If it wasn’t for the hubby, I wouldn’t of done it. I don’t want to have to care for the yard, or fix something if it breaks. He’s handy so he does all of that.

    Pest inspections are well worth the time as well. We were able to get the seller to pay for the termite treatment that lasts up to 10 years because of that. And I highly recommend setting up an escrow accnt for your home owners insurance and property taxes. Then it is included in your monthly payment and you don’t have to worry about setting money aside that you’ll be tempted to use in an emergency.

    • We are also in a high rent area – to rent a house like ours would cost over £1000 a month (literally, 2 houses on our street which are both smaller than ours and theirs are terraced not semi-detached are £1000+ per month atm). Mortgage is £460. It was a lot of stress and effort but we get to fill our garden with pet bunnies and not worry about “what would the landlord say?” about every single thing we ever do (our last landlord came round to inspect EVERY. WEEK. always on a Sunday at a stupidly early time of the morning). Buying a house took ages to find the right one and we were on the verge of giving up for another year and renting again, but we were offended at the price of rent once we knew how much a mortgage was. We eventually found ours after a failed viewing on the same street (the old lady didn’t know her son was selling her house), so we were going to drive 40 miles back to our house and decided on the spur of the moment to phone the number on another for sale sign. Long story short, the agent called the owners who showed us around and we put an offer on a week later and got the house for £3000 less than the asking price as it’d been on sale for over 18 months. Getting a mortgage was a nightmare but we kept trying and eventually found someone that would lend to us on our non-permanent job contracts. We’ve been here for 4 months now and aside from condensation which won’t go away (tried opening windows, using salt, heating, airing, etc etc) we haven’t had any major disasters that we couldn’t handle yet (fingers crossed). Not only that, but we would have been homeless by now if we’d had to pay so much rent as OH lost his job the month we completed the house purchase, but we could still pay on my salary which would’ve been impossible if we’d been renting.
      At 26, everyone in my family said it was stupid to buy a house so young esp. since we’re getting married later this year, but actually it was the best thing I ever did as the feeling of security is wonderful.

  12. Make sure you have trash pick up and mail delivery. We just bought a relatives home and found out that we have to pay for trash and a po box. 2 more expenses we weren’t planing on. Hauling your trash to the dump or if you are lucky like us to have a place near by that doesn’t mind that you using their dumpster is still a pain in the ass.

  13. This is really interesting- when we bought our house last year in PA, an inspection was required, and title insurance was automatic, though I’m not sure if it was required. Neither were options. Different states, different requirements! Our property taxes are also paid by our mortgage company and are part of our monthly payment to them.

    -One thing I wasn’t expecting was the mortgage insurance (PMI). It’s a smallish fee tacked onto our mortgage, which we pay until we’ve paid 20% of the entire mortgage. We had an FHA loan (first-timers, make sure you look into FHA!) with a tiny down payment, so it was required.

    -We knew our house had electric heat with oil backup, but did not know that oil was used when the outside temp dropped below 32 degrees. Know how your house is heated and what it all means! It was fun coming home in the middle of winter to a very cold house because we’d run out of oil and didn’t know it. Thankfully it only took a day to get the oil tank filled! But that bill huuuurt……

    -Try to add to your “shit happens” account as soon as you get paid. Even a small amount can add up after a while!

    -Ask a zillion questions. I’m mildly paranoid about money, and made sure I knew EXACTLY what we would pay each month for the house. Don’t be afraid to be a pain!

    -I made a spreadsheet with all of our expenses and our post-tax income so we’d know how much we could afford. We then went for a house that was slightly less than that.

    -Good friends will help if you feed them and/or have a cooler of cold beer. Weeding sucks a lot less when you have some friends to keep you laughing!

    -Try to learn the basics on your own, but know what you can’t fix…bad DIY fixes can lead to a bigger bill later!

    • My husband and I just closed on a house last Friday. My dad told us that sometimes you can get the PMI waived if your credit scores are good enough. Some lenders won’t waive it no matter what, but it’s something to ask about. It seems if you finance less than 80% of your mortgage a lot of things can change on what is required of you. An escrow account is not required and no PMI.

  14. Just remember… House inspectors can only see what’s on the surface/can be accessed normally, not inside walls or behind built-in appliances. My boyfriend and I are in the process of renovating our first home and have discovered some FUN surprises, like tile that was installed directly onto subfloor (and completely rotten subfloor underneath from water damage!) and outlets taped in with electrical tape behind a built-in microwave. It is a good thing we had a significant budget set aside for repairs and renovations, because if we had just cleaned and tried to live in it as-is, we could have potentially faced injury or death from these unseen safety hazards.

