home ownership

Buying Our First Home: Finding Budget & Spending Balance

First-time-home-buyer1This is the first post in a new series on Blonde & Balanced – Buying Our First Home – where I’ll chronicle our process to first-time home ownership!

A new home is in my near future!  If things go as planned, we’ll start looking for a new house – and become first-time home owners! – in the first few months of 2012.  We’ve always had the same budget in mind, but it’s a wide price range (not a high price range … the two are very different!).  We never plan to buy more house than we need, but how do you find that sweet spot between being too frugal or spending at the top of your price range?

Our price range spans about $100,000, meaning the lower number in our price range is $100,000 less than the high-end of our price range.  Even if we buy on the upper end of that range, we’ll still be within our budget – we’ll just be at the top of that budget.

The question is, do you sacrifice and spend less or do you go all in and spend more?  We’ve been living in apartments and spending frugally for many years, always thinking of our dream house.  Part of me wants to go big and get everything we want (within the budget).  But the other part of me wants to go frugal and buy at the lower-end of our budget so we can pay the house off several years quicker.

Since we never really bought a “starter” house, we’ll likely be in our first house for many years to come – maybe even until our kids graduate high school.  When I think of that, I want to go for the dream house at the higher end of our budget.  We’d still have it paid off by then, it would just take a little longer.

The zip codes where we’re looking at homes in is the biggest driver of our price range.  If we wanted to move back to our hometowns (other suburbs in Kansas City), we could probably spend about $100,000 less on a home.  Sounds tempting, but we’ve made a new home in our little space of Kansas City, we love this new “area”, and it’s closer to church and our jobs.

There is something enticing about owning a home with 5 bedrooms, a 3-car garage, a finished basement, an updated kitchen, and a huge backyard.  We could easily find that for an affordable amount in other neighborhoods, but it’s doubtful that we’ll find it where we’re looking to buy.

I guess I won’t know for sure which end of our price range we want to spend in until we start house-hunting with our future realtor.  Who knows, maybe in 9 months, the housing market will be on a rebound and prices will be rising.  Or maybe we’ll even find our dream house with all those extras at the lower end of our price range (now, THAT would be ideal).

In the meantime, I do plan to continue this series – Buying Our First Home.  I think many people are interested in what it’s really like to save for, plan for, shop for, and buy a new home.  We’ll be in the planning and saving for stages for several more months, but the house-hunting will be here before we know it!

What topics would you like to see in the Buying Our First Home series?

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B&B

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18 Comments

  • Hey.

    We bought a 2 bedroom 2 bath home. The only thing i’m regretting is that we didnt find something with a third bedroom. Or bedrooms on the same level. Were very happy with the house I would just prefer the third bedroom.

    All the best be excited and go to lots of open houses. Also my friends house will be coming up for sale in Kansas city. Its scary that you might be seeing it before I ever will!

    • Yeah, I am worried about getting 4 bedrooms and wanting 5. Not tha we need 5 bedrooms now, but what if we have 4 kids? Or what if we have 3 kids and I still want an office … the fact that we could be in this house for the next couple decades makes me want to get a lot of bedrooms… 🙂

  • When you put it on the “our home for 20 years” context it sure does make it seem worthwhile to go to the top and get the best possible house!

    Also, if you move to the burbs you’ll be closer to me! 😉

    • Yeah, I agree … I really do think we’ll be in this house for quite some time. So, that definitely makes me wanna go big. 🙂

      Oh, we’re definitely in the suburbs. 🙂 We’re just not in the (cheaper) suburbs that we grew up in. G’s sister recently bought a nice house in his home-suburb for like $100,000 less than we plan to spend. = \

  • Oh, goody! I love home buying posts! 😀 I would love to see posts about what things you and Lloyd are looking for in the actual house and what things you want but will have to compromise on for your location (i.e. Bigger yard, etc.). Also, in addition to your mortgage, are you planning to set aside any funds for home repairs and improvements? Home improvements are probably the biggest reason we HAVEN’T bought yet. Too afraid that they would triple our current rent, in which case we’d be dummies to buy. (So, I want to have a pretty big emergency fund in place when we buy, and I would like us to contribute to a “home improvement” savings account once we own.) Also, how did you and Lloyd determine how much cash to put down on your house? There was one more topic I wanted to mention, but it’s completely slipped my mind. I’ll have to think on it and come back for Round 2! 😉

    • Thanks, girl! You are supplying me with tons of topic ideas! I sort of answered some of these questions in previous blog posts, but I think I’ll have to catch everyone up on these things! 🙂

  • It’s so interesting to see each person’s journey. BF and I just bought our second home, but first house, and it blows my mind that you’ll be able to look for a 5 bedroom home!

    It shouldn’t surprise me anymore really because I live in a market that has ridiculous home prices. Our house has four bedrooms and two bathrooms BUT the lower level is a 2 bedroom suite which we will use to subsidize our mortgage (almost half our monthly payment). This is the case with probably 75% of houses in the area I live. For two reasons,

    1. Real estate here is expensive!
    2. There is a university and a college here and there is not enough student housing so renting out a suite is easy.

