How Much Money Do You Need to Buy a House?

A blue and white house sits on a green lawn, surrounded by trees.

According to the U.S. Census Bureau, the median sales price of new homes in May 2020 was around $317,000. Even if you’re purchasing a home that falls well below that average, chances are it’s one of the most expensive things you’ll ever buy. With such a big expense, you might be wondering—how much do you need to save for a house?

The good news? You don’t have to save for the entire purchase price. But the amount you might need on hand to buy a home can be significant. Get some idea of how much money you might need to buy a house below.

How Much Should You Save for a House Down Payment?

It all depends on the price of the home you want to buy and what type of loan program you qualify for. Down payments are usually a percentage of the home cost.

You might have heard that you need 20% down to buy a home. That’s actually not entirely true. Although the Consumer Financial Protection Bureau makes a case for the benefits of 20% down, it also notes that this number doesn’t work for everyone.

So, where does the 20% figure come from? It’s part of the guidelines set by Fannie Mae and Freddie Mac, government sponsored, mortgage guarantee companies. You either have to pay 20% down or pay private mortgage insurance, because analysis indicates that loans without 20% down are riskier for the lenders.

Here’s a look at some common mortgage options and how much you might need to have for a down payment:

  • The CFPB notes that conventional loans with PMI can require 5 to 15% down on average. If the home price is $300,000, that’s $15,000 to $45,000.
  • Loans through the Federal Housing Administration require down payments of at least 3.5%. That’s $10,500 on a $300,000 home.
  • Some loan programs, such as those for rural borrowers through the USDA, or those who qualify for loans through the VA, don’t require a down payment at all.

Other Expenses to Save for

Down payments aren’t the only thing you need to save for when buying a home. Closing costs can be thousands of dollars, and you may need to foot the bill for inspections, home repairs or even fun things, like new furniture. To make the home-buying process less stressful, it’s a good idea to save more than you expect to need for closing costs.

How Long Will It Take to Save for a House?

Saving 20% of your income could catapult you into purchasing a home in the next one to three years, depending on your market. For example, if you’re earning $96,000 per year, that’s $19,200 saved after one year. It’s $38,400 after two years and $57,600 after three. Even if you need 20% down, these amounts are roughly enough to help you buy homes worth between $100,000 and $300,000 within three years.

How Much of Your Savings Should You Spend on a House?

It’s tempting to empty out your savings or cash in your 401(k) to buy your dream home. Even if the house is just your first step into home ownership and isn’t perfect, it’s tempting to do what it takes to get those keys.

But spending 100% of your savings leaves no safety net if something happens. What if something breaks in your new home or there’s a medical emergency? Having some savings on hand to cover these issues helps protect your home, because you’re more likely to be able to continue to pay the mortgage.

Planning to Purchase a Home

If you’re planning on buying a home in the future, it’s important to start saving today. Every little bit you can do to save for a home helps make it happen.

If you want to buy a home for around $300,000 and you can’t qualify for a loan program that requires no down payment, you’ll need at least $10,500 to $15,000. You’ll also need closing costs and other fees, which typically run between 2 and 5% of the purchase price. Assuming $10,000 in closing costs, you need $25,000 minimum to position yourself for home ownership.

A Short-Term Plan

If you’re looking to buy a home within the next year or two, you’d need to save $12,500 to $25,000 a year. Saving 20% of your income can help you save the bulk of that in one or two years if you make more than $50,000 annually. To do that, though, you’ll need to set an aggressive personal budget and be willing to cut out some extras, such as cable or eating out.

A Long-Term Plan

By starting your journey to home ownership as early as possible, you can stretch your plan to five years or more. If you save over the course of five years, that’s only $5,000 a year. That’s $416 a month or just under $100 a week. You really could save for a house this way simply by cutting out a few expensive coffees, pizza nights, dinners, etc.

Start Saving Today

How much should you save before you try to buy a home? It depends on so many factors that there’s not a one-size-fits-all answer. So, do your research early, make a plan and stick with it. And, as you get close to being ready to buy a home, don’t forget to shop around to find the best mortgage rates. Because those mortgage rates, along with your home price, determine how much you’ll pay for your home.

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8 Ways to Save Money on Date Night

Whether you’re cozying up on the couch together with a bottle of wine or headed out to the trendy restaurant everyone’s talking about, date night is an essential part of most relationships.

“Date nights are important because they give new couples a chance to get to know each other and established couples a chance to have fun or blow off some steam after a rough week,” says Holly Shaftel, a relationship expert and certified dating coach. “Penciling in a regular date can ensure that you make time for each other when your jobs and other aspects of your life might keep you busy.”

Finding ways to spend less on date night can be easy if you're willing to be creative.

There’s just one small snag. Or, maybe it’s a big one. Date nights can get expensive. According to financial news website 24/7 Wall St., the cost of an average date consisting of two dinners, a bottle of wine and two movie tickets is about $102.

When you’re focused on improving your finances as a couple, finding ways to spend less on date night is a no-brainer. But you may be wondering: How can we save money on date night and still get that much-needed break from the daily grind?

There are plenty of ways to save money on date night by bringing just a little creativity into the mix. Here are eight suggestions to try:

1. Share common interests on the cheap

When Shaftel and her boyfriend were in the early stages of their relationship, they learned they were both active in sports. They were able to plan their date nights around low-cost (and sometimes free) sports activities, like hitting the driving range or playing tennis at their local park.