    Oh, and if you buy in a subdivision or other complex where units/homes were all built under the same contract… Get to know your neighbors well. We bought a townhouse in a large complex, and many of our neighbors had dealt with similar issues and were able to give us a heads-up (and sometimes a helping hand). It really is in everyone’s best interest for homes to be properly repaired/renovated when the time comes – a significant house fire or other problem could feasibly affect others in your neighborhood, or at least pull down property values.

    Another thing we’ve learned – sweat equity is worth it! Though actually tiling is a job we want done by a pro, getting the tile ourselves and bringing it to the area to be installed saved our contractor a lot of time (and therefore saved us money). Doing our own demo (with the help of some experienced friends) and clean-up is also saving a large chunk of money. Even with that, any job you undertake will likely wind up costing more than you estimated…

  15. Be totally honest with yourself about what you’re willing to DIY. This would have affected our budget like woah. I thought I was going to be really into painting, gardening and fixing up the house, but I was kidding myself. I hate manual labor and being out in the sun. Our bedroom is still half-painted from two years ago when I gave up half-way through.

    • I didn’t do ANYTHING voluntary (did fix the toilets a few times and get new fixtures for the bathrooms out of necessity) but slop some paint on the bedroom walls and call it macaroni until my husband moved in — he’s been here 8 months and we have already redone the kitchen, office, lower bathroom, deck, and we have a garden… and I can’t take credit for any of it 😉

    • My husband and I have been having this discussion lately too. We spent all our 20s moving from apt to apt. Neither of us like cutting lawns, fixing pipes, etc. When we got married at 31, we said “We’re ‘adults’ now. Adults buy property.Should we buy property?” I don’t think property ownership is in the cards for us just yet.

  16. FYI: Don’t choose a house JUST for the neighborhood. Good neighborhoods can easily turn into not-so-good ones, and sometimes it happens within a few months. It happened to me.

  17. I bought at age 24 in Sydney…

    -Sydney is the second most exxy place in the world to live, behind Hong Kong… Wish I’d known that before I bought! The cost of living is damn high, so eating, commuting to work, variable mortgage interest rates plus quarterly apartment expenses make the first year or so incredibly tight!

    – lenders mortgage insurance is required if you don’t have much of a deposit saved, and I didn’t. So, during the settlement process I had to madly scramble to find an extra 700 bucks from nowhere, right when I also had solicitors bills to pay.

    – set aside money each pay so that you’re covered when those quarterly bills pop up, because trying to cover them as they roll in will cripple you financially. I’m talking about electricity, strata fees, water, council rates.

    – you CAN live with that ugly-ass bathroom! Much longer than you initially cared to.

    – if you notice that the old apartment you’re thinking about buying has a brand spanking new water heater, be warned – there’s a chance that the old one recently varied it and flooded the apartment. I didn’t notice that one until I pulled up all of the carpet… To be greeted with an entire layer throughout the whole place of black mould. Gah.

    – you are going to have at least one crazy, horrible neighbor in your complex. Help yourself by resigning yourself to that fate now.

    – I got a rude shock when I called my strata managers office to discuss changes I wanted to make to my apartment. Turns out that technically, you don’t own any walls that are attached to the outside of the building itself, anyone elses apartment, your floor or your ceiling! I actually said to them “Youre telling me I just bought the air contained within my walls?!” (PS. They take offense to that kind of remark. Big time.) So, if you want to lay floorboards, put up a floating ceiling, replace your door – you HAVE to get approval. Otherwise, they can MAKE you reverse your changes, at your own expense, and take you to court if you refuse.

    -Floorboards cause a lot of noise to the apartment below yours, although if you’re on the ground floor, chances are you’ll get your floorboard request approved really quickly. Lucky for me this time! Although good to know down the track too.

    – that drab, grey, rocky cement type stuff on the ceilings of older apartments is called vermiculite… And often contains asbestos. So covering it up is a brilliant idea, both for health reasons and the added value it gives your place.

    – when people say that it’s cheaper to buy than to rent, it’s a lie. Agents will say it, their companies will put up ads saying it, and banks will say it. Don’t buy into the hype! If interest rates are low, your repayments may be on par with renting, but your ongoing costs will always make it so that you’re paying more. And interest rates can go up a hell of a lot in just a year or two! You need to be prepared for that, and able to cope financially should it happen. I definitely wasn’t , and it was such a struggle. I cried so many times, thinking I was going to have to sell because I could no longer afford groceries.

