As I started writing my last post on whether or not you should buy a home, I thought it would be cool to ask my friends Austin and Jackie to “guest write” about an experience that they’re currently going through of buying their first home. I knew that they are people who have done the right things to successfully position themselves financially to make their first home purchase. I also knew that they are people who have thought through all aspects of buying a home rather than continuing to rent, instead of just buying a home because someone told them it’s what they should do. I don’t want to put too many words in Austin’s and Jackie’s mouths, so here’s what they had to say…
About Us
We are Austin Angel and Jackie Michl, a soon to be married couple. Drew asked us to be guest writers on his blog to discuss our recent home purchase. Go us! Austin is a Financial Planning Associate at Market Street Wealth Management and Jackie is a Business Development Specialist at Bloomington Meadows Hospital. We’ve been together since 2012 and have lived together for 2 years. We currently live in Carmel, Indiana.
We are very fortunate to not have any student loans, we have paid for our two cars in full, and are savvy savers. We sit down together each month and budget using the app EveryDollar. All of these things have allowed us to put ourselves in a good financial position.
It Started With A Goal
We started off the year in 2019 wanting to move to downtown Indianapolis. The decision to move downtown was a lifestyle decision. Carmel is a great place to live, however, we felt that anytime we wanted to enjoy ourselves, we left the area. So, we asked ourselves, “Why are we paying the high cost of renting in Carmel when we aren’t even enjoying it?” On top of this, we found out that our rent would be increasing by 16% after July 2019. All of these factors pushed us to want to move to downtown Indianapolis.
Does Renting Work For Us?
We first created a budget to see how much increased living expenses we could afford without it hurting our savings goal. We initially decided to look into renting downtown instead of buying because of the many reasons Drew has discussed in past blogs. After many apartment tours we realized the rent was comparable to Carmel, but parking downtown is a whole new beast. Parking alone would add roughly $150 per vehicle per month. Both of us need our cars for work, so this would be an additional $300 per month on top of $1,200 in rent for a 1 bed 1 bath apartment.
Does Buying A Home Make Sense?
At this point renting didn’t seem feasible because it would increase our living expenses beyond where we felt comfortable. Our next option: look into home buying! We already had a large amount saved, which included an emergency fund, and enough for a 20% down payment. So technically, we had already conquered the hard part.
We were referred to our realtor, Jon Bell, and after our first meeting felt very comfortable with him. Jon helped us get pre-qualified for a mortgage and now was the fun part of looking at houses. We narrowed down our search to Irvington and Fountain Square. We had heard that Irvington was an up-and-coming neighborhood and we love Fountain Square for its funky aesthetic and feel.
The first house we looked at was only on the market for a couple of hours, and we loved it. The house sold the same night that it was listed, which was very surprising to the both of us and a little intimidating. Boy, the market moves fast. Were we in way over our heads?
We looked at more houses, but nothing compared to the first one. We found that Fountain Square was a little out of our budget for the size of house we were aiming for and Irvington only had a small supply of houses on the market. Austin researched potential areas and happily stumbled upon the Bates-Hendricks neighborhood.
Jon set up five houses for us to see all in Bates-Hendricks and we fell in love with a townhome that was slightly over our budget. We put an offer in below asking price and were countered with a price we were still comfortable with.
Home Buying Process
This is where things got real! Deciding closing date, earnest payment to the title company, mortgage discussion with broker, underwriting process, home appraisal, home inspection, and homeowner’s insurance were all tasks that we accomplished within a ten-day period. That’s enough to give you a headache!
A couple of things we learned through this process are to have your important financial documents organized and readily available for the mortgage underwriting process. Also, you will need excess cash to pay for things such as earnest money, home appraisal, home inspection, and homeowner’s insurance (remember you always get a discount by paying the annual amount up-front). During this stage of the process, it is important to have a good realtor to help you through all of these steps and to keep you calm.
Lifestyle Balance
For us, the decision to move was completely based on the lifestyle we want to live. Yes, our rent increasing by 16% in Carmel would still be cheaper than renting downtown or our mortgage. But is it worth it if we don’t enjoy it? We decided it wasn’t. We knew not to let this move affect our retirement savings and our short-term goals. You have to strike a balance between enjoying yourself today and enjoying yourself tomorrow. Don’t overindulge and don’t over sacrifice.
