First Time Homebuyer | Recently Engaged

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Topic Author
vangaal
Posts: 128
Joined: Thu Feb 05, 2015 12:01 pm

First Time Homebuyer | Recently Engaged

Post by vangaal » Sun Mar 10, 2019 8:14 pm

Hello Bogleheads!

My fiancee and I (34 and 31) are recently engaged and we are in the stage of deciding on whether we should continue to rent or buy. Here's some more information on us. I used my information to be pre-approved for up about $650k, but we would want to spend significantly less than that on a home. We would want to try to find a home between $425k - 525k (top end of budget). Both of our jobs are stable. We found a very good real estate agent who was highly recommended by another couple who we trust. Based on the information that you see below, my question is do you think it is smart to go ahead and buy our first home now OR wait another year to save? I want to avoid doing something stupid!

Personal
Dating for 6 years, engaged for 3 months, lived together for 3 years, Live in the Northern Virginia area.

Financial Situation
Me
100% Debt Free
Gross Income = $107k
Down payment = 56k
Emergency Fund = 16k
Earmarked savings = 12k
Retirement = 80k
Credit score = 800+

Her

100% Debt Free
Gross Income = $60k
Emergency Fund = $5k
Retirement = $40k
Credit score = 800+

Thank you for your feedback!
Last edited by vangaal on Sun Mar 10, 2019 8:43 pm, edited 1 time in total.

mortfree
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Re: First Time Homebuyer | Recently Engaged

Post by mortfree » Sun Mar 10, 2019 8:18 pm

You don’t have 20% down for the home prices you are looking at.

Plus closing costs

Plus household items

Plus moving expenses

Plus wedding plans

Yikes.

Wakefield1
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Re: First Time Homebuyer | Recently Engaged

Post by Wakefield1 » Sun Mar 10, 2019 8:27 pm

Save Save Save !

niceguy7376
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Location: Metro ATL

Re: First Time Homebuyer | Recently Engaged

Post by niceguy7376 » Sun Mar 10, 2019 8:31 pm

For 500K home, 20% would be 100K.
What would be the P+I+ PMI on that 500k home?
What is the rent that you are currently paying

Topic Author
vangaal
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Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Sun Mar 10, 2019 8:32 pm

niceguy7376 wrote:
Sun Mar 10, 2019 8:31 pm
For 500K home, 20% would be 100K.
What would be the P+I+ PMI on that 500k home?
What is the rent that you are currently paying
We are currently paying $1700

Topic Author
vangaal
Posts: 128
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Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Sun Mar 10, 2019 8:33 pm

mortfree wrote:
Sun Mar 10, 2019 8:18 pm
You don’t have 20% down for the home prices you are looking at.

Plus closing costs

Plus household items

Plus moving expenses

Plus wedding plans

Yikes.
What are your thoughts on looking at a cheaper home?

Jags4186
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Re: First Time Homebuyer | Recently Engaged

Post by Jags4186 » Sun Mar 10, 2019 8:35 pm

FWIW we bought 2 years after we got married. We ended up being able to put down 30% in the middle of the range you’re looking at, do about $15k worth of work to the home, pretty much fully furnish—all but 1 room which will hopefully be a nursery, pay for all closing costs without a “buyers assist”, and still have a full emergency fund and never missed a beat maxing our retirement accounts. Nor did we take a handout from mom and dad (not that there was one available). Similar incomes to you. You can do it, too.

Topic Author
vangaal
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Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Sun Mar 10, 2019 8:37 pm

Jags4186 wrote:
Sun Mar 10, 2019 8:35 pm
FWIW we bought 2 years after we got married. We ended up being able to put down 30% in the middle of the range you’re looking at, do about $15k worth of work to the home, pretty much fully furnish—all but 1 room which will hopefully be a nursery, pay for all closing costs without a “buyers assist”, and still have a full emergency fund and never missed a beat maxing our retirement accounts or taking a handout from mom and dad. Similar incomes to you.
That's awesome Jags! How did you all make that decision to wait? Also, with home prices continuously rising in this area, it makes you feel like you should buy now before it gets too high. I don't know if there's any truth to that but that is how it feels.

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ResearchMed
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Re: First Time Homebuyer | Recently Engaged

Post by ResearchMed » Sun Mar 10, 2019 8:43 pm

vangaal wrote:
Sun Mar 10, 2019 8:37 pm
Jags4186 wrote:
Sun Mar 10, 2019 8:35 pm
FWIW we bought 2 years after we got married. We ended up being able to put down 30% in the middle of the range you’re looking at, do about $15k worth of work to the home, pretty much fully furnish—all but 1 room which will hopefully be a nursery, pay for all closing costs without a “buyers assist”, and still have a full emergency fund and never missed a beat maxing our retirement accounts or taking a handout from mom and dad. Similar incomes to you.
That's awesome Jags! How did you all make that decision to wait? Also, with home prices continuously rising in this area, it makes you feel like you should buy now before it gets too high. I don't know if there's any truth to that but that is how it feels.
A LOT of people do not buy homes as soon as they get married (or even make full plans before getting married).

Many people rent for quite some time, until they are more established financially (and in some cases, professionally and geographically, so they have less chance of needing to move relatively soon after purchasing).

