Saving enough money for a down payment on a house is not an easy task. According to Zillow, the median home price in the US is just shy of $200,000. If you’re planning on putting 20% down to avoid Private Mortgage Insurance (PMI), that means needing to amass $40,000 just for the down payment – plus any closing costs, and then also make sure you have enough saved and for a few of the necessities when moving in (though definitely not everything)
Even if you are able to save $1000 a month toward your down payment, it’ll still likely take several years of intentional saving in order to hit your goal amount. So, when you kick into high gear, every penny matters.
After we moved to Minnesota, we knew that we were going to want to buy a house at some point. It wasn’t necessarily something we had on the immediate horizon, but a big contributor to us moving was the fact that owning a home in Southern California was just too expensive for us to manage in a reasonable area.
I had started saving a bit of money to help with a future down payment, but getting a job offer unexpectedly moved us to Minnesota several years earlier than we had intended on. Still, we planned on renting for a few years before looking to buy.
Then we started looking at what the market was doing, and considering what we wanted out of our future. To us, having a good community of friends nearby was very important to us. Having good neighbors makes everything better. Watching them raise their kids, conning them into dog-sitting and shoveling the driveway, and having some killer backyard barbecues were things Kristin and I wanted in our future.
Home prices in areas that we wanted to live seemed to be quite expensive for what we we’d be getting; and many of the homes listed required a bit of work, if not a significant renovation. When we looked at our budget and what we could realistically afford and feel comfortable with on a house, it started to appear that building may actually be a better option for us than buying.
And, as it turned out, we had some of our best friends – along with several other groups of friends – who all lived in the same new neighborhood, which still had open lots available, and we could afford to build within our budget. It seemed like the perfect opportunity – and it pretty much is.
This looks kind of like a case of keeping up with the Joneses, but when it’s really not a significant deviation from what we were already planning on and what we were already paying in rent, it made it even better.
Building Process and Our Apartment
Once our home is complete I’ll do a more in-depth post about our building process, but needless to say the actual construction of the home is relatively quick – about four months. Unfortunately, the timing on everything sucked. With our wedding in the middle of summer and our lease being up at the start of summer, it was going to be an extremely stressful time to also consider moving into a house at that point.
Thankfully, we convinced the builder to delay the construction until a time that was more reasonable for us with the wedding, but this still had one problem: we’d be forced into a short-term lease, or go month-to-month on the two bedroom apartment we had been renting closer to the city. If we stayed at our apartment – which we both loved – of course the rent would increase.
Faced with these two options, it quickly became clear that financially, we needed to get out of that place. In addition to it costing more than our mortgage would have (!!!) if we went month-to-month, we could save even more money than we’d thought we’d be able to if we lived in a smaller, older apartment for six months.
We both hate moving. Kristin and I have moved many times since we met (3 times individually, 2 times together including one cross-country move) so the prospect of moving into a house that we’d likely stay at for a long, long time was a welcoming change of pace. Unfortunately, it looked like we had one more short-term move to make that happen how we wanted.
The Move Before The Move
We begrudgingly started our apartment hunt, and found a place that let us live comfortably for a short time (despite the horrible kitchen) and save an extra $1000 a month. This was a huge help in making sure we have plenty of breathing room after we move. Over the course of our six month lease, this would save us over $6000 and will put our lease end just after our tentative closing date. The timing on it is pretty near-perfect, and made us much more comfortable in our financial situation.
This was also beneficial since it gave us a little bit more breathing room with celebrating our wedding (more on that later). It’ll undoubtedly be an inexpensive summer after we get back from the wedding, but knowing that we have a little bit of breathing room so we can go out on dates and still be at least a little social without having to skimp on everything will be a nice feeling.
Just earlier this week, in fact, we went to the Minnesota Twins game with two very good friends, where the Twins set a franchise record for number of hits in a single game. It was easily the most exciting baseball game I’ve been to, and if we had not made the decision to move before we moved, it’s one we couldn’t have enjoyed.
It’s true – moving sucks. But the money we saved by doing so made it completely worthwhile. Many young people I have talked to who have moved into houses or are considering doing so are taking a similar route to us: shacking up with Mom and Dad; getting a smaller, less expensive apartment; living out of their car for a month (no joke); etc.
Over the course of the summer I’ll be adding some more tips on how we saved money to help with the down payment for our house. In the meantime…
What extremes have you gone to in order to save money (whether for a house or not)?