Homeownership has been hailed as one of the ultimate signs of achieving financial stability and is a major goal for thousands to work towards. But how did this become the "American Dream?" Well, let's take a short history lesson break to find out. After World War II, consumerism became the name of the game. Before the war, frugality was a way of life for hundred and thousands of Americans. When the unmarried soldiers came back from war, most wanted to have gainful employment, settle down with a mate, and start a family. In order to have a bustling economy, it needed workers to make items for consumers to buy and repeat. After World War II, credit cards exploded and became more natural to use to acquire the items needed to furnish, clothe, and maintain a household. Living with parents became less common and more natural for couples to have their own home for their family.
With the high demand for housing, especially high in certain states/parts of the country, homeownership has become more elusive for individuals who cannot save enough for 10% down payment. There are federal grant programs that help
first-time home buyers reach their goal buy assisting with a portion of the payment needed to qualify.
2017 was the year that my partner and I were going to have it all. At least so we thought. We wanted to move out of the low cost home we were renting into our own home that we would buy to own. We also were planning to get married and have a wedding that we also had to pay out of pocket because my parents had no means or true desire to help financially. This was a lot to chew over. It felt like our eyes were larger than our financial stomachs which seemed to want to devour everything in sight. This period of our life forced us to look at our financial abilities and pick one priority at a time. My partner was so fed up living where we were due to our landlords aka his parents, and I craved more room since the 672 sq. ft place we called "home" was not sufficient for 2 adults and 1 small, very energetic toddler. Outside from the too many priorities and too little time conundrum, I had conflicting feelings of "Is this really the right time?" I really wanted to work on getting out of debt so I felt buying a house would just add on to the debt. My partner knew I had debt but thought it was just normal since he also had debt and was not actively trying to get out from under it. I felt like if we stayed in our modest yet rent-locked home which included utilities for another year to save up then we could feel more comfortable house hunting. Alas, we did not follow that wise advice of staying in our wannabe tiny home.
Even with the sage advice we knew deep down would help us, we stepped out into adulthood to look for our first home. As a couple, we had to come together on a budget. Uhhh A What?! Yes, a budget of how much home we could comfortably afford and not what the bank said we could could borrow for our first dream home. Being approved for a home takes good credit which meant my partner was out of the equation due to very poor credit (below 500). I applied for the home loan solo and was approved for more than I could ever afford on my pre-tax $35,000 dollar salary with student loans. But with that practical understanding, my partner and I agreed to buy a home that either he or I could afford without the other. This meant being real about if one of us was ill, injured, or laid off that we could afford to keep the home, lights on and water going without the other's paycheck for a few months. My partner did not like this idea because buying your first home was so supposed to be glamorous but I was making it down right BORING. Plus our budget meant the home we chose would definitely be a work in progress. After countless homes in low property tax areas (more on that in a later post), my partner convinced me to view a home that was $13,000 dollars over our agreed budget. I saw my partner's vision and knew his abilities in home maintenance/repair and agreed to give the home a chance if the Seller would even deign to take the offer. Serendipitously, the Seller was trying to get out of the home ASAP to fully start a second marriage and chapter of life and took our offer.
And from there we were off into "real" adulthood. We were going to Fixer Upper our new home and start planning our wedding. If only real home remodels were as easy as tv shows. Sigh.
Personal Takeaways
Takeaway 1; Plan within reason
I mentioned before that I really thought staying in our tiny rental for another year was the better option before going into homeownership. I stick by that idea. Why did I not stick to that logic? Well my partner is an all or nothing type. If we didn't go full force into the endeavor then he believed it was never going to happen. Yes, I succumbed to peer pressure and it was not my favorite highlights but I didn't help prove my point by explaining the how to my why. I didn't have a plan on how much we needed to save for said new home even though we didn't need the down payment money. Learn from where I fell short. Regardless of buying a home alone or with a partner, make a plan and timeline to save the amount of money desired for down payment and REPAIRS. Even if you don't need much for the down payment because of being a first time home buyer, you will need money for the unexpected issues that will come up.
Takeaway 2: Know how much you can ACTUALLY Afford
I feel then, and now, that my biggest strength was being prudent and practical about our money situation. Even before I fully understood what the 2008 financial crisis was, I knew that I would be approved for more than what I could afford. My debt was part of my home application but it was not a large factor because my credit score was over 700. My partner was not a co-sign because of bad credit and I didn't need one. If he was able to co-sign, we would have been approved for more money which would not be practical for us since both of our work industries (his-manual labor; mine- nonprofit) were not "stable" or well paying to ensure we had money to afford our mortgage, utilities, and other responsibilities. I am very proud to say that as of 2022, we live in the same home, it 70% renovated to our liking, and we can afford all of our bills including our mortgage on one salary. I made a conscious decision then to live within our means which has helped us live below our means now.
Takeaway 3: Homeownership may not be for All
I will be the first to say that my partner and I did not weigh out the pros and cons for ourselves in deciding to become homeowners. We were able to understand some associated expenses to homeownership but we did not list them all and understand how much it was really going to cost us to live in the home. One expense we had no way of projecting was our electric/gas bill because the supplier/company bases the bill on the previous homeowner. Our realtor was able to find the projections for the bill but it was based on the homeowner so figuring out a base is difficult because each homeowner/residents use the energy differently. If you are going to pursue homeownership take the time to understand all the expenses in learning your affordability.
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