As for prices continually rising, what do you think the people were thinking who purchased homes in, say, 2006-2008?
It's impossible to be so precise...

RM
This signature is a placebo. You are in the control group.

mvilleguy9
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Re: First Time Homebuyer | Recently Engaged

Post by mvilleguy9 » Sun Mar 10, 2019 9:09 pm

I would hold off for a couple of years. Weddings are stressful enough. Then there's the whole do you want to have children question and the potential of someone taking time off of work.

But I'd either wait or buy a townhouse or condo for $250-300k, and build up equity that way. I would probably do the latter, even if you only have it for a few years. As long as it's at least a 2 BR you'll be fine if a kid shows up one day :)

Good luck!

Jags4186
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Re: First Time Homebuyer | Recently Engaged

Post by Jags4186 » Sun Mar 10, 2019 9:15 pm

vangaal wrote:
Sun Mar 10, 2019 8:37 pm
Jags4186 wrote:
Sun Mar 10, 2019 8:35 pm
FWIW we bought 2 years after we got married. We ended up being able to put down 30% in the middle of the range you’re looking at, do about $15k worth of work to the home, pretty much fully furnish—all but 1 room which will hopefully be a nursery, pay for all closing costs without a “buyers assist”, and still have a full emergency fund and never missed a beat maxing our retirement accounts or taking a handout from mom and dad. Similar incomes to you.
That's awesome Jags! How did you all make that decision to wait? Also, with home prices continuously rising in this area, it makes you feel like you should buy now before it gets too high. I don't know if there's any truth to that but that is how it feels.
We waited because we wanted to be extra stable when we purchased. I didn’t want to feel financially strapped buying a home. And pretty much we haven’t, although the expenses of owning a home are significantly more than I had anticipated. Where we live the house stock is old. Unless you’re spending $700k+ on a new build you are getting a pre 1950 home. Our home is “newer” being built in 1948.

I did my best not to get sucked into the “buy now because house prices increase”. What I did do and in retrospect it had pluses and minuses was that we had lost out on several homes due to being outbid. When we found another home we liked we jumped on it faster than we should have an I figured we overpaid $10-$15k. But on the other hand, the house we ended up buying was much less expensive than the other houses we had bid and lost out on. Of course this means at some point we will either need to do an addition or move up...but we are in a position to continue to save and make that a possibility years down the line.

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leeks
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Re: First Time Homebuyer | Recently Engaged

Post by leeks » Sun Mar 10, 2019 9:24 pm

Wait until (1) you are married and (2) you have saved 20% down payment (at your incomes you should be able to get there in a reasonable time frame).

Topic Author
vangaal
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Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Mon Mar 11, 2019 5:43 am

leeks wrote:
Sun Mar 10, 2019 9:24 pm
Wait until (1) you are married and (2) you have saved 20% down payment (at your incomes you should be able to get there in a reasonable time frame).
Thanks for the response Leek. I appreciate your feedback. Can you provide further reasoning on why? Thanks!

Topic Author
vangaal
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Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Mon Mar 11, 2019 5:45 am

Jags4186 wrote:
Sun Mar 10, 2019 9:15 pm
vangaal wrote:
Sun Mar 10, 2019 8:37 pm
Jags4186 wrote:
Sun Mar 10, 2019 8:35 pm
FWIW we bought 2 years after we got married. We ended up being able to put down 30% in the middle of the range you’re looking at, do about $15k worth of work to the home, pretty much fully furnish—all but 1 room which will hopefully be a nursery, pay for all closing costs without a “buyers assist”, and still have a full emergency fund and never missed a beat maxing our retirement accounts or taking a handout from mom and dad. Similar incomes to you.
That's awesome Jags! How did you all make that decision to wait? Also, with home prices continuously rising in this area, it makes you feel like you should buy now before it gets too high. I don't know if there's any truth to that but that is how it feels.
We waited because we wanted to be extra stable when we purchased. I didn’t want to feel financially strapped buying a home. And pretty much we haven’t, although the expenses of owning a home are significantly more than I had anticipated. Where we live the house stock is old. Unless you’re spending $700k+ on a new build you are getting a pre 1950 home. Our home is “newer” being built in 1948.

I did my best not to get sucked into the “buy now because house prices increase”. What I did do and in retrospect it had pluses and minuses was that we had lost out on several homes due to being outbid. When we found another home we liked we jumped on it faster than we should have an I figured we overpaid $10-$15k. But on the other hand, the house we ended up buying was much less expensive than the other houses we had bid and lost out on. Of course this means at some point we will either need to do an addition or move up...but we are in a position to continue to save and make that a possibility years down the line.
That's awesome! So, did you all spend those 2 years loading up your house downpayment fund?

Topic Author
vangaal
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Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Mon Mar 11, 2019 5:48 am

mvilleguy9 wrote:
Sun Mar 10, 2019 9:09 pm
I would hold off for a couple of years. Weddings are stressful enough. Then there's the whole do you want to have children question and the potential of someone taking time off of work.

