00:00:00 welcome to Choosing Wealth where we talk everything personal finance money and real estate today we're going to be talking about how to buy your first house or if you haven't bought a house in a while just a refresher course on what it's like to buy a house we're real estate investors we bought seven houses over the last couple of years including we bought four last year so we bought a few houses just recently and uh so we we thought it'd be good to have some tips and tricks you know if it's if it's your

00:00:24 first house maybe you'll find something useful to avoid some of the mistakes that we made when we bought our first house and our second house and the third house so you know it's good you you learn tips as you go and so if you can avoid some of these mistakes that we've made hopefully we can help you out cuz all the mistakes are financial it's always financial mistakes but we're going to do a little a little bit about the format for this one we're just going to talk about the process just in case you've never bought

00:00:47 a house before we're talking about a little bit just about the steps on buying the actual house and then we're going to talk about some some things that no one else seems to talk about and hopefully you'll be able to take a lot of information and apply it to your life but just in case you're joining with us not on the video version and you're on the audio version this is my wife Rachel and uh she is the design aspect of our real estate investing business and she used to swing a hammer for I did the

00:01:14 first couple of years not anymore but yes I did help uh with construction for our first two properties but now I have a 2-year-old and a four-year-old so I am busy chasing them around yes and one more in seven days any day yeah seven days so a little bit about the process so when you're first buying your first house what you're going to want to do is you want to get pre-approved with a lender to figure out exactly what you can qualify from a mortgage standpoint and this is tough from a personal finance

00:01:44 channel we think that you need to be financially stable in order to buy a house because houses are expensive but your lender will be able to tell you what you'll qualify for right now it's typically about 43% granted I'm not a licensed lender so make sure you go and talk to a licensed lender but it's typically your debt to income is about 43% that's what they'll qualify you for monthly for a mortgage amount what does 43% mean uh so they're going to take your gross income and then 43% of that can go towards all of your debt that's

00:02:12 going to include your mortgage any credit card debt any car debt so things like that so if you want to qualify the for the most mortgage possible pay off your debt but you also should just pay off your debt anyway but yes so that that's what that means but they'll explain more about that that's what they'll talk about but and they'll give you like your monthly number yeah but that's that's of like what can you afford for a mortgage that's going to be not really afford they're going to say afford they're going to give you a

00:02:37 higher number than what you can really afford yeah i I think that they're going to give you a number to get you into a house but I think it's going to be it's going to be higher than I would want to spend just you don't need to take the highest number yeah but essentially they're going to tell you cuz you're like if they say you're approved for $2,000 a month or $3,000 a month that doesn't necessarily mean that's wise but before you start looking for houses they're going to give you a price point

00:02:59 based on your monthly income on what you're allowed to spend or what they'll qualify you for so that way you know like how much house to be looking for you know if you've got to look for houses in the $100,000 range that's what you can afford there's no point in going and walking $250,000 houses right or you know or or if it's you know you're in a neighborhood like anywhere else but in Western New York where the houses are 300 grand and you know that's what you qualify for but houses are 500 grand

00:03:23 there's no point in walking those 500 grand houses because you're not going to be able to buy it anyway realtor's not going to want to show you you're going to be wasting their time and you're going to be wasting your own time um so first step get preapproved second step is find a realtor and this is tougher than you would assume it's a lot harder than you would think like I think it's really worthwhile reading reviews online of people for our first house when we sold it the realer ended up being not

00:03:47 the realer of our dreams and you know that was that was hard it's so for for that realtor specifically she spent more time negotiating with us and not enough time negotiating with the other parties she was trying to convince us of things because we were young she was trying to convince us of things that we didn't want to do essentially and a deal that was not or terms that were not favorable for us but they were favorable for her because it would push the deal through so I think that that's something that's

00:04:16 important to look out for is the realtor that ever says "Oh I'm in it for the win-win." That is a huge red flag for me i will never work with anybody that says "I'm in it for the win-win." No no no no no like when they say "We want them to win and we want you to win." Like "We want the people selling you selling you their house to win and we want you buying their house to win." Well they work for you so your realer should be getting you the best deal on the house they should be getting you the best

