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The One Thing Everyone Should Do Before Buying A Home

Saturday, March 25, 2017   /   by Teresa Dipeso

The One Thing Everyone Should Do Before Buying A Home

Sometime in my mid-20s, I decided I wanted to stay in the Maryland area and buy a home.

I could afford a mortgage around $1,500 per month based on my expenses—mostly student loan payments—and salary. If I found the perfect home, I could stretch to afford around $1,750 per month.

As I searched for my future home, I played a financial game with myself. I’d soon be saddled with a $1,500 mortgage, so why not spend like I had one already? Why not pay a “pretend mortgage” before my real one, so I had a better idea of what it would feel like?

When I was looking for a home, I was sharing a two-bedroom apartment with a friend and paying $600 a month, plus utilities. It was a steep jump to go from $600 to $1,500 a month, so playing this game was important.

At the time, I was budgeting using an app, so I knew I could handle the increase.

I could maintain one of my key money ratios, paying less than 30% of my salary to housing. But I still needed to know how it felt. It’s one thing to see it in an app and another to feel it.

How ‘playing house’ worked for me

Every month, I paid my $600 for rent and set aside $900 in savings. As you’d expect, I didn’t just transfer money from one account to the other, because who has $900 sitting around? If I did, I wouldn’t need to play house!

I had to make adjustments. I contacted my human resources representative to reduce my 401K contributions so I’d have more in my paycheck. I had to adjust my other savings goals as well because I wouldn’t be saving as aggressively.

I also started going out to dinner and bars less often. Instead of going out for drinks a few times a week, I limited myself to two nights, on the weekends.

Making those trade-offs became easier — and easier to explain to friends without having to deal with grumbling, because I was making a clear choice. I was cutting some social time because I wanted to buy a house. I wasn’t saving money for the sake of it. I had a very good reason: to buy a house.

The housing search took about 18 months, and I played house for only 12 of them, so I had an extra $10,000 or so saved up in my mortgage account. I took that money and put it toward the down payment.

The house ended up having a mortgage that was a little less than $1,500, and after living with the mortgage payment for a year and a half, I had no trouble adjusting to it.

If you’re thinking about buying a home or making a similar large purchase, consider playing house first.

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courtesy of realtor.com

Teresa M DiPeso & The DiPeso Group Jersey Shore Real Estate Experts
Teresa M. DiPeso
Long & Foster
Avalon/Stone Harbor/Cape May/Sea Isle/Wildwoods, NJ 08202
609-780-1434

The data relating to real estate for sale on this web site comes in part from the Broker Reciprocity program of the Cape May County Multiple Listing Service. Real estate listings held by brokerage are marked with the Broker Reciprocity logo or the Broker Reciprocity thumbnail logo (a little black house) and detailed information about them includes the name of the listing brokers.
The data relating to real estate for sale on this web site comes in part from the Broker Reciprocity program of the South Jersey Shore Regional MLS. Real estate listings held by brokerage are marked with the Broker Reciprocity logo or the Broker Reciprocity thumbnail logo (a little black house) and detailed information about them includes the name of the listing brokers.
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