The purpose of this post is to explain how and why I chose to buy a house- despite my salary, marital status (single, if you can’t tell), and fear of commitment. And to hopefully give anyone else out there who’s thinking about buying a house some tips and encouragement. I’m lucky, because home-buying/renovating/landlording is in my blood, so I have a lot of great resources very close to me to point me in the right direction. But if you don’t have that, have no fear! You can find resources in a lot of places if you just know where to look. It may seem counter intuitive, but finding help and advice from those smarter than yourself is an important part of being independent.

My pros for buying vs. renting:

1. I was considering getting an apartment by myself and I realized that for what I wanted and was willing to spend, I could possibly make a house payment instead.

2. I’m kind of handy- (kind of). More importantly, I’m (usually) willing to learn.

3. My family is knowledgeable about real estate so it was a little less scary.

4. I don’t make enough money at my day job to “get ahead” and I wanted to make a solid investment that I could get some use out of in the meantime.

5. Home prices fell dramatically after the “bubble” and suddenly it was actually a reality for me to buy.

6. One word: Stimulus. One number: $8000.

7. I can. Legally, I don’t need to buy a house with someone, or be married. Apparently this was not always the case so taking advantage of this freedom is a bonus.

8. It felt right.

Some cons:

1. I’m not that handy. My family is a huge help, but they all live out of town so it really is my own deal. Sometimes it may take me hours to figure something out that my brother could do in ten minutes.

2. I’m a commitment-phobe.

3. I could only afford the demo houses in the good neighborhoods, or else I would have to look in the bad neighborhoods. (Funny, I actually ended up with probably one of the worst houses- in a “bad” neighborhood. Still don’t regret it.)

4. I am scatterbrained and it was hard for me to even get the paperwork in to get pre-approved (I’m getting better though!).

5. I have other stuff I want to do, like grad school.

Obviously the pros outweighed the cons for me and I have no regrets.

Here are some tips for when you decide to take the plunge:

1. Buy below what you can afford. I was pre-approved for a $190,000 house. Great! Technically, I could “afford” it. But that kind of mortgage payment would have literally taken up my entire paycheck. No exaggeration. I’m still a little confused about why I was approved for so much, but whatever. I saw plenty of adorable houses in the $130k-$150k range, but that was still too high- I would like to have a life outside my mortgage payment, thankyouverymuch. I decided that, although it wouldn’t be easy to find, I needed to buy within the $100k-$120k range.

2. You’re shopping for your starter home, not your dream home. Don’t get carried away. Home ownership is a beautiful investment. If the market increases at all, then it’s a pretty sure bet that you will make money on your home, which you can then use toward the house of your dreams.

3. Look outside your bubble. The west side of Salt Lake City traditionally has a bad wrap. And it’s true, it is not as nice as the east side. When I first started looking, I absolutely did not consider the west side. I quickly changed my mind when I realized that anything in my price range on the east side pretty much needed to be demolished. So I reluctantly crossed the tracks (quite literally) and was surprised to see tree-lined streets, parks, and well-kept yards. And it’s still close to downtown.

4. Research the area. I’m no economist, nor can I predict the future. But I got a pretty good feel for Salt Lake during all my house-hunting. I learned that they are building a TRAX (lightrail) line from downtown to the airport, which goes just a few blocks from my house. That may do great things for the area. I also realized that more people are moving downtown, and they are doing a lot of improvements there. I think that real estate close to downtown will get more valuable, regardless if it’s on the west side. My boss explained it to me this way: Cutesy, “artist” neighborhoods start out as the bad part of town because artists are typically poor. So they tend to congregate in the less-expensive, um, “lively” areas. Then that area becomes hip because artists are cool, and people start moving there, fixing up the old houses with character, and put a few sculptures in their yards. (I’m looking at you, 9th&9th.) Suddenly, the new generation of artists can’t afford that area anymore, so they find the next poor area and the cycle continues. Now I can’t say if Fairpark is the next 9th&9th, but his explanation made me feel better about buying in a “lesser” neighborhood.

5. Get a great deal, not an okay deal. I realize that if everyone did this, then sellers would never get a great deal, but if you’re serious about saving money then follow this tip. I couldn’t afford to buy a house for an okay price, I had to buy a house for a killer price. Be patient, don’t succumb to pressure, and hold out for that overlooked gem.

6. Work out the numbers. This was great advice from my brothers: Don’t buy a house whose payment would be more than you could rent it for. Here’s an example. A cute little 2-bedroom with no basement on the east side costs $150k. At 5.5% interest on a 30-year loan, the payment would be $851.68 plus taxes and insurance, so let’s say about $1000. Now, let’s research what cute little 2-bedroom houses rent for in that neighborhood. I would venture to say not more than $800 a month. That would leave you $200 short each month, and no safety net. (If it had a usable basement, it may be a different story since you may be able to finish it and get more rent money).

