Ashley, Co-Founder of TinLey Affair, is our guest blogger this week. She’ll be writing a series about her experience saving for, looking for and buying a home of her own. Ashley has a degree in Journalism and has been active in the media for more than six years. As Co-Founder of TinLey Affair, she is constantly scavenging the web for budget-wise crafts. TinLey Affair is a community for inspiration and motivation to encourage its readers to bring their visions to life.
As a newly married couple, my husband Arthur and I want to plant our roots and invest in a home all our own in Northern California. I am originally from Columbus, Ohio and Arthur grew up in San Francisco – the real estate markets in these parts of the country could not be more different.
This blog series will document our experience as we dream, save, shop and (hopefully!) hang up wallpaper. We have already begun some research, and let me say, it is not as simple as signing your name on the line.
This post is the first of a series I call “Dream Home Real” As my story unfolds, I will breakdown the processes of buying a home, in simple terms. The goal of this series is to document a real couple buying their first real dream home so that the readers can learn about the process from someone starting at the beginning, and a place to share their experiences along the way!
Every day on the radio on my commute home, I hear about the housing market…Is it up? Down? What’s going to happen next? The industry experts seem to be confused as well…
“The home builder Lennar said on Wednesday that its net income more than tripled in the first quarter as new orders and deliveries continued to rise.” – NYTimes.com
“In Nevada, more than half the people have mortgages that are bigger than the value of their house. In Florida, it’s about 40 percent. So it’s still a big problem.” – NPR.org
In Northern California, especially the Bay Area where we live, home prices seem to be staying pretty consistent and I’ve heard a journey of a thousand miles begins with a single step…
Our first step has been to do research, lots of research. We use online sites like Redfin.com, Trulia.com and Zillow.com to get a feel for what homes are available to us in the area. We create filters that help us sort the available homes for purchase; like price, bed/bath counts and location. Arthur works in SF and I work in San Rafael, so ideally we do not want more than a 30 – 40 min commute.
After creating a wish-list and seeing what the area has to offer, we went to a few open houses in Sausalito, Novato, Petaluma and Sonoma. I was mostly just curious – the pictures on the website sometimes are completely different than the real thing. I also wanted to get a feel for the neighborhood to see if it is somewhere I could live for more than 10 years.
For example, a home that costs $300,000, with 20% down which is $60,000, the monthly mortgage payment would be $1,559.05. A $500,000 home, with 20% down which is $100,000, monthly mortgage payment would be $2,540.08.
Once we found what monthly payment we were comfortable with, we started looking more seriously in that price range.
Looking and dreaming is the fun part, the next step of saving is not as exciting. Arthur and I decided if we are going to make this dream a reality, we need to save!
The Credit Union where I do my regular banking offers a program called Finance Works that is really great for tracking my spending and organizes it into categories so that I can see where my money is going. I have also heard great things about Mint.com, I will download the application to my Android and report back next time about its usefulness when planning a savings goal.
A mix of knowing where the money is going and consciously saving will help us get to our goal. When we met with our CPA Dalebert Peronteau at American Eagle Consulting this tax season, he gave us the idea to take 10% of each pay check and put it in savings right away, on every pay check. At the end of the year, that is 10% of your entire income that you saved. For a couple that makes around $100K, that is $10K which is almost 20% of a total down-payment for a $300K home.
After our meeting with Dale, we sat down together and mapped out our income using a simple Google Doc. We wrote down our monthly income on one side and our expenses on the other. Outlining our finances this way makes it easy to see where we can save and where we can cut back on spend (going out once a week as opposed to three times, for example). The Finance Works program I mentioned above is extremely helpful here as well. It creates a easy-to-view pie chart that shows where your money is going.
If you are in the same boat with trying to buy your first home, write about it here in the comments section. As I continue the series, I would love to hear what you hope to learn about along the way.