One way to save money on date night is to explore outdoor activities.

If you’re trying to find ways to spend less on date night, you can plan your own free or low-cost date nights around your and your partner’s shared interests. If you’re both avid readers, for example, even a simple afternoon browsing your local library’s shelves or a cool independent bookstore can make for a memorable time. If you’re both adventurous, check into your local sporting goods stores for organized hikes, stargazing outings or mountaineering workshops. They often post a schedule of events that are free, low-cost or discounted for members.

2. Create a low-budget date night bucket list

Dustyn Ferguson, a personal finance blogger at Dime Will Tell, suggests using the “bucket list” approach to find the best ways to save money on date night. To gather ideas, make it a game. At your next group gathering, ask guests to write down a fun, low-budget date night idea. The host then gets to read and keep all of the suggestions. When Ferguson and his girlfriend did this at a friend’s party, they submitted camping on the beach, which didn’t cost a dime.

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The cost of an average date consisting of two dinners, a bottle of wine and two movie tickets is about $102.

– Financial news website 24/7 Wall St.

To make your own date night bucket list with the best ways to save money on date night, sit down with your partner and come up with free or cheap activities that you normally wouldn’t think to do. Spur ideas by making it a challenge—for instance, who can come up with the most ideas of dates you can do from the couch? According to the blog Marriage Laboratory, these “couch dates” are no-cost, low-energy things you can do together after a busy week (besides watching TV). A few good ones to get your list started: utilize fun apps (apps for lip sync battles are a real thing), grab a pencil or watercolors for an artistic endeavor or work on a puzzle. If you’re looking for even more ways to spend less on date night, take the question to social media and see what turns up.

3. Alternate paid date nights with free ones

If you’re looking for ways to spend less on date night, don’t focus on cutting costs on every single date. Instead, make half of your dates spending-free. “Go out for a nice dinner one week, and the next, go for a drive and bring a picnic,” says Bethany Palmer, a financial advisor who authors the finance blog The Money Couple, along with her husband Scott.

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4. Have a date—and get stuff done

Getting stuff done around the house or yard may not sound all that romantic, but it can be one of the best ways to save money on date night when you’re trying to be budget-conscious. And, tackling your to-do list—like cleaning out the garage or raking leaves—can be much more enjoyable when you and your partner take it on together.

5. Search for off-the-wall spots

If dinner and a movie is your status quo, mix it up with some new ideas for low-cost ways to save money on date night. That might include fun things to do without spending money, like heading to your local farmer’s market, checking out free festivals or concerts in your area, geocaching—outdoor treasure hunting—around your hometown, heading to a free wine tasting or taking a free DIY class at your neighborhood arts and crafts store.

“Staying creative allows you to remain flexible and not bound to simply doing the same thing over and over,” Ferguson says.

6. Leverage coupons and deals

When researching the best ways to save money on date night, don’t overlook coupon and discount sites, where you can get deals on everything from food, retail and travel. These can be a great resource for finding deep discounts on activities you may not try otherwise. That’s how Palmer and her husband ended up on a date night where they played a game that combined lacrosse and bumper cars.

Turn to coupons and money-saving apps for fun ways to save money on date night.

There are also a ton of apps on the market that can help you find ways to save money on date night. For instance, you can find apps that offer discounts at restaurants, apps that let you purchase movie theater gift cards at a reduced price and apps that help you earn cash rewards when shopping for wine or groceries if you’re planning a date night at home.

7. Join restaurant loyalty programs

If you’re a frugal foodie and have a favorite bar or restaurant where you like to spend date nights, sign up for its rewards program and newsletter as a way to spend less on date night. You could earn points toward free drinks and food through the rewards program and get access to coupons or other discounts through your inbox. Have new restaurants on your bucket list? Sign up for their rewards programs and newsletters, too. If you’re able to score a deal, it might be time to move that date up. Pronto.

8. Make a date night out of budgeting for date night

When the well runs dry, one of the best ways to save money on date night may not be the most exciting—but it is the easiest: Devote one of your dates to a budgeting session and brainstorm ideas. Make sure to set an overall budget for what you want to spend on your dates, either weekly or monthly. Having a number and concrete plan will help you stick to your date night budget.

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“Staying creative allows you to remain flexible and not bound to simply doing the same thing over and over.”

– Dustyn Ferguson, personal finance blogger at Dime Will Tell

Ferguson says he and his girlfriend use two different numbers to create their date night budget: how much disposable income they have left after paying their monthly expenses and the number of date nights they want to have each month.

“You can decide how much money you can spend per date by dividing the total amount you can allocate to dates by the amount of dates you plan to go on,” Ferguson says. You may also decide you want to allot more to special occasions and less to regular get-togethers.

Put your date night savings toward shared goals

Once you’ve put these creative ways to save money on date night into practice, think about what you want to do with the cash you’re saving. Consider putting the money in a special savings account for a joint purpose you both agree on, such as planning a dream vacation, paying down debt or buying a home. Working as a team toward a common objective can get you excited about the future and make these budget-friendly date nights feel even more rewarding.

The post 8 Ways to Save Money on Date Night appeared first on Discover Bank – Banking Topics Blog.