    I am absolutely happy to become a landlord, this was the plan all along. The other thing I find so very interesting is the approach. To BF and I our real estate decisions have been based on it being a business. To us this house is a place we will live for 5 or so years and then we will take out the equity and buy (hopefully) our dream home. This house will become a rental property that we hope to keep for many years to come. I find that I don’t come across many PF bloggers who take this approach to real estate. Maybe it has to do with market conditions in their area and the rentability factor.

    It’s all so interesting! Can’t wait to read more about your journey!

  • What a roller coaster it will be! It always is. I definitely say go for that extra bedroom or that extra whatever it is that will keep you happy if you intend to stay for a long time. You might as well! You can scrimp in other areas you can’t change but the size of the house is important. And obviously location. We are happy with our 3 BR + Loft and 2.5 bath home. If we had one kid it would be a bit tight but OK any more and it would be way too small in our opinion, so think about that too. We actually don’t plan on having any kids so we should be ok here for a while. He says it’s a “starter” and technically it is I guess but I really love it and would be happy there for a while.

  • It sounds like you guys are fairly certain that the home you buy will be you live in for many, many years to come, but don’t discount the concept of the starter-home until you start looking. There’s a lot to be said for not getting everything you want right out of the gate! Plus, what you want changes over time and you very well may find yourself wishing you’d gone SMALLER in years to come – that IS the trend in housing, afterall – and find it difficult to sell a larger home.

    Plus, while I know that home size and higher home prices don’t always go hand in hand (there are a lot of adorably small houses selling for a mint in my city!), keep in mind that it costs a lot more money (and takes more time) to maintain a larger home too.

  • Well, I’ve never believed in starter houses. By the time we manage to save a DP, I’d say we’d be close to ready to having kids. And I hate moving. I’d rather get a house that I’m going to stay in for most of my life.

    As for a nice place vs doerupper, all things equal, I’d rather not do the work myself.

    I just want a classic 3-bed with garden, garage and maybe a workshop for T.

  • I’m actually working on a series about first time home buying right now, since we just bought our first place. Closed a couple of weeks ago! I’ll be following to see how things go for you.

  • I say, err on the side of getting most of what you want, whether that’s 5 bedrooms or whatever else–but if you love your neighborhood, do what you can to stay there. Maybe go for 3.5 or 4 bedrooms instead of 5. 🙂 (You could always build on later!) My parents bought a “starter home” in 1972 (VERY small by today’s standards) and they never left. My mom now says if she had known that they would live there forever, she never would have agreed to it! The same goes for the suburb where you currently are loving life. The two of you have such stable careers and high earning potential, I don’t think it will keep you from meeting your financial goals if you have to pay a bit more on a mortgage and you will be happier in the long run being closer to church and the other things you enjoy!

  • Am loving the blog!

    DH and I married in our 30s, so we both had substantial savings and our own homes to sell. Nonetheless, we stuck with our budet in the neighborhood we wanted, and we are still in the house 10 years later. I doubt if we’ll move unless we move to another state. With that in mind, my recommendations are:

    1. Hold firm on your town/neighborhood/zip code requirement. That will probably keep you in the school system you admire and with the infrastructure (police, fire) that you want.
    2. Buy a house with good bones. Look at the layout and the way you can customize it. Pick a lot that you are happy with.
    3. Four bedrooms is probably enough (even if you have four kids). Four bedroom houses are readily available, but five tends to make the price jump. Think about where you would put an office that isn’t a bedroom — in a lower level or in the corner of the family room? And having same-sex kids share a room is OK, even through high school.
    4. Disregard finishes and upgrades if you can get the above. You are young, and you have time and energy. Floors can be replaced, walls can be painted (or knocked out if not load-bearing), appliances will die, counters and faucets will need replaced. You can even add on. You don’t need a house that is move-in-ready in the same way that an older couple with perhaps some physical limitations might. Trade effort for money.
    5. Live in the house like it is the last one you will buy. If it makes you happy to have navy blue carpet or lavender walls, go for it. The days of keeping everything buyer-neutral so you can flip the property at a moment’s notice are gone.

    And, enjoy!

  • Looking forward to reading about your journey toward home ownership! We had the same dilemma, and wound up with a house at the high end of our budget. While we could have found a cheaper home, almost all of them on the lower end of our price range would have required extensive renovations and/or only had two bedrooms. We wanted at least 3 bedrooms and a home we could live in for the rest of our lives, rather than a “starter” house. The one thing I wish we had in this house is all the bedrooms on one floor. But right now, it works out, and we do have the space, even if one bedroom is on the first floor and the other two are on the second.

  • I bought my first house two years ago. I got an amazing deal on a home that i could never afford otherwise, because it was bank owned. Be sure and check out realtytrac if you look for these type of homes. It is more difficult to purchase them because the banks basically do what they want. I signed an escrow contract with them that stated that they could get out of the contract at any time, for any reason. My brother is a commercial real estate broker and he said it was borderline illegal and would never hold up in court.
    But in the end i got what i wanted, and my house is already worth much more than i paid for it. It is definitely worth it to check out REO’s and short sales.

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