We currently rent. I
started this blog to document our journey from renting to home
ownership... well, it was also to serve as a distraction/creative
outlet/fun project. The city that we live in is a very expensive place
to purchase a house. In fact, it is the 2nd most expensive city in the
country so we have our work cut out for us. We are starting with nothing
and hope in about a year to end up in our very own house. The first
step that we took was to talk to a mortgage broker. After telling him
what we wanted to do, he went through our finances with a fine tooth
comb and helped us come up with some goals. Here are the options we were
given:
1. Pay down 15k worth of our debt. We could then get a 0 down mortgage - most likely at the banks posted rate of about 5.2%
2. Pay down 15k worth or our debt and save 20k towards a downpayment. We would still be paying insurance on the mortgage but with a downpayment of that size, we could probably get an interest rate of about 3%.
The different between 5.2% and 3% could save us hundreds of dollars on our mortgage payments each month which would be a great way to ease us into home ownership. There are so many extra expenses that it would be nice to get used to those and stay within a comfortable range in our budget. So, as fun as it would be to get into a house sooner like option 1 offers, we are being responsibly and delaying the gratification just a little bit longer by going with the second option.
Next step was to develop a budget. We need to pay down 15k and save 30k...sounds easy enough! So I sat down and wrote out a very detailed budget... every single penny that comes into us is now accounted for. That means that entertainment and coffee budgets, limited shopping and no impulse purchases! The budget officially kicks in APRIL 1st 2012... we gave ourself a little bit of a break for the rest of March because we had perviously booked a vacation to Bermuda and that will eat up any extra cash this month.
So, after we kick-off the budget in April, I will be tracking everything in our budget sheet that I created and I will be updating this blog with our progress each month. The budget it 10 months long right now and if all goes according to plan, we will begin house hunting in December. I am REALLY excited to document that process when it gets started... but, one step at a time!
Let's enjoy the journey!
1. Pay down 15k worth of our debt. We could then get a 0 down mortgage - most likely at the banks posted rate of about 5.2%
2. Pay down 15k worth or our debt and save 20k towards a downpayment. We would still be paying insurance on the mortgage but with a downpayment of that size, we could probably get an interest rate of about 3%.
The different between 5.2% and 3% could save us hundreds of dollars on our mortgage payments each month which would be a great way to ease us into home ownership. There are so many extra expenses that it would be nice to get used to those and stay within a comfortable range in our budget. So, as fun as it would be to get into a house sooner like option 1 offers, we are being responsibly and delaying the gratification just a little bit longer by going with the second option.
Next step was to develop a budget. We need to pay down 15k and save 30k...sounds easy enough! So I sat down and wrote out a very detailed budget... every single penny that comes into us is now accounted for. That means that entertainment and coffee budgets, limited shopping and no impulse purchases! The budget officially kicks in APRIL 1st 2012... we gave ourself a little bit of a break for the rest of March because we had perviously booked a vacation to Bermuda and that will eat up any extra cash this month.
So, after we kick-off the budget in April, I will be tracking everything in our budget sheet that I created and I will be updating this blog with our progress each month. The budget it 10 months long right now and if all goes according to plan, we will begin house hunting in December. I am REALLY excited to document that process when it gets started... but, one step at a time!
Let's enjoy the journey!
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