New Year's Resolutions

It is almost the New Year, and you know what that means...New Year's Resolutions. My normal resolutions usually comprise of things like workout more, eat healthier, get good grades (I just finished school forever, so this will no longer apply) but this year I have a real goal in mind. That is to buy a house so I have to have a household budget and stick to it.

As Nicki, my fiancé, and I enter the home buying process, we are working hard to save up enough money for our down payment, closing costs, and emergency fund. Unfortunately (or fortunately, I can't decide), we make too much money for any down payment assistance programs, so a strict budget is our only option. But thank god, Nicki is a Type A personality who loves to budget money. She researched budget spreadsheets online and came up with this beauty. We uploaded it to Google drive so we both have a copy.

We entered in our minimum monthly incomes, all of our expenses and devised a strict savings plan to get us on track for having the funds we need. We are also going to use an online money monitoring tool, like learnvest, to track all of our expenses. In order to save the money we need, we are devoting one of my full paychecks a month to savings. In addition, since I work on a salary plus commission basis, any commissions I make are going directly into our savings account.

We are not strangers to living on a budget, as law students we had to work within the realm of our student loans and we always managed. But now, we make more money, and it is very tempting to spend more money. I just keep reminding myself every time I see that shiny new gadget or shirt, or pair of shoes or beer or taxi, that I am saving for a house, and it is going to take some discipline. My plan is to just forget that I have the money. I think maybe if I pretend it doesn't exist, our savings plan will work.

Pinterest is a Home Buyers Best Friend

It has been about two weeks since I got bit by the house buying bug. Since then I've spent a lot of time doing research on the Internet. I've been perusing Zillow and Trulia, looking at home prices in various neighborhoods. I've visited blogs and government websites and company sites researching mortgage products and qualifications. I've spent time googling the phrase "tips for a first time home buyer". But the most fun I have had in my research is looking at renovated spaces (on a budget of course) on Pinterest.

I've come to appreciate Pinterest for what it really is, a home buyer and decorator's best friend. Granted, this is the obvious use of Pinterest, but what I discovered last night is that if you search for the phrase "first time home buyer" in Pinterest, it keys up a bunch of info graphics and on point blog posts that are perfect for someone like me. I was able to find a bunch of information, that google didn't pull up for me. So I've decided to create my own Nesting in New York Pinterest account. I'm pinning designs of my dream rooms and I will pin my blog posts as well. So in the spirit of creating an online community on Pinterest...please follow me and my boards.

I'm Dreaming of a White...Picket Fence

When I think back to growing up in the suburbs, one of my favorite things was running around in my backyard with my dog and playing on my swing set. Now that I've been living in the city for so long, I've begun to forget what having grass right outside your backdoor is like (or what a backdoor is for that matter). As a New Yorker, I've become accustomed to using the term "outdoor space". In NYC real estate outdoor space is usually some small balcony that is all concrete and there is barely enough space for a chair and a plant. But I've discovered this whole new world of backyards with fences right here in New York and as you may know, I'm obsessed. 

Photo Courtesy of rkramer62.

As of late we have been doing a lot of research into towns. We have been considering many factors in our town search. First, we know that we want to be in Westchester, within a 30-40 minute train commute to Grand Central Terminal and a 30 minute commute to Queens by car. This basically limits us to southeastern Westchester. The next important factor for us is affordability. We have a pretty tight budget for Westchester, so we need to focus our search in towns with a more affordable median home price. Areas we are currently considering include New Rochelle, White Plains, and Port Chester. 

Most people in the market for a house in Westchester place a lot of emphasis on school districts. As I would say is probably an important consideration in most of the country. But being a few years away from children, we aren't that concerned with school ratings right now. But we are concerned with the resale value of our house when it comes time to sell. The current thing we are debating include whether we should place a lot of emphasis on the schools in light of the fact that it will be 8-10 years before we have school age children. We are somewhat realistic about home ownership and the volatile "investment" that is real estate, we are not expecting to make a killing from the appreciation, but a modest rise in value would be fantastic. I think in reality, we will be thrilled if we could sell for at least what we paid. 

I know I am way early in trying to do town/neighborhood research since we will probably be saving up money for over a year, but I figured it won't hurt to do a little research now. Who knows, we might move out to one of the towns when our current lease is up and rent something just to get a feel for things. Anyone out there have any suggestions or input? What factors did you consider in your search for the perfect neighborhood?