Home Buyer’s Guide: How to Purchase a Property, From Start to Finish [Free Download]

Purchasing a home is both exciting and a major milestone in your life, so you’ll want to be prepared for what to expect to avoid a stressful process. Having an in-depth look at the buyer’s journey can help you make informed and confident decisions.

From finding a real estate agent, negotiating offers to getting your keys on closing day, we’ve outlined all the steps of a home buyer’s journey in our free Buyer’s Guide, which you can download here.

The Buyer’s Guide will cover the buyer’s timeline from meeting an agent to preparing for closing day. We’ve outlined the 8 steps in a home buyer’s journey below.

1. Working With An Agent

Every city is filled with thousands of agents, but not all are equal. We believe it is important to choose an agent that you feel confident with. Before you commit to working with an agent, make sure you have a good understanding of the knowledge and experience they offer. It’s important that you ask your questions before making the decision to work with them.

2. Financing Your Purchase

Before you set a budget and start looking for a home, you’ll have to understand what costs to expect when purchasing a home. Here are some of the major costs involved:

  • Deposits
  • Down payments
  • Mortgage insurance
  • Closing costs

You’ll also want to calculate a rough estimate of the down payment that you will be expected to pay. Depending on the price of your home, your minimum down payment can range from 5% to 20%. If you’re interested in learning more about how to finance your home, you can get our free Financing Your Purchase guide here.

3. Searching For A Home

An important part of searching for a home is understanding how the home will fit with your needs and your lifestyle. You’ll want to consider home ownership as well as different types of properties and features. 

Types of Home Ownership

  • Freehold Ownership
    • You purchase the home and directly own the lot of land it sits on
  • Condominium Ownership
    • For condos, you own specific parts of one building: titled ownership of your unit, along with shared ownership in the condo corporation that owns the common spaces and amenities
  • Co-Op Ownership
    • You own an exact portion of the building as a whole and also have exclusive use of your unit

Types of Properties

  • Detached houses
  • Semi-detached houses
  • Attached houses
  • Condos and apartments
  • Multi-unit

Tip: Depending on your budget and desired location, you may need to be flexible to find a home that meets your needs. By being willing to trade some features for others, you’ll have more options to choose from.

4. Negotiating An Offer

When you are making an offer to purchase a home, the purchase agreement should include the essential components listed below. Your agent can help put together an offer that is compelling, while safeguarding your interests and puts you in a competitive position to secure your new home.

You’ll also have the opportunity to choose the conditions that you’ll want in your offer. Some of these may include a home inspection or a status certificate review.

5. Financial Due Diligence

Whenever you make an offer on a house, you need to provide a deposit to secure the offer. The deposit is in the form of a certified cheque, bank draft, or wire transfer; it’s held in trust by the selling brokerage and is applied towards your down payment if your offer is successful.

There are two types of deposits:

  • Upon acceptance
    • The deposit is provided within 24 hours of the seller choosing your offer
  • Herewith
    • The deposit is provided when the offer is made

6. Property Due Diligence

To firm up a deal or educate yourself more on the state of the property, you’ll likely want to have a home inspection if you’re purchasing a house. If you’re purchasing a condo, then your lawyer will review the building’s status certificate.

Home Inspection

A home inspector will assess elements of the home such as the walls, windows, plumbing, heating and roof to judge the condition of the home. This process is non-invasive and is essential to help provide buyers with a good idea of the home’s current condition and the confidence of putting in an offer. 

Tip: The home inspector will provide a summary of suggested work along with a minimum budget estimate for the repairs needed. 

Status Certificates

If you’re purchasing a condominium, you’ll need to obtain a status certificate from the condo board or management for your lawyer’s review. This document will include valuable information about the condo’s budget, legal issues, reserve fund, maintenance fees and future fees increases – and the lawyer can help identify potential red flags

7. Preparing For Closing

Before the big day, you’ll want to keep a checklist of what to do ahead of time. Some of these include:

  • Review your contract
  • Complete a final walkthrough of the home
  • Purchase home insurance
  • Meet with your lawyer
  • Know how much cash you’ll need
  • Secure cash required for closing

8. Closing Day

Closing Day is when you’ll finally get the keys to your new home! In addition to bringing the cash required for closing, you’ll have to sign a few more documents which will include:

  • Mortgage loan
  • Title transfer
  • Statement of adjustments
  • Tax certificates

For the full details on the home buyer’s journey including examples, advice, pictures and sample calculations, download a copy of our free Buyer’s Guide here.

The post Home Buyer’s Guide: How to Purchase a Property, From Start to Finish [Free Download] appeared first on Zoocasa Blog.


How to Move Out of Your Parents House

How to Move Out of Your Parents House

There’s nothing inherently wrong with living with your parents, other than EVERYTHING! So let’s talk about how to GET OUT!

To be clear, I’m going to discuss moving out and buying a place of your own, not moving out and renting, seeing that the latter is fairly self-explanatory.

The desire to move out might be especially strong right now given that we’re in a pandemic and everyone is home, all of the time.

But don’t just make a home purchase on a whim, really take the time to think it through, especially since home prices aren’t very cheap.

