- Courtesy Ashley Abramson
- I’ve owned two homes in Minnesota; I bought my first in 2012 and my second in 2017.
- When I bought my first house, I was paying $2,200 a month in rent, so I thought a house with a small mortgage would be cheaper – it wasn’t.
- I wish I’d known a few things before becoming a homeowner, including the hidden costs of maintenance and how difficult it can be to find a realtor and lender who work well together.
- Read more personal finance coverage.
My journey with home ownership has been complicated. Since my husband and I got married in 2011, we’ve purchased two homes: one in 2012, and another in 2017.
If we had just stayed in our 2012 home, made money on the sale, and purchased again in 2017, there probably wouldn’t have been any problems. But we took a more roundabout path.
After our son was born in 2014, I quit my office job to stay home and finances were tight. To make ends meet, we rented out our 2012 house and moved into a cheap, old apartment to save money. Not a bad move.
When our second son was born in 2017, though, we upgraded to a fancier apartment downtown. After that lease ended, we were at a crucial crossroads: Would we keep “throwing money away” on rent, move to a smaller, cheaper apartment, or buy? We opted to purchase.
While we don’t have any major regrets about our twists and turns between homes, we definitely could have thought things through more carefully to protect our finances.
Here are a few things I wish someone had told me before we took the leap into home ownership.
Owning a house is expensive
It may seem obvious, but home ownership comes with so many hidden costs – and in some cases, renting could be the smarter financial move.
When we purchased our 2017 home, we were paying $2,200 a month on an apartment in the middle of Minneapolis. Buying a home made sense to us at first, since our house payment would be $400 less than our rent.
But we failed to consider that renting also meant we weren’t paying for home maintenance.
When we bought the house, we also spent money on a lawn mower and other lawn-maintenance tools. Within the first year of purchasing, we paid landscapers, a chimney sweep, and an HVAC contractor to keep up with our house’s issues.
I also wish I had known that a home with more space means buying furniture to fill it. Compared to our tiny two-bedroom apartment, our house felt like a castle, which meant we dropped a good amount of money on furnishing the rooms.
Dipping into your 401(k) for a down payment isn’t worth it
When we hopped into home ownership, we wanted to benefit from cheaper monthly payments. But because we’d been spending so much of our income on rent, we didn’t have much extra to set aside for a down payment.
Unfortunately, we decided to withdraw from my husband’s 401(k) to increase the down payment on our 2017 home so we’d have a lower monthly payment. It wasn’t a great choice. Not only did we basically drain his retirement savings, but we also paid a tax penalty on the withdrawal.
Freelancing can make it hard to buy
My husband and I felt like we were in a stable financial position when we went to get pre-approved for our 2017 mortgage. He was making a decent salary, and I had been growing my freelance business for the past year.
Then we learned from our mortgage officer that for my income to count towards our pre-approval, I had to have two years of 1099s.
I only had one year, so we could only use my husband’s income for our pre-approval – which meant that even though we could technically afford a more expensive home, we were limited to purchasing one that his income would cover. Luckily, next time we buy, I’ll have several years of freelancing under my belt.
Find a mortgage broker/realtor team that works well together
I had no idea how frequently our mortgage officer and real estate agent would be in touch during the pre-approval and search process.
When we bought our first home in 2012, we opted for a mortgage officer a friend had recommended and a realtor another friend suggested. The experience was fine, but the pair had never worked together, so communication was slower.
When we bought our second house in 2017, we let our realtor recommend a loan officer he enjoyed working with. I was impressed by how efficiently the two communicated, and the entire process went smoother than I could have imagined.
You may have to settle on negotiables
Going into the search process, I had far too many non-negotiables for the home itself. I wanted at least three bedrooms and two bathrooms, at least twice the square feet of our apartment, a fenced-in yard, central air, and an updated kitchen. No wonder the results on our MLS were scant.
By opening up our search prospects to include houses with one bathroom, we found a home we wouldn’t have otherwise come across. The house was cheaper than options with multiple bathrooms, so we hope to add a second when we can afford it.
It can pay to expand your search
Having lived in the city for most of my adult years, I was resistant to the prospect of moving to the suburbs. I had just had my second son when we set out to buy our home, and I didn’t want to be “that parent” – the one who buys a minivan and moves out of the city.
Unfortunately, limiting our search to very specific neighborhoods in the city left us with few options we could afford. If we wanted a nicer, bigger home with a yard (and lower property taxes), we realized we’d have to expand our search to at least the first ring of suburbs around our city.
After doing so, we found and made an offer on our house within a few days, and we haven’t regretted it! Sometimes letting go of expectations is the best way to find what you need.
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