But I'd either wait or buy a townhouse or condo for $250-300k, and build up equity that way. I would probably do the latter, even if you only have it for a few years. As long as it's at least a 2 BR you'll be fine if a kid shows up one day :)

Good luck!
Thanks for your response here! I'm glad you mentioned the idea of buying a cheaper townhouse or condo. I've thought about that idea, especially if we were able to get one in a neighborhood that historically easier to sell or even rent out if we could pay it off! HOA fees can get expensive for certain town home communities, but I really like this idea. If you have any more advice or insight into this idea would love to hear more from you.

Topic Author
vangaal
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Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Mon Mar 11, 2019 5:48 am

mvilleguy9 wrote:
Sun Mar 10, 2019 9:09 pm
I would hold off for a couple of years. Weddings are stressful enough. Then there's the whole do you want to have children question and the potential of someone taking time off of work.

But I'd either wait or buy a townhouse or condo for $250-300k, and build up equity that way. I would probably do the latter, even if you only have it for a few years. As long as it's at least a 2 BR you'll be fine if a kid shows up one day :)

Good luck!
Thanks for your response here! I'm glad you mentioned the idea of buying a cheaper townhouse or condo. I've thought about that idea, especially if we were able to get one in a neighborhood that historically easier to sell or even rent out if we could pay it off! HOA fees can get expensive for certain town home communities, but I really like this idea. If you have any more advice or insight into this idea would love to hear more from you.

Jags4186
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Re: First Time Homebuyer | Recently Engaged

Post by Jags4186 » Mon Mar 11, 2019 7:23 am

vangaal wrote:
Mon Mar 11, 2019 5:45 am
Jags4186 wrote:
Sun Mar 10, 2019 9:15 pm
vangaal wrote:
Sun Mar 10, 2019 8:37 pm
Jags4186 wrote:
Sun Mar 10, 2019 8:35 pm
FWIW we bought 2 years after we got married. We ended up being able to put down 30% in the middle of the range you’re looking at, do about $15k worth of work to the home, pretty much fully furnish—all but 1 room which will hopefully be a nursery, pay for all closing costs without a “buyers assist”, and still have a full emergency fund and never missed a beat maxing our retirement accounts or taking a handout from mom and dad. Similar incomes to you.
That's awesome Jags! How did you all make that decision to wait? Also, with home prices continuously rising in this area, it makes you feel like you should buy now before it gets too high. I don't know if there's any truth to that but that is how it feels.
We waited because we wanted to be extra stable when we purchased. I didn’t want to feel financially strapped buying a home. And pretty much we haven’t, although the expenses of owning a home are significantly more than I had anticipated. Where we live the house stock is old. Unless you’re spending $700k+ on a new build you are getting a pre 1950 home. Our home is “newer” being built in 1948.

I did my best not to get sucked into the “buy now because house prices increase”. What I did do and in retrospect it had pluses and minuses was that we had lost out on several homes due to being outbid. When we found another home we liked we jumped on it faster than we should have an I figured we overpaid $10-$15k. But on the other hand, the house we ended up buying was much less expensive than the other houses we had bid and lost out on. Of course this means at some point we will either need to do an addition or move up...but we are in a position to continue to save and make that a possibility years down the line.
That's awesome! So, did you all spend those 2 years loading up your house downpayment fund?
Well we spent the following two years doing essentially what we had done the prior two years. Living very cheaply and saving buckets of money. We lived in a 1 bedroom apartment with $1600 rent and our monthly expenses were roughly $3500 a month. That meant we were able to save $3000-$6000/mo in after tax accounts on top of maxing out tax advantaged accounts. You can do it too.

Also I will mention I do not recommend the above posters suggestion of buying a townhouse or condo if that won’t make you happy—especially if you’re simply a year or two away from buying what you want in the first place. Using a property as a “stepping stone” is very risky. If you plan to upgrade in 5-7 years there is no guarantee the property will be worth enough in that time to sell and cover the costs of selling the home and buying a new one. It cost us close to $10,000 to simply complete the home purchasing transaction—that includes lawyer, multiple inspections on multiple homes, and closing cost fees (title insurance, etc. etc.). All sunk money. In addition, all of the home maintenance costs you will be spending which may not add to the value of the home. Repairing/replacing a broken AC compressor does nothing to the value of your house—it simply maintains the value of the house for example. It will cost us similar to buy a new home, and we will lose 6% of the sale price when we sell. So on a $500k home to buy, sell, and buy could cost you $50,000 at minimum.

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JoeRetire
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Re: First Time Homebuyer | Recently Engaged

Post by JoeRetire » Mon Mar 11, 2019 7:44 am

leeks wrote:
Sun Mar 10, 2019 9:24 pm
Wait until (1) you are married and (2) you have saved 20% down payment (at your incomes you should be able to get there in a reasonable time frame).
This is clearly the correct answer.

1) Too many things can change.

2) If you cannot afford a 20% down payment, you cannot afford a house, IMHO. You might be wasting money on PMI.

Get married. Save 20%. Then start looking for a house.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.

Maven
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Re: First Time Homebuyer | Recently Engaged

Post by Maven » Mon Mar 11, 2019 8:05 am

Have you thoroughly gone through your expenses as well? And taken into account new or increased expenses that will arise due to homeownership? Higher utility bills, trash service, repairs/maintenance, lawn care, etc?