00:04:43 number and you know whatever extra things you're asking for whether it's appliances or you want to have something fixed or whatever that is before you actually get the house they should be negotiating that on your behalf and working for you yeah yeah i think realtors cuz you pay the you are paying them hey uh the video version you can see Kevin our dog just sat up he's usually asleep with the kids by now but uh party animal tonight yeah he wanted to join us he's past his bedtime it's 9 9:45 now so he's awful tired so yeah so

00:05:17 get pre-approved find a realtor make sure you do your homework and then Oh hi Bud and then third is start looking for houses find a house this part is fun it can be fun to go look at houses and you know walk through houses i think you need to figure out what you really need in a house what are your deal breakers whether that might be how renovated it is or maybe it's how many bedrooms you need or a garage or whatever that is you know figure that out ahead of time and then have fun looking so step so far get

00:05:48 pre-approved find a realtor start finding a house when you find that house place an offer on it so try to get an inspection if you can i know it's it's difficult in some places still even postco but definitely if you can do it I would uh but keep in mind that's not free to you you got to cost that's going to cost you some money $3 to $500 depending on where you are so just plan for that but keep in mind if you don't have an extra $300 to $500 like if if that expense pops up and you're like "Oh I don't have an extra

00:06:15 $300 to $500." I don't know if you should be buying a house yeah i don't know if you can afford it because we're going to soon talk about unexpected costs that come up yeah cuz houses are really expensive and uh houses are great they're a great investment but you need to be able to afford it yeah exactly then the next thing would be closing and how long it takes and that one's pretty straightforward that was just going to be stated in your contract typically if you're closing in cash about 4 weeks

00:06:39 sometimes a little bit less i guess this just depends on the state we're talking specifically in New York cuz I know if you're in a title state a title company state it's uh it's a little bit quicker usually but there's a lot of red tape in New York because we're an attorney state so 6 week 8 weeks it really just depends on the title search and uh how quick you can close the loan but that'll be stated in your contract that one I would say is it's self-explanatory but just know that you know you're 6 8 weeks out even after

00:07:04 yeah and be aware of that like if you're in an apartment you need to be thinking about okay like when does my lease end what's the penalty if I leave you know early if you know will they agree to once they find a tendant to cut me like the last few months so like those are the really good things to think about ahead of time because you know that's really expensive if you're paying your first couple mortgage payments and you're also paying for your the house that you're renting or apartment you're

00:07:31 renting and also like North Carolina was or it's a state where it's we're going to close on this day at this time and you close on this day at that time but New York is like we're going to close generally around this date so it could be sooner it could be later like I like one of the houses that we sold this year they were ready to close two weeks before like it was it was a a four or five week close and they were ready to close in two weeks and we're like "Oh my gosh this is the quickest ever." Yeah it

00:07:57 was great uh but yeah so keep in mind that it might be you know if your lease ends that day and you're expected to be closed on that day you need to figure out what kind of state you're in because it could be like oh it could be a couple of days more or a couple you know so this is what you can talk to your realer about yeah that is that is something they should be able to tell you because you know just be upfront with them hey I'm moving out of apartment and also if you have an attorney be like "Hey I'm

00:08:20 moving out of an apartment i got to be out this day we need to make sure that we close this day." And you know I guess if they're aware about it aware of it then they might be able to push it through and make sure that it happens but these are all things that you know the whole process is super overwhelming and and your realtor is going to help ride this process exactly i mean this that's kind of the reason that you buy they're the realtor you know they're the person that's going to filter all these

00:08:44 questions and they're going to have attorneys and stuff that work with them so you can just ask all these questions to your realtor and they'll help filter through all this stuff so the next thing is to know about fees and these fees are going to be collected when you buy the house so upfront yeah so again if you aren't financially stable this is where become buying a house maybe not the greatest idea but so there's going to be normally what you put down for your mortgage your 3% 5% 10% 20% whatever it

00:09:12 is so that's not the only cost that's going to be there you're also going to have to pay taxes up front insurance and uh what else is there there's I mean there's closing costs there's transfer tax um there's attorney fees there's a bunch of fees i mean in New York we're typically spending about $5,000 just in fees and a lot of that's taxes and this isn't something like you pay later like you bring this with you so like they'll collect in your in your insurance or excuse me in your mortgage for your

00:09:39 taxes and your insurance but they they they expect those to be preloaded like they collect in advance for your insurance and taxes coming up for next year they're not like "Oh yeah we're just going to front you the money for your taxes and your insurance and then you're going to pay that back." No no you'll have paid into that before and that's what they pay with so you have to frontload it up front obviously that's what frontloading means so just something to be aware of because if you're not prepared for the $300

