Holy crap on a stick. As of Monday, Kristin and I are officially homeowners! I’ve wanted to own a home for a long time – I even had an accepted offer on one back in 2013. But when I made the decision to move to California, I came to terms with the fact that home ownership was off the plate for me.
When I got a new job that took me back to Minnesota, we rented for a while. But by the end of last year we’d considered what we wanted our future to look like, and home ownership was in it.
The Beginning Of An Idea
We moved up to Minnesota into a decently nice neighborhood and a nice apartment. It was a 2-bedroom place close to Uptown – an area with great food, art fairs, and right by Lake Calhoun (which is pretty much the bees knees). We could afford our rent, but it was still expensive, at just under 2 grand a month.
It was still easy to save 2 grand a month to help pay for our wedding, and we felt comfortable with our decision. As 2016 wore on, though, we started considering how much we were paying in rent and if there were better options.
But there was more to the equation than just simple numbers. Did we want to stay in Minnesota long-term? Would we be able to afford both a wedding and a house so close together?
Should We Stay Put?
After talking about these questions (and some more), we concluded that we did want to stay in the area. The job market here is pretty great. Weather – aside from the potentially brutal snow-storms – is awesome. Springtime in Minnesota is incredible.
We also love the people here. Some of our closest friends and family live up here, which made the decision to move in the first place a bit easier.
There’s a TON we miss about California – especially the people in our lives – but we both wanted to own a home. In the area we were in, to get some place not in the ghetto…it just wasn’t an option for us.
So, we decided that staying put was what we wanted to do. With that in mind, paying almost $2k on rent every month didn’t seem like the best use of our money.
Our Wishlist – Unrealistic?
In October 2016 we started talking about seriously buying a home. Off to Zillow we went, looking for listings. Being 30 years old and having lived in a ton of different places (9 between the 2 of us within 3 years or something crazy like that), we knew what we wanted.
I wanted a dedicated office at the front of the house. An extra bedroom that could double as one was fine, but having a separate one near the front of the house was ideal. We wanted a few extra bedrooms.
Sure, we knew it’d cost us both in the square footage and utility costs. But it’s important for us to have the room for friends and family to stay when they visit. We knew what it meant to our retirement plans and we feel great about this decision.
We also knew we enjoyed cooking. I wanted to have a nice kitchen – one that I could move around in and not feel cramped.
Our closets needed to be decently sized, and we wanted a master en suite bathroom.
Unfortunately, our wishlist was a bit much for our price point. Nothing on Zillow matched what we wanted, and the idea of spending $350k on a house only to have to put another $100k in renovations into it to make it what we wanted didn’t seem appealing.
So, we got to thinking.
Could We Build?
Some of our good friends had built a home in one of the suburbs, in a newer community. They moved in at the very tail end of 2015, and we’d been over to their house several times. We loved the neighborhood, loved the neighbors, and loved their house.
As luck would have it, the lot next to theirs was still available, and we got to questioning. What would we have to do to build our own dream house? Could we even afford it? I mean, we had a wedding coming up in less than a year.
A few long talks took place. Our math skills were put to the test as we figured out how much we needed for our wedding, a down payment, and closing costs. We did a practice budget – one that made sense – to make sure we had the wiggle room we thought we did.
We needed to figure out, after all of that, when we could move.
And, once we did, the numbers didn’t look good. The builders anticipated a ~6 month turn-around from when we signed the purchase agreement to move-in. There was no way we could swing that starting in November – it’d put us closing in May 2017, just one month before our wedding.
We let the builder know that we would be unable to proceed. The earliest we could conceivably close would be sometime after the wedding – probably August or September, but preferably November or later.
Down But Not Out
And that’s when we got some news we were not expecting. Despite the final month of 2016 rapidly approaching, the builders agreed to a late 2017 timeline.
We crunched the numbers again to make sure we could afford it. Cash on hand was important; being able to afford the monthly payments even moreso. Luckily for us, it all checked out: we agreed to an October/November close, and in early December 2016 signed on the dotted line.
It was a bumpy road from December until we got to pick out all of our finishes. In early February I got laid off. The first thought in my head was “what is going to happen to the house?”
We had freak-out moments. Plenty of sleepless nights, lots of alcohol consumption. There was this general feeling that what was once our dream home would soon be out of reach, maybe forever. It sucked ass. There’s no eloquent way to put it.
I started job hunting immediately after I got laid off, but nothing panned out for a few weeks. Unemployment wouldn’t have kicked in until early March, and at that point it’d be a fraction of what I was bringing home previously.
We thankfully had enough money already saved up to pay for all of our wedding expenses. We felt relatively comfortable about our ability to have cash on hand for closing at the end of 2017. It’d be a stretch, but we could make it work.
The bigger issue, though, was financing. Would we still be approved for a mortgage after suffering a layoff?