I also agree it's wise to wait a couple more years to be in a better place financially. My husband and I are very thankful we didn't buy too soon. We ended up in a location and home that is perfect for our family of four but would not have been our preferred place pre-children.

Good luck to you!

bluebolt
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Re: First Time Homebuyer | Recently Engaged

Post by bluebolt » Mon Mar 11, 2019 8:06 am

ResearchMed wrote:
Sun Mar 10, 2019 8:43 pm
As for prices continually rising, what do you think the people were thinking who purchased homes in, say, 2006-2008?
It's impossible to be so precise...

RM
I purchased my first home around then. I asked myself - would we be able to stay in this house if the market declined 20%? Would we be financially secure if that happened? Would we be able to move if we needed/wanted to? Not because I had some magic eight ball, but because prices had been rising so fast that I thought it was a good idea to plan for some of the worst case scenarios. It also led me to the conclusion that we should buy a place at the low end of what we could afford.

It turned out that the RE market did tank after that (though not as bad here as in other locations). But we slept soundly knowing that we were living in a place where we could afford the payments and where we had enough equity to sell/move if we wanted to.

mvilleguy9
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Re: First Time Homebuyer | Recently Engaged

Post by mvilleguy9 » Mon Mar 11, 2019 8:58 pm

vangaal wrote:
Mon Mar 11, 2019 5:48 am
mvilleguy9 wrote:
Sun Mar 10, 2019 9:09 pm
I would hold off for a couple of years. Weddings are stressful enough. Then there's the whole do you want to have children question and the potential of someone taking time off of work.

But I'd either wait or buy a townhouse or condo for $250-300k, and build up equity that way. I would probably do the latter, even if you only have it for a few years. As long as it's at least a 2 BR you'll be fine if a kid shows up one day :)

Good luck!
Thanks for your response here! I'm glad you mentioned the idea of buying a cheaper townhouse or condo. I've thought about that idea, especially if we were able to get one in a neighborhood that historically easier to sell or even rent out if we could pay it off! HOA fees can get expensive for certain town home communities, but I really like this idea. If you have any more advice or insight into this idea would love to hear more from you.
Thanks! If you're going to do the townhouse/condo route, yes HOA fees suck. Of course, not shoveling snow is cool too :).

But the key is to buy into a top notch system. People will ALWAYS buy into a top notch system. Plus if you do have kids, you don't necessarily have to move right away, the school system is taken care of. I bought my first townhouse when I was 30 and single in a top notch school system. I had it for 6 years, got married while living there, made a bunch of $$ on it then bought a "real" house.

IMO, I'd buy something cheap, and build up some equity. Especially when interest rates on a 30 year mortgage are still in the 4s. Then put the minimum in your 401k that your company matches and save everything else.

Hope that helps!

dachshunddad
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Re: First Time Homebuyer | Recently Engaged

Post by dachshunddad » Mon Mar 11, 2019 9:06 pm

leeks wrote:
Sun Mar 10, 2019 9:24 pm
Wait until (1) you are married and (2) you have saved 20% down payment (at your incomes you should be able to get there in a reasonable time frame).
+1 on the advice. You may consider earlier if you don't have the 20% if the bank will gave you a loan without PMI/fees. This would typically be a smaller bank or one you have a relationship with that could do a portfolio loan.

Topic Author
vangaal
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Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Sun Mar 17, 2019 7:55 pm

mvilleguy9 wrote:
Mon Mar 11, 2019 8:58 pm
vangaal wrote:
Mon Mar 11, 2019 5:48 am
mvilleguy9 wrote:
Sun Mar 10, 2019 9:09 pm
I would hold off for a couple of years. Weddings are stressful enough. Then there's the whole do you want to have children question and the potential of someone taking time off of work.

But I'd either wait or buy a townhouse or condo for $250-300k, and build up equity that way. I would probably do the latter, even if you only have it for a few years. As long as it's at least a 2 BR you'll be fine if a kid shows up one day :)

Good luck!
Thanks for your response here! I'm glad you mentioned the idea of buying a cheaper townhouse or condo. I've thought about that idea, especially if we were able to get one in a neighborhood that historically easier to sell or even rent out if we could pay it off! HOA fees can get expensive for certain town home communities, but I really like this idea. If you have any more advice or insight into this idea would love to hear more from you.
Thanks! If you're going to do the townhouse/condo route, yes HOA fees suck. Of course, not shoveling snow is cool too :).

But the key is to buy into a top notch system. People will ALWAYS buy into a top notch system. Plus if you do have kids, you don't necessarily have to move right away, the school system is taken care of. I bought my first townhouse when I was 30 and single in a top notch school system. I had it for 6 years, got married while living there, made a bunch of $$ on it then bought a "real" house.

IMO, I'd buy something cheap, and build up some equity. Especially when interest rates on a 30 year mortgage are still in the 4s. Then put the minimum in your 401k that your company matches and save everything else.

Hope that helps!
Thanks! When you say put the minimum of your 401k that company matches. Do you mean the max match?

