If you’ve been following our journey, you know that my husband and I have started an audacious goal of saving $30,000 this year with the full intention of using these funds for a down payment to buy our first house.
Last year, I asked if it was the right time to buy a house. Ultimately, we decided that even though the media was pushing (relentlessly, I might add) that 2013 was the year to buy a home or else you risked getting priced out again, we simply weren’t ready to take such a dramatic plunge.
There were a variety of reasons leading up to our decision. Mainly, my husband still didn’t have a permanent job, and we were still focused on paying off debt.
Luckily, we accomplished both items by the end of 2013. My husband landed a job as a firefighter and we managed to pay off our debt (all $45,000 of it!).
Now that our circumstances have changed, it’s time to re-evaluate our game plan on buying our first house.
Forbes recently did its prediction piece on the 2014 housing market, by stating that interest rates will inevitably rise (which they have) and turnarounds are happening in a lot of cities faster than expected. This all boils down to the idea that 2014 will be the year the housing market begins to stabilize.
I really, really wish that we would have been prepared financially to buy a home when the market was down. However, we weren’t.
So now we’re going to try and save as much as we possibly can so we can jump into the housing market before we really do get priced out.
Here are the three major things we’ll be focusing on this year in an effort to buy our first house.
Save as much as possible. We’re committed to saving up $30k this year. That may sound like a decent down payment to most people, but in southern California, that won’t even cover 10%. It’s pretty much unheard of in our housing area for any first-time home buyers to purchase their first house with a 20% down payment. And normally, we would do anything in our power to avoid PMI. However, given that we have no other debt, we are okay with taking out a larger loan in order to achieve our dream of buying our first house.
Solidifying our credit. We did everything possible to pay off our debt. This will allow us to have a whole year of debt-freedom that will allow us to save but also make us look like good loan candidates to mortgage companies. We hope that strong credit will make it easier to pass through the stringent mortgage qualifications.
Stable income. I have been stable at my job for the past three years, and my husband just landed a job as a firefighter. On paper, I feel we’ll come across as really great financial candidates thanks to both of our extremely stable jobs.