Up Front Costs are a Killer

When I first thought about buying a house, my thoughts didn't immediately go to how much this was going to cost up front. I mean, I knew I would need the down payment, and that this was going to cost me anywhere from $15-20K minimum, but mostly I was preoccupied, and I still am for that matter, with how much house Nicki and I can afford. I have been on just about every mortgage affordability calculator I can find. Each time I type in our specific parameters and it spits out a number, and then I fiddle with the max debt-to-income ratio, and it spits out a bigger number, that I like a little more.

For those of you who don't know anything about debt-to-income ratios, and the other monthly costs I suggest you do some googling like I did. But to give you a rough overview, the debt-to-income ratio is the amount of money you spend each month on your debt compared with how much money you make pre-tax. When you get a mortgage loan for your house, lenders usually prefer that your monthly housing costs are less than 28-29% of your total pre-tax monthly income and that your total overall debt obligations (car, housing costs, student loans, credit cards etc.) are less than 36% to 41% (FHA allows for a slightly higher debt-to-income ratio than conventional financing). These are the main  numbers that a mortgage affordability calculator is using to compute how much house you can afford.

But one area where the mortgage affordability calculators, and the majority of the internet for that matter, is lacking in information, is how much buying a house truly costs up front at the closing. I'm not going to pretend that I know how much this is going to be either. Apparently, it varies by state, county, city, bank, and price of house. From estimates I've been able to scratch together from the various forums I've been obsessively reading, closing costs in my area are going to range anywhere from $15-25K. If you are an observant reader, you'll notice that this is the same amount of money that I was planning on using as a down payment. Needless to say, I was not a happy camper when I discovered that I will have to save up double that amount of money to pay in fees, taxes, and insurance at the closing.

The other "up front cost" is not really a cost so much as a safety net, but it still involves saving cash to have on hand, this is your emergency fund. According to the internet, smart financial people recommend having at least 6 months living expenses saved up in an emergency savings fund, so that if something goes terribly wrong, (read: you lose your job), you will still be able to pay your mortgage and expenses. Lets see, 6 months of living expenses that's another $30K or so.

 So, to sum this up, if you are looking at about a $350-$400k house in New York like we are, then you'll need at minimum $15k (this assumes an FHA loan down payment amount of 3.5%), add to that the potential $25k in closing costs, and the $30k emergency fund and that totals $70k cash to have on hand to buy a house. I don't know about you, but I'm a little terrified of that number. I have a feeling there is going to be some Ramen noodles in my future. Now let the budgeting begin...

Hello, I'm Obsessed, Don't Judge Me.

I'm 26 years old, in a long-term relationship, and I've recently made the (semi uni-lateral) decision that my fiance and I need to buy a house in the near future. A little background info: Nicki and I have been together since meeting at the University of Florida, 6 years ago. We both grew up in different parts of suburban Florida and we were used to some of the creature comforts like central AC, updated electricity, and 2-car garages. Then we both decided it would be awesome to move to New York City and attend law school. Needless to say, those creature comforts we were used to disappeared. We both traded in our cars and space to spread out for a shoe box apartment and a metrocard in Manhattan. 

The first house Nicki and I looked at in New Rochelle, NY.

Now almost 4 years later, we have a little bit more space living in Astoria, Queens and we bought a car. But we are still renting a 2 bedroom apartment that has only one closet and blows a circuit every time I turn on my hair dryer while the lights in the living room and bedroom are on. Needless to say, I have finally hit the point where I am ready to move out of the city and get back to the cushy suburban lifestyle I was raised on. Luckily, Nicki loves me and however unwilling she is to admit it, loves the suburbs too, so convincing her that we should buy a house outside of the city was much easier than I had imagined. 

Ever since we made the conscious decision to start saving for our down payment, I will admit it, I've become obsessed with the home buying process. I've been researching home prices, mortgage options, specific towns and commute times. I've been doing countless math calculations to discover our optimal price point, and what our down payment would need to be at those various prices. I've been contemplating fixer uppers versus turn key homes, and I jumped six steps ahead in my mind, planning our DIY renovation projects for a house that probably isn't even on the market yet. 

So here it is Christmas night and I have decided that the best way for me to organize my thoughts (read: avoid annoying Nicki so much that she breaks up with me) is to write a blog. I hope that other potential first time home buyers out there will get a kick out of my neurotic obsessions, and maybe I can even provide some useful information in the meantime. And so it begins...this could be a long and bumpy ride, fingers crossed (sorry Nicki, I apologize in advance)