Topic Author
vangaal
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Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Sun Mar 17, 2019 7:58 pm

dachshunddad wrote:
Mon Mar 11, 2019 9:06 pm
leeks wrote:
Sun Mar 10, 2019 9:24 pm
Wait until (1) you are married and (2) you have saved 20% down payment (at your incomes you should be able to get there in a reasonable time frame).
+1 on the advice. You may consider earlier if you don't have the 20% if the bank will gave you a loan without PMI/fees. This would typically be a smaller bank or one you have a relationship with that could do a portfolio loan.
Have you heard of the lender covering PMI?

feehater
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Re: First Time Homebuyer | Recently Engaged

Post by feehater » Sun Mar 17, 2019 8:27 pm

In re: home prices feeling like they only go up here.

I was in the market for a house in the DC area last year and I made a habit of scrolling down through the redfin listing to the "previous sales" part of it. While there are a lot of homes that have appreciated, it was also not hard to find a house where some unlucky person had paid the same amount in 2008 that they were now trying to sell it for ten years later. Real estate agents have every incentive to make you feel pressured to buy now. I recently had a colleague who might only be located here for a year, and a real estate agent who he is "friends" with told him it was still a good idea to buy a house here because the appreciation in only one year would make it worth it(?!)

chevca
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Re: First Time Homebuyer | Recently Engaged

Post by chevca » Sun Mar 17, 2019 10:45 pm

JoeRetire wrote:
Mon Mar 11, 2019 7:44 am
leeks wrote:
Sun Mar 10, 2019 9:24 pm
Wait until (1) you are married and (2) you have saved 20% down payment (at your incomes you should be able to get there in a reasonable time frame).
This is clearly the correct answer.

1) Too many things can change.

2) If you cannot afford a 20% down payment, you cannot afford a house, IMHO. You might be wasting money on PMI.

Get married. Save 20%. Then start looking for a house.
+3 or 4 or whatever it's up to now. :happy

Wait.

jcoll1
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Re: First Time Homebuyer | Recently Engaged

Post by jcoll1 » Mon Mar 18, 2019 5:11 am

vangaal wrote:
Sun Mar 10, 2019 8:37 pm
Jags4186 wrote:
Sun Mar 10, 2019 8:35 pm
FWIW we bought 2 years after we got married. We ended up being able to put down 30% in the middle of the range you’re looking at, do about $15k worth of work to the home, pretty much fully furnish—all but 1 room which will hopefully be a nursery, pay for all closing costs without a “buyers assist”, and still have a full emergency fund and never missed a beat maxing our retirement accounts or taking a handout from mom and dad. Similar incomes to you.
That's awesome Jags! How did you all make that decision to wait? Also, with home prices continuously rising in this area, it makes you feel like you should buy now before it gets too high. I don't know if there's any truth to that but that is how it feels.
You can't predict the future so don't buy based on the idea you'll be priced out.
jcoll1

Raylon
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Re: First Time Homebuyer | Recently Engaged

Post by Raylon » Mon Mar 18, 2019 10:56 pm

How much would the monthly payment be for that house? My wife and I make quite a bit more than you guys, only own a $340k house, had a 20% down payment, and still our payment is 20% our monthly takehome. That takes into account ridiculous Illinois property tax, but still, your payment would have to be pushing the 30-40% range of your takehome I would imagine.

Filetmerlot
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Re: First Time Homebuyer | Recently Engaged

Post by Filetmerlot » Tue Mar 19, 2019 2:27 pm

DW and I were a smidge older than you when we purchased our first house. It was 6 months after we got married and I kid her it was the largest impulse purchase we had ever made. We had gone out one afternoon to be looky-loos at random open houses, but apparently we got a case of 24 hour house-itis. We looked at 3 houses being built and put an offer on one that night. Our combined income was about $110 and we purchased a $400 house with 10% down back in 2008. NOT the brightest thing we ever did, but somehow we got lucky, had no emergencies, and our incomes have gone up a bit. Looking back I don't know how I didn't stress out over the precariousness of being in that position especially since I still had student loans, car payments, condo payments for a condo my wife had, and HELOC payments since we did the old trick of taking out a HELOC to avoid PMI. since then we have had 2 kids and added daycare expenses, but somehow we managed to come out on the other side with everything paid off (except the house which now on a 15 year mortgage), no more daycare since the kids are now in school, and on track to be FI by 50.

So, while I don't recommend buying right now, it can work out

mvilleguy9
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Re: First Time Homebuyer | Recently Engaged

Post by mvilleguy9 » Wed Mar 20, 2019 8:26 pm

vangaal wrote:
Sun Mar 17, 2019 7:55 pm
mvilleguy9 wrote:
Mon Mar 11, 2019 8:58 pm
vangaal wrote:
Mon Mar 11, 2019 5:48 am
mvilleguy9 wrote:
Sun Mar 10, 2019 9:09 pm
I would hold off for a couple of years. Weddings are stressful enough. Then there's the whole do you want to have children question and the potential of someone taking time off of work.