00:10:08 inspection the the the down payment that you know if you're barely scraping to get a 5% down payment like say you're getting an FHA loan and then you've got to pay all these closing costs well that that adds up yeah it adds up fast and that's another reason why when they're talking about the houses that you can afford you know like based on like your monthly income it's better to you know try to spend less on a house I personally think than hit like the very top of your budget because then when you

00:10:38 have these you know closing fees come in or we're going to talk about in a second other things that come with owning a home you know you're not already just like barely able to to afford that house yeah exactly you don't want it to be a point of stress and so we buy really cheap houses to live in because we don't want the stress of like we just max out our budget our first house costs like 80 something,0005 $75,000 the c house we live in now cost how much 52 52 so I I knew it was so you know we like to spend not much but then

00:11:14 when all these things come up it's not a big deal okay so now you finally closed on the house so let's talk about extra costs extra cost would be so let's say theoretically you're moving you're coming from an apartment okay well there's lawn maintenance at the apartment so now as a homeowner you got to mow your own lawn or you got to pay somebody else to mow your own lawn but that's really expensive so you got to buy a even if you buy a push mower nowadays they're 300 bucks 400 bucks they're crazy expensive you can't It's

00:11:38 not like back in the day when you get like a $99 barebone you know unbranded like it wasn't even a Craftsman they just had like a Briggs and Stratton engine it was just like a black deck that had just an engine our first mower was like 300 bucks and it didn't even have self-propel it was a nice one it was It had a bagger it was not nice it was not nice at all because my husband's allergic to um fresh cut grass which now he just wears a helper filter mask and looks like a zombie when he mows our lawn and there's toddlers

00:12:08 riding on our mower with him but before I pushed it yeah well and it was not self-propelled my allergies are better when it comes to mowing and overall being outside okay when you're behind a push not the allergy podcast when you're behind a mower you're getting a lot of dust and a lot of like cut grass clippings everything you know what I'm talking about but when you're on a zero turn you are going so fast you're moving at the speed of light and everything's discharging out the side and you're

00:12:37 already gone by the time good i'll never mow again i'm so quite Exactly so now now we have a zero turn and so now I mow because we have a zero well because I not only mow a house I also will mow the flip houses so like I got to mow a lot of yards yes and so and also rentals yeah so it makes sense to have a zeroturn so now we have a zero turn another cost would be dryer sometimes you know you luck out and you buy a property with a washer and dryer and sometimes they don't have one if you put an offer in on a house and you notice it

00:13:04 doesn't have that you know figure that out how much does that cost or even if it has a washer and dryer let's say theoretically it's old or it's like in a mana or something that's probably not going to last you're going to have to replace that so you need to really budget that in because it's not like you know in an apartment community or places you know like those big apartment buildings they're going to have laundry or they're going to be in places that have laundry mats close but when you buy

00:13:25 a house that's not necessarily the case there might not be laundry mats that are accessible that you know without having to drive a decent amount yes and so this would come into you know before buying a house really having an emergency fund having some money set aside for things like this like your washer and dryer going exactly so it's not So this whole theme of this podcast of buying a house is not is essentially that buying a house is more expensive than you're going to realize not that we're trying

00:13:53 to discourage anyone from buying a house but no we love buying houses it's just expensive home ownership is expensive like everything's expensive and so the next thing that you're going to have to spend money on is trash cuz no one thinks about trash cuz you're like trash is literally the last thing on your mind and then all of a sudden you're like oh wow the trash is piling up i need trash and it's 50 bucks a month it depends there's some cities that have trash included but we pay 50 bucks a month for

00:14:18 trash and I'm like okay well that's cuz our trash and our recycle yeah okay well that's 50 bucks a month that I don't have because you know if you're moving from an apartment you're already going to have internet like most people pay for internet so that you're already thinking I'm just going to transfer my service okay okay well that 60 bucks or 80 bucks that you you know are already used to paying but trash is something that's free you just take your trash out of the can yeah so now you're paying for

