Saving to buy a house?

A house. A home. The American Dream…to own and not rent. To be your own boss in your humble abode. To be able to paint your walls with chalkboard paint, add new cabinets, and throw away that nasty old tub….without having to call maintenance and get permission for, well….anything.

My 2 youngest children are married and are now in the financial position that they can start saving to buy a house. And they are so excited. They are on Zillow every day. Driving around to look at neighborhoods. Deciding whether or not the school system should be considered or not. Determining a budget for their house. Should they get a fixer upper or one that is pretty up to date? So many decisions.

And, of course, the topic of ‘How much money do I need to save to buy a house?‘ has come up many times. Being the ‘wise and wonderful Oz' that I am (haha) they have both talked to me about their thoughts. I listened, offered advice, pointed out the good and bad…and let them come to their own conclusions. With, of course, a few mom nudges now and again.

Maybe you have the same questions…maybe you are wanting to buy a house. So, I thought I would give you something to think about too when you are saving to buy a house?

Let's start with…is it even time for you to be considering buying a house?

Let's lean into the main stream for a minute here – Most people will say ‘You are wasting your money on rent.' Or, ‘Buy a house, you need the equity.' Which are all true statements…but from a financial standpoint you are NOT wasting your money on rent if:

You are living someplace short term and plan on moving in 2-4 years
You do not have your 6-9 months emergency fund established
You are spending more than you earn
Your debt-to-income ratio is out of sync
You do not have a MINIMUM of 10% for a down payment
You do not have money set aside for any type of repairs

Saving to buy a house.

First – Determine your max budget for the house. And DO NOT LOOK at anything outside your max. Because you will always fall in love with the more expensive house – it's human nature. Which then increases your down payment, interest paid and taxes.

And then set aside money for:

A minimum of a 10% downpayment. 20% used to be the norm, but that is difficult to do now with the rising cost of houses.
Closing costs – they can vary depending on your credit rating, loan amount and a multitude of other things. A good round number is $5- $7k
Moving costs
First home? Lawn mower, trimmer, edger….all the usual lawn equipment
Appliances – usually a refrigerator, clothes washer and dryer
Fixing up a few things. Maybe new blinds, painting the walls, refinishing the floors before you move in (always easiest to do when the furniture is not there)
Repair fund – this again will depend on your own financial situation – I would say a minimum of $1000. As you live there, add to it. Get it to about $3000. You can usually repair most things for that amount of money because your homeowners insurance will kick in the rest
Renovations – if you really hate that bathroom, and can't wait a few years to save money to fix it, then make sure you have the money ahead of time. Otherwise you will finance it or put it on a credit card. Which is a no no if you do not want to spend more than you earn.

Yes, it might take you another year for you to save to buy a house. But, in the interest of not getting into debt and being a wise and smart homeowner...a year is a drop in the bucket.

And once you have all the boxes checked in your savings categories, go on and enjoy that house….I can hardly wait to see what houses my kids choose. I think they have me lined up for tile work, painting and wallpaper. I better stock up on Tylenol now! Right?