But I'd either wait or buy a townhouse or condo for $250-300k, and build up equity that way. I would probably do the latter, even if you only have it for a few years. As long as it's at least a 2 BR you'll be fine if a kid shows up one day :)

Good luck!
Thanks for your response here! I'm glad you mentioned the idea of buying a cheaper townhouse or condo. I've thought about that idea, especially if we were able to get one in a neighborhood that historically easier to sell or even rent out if we could pay it off! HOA fees can get expensive for certain town home communities, but I really like this idea. If you have any more advice or insight into this idea would love to hear more from you.
Thanks! If you're going to do the townhouse/condo route, yes HOA fees suck. Of course, not shoveling snow is cool too :).

But the key is to buy into a top notch system. People will ALWAYS buy into a top notch system. Plus if you do have kids, you don't necessarily have to move right away, the school system is taken care of. I bought my first townhouse when I was 30 and single in a top notch school system. I had it for 6 years, got married while living there, made a bunch of $$ on it then bought a "real" house.

IMO, I'd buy something cheap, and build up some equity. Especially when interest rates on a 30 year mortgage are still in the 4s. Then put the minimum in your 401k that your company matches and save everything else.

Hope that helps!
Thanks! When you say put the minimum of your 401k that company matches. Do you mean the max match?
Yes so if company has a 4% match, just put in the 4% and save the rest for a bigger house. Or whatever else life brings :)

dachshunddad
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Re: First Time Homebuyer | Recently Engaged

Post by dachshunddad » Thu Mar 21, 2019 9:28 pm

vangaal wrote:
Sun Mar 17, 2019 7:58 pm
dachshunddad wrote:
Mon Mar 11, 2019 9:06 pm
leeks wrote:
Sun Mar 10, 2019 9:24 pm
Wait until (1) you are married and (2) you have saved 20% down payment (at your incomes you should be able to get there in a reasonable time frame).
+1 on the advice. You may consider earlier if you don't have the 20% if the bank will gave you a loan without PMI/fees. This would typically be a smaller bank or one you have a relationship with that could do a portfolio loan.
Have you heard of the lender covering PMI?
Yes. Some banks will offer programs for some professions (such as attorney/dentist/physician/etc) that offer loans for little down and no PMI. This would require high credit score and employment history, etc. I assume they are most concerned with a steady paycheck to lower their risk vs the larger downpayment. I would shop around and see what you can find. Smaller banks tend to be more negotiable. Good luck in your search

Nissanzx1
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Re: First Time Homebuyer | Recently Engaged

Post by Nissanzx1 » Fri Mar 22, 2019 3:30 am

I’d wait until married and 20% down at the minimum. I know everyone says buy a house, get a house, etc.

Use lots of caution when you do buy. Learn things about plumbing, HVAC, electrical, sewer, windows, etc. make sure you aren’t buying into a money pit. My first home, I probably lost $20,000 I’ll never get back in maintenance items I should have known about... don’t get in a hurry and don’t get house fever.

FederalFIRE
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Re: First Time Homebuyer | Recently Engaged

Post by FederalFIRE » Fri Mar 22, 2019 4:22 am

I agree with the opinions here of waiting until you have 20% down to get a better rate and avoid excess extra costs that you'll be carrying for a long time. PMI could run you several hundred per month for a long time. That's money that could otherwise be going to retirement or other expenses.

Your current savings rates aren't particularly clear from your post, but given your income, lack of other debts, and modest retirement assets I'm guessing you probably aren't at a 50% savings rate or anything crazy like that. With a combined gross income of $167K you could likely save the additional ~$40K to hit 20% within 12-18 months if you really buckle down and cut expenses. Then you can buy a house without PMI, flip that high savings rate into your retirement accounts and start socking away money there - especially if kids are in the future plan.

I certainly understand the concern for increased housing prices in NoVa (Amazon and all...), but it just seems like there's a reasonable path in a modest amount of time to buy a house with a full down payment, so I'd suggest you go that route.

Topic Author
vangaal
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Re: First Time Homebuyer | Recently Engaged + Update!

Post by vangaal » Sun Mar 24, 2019 7:43 pm

Hello Bogleheads!

My fiancee and I (34 and 31) are recently engaged and we are in the stage of deciding on whether we should continue to rent or buy. Here's some more information on us. The place we are looking at and want to put an offer on is listed at $399,900 in the Northern Virginia area (inside the beltway if you are familiar with this area). We are setting a max of $415k.

This home is completely move-in ready! The HVAC was replaced in 2018, The water heater was replaced in 2015, & the windows were replaced in 2013! So, we don't anticipate any major maintenance issues. We both work within a 4 mile drive of this place and have stable jobs. We currently pay $1700 in rent.

Do you think that it is smart to buy?

Personal
Dating for 6 years, engaged for 3 months, lived together for 3 years, Live in the Northern Virginia area.

Financial Situation
Me
100% Debt Free
Gross Income = $107k
Down payment = 57k + 15k (gift from fiancee's father)
Emergency Fund = 16k
Other savings = 12k
Retirement = 80k
Credit score = 800+

Her

100% Debt Free
Gross Income = $60k
Emergency Fund = $5k
Retirement = $40k
Credit score = 800+

Thank you for your feedback!

Topic Author
vangaal
Posts: 128
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First Time Homebuyer | Recently Engaged + Update!