Living with Your Parents Is a Great Launchpad

how to move out

  • Live rent-free and save up money
  • Establish employment history (2+ years is generally good)
  • Pay off other debt like student loans, credit cards, etc.
  • Work on your credit scores and bolster your credit history
  • Study how real estate and mortgages work
  • Determine if and where you want to buy a property

While it might not be cool now or ever, living with your parents is actually a really good time to get your ducks in a row before applying for a mortgage. You may be able to save up some serious dough in the process too.

You generally don’t need rental history to qualify for a mortgage if you’ve been living with your parents, though it can help to pay rent beforehand in terms of avoiding payment shock (going from no monthly payment to a very large one).

It can also be helpful to move out, pay rent, and live on your own a bit to get a better understanding of what it’s like in the real world. And qualifying for a mortgage might be easier if you have documented rental history.

But if you want to go straight from mom and dad’s house to your own house or condo, it’s doable as well.

As I alluded to, it can be a great way to set yourself up for success if you do all the right things while living at home. Let’s talk about some of those right moves.

Establish Your Credit History While at Home

  • Make sure you have 3 open and active tradelines that appear on your credit report
  • This can include credit cards, auto loan/leases, student loans, etc.
  • Should all be open at least 2 years to be beneficial
  • Aim for credit scores of 760+ for best mortgage rates and terms
  • But loan programs are available for much lower credit scores too

One key thing you’ll want to do while living at home is build your credit history. This is very important in terms of qualifying for a mortgage, especially if you don’t have prior rental history.

If you can’t show the loan underwriter you’ve been able to pay rent on time in the past, they’ll at least want to know that you’ve made good on other credit obligations.

This can include credit cards, auto loans/leases, student loans, and so forth. Generally, it’s advised to have at least three of these types of tradelines open and active, with a minimum two-year payment history on each.

For example, if you’ve got two open credit cards and a car lease that have all been open for 24 months or longer, you should be looking good in the credit category.

That’s assuming you’ve been making on-time payments during that entire period. Definitely make sure you’ve got no missed payments!

Note: You don’t need to carry a balance to benefit from these accounts, despite what you might have heard or read. Simply having the accounts open and in good standing is enough.

In fact, if your balances are paid off in full each month, you should have more purchasing power for your eventual mortgage loan. And there’s no need to pay interest to boost your scores.

I’ve already written about credit scores and mortgages, so review that page to learn more if you have additional questions in that department.

Building credit is a somewhat passive activity that happens over time. It’s something you don’t constantly have to worry about as long as you have a few accounts open and in good standing.

But it’s important to get started as early as possible, as it does take time to establish credit history, hence the word “history.”

If you lack rental history and credit history, it’ll just complicate matters when it comes time to apply for a home loan, and it might require you to use a co-signer to get the job done.

Save for a Down Payment While You’re Saving on Rent

  • Consider the down payment needed on the house
  • Cash reserves for future monthly housing payments
  • The closing costs associated with the mortgage
  • The relocation costs once you move out
  • And the costs to furnish your new property

While you’re building your credit in the background, you should be focusing on saving up for a down payment on your new digs.

While there are some no down payment mortgages available, such as VA loans and USDA loans, along with private offerings from credit unions and the like, you should aim to put down at least 3%.

For one, you may not qualify for those zero down programs, and if you’re a first-time home buyer, it can show that you’re adequately prepared for homeownership.

Having more money to put down is also critical in today’s very competitive housing market, with bidding wars all too common. Home sellers won’t be very impressed if you can’t even muster 3% down, and even then, they might pass you by.

When I say 3% down, it’s in reference to the minimum down payment generally required by both Fannie Mae and Freddie Mac to purchase a home.

If you go the FHA loan route, you’ll need a slightly higher 3.5% down payment.

However, it is possible to use gift funds with these loan programs, so technically you could come in with none of your own money and still move out of your parent’s home, assuming someone is willing to help you.

But again, try to strive for better here. Doing the bare minimum isn’t exactly putting your best foot forward. And if you put less down, you’ll wind up with a higher mortgage rate and most likely have to pay mortgage insurance.

It’s also helpful to have money set aside for closing costs (financing a home purchase isn’t without costs) and for reserves. You may need a couple month’s reserves as well to show that you have the ability to make monthly mortgage payments.

While you’re at it, take the time to start running some calculations to determine how much mortgage you can afford based on your income, down payment, and DTI ratio.

Speaking of income, underwriters generally want at least two years of employment history in the same position or line of work.

So if you just got a job last week, that might not be sufficient unless you’re a doctor, dentist, lawyer, or in a similar field that required a lot of training and guaranteed money after the fact.

This is why it might be good to live with your parents while establishing employment history, especially if you don’t have much saved up just yet and don’t want to blow it all on rent.

Run the numbers through a basic mortgage payment calculator to see what a given loan amount will set you back at a certain interest rate, and also consider using a mortgage affordability calculator to really dig in.

Start Familiarizing Yourself with Mortgage & Real Estate

  • Visit websites like mine and others like it to educate yourself
  • Learn the real estate and mortgage lingo
  • Scour listings on Zillow, Redfin, and similar websites/apps
  • Go to open houses to get a better feel for properties in person
  • Formulate your own opinions before speaking to interested parties

These days, there are a lot of great resources available to prospective home buyers, all at your fingertips, literally.

