If you haven’t picked up on this yet, after we stated earlier in the year we were not in a hurry to buy a house, my wife and I are beginning to ramp up the process for buying a house. Wow is it a complicated, intense, and fast-moving process. We’ve read articles, listened to countless hours of conversations with family/friends, and co-workers, and fallen asleep too many nights to HGTV in our effort to gather as much information as possible. Buying a house is such a major life decision and we are going to take our time with the decision. We are finalizing on our list of things that are the most important to the two of us and it only seemed fitting to whittle our list down to a five.
Before I dive into the listing, I just wanted to take a moment and thank everyone for their great pieces of advice. A few months ago I wrote an article asking everyone for their advice about buying a house and I receive an amazing response from all of you. Again…THANK YOU ALL SO MUCH. Now it is time to dive into our Top 5 factors!
Factor #1: Live Within Walking Distance of Activities, Not Necessarily Shopping – Location, location, location. The #1 piece of advice we have received from everyone is to not sacrifice on location. There are so many things that you can change about a house, but the one thing that you cannot change is the location (Unless you buy a tiny home…then you can move those anywhere!). My wife and I have talked about what we want in a location and if she were sitting next to me, she would be rolling her eyes. When looking for the perfect location, we want to be within walking distances of places that have a lot of activities for a future family. This could be a park, large playground, community center/campus, a beach, or restaurants/shops. One of the nice features about the greater Cleveland area are all of the parks as the city has done an amazing job preserving and promoting green areas throughout the city. Ideally, I would love to live within walking distance of one of the parks or green areas to allow us to capitalize on these spaces. We could easily walk there with our family after dinner, spend all day near the nature center, ride bikes, go for a late night run, or even just a long walk together. Did I mention that all of these activities are free if we select the right area? We pay taxes for a reason and these types of areas/activities are one of the major items that are funded by our tax dollars. So why not put yourself in the position to take advantage of these amazing free resources on a regular basis by selecting the right location?
One of the other things we considered about location was proximity to shopping. We love Target as I’m sure you all know by now and who doesn’t want to be able to walk to the grocery store and carry your groceries home? The more we thought about it, how frequently would we be able to walk to the store and carry all of our goods home? Especially once we have kids. Living near shopping became less important to us once we faced the realization that we are more likely than not going to be driving to and from the stores on a regular basis. Why focus our location decision on this versus living closer to areas that would allow us to walk to activities or other cool locations? On a funny note, my wife is completely taking advantage of the fact that I want to live by parks and is not shy about making fun of me. Too frequently, she sends me amazing houses that she knows are way above the price range with a message like “BUT IT IS CLOSE TO A PARK!” It always gives me a good laugh.
Factor #2: Not A Fixer Upper – I’m not a handy person. There I said it. All jokes aside, this doesn’t stem from the fact that I didn’t inherit my family’s handy jeans but rather this stems from the fact that my wife and I do not want to spend the capital to purchase a home that is going to need a ton of work and updating. We aren’t talking about a house that is flawless or looks like it should be on HGTV, but we want a house that is updated and doesn’t look like it hasn’t been touched since it was built-in the 1960s or 1970s. There is a time and a place for a fixer upper, and that time is not now. In addition, the areas we are looking to buy a home are not exactly the cheapest areas in Cleveland, so if we are going to spend the money, we don’t want to have to spend even more capital to upgrade the amenities. I know some of you are thinking “The cost to updating is built into the price and you should be able to score some deals;” however, even the outdated houses are costing a pretty penny in our area, so there are very few diamonds in the rough out there. Is it a little more expensive….sure. But my wife and I have decided that it is worth the extra cost to buy a house that needs less work now.
Factor #3: Strong School District – Another fun fact about the county we are going to live in…it has some of the highest property taxes in the state. Ask Lanny, he knows all about that and has complained about it on our website several times. The areas we are looking into have property tax rates between 2.5% and 3.2%. Besides for investing in parks and resources for the community, the other major line item in a city’s budget is funding of the schools. Besides for the obvious fact that we want our kids to get the best education possible, if we are going to have to fork over an insane amount of taxes every year, we want to live in one of the best school districts in the area to get the most bang for our tax dollar buck. To me, it does not make sense to pay a lot in taxes and live in a district with sub-par schools where the best education option is to send your kid to private school. Why would you want to essentially pay tuition at two schools? I’m not saying here that private schooling isn’t a great option. There are plenty of intelligent people (my wife and fellow diplomat included) that received private school educations. I would just be more inclined to consider private schooling if we weren’t going to pay a ton in property taxes to fund a public school district regardless of what school our kids attend. Another benefit of a strong school district is that it will help maintain or driving our housing values higher. People want to buy into a strong school district for the same reason I mentioned earlier in the paragraph, helping keep the market active and fueling the seller’s market.
Factor # 4: Put Enough Down to Avoid PMI – Barring some crazy mortgage product, I want to avoid PMI (Private Mortgage Insurance) and put down enough money on my house to avoid doing so. Right now, we have the savings for between 15% and 20% down in our price range, so we should be able to avoid this all together. Besides for finding a house in the perfect location, avoiding PMI was the second most popular response I received from my article asking all of you for advice. With that being said, if we can find the house of our dreams before mortgage rates get out of control, I am going to try to find a bank that offers the smallest down payment to avoid PMI as possible. Then, I can use some of the excess capital to invest in the market or pay down our student loan balance. Maybe then I can finally understand Lanny’s pay down the mortgage or invest dilemma that he is always talking about! But in the end, we don’t think incurring a monthly payment dedicated to insurance is the smartest use of our capital if it can be avoided.
Factor #5: Thinking Beyond the Starter Home – One other piece of advice we received was to think about where we will be 10 years from now. Picture your family and life situation then and see where the house you are purchasing will fit into this picture. If we purchased a starter home, we easily could foresee a situation where our family would outgrow the starter home and we would be hitting the market again for a larger home. So our preference is to purchase a home that could fit our future family that would prevent us from having to move twice within a decade. This may result in a higher mortgage cost, but we are willing to incur it to avoid a potential move and start this process all over again.
Bonus Factor: Must Have a Two Car Garage – This week, I spent an hour and a half digging our cars out of the driveway one day and then twenty minutes scraping what seemed like a sheet of ice off my car another day. Needless to say, I am tired of doing that! While having a two car garage won’t help me with shoveling my driveway, I won’t have to worry about brushing off my car, having to put my windshield wipers up each night so they don’t turn into icicles, or digging my car out of the street after the snow plow pummel my car with snow in an effort to clear the streets. I don’t think having a two car garage is too much to ask for, right??
There are so many factors to consider when buying a house…it was pretty tough to narrow the list down to just six. Surely there are other honorable mentions that I was not able to include in the article. All I know is that if a house checks all of these boxes and fits our price range, my wife and I will be happy for many, many years to come. Buying a house is one of the most exciting times of your life and nothing makes me happier than walking through an open house with my wife trying to picture our family growing up in the house. Buying a house can also be one of the most stressful experiences as well. But understanding your must haves in a house and not sacrificing on the most important factors in your house will help reduce the stress and allow you to make a rationale decision in the heat of the moment (at least we hope).
What are your thoughts on our Top 5 factors? Do you think there should be any other honorable mentions on the list? Are we over-emphasizing one factor? I’m looking forward to reading your comments!