Post by vangaal » Sun Mar 24, 2019 7:44 pm

[Thread merged into here, see below. --admin LadyGeek]

Hello Bogleheads!

My fiancee and I (34 and 31) are recently engaged and we are in the stage of deciding on whether we should continue to rent or buy. Here's some more information on us. The place we are looking at and want to put an offer on is listed at $399,900 in the Northern Virginia area (inside the beltway if you are familiar with this area). We are setting a max of $415k.

This home is completely move-in ready! The HVAC was replaced in 2018, The water heater was replaced in 2015, & the windows were replaced in 2013! So, we don't anticipate any major maintenance issues. We both work within a 4 mile drive of this place and have stable jobs. We currently pay $1700 in rent.

Do you think that it is smart to buy?

Personal
Dating for 6 years, engaged for 3 months, lived together for 3 years, Live in the Northern Virginia area.

Financial Situation
Me
100% Debt Free
Gross Income = $107k
Down payment = 57k + 15k (gift from fiancee's father)
Emergency Fund = 16k
Other savings = 12k
Retirement = 80k
Credit score = 800+

Her

100% Debt Free
Gross Income = $60k
Emergency Fund = $5k
Retirement = $40k
Credit score = 800+

Thank you for your feedback!

KlangFool
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Re: First Time Homebuyer | Recently Engaged + Update!

Post by KlangFool » Sun Mar 24, 2019 7:50 pm

OP,

Any detail on the house/townhouse/condo?

Size?

Do you have 20% down payment?

KlangFool

KlangFool
Posts: 15485
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Re: First Time Homebuyer | Recently Engaged + Update!

Post by KlangFool » Sun Mar 24, 2019 7:54 pm

OP,

It is obvious that your PITI will be higher than the rent. it is cheaper to rent. But, you are going to buy the house even if it is more expensive to buy. So, I wish you the best of lucks.

KlangFool

Triple digit golfer
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Re: First Time Homebuyer | Recently Engaged + Update!

Post by Triple digit golfer » Sun Mar 24, 2019 7:55 pm

Any plans for children? Are those expenses budgeted? Quitting a job or paying for daycare is expensive.

Make sure you budget for unexpected repairs. It's not if, but when. Everything could be new and in great shape, yet something stupid will happen and things break and leak and wear out.

Put a budget on paper. Are you able to afford it comfortably and still save for your future?

Thegame14
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Re: First Time Homebuyer | Recently Engaged + Update!

Post by Thegame14 » Sun Mar 24, 2019 8:01 pm

so you are going to put down about $72K, to bring the mortgage down from $399 to around $325K, your income is $165K ish so that is a house at 2X income so you can definitely afford it. make sure you get a good home inspection, especially checking for water and foundation issues and termites. I hate seeing moving in before married but so is life, Id probably want written documentation of where money is coming from, but it doesn't look like one side is putting out a ton more than the other.

Only issues I have are don't see separate savings for a wedding, and retirement savings is a little low for your age, it should be around 2X income at your age, and plans for kids, if right away and how many you plan to have vs can this place fit to stay in forever, vs planning to move or "upgrade" later on. Love it being so close to work, that is great from a money standpoint of gas and car expenses but also work life balance.

Id still say buy it but just keep in mind savings for a wedding, retirement is a little light and if you have kids soon, that will all be tons of new expenses you may not have time to adjust to but if she is already 34, you basically HAVE to have kids right away if you want them at all... So that is my 2 cents...

pasadena
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Re: First Time Homebuyer | Recently Engaged + Update!

Post by pasadena » Sun Mar 24, 2019 8:03 pm

I agree that you don't give much info on your plans and budget. I'll add that:

- You don't have a 20% downpayment, so you will either have to dip into your savings to scrap what's missing, or pay PMI.
- Unless you're planning on a 10% downpayment, you don't have enough to pay for closing costs on top.
- And not much buffer for ancillary and unexpected expenses. Owning a house is more expensive than renting, and most first-time homebuyers fail to take that into account, or underestimate it. My sister sold her house and rented an apartment for a while, and she was amazed at how much money she was saving. You don't say if you have considered that in your plan.

But I will say this - you're not far from being able to do it. But you're not there yet.

Flyer24
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Re: First Time Homebuyer | Recently Engaged + Update!

Post by Flyer24 » Sun Mar 24, 2019 8:04 pm

You just did this thread last Sunday. Please just update your original thread and not make duplicates.

pasadena
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Re: First Time Homebuyer | Recently Engaged + Update!

Post by pasadena » Sun Mar 24, 2019 8:06 pm

Flyer24 wrote:
Sun Mar 24, 2019 8:04 pm
You just did this thread last Sunday. Please just update your original thread and not make duplicates.
Yep, just saw that. Here's the link : viewtopic.php?f=2&t=275362

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Re: First Time Homebuyer | Recently Engaged

Post by LadyGeek » Sun Mar 24, 2019 8:17 pm

vangaal - In order to give appropriate advice, it's best to keep all the info in one spot. I merged your update back into the original thread. This isn't a big deal, don't worry about it.