    – your lender more than likely not let you borrow against the equity in your loan for several years, and even once they do allow it, its never for the full amount of equity you actually have. It doesn’t matter how much of a value add your renos have provided, your lender doesn’t just want to hand over more cash… They are much more conservative in calculating the additional value of your place than anyone else will be.

    Further to that, you won’t be able to access any of the equity until it reaches a certain proportion in their Loan to Value Ratio (LVR), so when they value it at much lower than market prices for similar properties in your area, it decreases your ability to access that equity. Please make sure you are NOT banking on equity to fix up anything urgent in your property within the first 5 years of your mortgage! Coz, well, it’s painfully disappointing when they say no and you realize you’re stuck somewhere dank struggling week to week to keep your head above water, unable to save up a single dollar and unable to access the equity to fix the place and sell so you can stop struggling so damn much.

    – paying a mortgage alone is HARD and downright scary. If your income stops, you have no one to fall back on. If something breaks and you were already struggling to pay everything off, you have nothing but yourself to fall back on. For me, it was a brilliant lesson in self reliance… But it was one of the hardest things I’ve had to do, and turned me into a blubbering mess more times than I can count.

    • I love this comment, but I have to disagree with one bit — at least where I am (New Mexico), to rent an equivalent home would cost around $1200-$1500. Our mortgage is $400/month and we have actually rented out two rooms (as well as a closet) in the house for $300/room and $200/closet (I didn’t want to charge him for living in the closet, this was his decision). So just by owning, despite the many problems that come our way, we are coming out ahead — and I was even able to be unemployed for a few months and still be able to cover the cost of everything.

      • This will depend on what the market and laws are like in your area, though. I completely agree with this person’s assessment about Sydney, because the market here is INSANE.

    • And this is why I refuse to buy in Sydney – especially when I can buy a house in Seattle for what my friend paid for his apartment in Hornsby…

  18. Also, take any HOAs into consideration. My husband and I made a pact to not buy a home in a HOA area after living in a condo where all the other members were super conservative and could fine us for having the wrong color of curtain. My uncle’s HOA made them keep the pool (and keep it up) they never used, rather than convert it back to a yard. And those fines? If you don’t pay, they can foreclose on your house in most states for only a couple hundred dollars.

    • I think this really depends on the HOA. Our home we just closed on is in an HOA, but the HOA fees go to keeping up the community pool and fitness center. There are a couple rules to follow, like don’t leave your trash can out for 24 hours, and restrictions on height of additions onto your home, but nothing we couldn’t live with. Checking HOA rules really helps, and may change your mind on purchasing in an HOA neighborhood.

    • It all depends on the home owner’s association. My friend lives in a community with heavily enforced yard regulations – they get notice letters if the grass is 1/2 inch too long, they are only allowed to have 1 kind of grass, they get fined if they have too many weeds (my friend actually had to sign up for an expensive lawn service treatment series because what she was trying was not working on the weeds). Definitely research it before hand.

    • Idaho just created a law that requires HOAs to give homeowners 30 days to correct problems and allows homeowners to challenge the fines. That being said, we told our realtor to not even show us homes with an HOA because we wouldn’t buy.

  19. Closing costs will be much more expensive than you think they will be. We are (hopefully) closing later this month, and looking at 10k plus in closing costs after paying the lawyer (in NJ a lawyer is more or less required to buy a home) the title search, filing fees, pre-payment of HOA fees and taxes.

    • Definitely. I was about to make a separate post about this, but I’ll just comment on yours since you mentioned it. It’s not enough to save just your 10% or 20% towards the down payment on the mortgage, but you also have to anticipate several thousand dollars for attorney fees, closing costs, and title insurance (all of which are absolute necessities, no matter who you are purchasing from).

      • AMEN. My husband and I bought our house last month, and while we were aware of what we were getting into house-cost wise, we weren’t prepared for the cost of closing, even when factoring in the fact that the sellers were “paying for closing costs.” That still didn’t include all those hidden fees, and once you start the process, everything sort of snowballs, and you can’t back out because you’ll lose all that money, but you don’t want to keep going forward because there’s all that money! It’s a lose-lose situation, so be prepared before ever starting the process that there will be fees up the butt for everything imaginable, and there’s really no way out of it. I wish someone had told us that — we managed, but only because we knew we couldn’t just “wait a year” because…well, with the housing market being what it is, we didn’t want to risk not being able to get a house in this area a year from now for the same amount of money.

    • Be sure to ask your bank/mortgage broker if they will draw up a “good faith estimate” of the closing costs & associated fees. I was provided one when I first applied for the mortgage, a more accurate one when I found my house & had a purchase price, and the actual closing costs 2 days before closing. Amazingly ours was far less than the initial estimate, but it was good to be prepared.