Aside from mortgage qualification, which is very important, it’s vital to get a better understanding of how real estate works, the various types of real estate available to you, how to buy a home, and who to use along the way.

Start scouring individual listings in areas you’re interested in just to get a feel for pricing. Fire up the Redfin and Zillow apps and start creating saved searches and alerts to see what pops up over time.

Then track the listings you care about to see how they turn out. You can see what they were originally listed for and what they eventually sold for, assuming they actually sold.

You can even go to open houses if one is being held (without a real estate agent) and check out the properties to get a really good feel for them.

While you’re there, do not feel obligated to leave your information with the listing agent working the open house. It’s okay to be a lookie loo for now.

There are a lot of so-called disruptors like iBuyers out there trying to change the classic real estate agent model, but it’s still quite likely you’ll use a real estate agent.

Before you even speak to one, it might be advisable to learn on your own and form your own opinions, so someone else doesn’t make them for you.

Check out what the houses, condos and townhomes are like at certain price points in your desired locales. See what features matter to you, and how much square footage you might require.

You can also see design trends and visualize your ideal living space in the process.

The same goes for home loans – at a minimum, learn how mortgages work, where you can get one, and how they differ from other types of loans you might be more familiar with.

For extra credit, take the time to understand how mortgage rates are determined and why.

You could be making mortgage payments for 360 months if you go with a 30-year fixed, so shopping around to get a lower interest rate can really pay dividends.

What Type of Property Do You Want?

  • Do you want a condo, townhouse, or a single-family home
  • Do you have pets and plans to start a family?
  • Do you want to live in the city or the suburbs?
  • What amenities are nearby?
  • What about the schools, crime, etc.?
  • Is this an investment or a forever home?

As you conduct your searches and potentially visit properties, you should make a list of what’s important to you and what’s not.

For example, do you want a condo or a house? If you have a dog or other pets, you might want/need more space.

Do you like city living or suburban living? This isn’t always an option if affordability is an issue, as it’s often a requirement to drive until you qualify to find something suitable.

But consider the work commute if you’ve got one, and really study the area you’re interested in moving to.

Go during the day, go at night, go during the week and on weekends. Get a really good feel for the city in question, and even the street or pocket the properties are located in.

Check out the walkscore and the amenities nearby. Really try to visualize yourself living in a certain area, and not just for a year or two. For several years.

Also consider your goals for the property. Are you buying it as an investment, as a forever home, or have you not even thought that far ahead?

You should have a fairly clear picture in your head of what you want to achieve with the home purchase. If you don’t, maybe take an extra moment to think it all through.

[When to start looking for a home to buy.]

Buying Real Estate Is a Commitment

  • Prepare to stay in the property for at least 5 years
  • Be sure you can afford to make housing payments for the long-haul
  • This usually requires a good, stable job
  • Make sure you buy a place in an area you love
  • It might be possible to sell earlier if you change your mind but consider the costs
  • Homeownership is not for everyone!

If you wind up having buyer’s remorse, it might be possible to unload your unwanted home or condo. But you could pay the price, literally, via closing costs on both the buy and sell side.

And it’ll likely be taxing and a lot of work, assuming you aren’t using a service like Homie, Opendoor, or some other iBuyer.

So really take the time to think it through, and try to imagine yourself living in the property for at least five years.

While that might not be a requirement, you should at least consider longer timelines because homeowner tenures tend to be pretty long.

Finally, ask yourself why you even want to buy a place of your own? Because your friends are or because you’ve thought it through and believe homeownership fits your personality and financial path?

It’s probably not for everyone, and while a home purchase is often driven by emotion, it’s important to keep a level head while making this very big financial decision.

After all, you don’t want to be tethered to a certain area if you still want to keep your options open.

This is especially important for younger home buyers, who may still be deciding where it is they want to live, or what type of industry they want to work in.

If you think you’ll move for work anytime soon, it could be smart to pump the brakes on the home purchase and just take a wait and see approach.

Of course, it’s always a good time to educate yourself on homeownership so that when you’re truly ready to take the plunge, you can dive in with confidence.

Oh, and don’t forget to thank your parents for all those years of free rent!

Read more: 11 tips for buying a home in 2021

Don't let today's rates get away.


Why 2 Finance Experts Still Struggled To Buy This House

Why 2 Finance Experts Still Struggled To Buy This House

Think two seasoned certified financial planners would have an easy time buying a house? Tony and Barbara Matheson would beg to differ.

In fall 2019, these empty nesters found themselves itching to downsize from their large rental in the ultraexpensive San Francisco Bay Area. Hoping to buy a reasonably priced house within walking distance of restaurants and other amenities, they set their sights on Sacramento, CA. Armed with a healthy income, solid credit history, and a deep knowledge of personal finances—plus they’d owned property before—they figured they would sail through the home-buying process.

Six months and three lost bidding wars later, they realized that Sacramento’s real estate market was far more cutthroat than they’d imagined.

In March, the Mathesons finally purchased a three-bedroom, one-bathroom 1926 Tudor on a tree-lined street. With the closing papers signed, they figured they were home-free—but COVID-19 was about to throw another curveball into the picture.

Here Tony shares their story, and his hard-won lessons for aspiring first-time home buyers and others who want to learn what buying real estate is really like today.

