I’m pleased to announce that Lloyd and I have set a date! …a date for when we plan to buy our first place!
Before you get too excited, we’ve still got a ways to go, but the point is that we have a plan and a set date (or month) that we will start looking! I’m a little obsessed with planning ahead for events (be it a run or buying a house), so I’m ecstatic that we have a plan in place right now.
As you all know, Lloyd and I are 100% debt-free and have been for quite awhile now. When we became debt-free, we starting socking money away for our first house like crazy. But, we’re not just saving for our first house, we’re also saving for our New Home Expense Fund (NHEF).
House Down Payment
We are planning to buy a house in the $250,000 range. Our true range that we’re looking in is between $200,000 – $300,000.
However, I really don’t want to spend more than $250,000. Where we live, $250,000 can buy you enough house to raise a family of 4 or 5 (which we plan to have … someday). Sure, we could probably get approved for a house much more expensive, but we don’t need that much house.
I am adamant about not buying a house until we have 20% or more of a down payment. With the timeline that we have set up, we should exceed that goal by the time we start looking.
New Home Expense Fund
I can’t stress enough just how important a new home expense fund is – home ownership comes with more expenses than just a monthly rent payment.
For example, a good friend of mine recently bought their first house and was telling me the other day how the air conditioner had just gone out that weekend and cost a cool $5,000 to replace.
Where are you gonna get that money if you don’t have a NHEF? There’s no way I’m financing that $5,000 and getting myself back in debt. It just won’t happen. I broke up with debt a long time ago and I don’t see us rekindling our romance ever again. That ship has sailed.
So, in addition to saving for our down payment, we’re also opening a new online savings account for all the expenses that come with home ownership. But we’re not just saving to maintain our house, the NHEF will also cover other expenses. The NHEF will not only cover maintenance costs, but it will also cover furnishings, decor, and other home equipment (like lawn mowers, tools and all that jazz). We currently have enough furniture to furnish a two-bedroom apartment – not a four bedroom HOUSE – so we’ll need to spend some dough furnishing our new place.
And because home maintenance never ends (one of the perks of renting, people!), neither should the NHEF end. Which means that eventually I’ll just refer to my NHEF as my HEF. Cute, huh?
We Set The Date!
Now that you know what exactly we’ll be saving for, you’re probably wondering when exactly we’re going to start looking for houses, huh? I can officially tell you that we are going to start seriously looking for a house in December 2011.
Why December 2011?
The date mostly revolves around when our lease is up and our savings accounts. Our current lease will end in April 2011, which is just a mere two months before our wedding. We probably wouldn’t be 100% comfortable with moving before our current lease ends, so we’re just going to sign another one-year lease next April which will then end in April 2012. While we’ll probably be more than financially ready to move during the summer of 2011, but we don’t want to break our lease or rush into anything.
So, since we want to move out before our lease ends in April 2012, we’d like to start looking in December 2011. That way, we’ll have plenty of time to look for our dream house without being in too much of a rush. Additionally, it’ll give us that many more months to pad our savings account. If we do happen to find a house before our lease is up, we are okay with paying the rent for a couple months after we’ve moved out. Trust me, it’s much better than paying a cancellation fee! Those things are ridiculous!
So, there you have it: We plan to officially start house-hunting in December 2011. Until then, we’ll be quietly padding our down payment and NHEF accounts in preparation for the big move.
If you are a homeowner, what has been your experience with buying a house? Did you feel like you bought too early or at just the right time? If you’re a renter, why are you waiting to buy a house? Are you saving for both a down payment and a New Home Expense Fund?