To get our attention sooner, please report the post using the ! in the top-right corner of the post. One of the reasons is "Wrong forum". Many thanks to the member who did just that.
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

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celia
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Re: First Time Homebuyer | Recently Engaged

Post by celia » Sun Mar 24, 2019 8:21 pm

How much are both of you spending on the wedding and where will it come from?

It would be safer, in my opinion, to wait to see your finances after you are married. It doesn’t hurt to house hunt for a long time because you become better at it, especially the first time. It took us a year before we made an offer and by then we could walk in a house and know in a few seconds how much it would go for. Then you just have to wait for a listing that meets your criteria and is priced right.

Topic Author
vangaal
Posts: 128
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Re: First Time Homebuyer | Recently Engaged + Update!

Post by vangaal » Sun Mar 24, 2019 8:31 pm

Flyer24 wrote:
Sun Mar 24, 2019 8:04 pm
You just did this thread last Sunday. Please just update your original thread and not make duplicates.
Sorry about that Flyer. What do I need to do?

Topic Author
vangaal
Posts: 128
Joined: Thu Feb 05, 2015 12:01 pm

Re: First Time Homebuyer | Recently Engaged + Update!

Post by vangaal » Sun Mar 24, 2019 8:42 pm

KlangFool wrote:
Sun Mar 24, 2019 7:50 pm
OP,

Any detail on the house/townhouse/condo?

Size?

Do you have 20% down payment?

KlangFool
Sq feet: 850
Interior Features
Bedroom Information
# of Bedrooms On 1st Upper Level: 2
Bathroom Information
# of Bathrooms (Full) On 1st Upper Level: 1
# of Bathrooms (Half) On Main Level: 1
# of Bathrooms (Full) On All Upper Levels: 1
# of Bathrooms (Half): 1
# of Bathrooms (Full): 1
Interior Information
Living Area Sq.Ft. Source: Assessor
Room Information
Laundry Type: Has Laundry, Main Floor

Homeowners Association Information
Condo/Coop Fee: $281
Condo/Coop Fee Frequency: Monthly

We are not quite at 20%

Bacchus01
Posts: 3182
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Re: First Time Homebuyer | Recently Engaged

Post by Bacchus01 » Sun Mar 24, 2019 8:43 pm

mvilleguy9 wrote:
Sun Mar 10, 2019 9:09 pm
I would hold off for a couple of years. Weddings are stressful enough. Then there's the whole do you want to have children question and the potential of someone taking time off of work.

But I'd either wait or buy a townhouse or condo for $250-300k, and build up equity that way. I would probably do the latter, even if you only have it for a few years. As long as it's at least a 2 BR you'll be fine if a kid shows up one day :)

Good luck!
No kidding.

In 2006 we bought a brand new beautiful house in a LCOL major metro for $530k.

In 2011 we sold it for $425k.

The new owners dumped another $100k into some upgrades.

Then sold it in late 2018 for $525K.

After 12 years and $100K in upgrades, it’s still worth less than we paid when new.

Topic Author
vangaal
Posts: 128
Joined: Thu Feb 05, 2015 12:01 pm

Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Sun Mar 24, 2019 8:57 pm

Raylon wrote:
Mon Mar 18, 2019 10:56 pm
How much would the monthly payment be for that house? My wife and I make quite a bit more than you guys, only own a $340k house, had a 20% down payment, and still our payment is 20% our monthly takehome. That takes into account ridiculous Illinois property tax, but still, your payment would have to be pushing the 30-40% range of your takehome I would imagine.
We are calculating ~2,400 monthly payment.

Topic Author
vangaal
Posts: 128
Joined: Thu Feb 05, 2015 12:01 pm

Re: First Time Homebuyer | Recently Engaged

Post by vangaal » Sun Mar 24, 2019 9:00 pm

celia wrote:
Sun Mar 24, 2019 8:21 pm
How much are both of you spending on the wedding and where will it come from?

It would be safer, in my opinion, to wait to see your finances after you are married. It doesn’t hurt to house hunt for a long time because you become better at it, especially the first time. It took us a year before we made an offer and by then we could walk in a house and know in a few seconds how much it would go for. Then you just have to wait for a listing that meets your criteria and is priced right.
We are planning to spend 12k on wedding. We were gifted 10k and will save the rest ourselves.

KlangFool
Posts: 15485
Joined: Sat Oct 11, 2008 12:35 pm

Re: First Time Homebuyer | Recently Engaged

Post by KlangFool » Sun Mar 24, 2019 10:24 pm

vangaal wrote:
Sun Mar 24, 2019 8:57 pm
Raylon wrote:
Mon Mar 18, 2019 10:56 pm
How much would the monthly payment be for that house? My wife and I make quite a bit more than you guys, only own a $340k house, had a 20% down payment, and still our payment is 20% our monthly takehome. That takes into account ridiculous Illinois property tax, but still, your payment would have to be pushing the 30-40% range of your takehome I would imagine.
We are calculating ~2,400 monthly payment.
vangaal,

Your rent is $1,700 per month. Your new house(Condo?) is $2,400 per month. It costs a lot more to buy.

My numbers are opposite of yours. Rent = $2,200 to $2,300 per month. PITI = $1,800 per month.

KlangFool

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