Tony and Barbara Matheson's new home in Sacramento, CA
Tony and Barbara Matheson’s new home in Sacramento, CA

Tony Matheson

Location: Sacramento, CA
House specs: 1,225 square feet, 3 bedrooms, 3 bathrooms
List price: $550,000
Price paid: $580,000

Why did you decide to move?

We’d been living in the Bay Area and were looking to downsize since both of our kids had moved out. We wanted to be near downtown Sacramento, close to restaurants, bars, museums, and coffee shops.

I’d think home buying would be a breeze for two finance pros. How did it go?

I was really surprised by how tough the market was. After five months touring homes, we made an offer on our first house. This house went into a bidding war; we had to raise our bid five times before tapping out.

Next, we fell in love with a second home. This time, we offered the sellers $30,000 over the asking price. The sellers had so many other bids, they never even bothered to counter our offer.

We found a third home, and once again bid over the asking price. But after five tries, we lost out again. It was heartbreaking.

How awful! Why do you think these homes sold to other buyers?

We came prepared with what most consider strong financials for making an offer on a single-family home: great credit scores, a significant down payment, pre-approval for a mortgage. We offered good earnest money and 15-day escrow, didn’t include an appraisal contingency, and probably had a few other bonuses to the seller that I’ve forgotten. So we were doing everything “right.”

What we were finding is that we were up against some other buyers who were making all-cash offers, sometimes $50,000 above the asking price. How does anyone compete with that?

So how did you finally get an offer accepted?

We were extremely fortunate that we had a great real estate agent who was able to find a home that hadn’t been listed yet. We could negotiate one on one with the seller without having to compete against multiple offers.

The sellers had planned to invest $30,000 to $40,000 on home improvements before putting it on the market. We offered to buy the house as is, without the improvements. After going back and forth a few times, the sellers took our offer.  

What did you like about this house?

We knew within 5 seconds of walking into the house that this was the one. It was the perfect neighborhood. We were close to everything, within walking distance to plenty of bars and restaurants. The outdoor area is gorgeous. Beautiful trees surround our house, and the house is the perfect size for us.

The living room of Tony and Barbara's Sacramento home
The living room of Tony and Barbara’s Sacramento home

Tony Matheson

So once your offer was accepted, what happened next?

The sellers weren’t prepared to move immediately. They needed time to prepare. So we rented the house back to the sellers for a month after closing. We closed on Valentine’s Day, but we didn’t move in until mid-March.

Little did we know what was about to happen.

Tony and Barbara love this window in their Sacramento home.
Tony and Barbara love this window in their Sacramento home.

Tony Matheson

March is when the coronavirus really hit. What was it like moving during that time?

It was difficult and terrifying in the beginning. We moved in ourselves without hiring movers. Then, after we moved in, it was quite an adjustment. Simple things like calling an electrician or completing other minor home projects were enormously difficult.

Did you make any renovations to your home?

We put $10,000 to $12,000 into the house so far. The major issue after moving in was electricity—it needed to be completely reconfigured. For example, the second bedroom, which became my office, only had two plugs. Between my monitors for work, computers, Peloton, cellphones, and other devices, I needed 12 plugs. We also wanted to put in a tankless water heater for more space, and install a security system.  

During the COVID-19 shutdown, Tony and Barbara painted their new home.
During the COVID-19 shutdown, Tony and Barbara painted their new home.

Tony Matheson

How did quarantine affect these repairs?

It was horrible. We couldn’t get anyone to come out to do any work for at least three months. For the first month, no one was booking. Then, when we could finally get through, the businesses were overwhelmed with requests.

Tony and Barbara celebrate finally closing on their dream home in Sacramento.
Tony and Barbara celebrate finally closing on their dream home in Sacramento.

Tony Matheson

What was it like when you finally settled in?

It was exhilarating, exciting, and weird. Exhilarating because we got the house we wanted. Exciting because we were beginning a new phase in our lives. And weird because we moved in at the beginning of the pandemic. We wanted to have a housewarming party, but of course, we couldn’t.

What is your advice for aspiring home buyers?

Even if your finances are completely buttoned up, be prepared that buying a house may be a difficult and even painful process.

Tony and his daughter on game night in their new home
Tony and his daughter on game night in their new home

Tony Matheson

Emotionally it does get hard. As much as you try not to get attached to a house during the negotiation process, you can’t help it. And there is a competitive drive that kicks in when you are in a bidding war with others. It’s draining.

Still, in the end, knowing that you’ve overcome challenges along the way just makes you more appreciative of the reward at the end. We have a place to call home amidst all this craziness. It’s all worth it.

Their parrot Kiwi also enjoys the new home's view.
Their parrot Kiwi also enjoys the new home’s view.

Tony Matheson


How to Prepare For Closing Day [Free Downloadable PDF]

How to Prepare For Closing Day [Free Downloadable PDF]

After you’ve successfully put in an offer for your dream home and set a date for closing, you’ve come to the final steps of your home buying journey. However aside from getting the keys, you’ll want to be prepared for the additional costs, and steps that will be required for a successful home purchase.

The Preparing For Closing Day guide contains information, tips, and more about what to expect on the big day. The guide will also include a checklist of what to prepare and an example of how to calculate the funds needed for closing.

To learn more about how you can best prepare for closing day, get our free buyer’s guide here.

