I grew up in a household where the only thing said about money was, “we don’t have any money”. We were poor. Maybe we weren’t. I think my parents made decent money, they just didn’t manage it well. We were always moving. It’s been awhile since I have thought about it, but I think I lived in ten different houses with my parents by the time I was 18.
Owning a home was something I rarely thought about. Honestly, I probably would have been headed down the same path as my parents had I not met J.C.. I had rented 4 places by the time J.C. and I got together when I was 22 and already had a decent amount of debt. J.C. had just closed on his house shortly after we had gotten together and that’s where we lived for the next 6 years. We’ve only rented one apartment and that was for 6 months when we moved to Texas.
Buying Our First Home Together
This was a very exciting time for me since it was my first time actually buying a house! By now I had gotten my credit back on track and was able to get approved for a home loan. We were approved for X amount, but decided it would be best to stay around $50,000 less than that. It didn’t take very long for us to find a house that we liked and before we knew it were signing all the papers and getting the keys! Exciting right?!
While there are many pros and cons to owning a home, the pros definitely outweigh the cons. I do love having our own house, but I do wish we would have known better and saved more before buying.
What would I have done differently?
I would have saved at least a 20% down payment! We had only saved the minimum of 3% required for an FHA loan. At the time I was just happy that we were approved for so much. But with a FHA loan you are required to pay an upfront Mortgage Insurance Premium (MIP) as well as an annual MIP. The MIP is basically to protect the investor if you default on the loan. I believe when we bought our house they told us we would have to pay the MIP for 8 years or until we had more than 20% equity in our home. I think for current buyers they changed it to 11 years, but somewhere I read that you have to pay it for the life of your loan, so I am not really sure how long we will have to pay it for. I know we are 2 years down, so potentially 6 to go? All I know is that there is an extra $120 a month going toward something that has no benefit to us, which sucks!
I would have saved enough money for an emergency fund to cover at least 6 months of our bills. Little did we know that shortly after we bought our house we would have some personal stuff happen which led to thousands of dollars in medical bills and J.C. quitting his job to stay at home with the girls while I worked full time and became our only source of income. Luckily we have never been behind on any of our bills, but we have racked up some credit card debt that was paid off once, and now we are working to pay it off again.
We also had to get a new A/C unit last year, which was an unexpected $7200 that we didn’t have! If we had an emergency fund, we could have taken money from there. As well as use it for a new fence, because I am sure it will be falling over on the next super windy day or if another hurricane comes through.
One step forward, two steps back
As much as I am trying to pay off our debts and save for the future, it seems like sometimes we are getting no where. We get one thing paid off and something else comes up. For example, we got one credit card paid off and then we get a letter that we are short in escrow, so our house payment is going up $220 a month for the next year. It seems like an endless cycle at times and can be pretty discouraging. Sometimes I wish we could just sell our house and buy a lot out in the country and live out of an RV. But right now that isn’t even possible because the cost of living has risen so much in the 2 years that we’ve lived here and you can’t even find an acre of land in the country for less than $55,000. So the only other option would be moving back to somewhere more affordable, but we like it here and the schools are good, so I guess that isn’t an option.
I know we won’t be stuck in a rut forever. J.C. is doing really good staying on top of his school goals and if he continues, then he should finish a year early which would be next June. So once he goes back to work then we will have two incomes again. And as long as we continue to be strict with our finances and keep paying off debt and saving, then we should be able to meet some of my financial goals within the next 5 years, which is pretty exciting to me!
Do any of you own a home? If so, is there anything you planned for ahead of time, or wish you would have done differently before buying?