  20. I’m 23 and bought my first house last year- It was quite the learning experience!
    -Go with your gut feelings-our realtor was trying to get us to raise the offer we put on our house because he thought there was another bid going in. My gut wasn’t feeling it and we ended up getting our original (lower) offer accepted.
    -Be warned of the PMI (private mortgage insurance) on FHA loans. FHA loans are great, but the PMI can raise the monthly mortgage a little bit for the first 5 years.
    -Be prepared to hurry up and wait. Our closing date got changed at least 5 times because of the mortgage company requiring extra paperwork.
    -On that note, make copies of EVERYTHING and have a filing system to keep your sanity.
    -Make yourself aware of any tax breaks or credits available for home improvement projects.
    -“Just call the landlord” isn’t an option anymore. Have your “oh shit” fund and a good handyman.
    -A case of beer and a few pizzas can get any project done!
    -I’ll always have a love/hate relationship with my house, but the enjoyment I get out of making it mine and learning along the way outweighs the stress it can bring!

  21. I bought my first house when I was 23, despite my entire family telling me I was commiting financial suicide, that I wouldn’t be able to handle it, and that I should really just wait until I was older and married.

    For the first time in my life, I stood up to my family and bought a house anyway. I learned it all as I went along, refusing to ask for ANY help from ANYONE, because I was terrified to admit defeat. I bought my house in the spring of 2005 for $175,000 – one year later, it was being appraised at $350,000. This wasn’t because I’d changed it, it was simply that the real estate market in my city underwent a MAJOR jump. If I had waiting until I was older or married, I wouldn’t have been able to afford to get into the market. Period.

    Not only that, 6 years later, my mortgage is almost paid off (down to about $40,000), and the house is currently worth about $300,000 – which will be a BIG help when we go buy a home to have a family in.

    I will second the advice about knowing how much DIY you can handle. When I met my now-fiance 4 years ago, we had dreams of buying a 100-year-old house and completely gutting and redoing it. 3 years ago, we were forced to rip out our upstairs bathroom (due to mysterious water leaking in our living room below), and we have only JUST completed the reno (by caving in and hiring contractors). As much of a PITA as the bathroom reno has been, it proved to us that we are NOT the kind of people who should buy an old fixer-upper. I am SO thankful that we learned this lesson in 30 square feet, not an entire home.

    We are looking to sell my house and buy a home together in the next year or two, and it will absolutely be a house that requires little to no fixing up – We have FAR too many other cool hobbies to spend our time on.

    • I almost applauded you, there! That’s awesome. My house… well, part of it was built in the late 1800’s, part of it in the early 1900’s, and the rest of it in the 1970’s. But I got it for $88K. And now we’re down to about $20K. And I married someone who’s father is a contractor and is very into home renovation… thankfully, lol.

  22. I’m glad to know I’m not the only one. I’m 21 and my girlfriend and I bought our house last november. My advice is to watch out for questionable diy work. We had a home inspector come in and assess the things we thought would be the expensive stuff like the water heater, roof, attic, electrical box, ect. Our loan was an FHA loan so we also had to have an FHA inspector come and check for safety. Well, the cosmetic stuff on the outside that the inspectors could get to didn’t seem to have any visible problems. Well, there was a tiny (and I mean TINY) half bath that had clearly been converted from a closet in one of the bedrooms. 2 months after moving in the toilet in the tiny bathroom stopped working. In the process of trying to replace the toilet we discovered that the plumbing under the bathroom was apparently a diy kind of thing and had not been done correctly. The toilet had been leaking for years, and we were lucky we didn’t fall through the floor because all the wood was rotten. We had to rip out the ENTIRE bathroom and redo it from the ground up. All I can say about that is thank God for loving family!
    So my advice, look for rooms or areas where there may have been diy renovations and have a home inspector or contractor concentrate on that area.

  23. The hubs and I are buying his sister out of his parent’s house and now we have to get a mortgage and all that. This scares the heck out of me. Some things I wish I knew:

    1. That the emotions tied into a family home really get muddled and distorted when money is involved.
    2. Keeping a house “in the family” when taxes keep going up and the neighborhood is not, may be an emotional choice with poor financial sense.
    3. Learn these things before dumping 100k into grief/coping renovation.

    Alas, my property taxes are being reassessed again (I pay 6500 a year now) so if it goes higher we just can’t do it anymore. This is a big downer on both the $ and sense fronts.

Read more comments

Join the Conversation