Pre-Closing Day Checklist

To ensure a smooth process for your home transaction, you’ll still have a few steps to go through before you get your keys. Here are 6 steps to check off your list before closing day:

  1. Review your contract
  2. Complete a final walkthrough
  3. Meet with your lawyer
  4. Purchase home insurance
  5. Know how much cash is required at closing
  6. Secure cash required for closing

Cash Required At Closing

Understanding the costs that will be required at closing day is important to know even before you start your home search. Not only will you be prepared for what to expect, but this can help you with budgeting your costs.

Some examples of costs to include in your calculation:

  • Down payment
  • Title insurance
  • Legal fees
  • Land transfer tax

Statement of Adjustments

Another important document is your statement of adjustments, which will display any credits to both the buyer or seller as well as the final amount payable by the buyer on closing day. You can expect the following to be listed in the statement:

  • Purchase price
  • Your deposit
  • Prepaid property taxes, utilities or fuel
  • Prepaid rents 
  • Appraisal fee
  • Land survey fee

For a sample calculation of cash required at closing, download our Preparing For Closing Day guide here.


How Does Love Affect Homebuying?

When buying a home, what’s love got to do with it? As it turns out, more than we thought! Just in time for Valentine’s Day, we surveyed almost 800 people to find out how love shapes their varying attitudes and experiences when buying a home. (Don’t worry, we included singles, too!) Here’s what our survey uncovered:

Shifting Views on Marriage Impact Ideal Time to Buy a Home

For most of our respondents, love is a crucial factor in their desire to buy a home. Almost 72% said their ideal time to buy a home is during a romantic relationship. However, love in itself isn’t their only consideration; the level of romantic commitment also influences their ideal time to buy. 

Interestingly, slightly more people (over 36%) said their ideal time to purchase would be while in a committed — but not legally binding — relationship such as marriage or a civil union, compared to over 35% who said they’d wait to buy until joined together by law. As national marriage rates continue to decline, we may see a growing gap between these two camps.

Rounding out our answers, 21% percent said they would prefer to buy while single. 

love and homebuyinglove and homebuying

Single Homebuyers Also Want Single Living

While taking on roommates is an increasingly popular way for new buyers to finance their homes, there’s not much love for them among many of the prospective single buyers we surveyed. Almost 40% of them said they never want roommates, and just over 30% aren’t planning on having roommates, but are willing to consider them. Only 6% said they’d buy with the intention of having roommates.

It’s worth pointing out that this may not be realistic, with tightened inventories and higher than average prices for starter homes weighing down the market. Some of you single folks might need to embrace the company!

Finances and Personalization are Top Concerns for Single Homebuyers

Our single prospective homebuyers may not feel the love with roommates, but they definitely love stability and freedom. Almost 39% said their top motivation for buying a home is that they believe “it’s fiscally responsible,” while 29% are motivated by a desire to have a space they can transform however they want. This makes sense, as renting often doesn’t afford the chance for tenants to perform high-level customization. Come to think of it, roommates make that more difficult, too….

OK, singles….we hear you!

More “Young” Couples are Comfortable Buying Together than Long-Term Couples

Young love is exciting, exhilarating and full of potential — to buy a home, at least. Of the group who desires to buy with a romantic partner, more people said they’d be comfortable co-buying within only a year of starting their relationship than those together five years or more (17% to 13%, respectively). 

Less surprising was that the majority (over 61%) said they’d be comfortable with co-buying after being in a relationship for 2-4 years. As the simply smarter home experts, we definitely recommend this option!

Over a Quarter of Homebuyers Spend at Least 5 Years Together Before Buying

Two to four years seems to be the magic number for couples to buy a home together. Echoing the sentiments of the future buyers we surveyed, the majority (61%) of those who have purchased with a partner indicated they were in the relationship between 2-4 years before buying together. However, over a quarter (26%) said they waited between 5-10 years, while only 13% said they purchased within the first year of their relationship.

Location is the Most Common Compromise for Homebuying Couples

Of those who have purchased a home with their partner, 39% said location was what they had to compromise to make it work. However, this may not be too negative a story; a previous survey on those who have moved for love found that only 17% didn’t like the location.

Surprisingly, only about 7% of respondents said they had to compromise on the number of bedrooms or bathrooms (are we the only ones who thought this would be higher?), while 16% compromised on the house size. 

Most Couples Feel OK with Compromising for Their Partner

According to a previous study, 1 in every 3 homebuyers is reduced to tears during the homebuying process, and 2 out of 5 feel it’s the most stressful life experience they’ve ever had. Add in the desires of someone you love, and things can get messy really quickly. But, it’s not all doom and gloom! An astounding 96% of respondents said they felt either neutral (54%) or positive (42%) about making compromises. Only 4% said they absolutely hated to compromise. 

Couples, breathe a sigh of relief. Even during the stress of buying a home, it looks like love still conquers all!

Having Kids is a Non-Factor for Many Couples’ Decisions to Buy

As we expected, the majority of respondents (63%) said they’d definitely buy a home if they had kids. What we didn’t expect was that more respondents said kids wouldn’t affect their decision to buy than those who said kids would make them at least consider buying (15% and 6%, respectively). 