00:14:39 it another thing is just like pest control so you know if you're going to buy a house that's been lived in recently this shouldn't be that big big of a deal but if you're buying a house that sat for a while our first house sat for a couple years before we bought it actually this house too sat for a while and so you know you need you're going to need to buy the ant spray the bug bombs hopefully you're not buying the houses we have that you know might have a squirrel or two living in it or whatever

00:15:07 but you will have to buy you know mouse traps you know whatever just be aware of what you're buying and if you're going to pay for services or do it yourself but in your inspection hopefully they catch any kind of like insect but it's going to be something it's you're always going to have something and again it's just something you're gonna And if you pay a company to come out and do it it's going to be crazy expensive like to have anybody come out and do it you're spending at least 150 bucks so I mean

00:15:33 you can just go to Home Depot but you know you know that's just 50 bucks it's like good to know okay i might have to buy some like pest control stuff the last thing is moving costs so you know you've got to pay for the U-Haul uh or you know maybe you have friends with pickup trucks that can you know we didn't have very much stuff when we moved into our first apartment uh we only own one piece of furniture then so we did not need uh you know we didn't need a U-Haul um but when we left that apartment we did so U-Haul the boxes the

00:16:03 tape you're hiring movers hopefully friends with pizza and beer or pop you know if you're over 30 if you're over let's say 35 if you're over 35 just hire movers because if anybody over 35 we're almost 35 ask Yeah I know if people if someone comes and asks me hey can you help me move i'm like "No you just helped someone move." He says this but then he goes and does these things cuz he's a nice man oh I did our whole family went i I'm only 32 so I still got a couple of years but in general still have some testosterone

00:16:33 but in general I I would plan for a mover cuz I'm moving terrible it's so terrible terrible i would really hope that when we move next I would hire movers i think the chances are really really close to zero that that actually happens but in an ideal world that would be really cool if they packed everything if they didn't pack everything I'm like well that's the hard part carrying it down the stairs is not the hard part we have great friends though but anyway moving and talking about moving costs just making sure you

00:17:00 can afford the transportation that you need the boxes and all of that stuff and pricing that out ahead of time I think is important so the last and most important tip when buying a house is that your neighborhood matters if you don't feel comfortable getting out of your car when it's night time and walking into your house that might be a house that you're potentially looking at that you might want to reconsider or if you're a man and you feel comfortable how does your wife feel how how do you feel about your wife walking into that

00:17:28 house at night like if you're not home if you're on a trip or a business trip or whatever just something to think about yeah our first house that we bought so you know to the left was a neighborhood that had a lot of crime we were in the middle our neighborhood was like the middle neighborhood and then to the right was like really affluent uh neighborhoods and I remember like my husband would go on trips and things and I was worried I was really nervous that night and by the time we sold the house

00:17:56 I'm really glad we sold it when we did the neighborhood kind of did go under it just had a lot more crime than it did and it was really great that we sold we had a 9month old daughter at the time um by the time we when we when we moved there we had no kids left with a 9month-old and so I was really glad that we left that neighborhood but I think now that we have like a family and young kids I just think that once again it's like it's okay to save a little bit longer for a house if you can get something that's safe for your family

00:18:26 and you know what you might have to fix it up and it might be a hard conversation you have to have in your family like you might not be able to afford a house in a decent neighborhood that's all renovated you might have to you know go to Home Depot buy a drill go on YouTube like we did we could not afford our first house we could not afford anything but that and we had to do all the work ourselves we didn't even have the intention of like flipping it we just like wanted to live in a nice house but we had to build that house and

00:18:56 the house that we live in now it was what we could afford and our biggest what mattered the most to us was that this neighborhood we live in is super safe it's extremely safe and we have wonderful neighbors but we couldn't afford to live here so we had to buy the house with the flooded basement in the black mold thanks so much for joining us today um we had so much fun talking to you about things we wish we would have known when we bought our first house and just different costs that you don't think about ahead of time and we hope

00:19:26 that you didn't just find this to be discouraging but really just encouraging you to think through your finances and dream and dream about what house you can afford start budgeting like in our previous episode we talk about budgeting and you know how can you budget so that you can afford uh to live in your dream home cuz you want your dream home to be a dream you don't want it to think it's going to be a dream and then it turns into a nightmare that you're stuck in because you can't afford it exactly and

00:19:51 so we cannot wait to talk to you soon about more things about finances thanks so much for tuning in hopefully you enjoyed it check back next week for our next episode