Back To Work
Six weeks after being laid off, I landed another job. After my first day, I emailed the loan officer to notify him I’d changed jobs – thankfully for one that paid better, was “more stable”, and was at an established company.
No red flags, everything looked good, and I was bringing in more money to boot.
After an incredibly stressful month, it was time for some fun stuff: our day at the design studio.
When you build a home, your experiences, I’ve found, can vary wildly depending on how you go about it. A friend of mine made his own floor plan, bid out the work to local contractors, chose everything custom himself, and had 100% control over everything.
Other people I’ve talked to had virtually no wiggle-room. They could pick out their floor plan and a few of the details, but everything was largely controlled. There wasn’t much flexibility in their selections, just what was provided by the builder.
Our experience fell somewhere in the middle. The builders also owned the land, and we did everything through them. this actually made it a bit easier – we didn’t have to hassle with a construction loan.
My friend who picked out all of his own stuff? He bought the land separately, then had to sell it to the construction company so he could secure a non-construction mortgage when the construction company sold it back to him.
Our house is part of a community with an HOA so there are rules about silly things like what color your house can be (can’t be the same as your next-door neighbor, or the person kitty-corner from you). Still, we had a good range of options to select from.
Interiors though we had a ton of flexibility. In March we went to the design studio. They’d advised us to block off a half day for picking our finishes (countertops, back splash, floors, faucets, paint…you name it).
Another few hours in the afternoon would be dedicated to the nerdy stuff – all the electrical. Alarm systems, recessed lighting, surround sound speakers, extra outlets, where we wanted our light switches – if it was something powered, we’d figure it out then.
Too Much HGTV
It became obvious about 20 minutes into our time at the design studio that we watch way more HGTV than the average person. The three hours they had planned on us picking out all of our finishes turned into less than 90 minutes.
After hanging out at our friends house so many times, and our hours of lazy Sunday Property Brothers marathons, we knew what we wanted. It was super straight-forward, and we lined up all of our selections so we could see how everything went together.
The electrical session in the afternoon was the same story. Our 90 minute conversation turned into 60. Kristin tackled the lighting, I tackled all the other stuff like surround sound.
Upgrades Aren’t Free
Going into those sessions we knew what our budget was. An upcoming move would save us some more money, too, and that gave us a little bit of wiggle room here.
We agreed that we could swing another $20k with relative ease, but had no idea what to expect for prices. Would we need to avoid some of the nicer upgrades we wanted to keep to our budget?
Nope. We walked out of there spending an extra $17k above our agreed-upon purchase price based on our upgrades – we came in under-budget by nearly 3 grand compared to what we’d expected.
Still, adding money to the purchase price is something that many folks totally overlook. And we weren’t done.
On top of the design selections, we were on the hook for a few things including blinds, gutters, and a washer/dryer.
These things can be budget-busters for home buyers, particularly for new construction where those things almost certainly aren’t included in initial estimates provided to you.
Finally, a few months after we picked out our finishes, the builders broke ground.
Things moved along quickly on the framing.
By the 4th of July they were ready to drywall.
We had a pre-drywall walkthrough. If you’re building a home, this is a great time to take video/pictures so you can see where everything is. Changing things in the future is a lot easier if you know where your duct runs are, and it’s easier to know those quirks with just the studs.
After the 4th of July, everything moved SO. DANG. SLOW. Well, relative to the first part. We’d peek inside through the windows every now and then, and got some good glimpses of the progress they were making.
Three weeks before closing, they were done. Our “punch-list walk-through” was scheduled, and we went through the house with the contractor.
For those unfamiliar with a Punch List, it’s simple: you walk through the house, and point out everything you need changed. Building a home isn’t an incredibly precise art; things get damaged, paint gets chipped (or in our case mirrors), walls get scuffed. Cabinets are hung crooked, appliances aren’t always hooked up.
We walked around with a roll of blue painter’s tape and marked everything that needed to be cleaned, fixed, or replaced. A few weeks later (last Thursday) we had our final walk-through, where we got to make sure everything else was done.
We closed on Monday at 9:00. The whole ordeal took exactly 28 minutes. We signed our life away to the tune of nearly $400k in debt. For a couple who have lived the past several years of our life avoiding debt like the plague, it was honestly a bit unsettling.
Thankfully, the lady who helped us close, Jackie, had said that we had the lowest interest rate she’d seen in a very long time. Our lender emailed us about a week prior to closing stating they were going to luck is in at a rate 3/8% lower than originally quoted. Closing costs were also $3k less than anticipated. Win!!
But we own a home, and our property was appraised quite a bit higher than what we paid for it. We can make pre-payments and still hit our target retirement date.
This is (as of our thinking right now) our forever home. We will create great memories here. Our neighbors kick ass, it’s quiet, and our place is nice. It’s empty, but it’s nice.
Building a home wasn’t without its stress. We could have done things cheaper, we could have bought an existing home. In the end, though, we ended up exactly where we wanted to be.
Would you ever consider building a home?