7. Watch out for “remodeled”. I saw so many houses that excitedly said “newly remodeled!” on the listing, and then you get there and it’s some craptastic tile-job slapped on fugly cabinets and they want to charge you top dollar. You can’t put perfume on a pig. Know what to look for. I personally probably wouldn’t have noticed that kind of thing had I not been shopping, but when you look at something with the thought “Will this be mine?” it really gives you new eyes.

8. Don’t be afraid of a fixer-upper, as long as it’s the right things that need fixing-upping. Things like carpet, paint, and even windows and cabinets- cosmetic things- can be pretty cheap. But inspect things like the sewer line, the plumbing, the furnace, the roof, etc. and make sure it’s in your budget to make those repairs. (In my case, I had to replace the roof and the furnace on top of everything else, and it still ended up being a great deal.)

9. Give yourself a safety net or two. For me, my safety nets are: I have an extra bedroom upstairs that I could rent out if I were ever in a pinch;  my house payment is low enough that if I had to, I could make the payment on minimum wage. (It would not be pretty.) I also have three months’ expenses in savings at all times, and I wouldn’t mind increasing that to 5 months.

10. Cash is important. Liquid assets are invaluable. They are the only thing that can bail you out if you get into financial trouble. I’ve told my brother many times how nice it would be to put the $8000 tax credit I received toward my house, as it would save me LOADS of interest and years on my loan (indeed it would). But he stresses that that would not be a wise move, since I don’t have very much cash. If I lost my job or something, having that cash in my hand would be more important than owing less on my loan. Also, at this point, it probably makes more sense to put that money into improving my house than paying it off earlier. (I do hope to make supplemental payments eventually.)

11. Don’t be afraid to go it alone. Sure, it would be easier to buy a house if I knew that I would always have someone there to help me pay for stuff. But it didn’t make sense financially or personally to wait for that. I can do it on my own, so why not?

12. Take advantage of development programs. My house was a HUD (Housing and Urban Development) home, which was part of the reason it was so cheap (that, and it smelled like dog pee SOMETHING FIERCE). HUD likes to see individuals buy homes and fix them up, which was maybe partly why they accepted my bid over other investors’, who wanted to buy it and rent it out. If you’re a firefighter/EMT, a police officer, or a teacher, you can buy a HUD home for 50% OFF if it’s in the neighborhood where you work. I so wish I had one of those professions! Go here for more info. Bottom line: see what’s out there for you, and take advantage of it! (Just don’t abuse it.)

Some common worries:

1. Buying a house is too big a commitment. If you do it right, it doesn’t have to be. True, since mine was a HUD home I am bound to live here for at least a year. Same thing with the $8000 tax credit- I must stay in the house at least a year. But most of us would sign a year-long lease anyway. If I got an awesome job offer somewhere else after a year, I could theoretically rent my house for enough to cover the payment (more if I finish the basement). See Tip #6 above. I may not be cash-flowing on it, but at least it’s an investment that will work to my advantage.

2. I don’t know how to fix something if it breaks. This is a very valid concern. If you call a plumber to unclog your drain, they have to charge you at least 50-70 bucks just to make it worth their time. But if you know how to unscrew a P-trap (or if you know someone who does) it’s free. However there is hope. In my experience, people love giving advice (what am I doing right now?) as much as they love to talk about themselves. Ask anyone- an old guy at work, your neighbor across the street, your parents, a friend, heck there’s even a free phone number you can call to ask anything you need! Seriously, it’s their job. It’s like a more reliable ChaCha. (Check to see if your state has an Extension Service.) Also, I went to the library and saw soooo many books with titles like “Who Needs a Man? The Sassy Girl’s Guide to Home Improvement” (that might not be an actual book, but you get the picture). If you really want to do it, and you want to devote the time to it, you can figure out home improvement. It is really fun and empowering. Just be aware that it does involve a fair amount of work and it’s not always fun.

3. I don’t have enough money. Again, this is a valid concern. But if buying a house is a priority for you, then you will find a way to save the money. And many loans for first-time homebuyers only require a 3.5% down payment. Side note: I thought about trying to make a larger down payment to lower my monthly payment. But it only starts getting lower after about a 20% down payment, which wasn’t an option for me.

So there you have it; my long-winded advice column. If you made it to the end, congratulations! That’s some stamina! I may add to it in the future if I decide that my brain has more stuff in it that the world absolutely can’t live without. And please email me or comment if you have any questions!

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