Year 2 of Home Ownership

Owning my first home was a dream come true. We are in year 2 of home ownership and have learned a lot.

–          An older home is exactly that, older. Everything seems to break or I seem to break it somehow. Expect for an item to break every month or so. I started budgeting an extra $100 for home improvements, but in reality this $100 is being used for maintenance. So when you are budgeting for your house, think holistically. Mortgage + property taxes + home insurance + maintenance + renovation budget.

–          15 Year Mortgage vs 30 Year Mortgage – I think one of the best decisions we made was choosing a 15 year mortgage over a 30 year mortgage. Yes, it means our budget is tighter every month because our payment is higher, but it also means we will have our house paid off way faster. Actually as of right now we have 13.5 years left in our mortgage. Sounds way better than 28.5!

–          Less House – Since we chose to go with a 15 YR mortgage, it meant our home budget price was lower than most. If you are going to choose a 30 YR mortgage, you can usually “afford” to buy a more expensive house because your payment for a 30 YR mortgage will be similar to a 15 YR payment, except you will pay an extra 15 years of interest on the house. By buying a more affordable house, our loan was smaller, even though I wish it had even been smaller. I definitely get jealous when I see my coworkers’ new build homes with upgraded finishes, but I take in stride, and figure out how can I implement at my house DIY. If I lose my job, we can keep up with most of the bills with hubby’s paycheck for a couple of months at least.

–          Endless Projects – I guess the fun part is I have an endless list of projects I want to work on around the house. Time and money are always limiters. Well, money is what usually slows me down. I’m still renovating my kitchen one year later because I’m doing it myself on a budget. Additional projects we need to tackle: Redoing flower beds in front yard; laying down pavers in backyard, master bathroom renovation, etc. All of these projects are pricey and I need to save up money as well as figure out how I’ll tackle the projects myself.I, also, have to consider there’s only so much my house is worth. So I can’t invest $20,000 when our house is only worth $150,000. Not that I have $20,000 to invest in the kitchen. I have champagne taste on a beer budget.

–          Home Price Experience – I also learned we most likely over paid slightly for our house. I think we should have negotiated an additional $5000, at least, off purchase price to cover all the work the house needs done. But the market in Dallas was starting to go crazy when bought our house, so we did not feel like we had a lot of leverage. Looking back we should have bought the year before, we would have paid less and our interest rate would have been even lower by half or a full point. But hindsight is 20/20.  The market continues to go up in Dallas, home prices are increasing every day.

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  • The problem with buying a cheaper home is that there is a lot less upside if the housing market goes up and up. I bought and paid off a “starter” home in Las Vegas for 140k. My friend bought his “nicer” home for 250k. Now his home is worth 450k and mine 225k. I like his appreciation better than mine.

    • You’re right. Appreciation is not as high on “starter homes.” We have debates on that all the time. If we had bought a home off $100K more, we would have more appreciation, but we would also have higher mortgage payments and property taxes….I don’t know…

  • I just read an article the other day that Dallas has a higher market rate than the rest of the country. All these companies are moving to DFW and there isn’t a lot of inventory. It’s making it hard to even find a decent starter home without it having multiple offers in a day or two. Your lucky you got yours when you did.

    I think any house, unless completely custom build, will have projects going on. You just get to be extra creative because of your budget. 😉

    • I know. The market is crazy right now. I just have to save up money to work of my projects. Projects are fun. I’m learning a bunch of stuff. Like now I know how to resurface and paint cabinets :)

  • I think the maintenance line is one that a lot of people tend to underestimate. I would say that $4K per year is our estimate for maintenance plus necessary upgrades (windows, siding, roof, doors, and general design upgrades on a once a decade and a half cadence).

    This probably sounds like a lot, but I think its realistic.

  • Great to hear that your first home is proving to be a dream. As you certainly know, they can be a nightmare! Like you, we went with a 15-year mortgage – well, actually refinanced a 30-year mortgage a couple of years ago – and are thrilled that we did. It is certainly the better way to go. Between cutting the number of years paying a mortgage in half and paying a little more each month on principal, we are focused like a laser on getting rid of this debt.
    SavvyJames recently posted…A Richer Understanding: A Comfortable NestMy Profile

    • Hi Savvy James! It’s not a super dream, but it’s nice to not live in an apartment anymore. The projects keep my mind busy. I don’t know yet if we’re going to pay off our mortgage early. Right now we are focusing on building up our cash reserves.

  • Home maintenance is a never ending battle. Pick and choose your battles, and continue to save. Ask yourself does the item being fixed cause more damage and expense if not fixed? Often, you can delay projects. Landscaping is a large one that can often be delayed.

    If you do not get immediate enjoyment from the improvement, delay it. Your money will grow faster that the improvement costs. Also, do it yourself save a ton.
    No Nonsense Landlord recently posted…June – July 2015 Rental Cash FlowMy Profile

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