More people citing kids as a non-factor in their decision making may point to the millennial struggles to break into the starter home market; in essence, having kids may be a non-factor because, well, many young families sadly can’t afford to enter the market in the first place. 

Do you have a story about love and home buying? 

We’d love to hear it! Scroll down to the comments section and tell us how love has impacted your homebuying journey. is where you connect with real estate professionals to find your forever home the #simplysmarterway ?


Second Home vs. Investment Property: What’s the Difference?

Second Home vs. Investment Property: What’s the Difference?

You hear these terms thrown around all the time: Second home, investment property, vacation home, rental property. But is there any real difference among them? And does it even matter what you call it?

As it turns out, there are some very big differences between second homes and investment properties, especially if you are financing it.

“Both are fantastic ways to build wealth over time by capturing the appreciation of a real asset,” says Tony Julianelle, CEO of Atlas Real Estate in Denver. However, “both come with inherent risks and expenses that should be carefully considered when making a purchase.”

As with any real estate transaction, you’ll want to do your homework and make a smart choice for your wallet, no matter which path you go down. We chatted with experts to get the scoop.

What is a second home?

A second home is just that: a second property where you and your family spend time, away from your primary home. You might also hear a second home referred to as a vacation property. You may rent it out for a few days each year on Airbnb or VRBO, but you primarily use it yourself.

Buying a second home makes financial sense if there’s one particular vacation spot you visit regularly. Why spend a fortune on hotels or Airbnb when you can own your own piece of paradise that will hopefully appreciate in value over time?

“Let’s say you live in San Francisco, but you are an avid skier in the winter and like to hike in the summer,” says Rachel Olsen, a real estate agent in California. “If you spend many weekends and vacations in Lake Tahoe, it may make sense to purchase a second home there.”

What is an investment property?

An investment property, on the other hand, is one that you purchase with the explicit intention of generating income. The investment property could be right next door to your own home, or it could be in another state—it doesn’t really matter. You’ll be playing the role of landlord, with long-term or short-term renters paying cash to stay in the home.

“Never forget that an investment property is all about the Benjamins,” says Lamar Brabham, CEO and founder of financial services firm Noel Taylor Agency. “The entire point is to turn a profit. No emotions, no affection.”

Before making an offer on an investment property, you’ll want to crunch the numbers to make sure it’s a solid investment. Similarly, consider what factors will be important to prospective tenants (e.g., access to public transportation, good schools, parking, and low crime rates).

How to finance a second home or investment property

If you’re paying cash, you can skip this section. But if you need a mortgage for your new property, you should know that financing a second home or investment property is very different from financing a primary residence. And, while mortgages on second homes and investment properties have some similarities, there are also some key differences.

  • Interest rate: You can expect to see a higher interest rate for both second homes or investment properties than for primary homes. Why? Because lenders view those transactions as riskier. If you get into a tight spot with money, you’re far more likely to stop paying the mortgage for your second/investment property than for your primary home.
  • Qualifying: Whether you’re buying a second home or an investment property, you might need to do some extra legwork in order to qualify for that second loan. Your bank may require you to prove that you have healthy cash reserves (so it knows you can afford both mortgages). It’ll take a long, hard look at your overall financial situation, so be sure everything is on the up and up before you apply.
  • Down payment: Depending on your situation and the lender, you might also need to bring a larger down payment to the table for an investment property or second home, typically 15% to 25%. Again, this is because the bank wants a bigger cushion to fall back on in case you default.
  • Rental income: If you’re buying an investment property, your lender might allow you to show that anticipated rental income will help cover the mortgage payments. However, proving how much rental income the home will generate can be complicated. Prepare to pay for a specialized appraisal that takes into account comparable rents in your area.
  • Location: Your lender may require a second home to be 50 to 100 miles away from your primary home. An investment property, however, can be anywhere in comparison to your primary home, even next door.
  • Taxes: Federal income tax rules are different for vacation homes and investment properties. Generally, you’ll treat your second home just as you would your first home when it comes to taxes—if you itemize, you can deduct the mortgage interest you paid up to a certain limit. (The rules vary if you rent out your second home for part of the year.) If you own an investment property, you get to deduct the mortgage interest, plus many of the expenses that come with operating a rental business, but you also have to report your rental income, too.

Why it’s important to not confuse the two

It’s important that you’re totally clear about the difference and not use the terms “second home” and “investment property” interchangeably. Some people try to pass off their investment property as a second home to get more favorable financing, but you should never do this.

If you lie on your loan application, you could be committing mortgage fraud, which is a federal offense.

Your lender’s underwriting team is aware of this possibility, so don’t try to pull the wool over their eyes. They’ll take the big picture into account when deciding what loan terms to offer you, says real estate attorney David Reischer.

“A single-family residence by a lake that is located in a completely different state from the borrower’s primary residence is much more acceptable to be categorized as a second home by a bank underwriter,” he says. “A multifamily-unit property with rental income in an urban area is likely to be treated as an investment property.”

Bottom line: Keep everything aboveboard, and you won’t have to worry about a thing.


A Guide To Everything You Need To Know About Home Ownership Costs [Free Download]

A Guide To Everything You Need To Know About Home Ownership Costs [Free Download]

Along with the excitement of purchasing a new home, comes the additional costs that you will be expected to pay as a homeowner. Apart from covering the mortgage of your home, you’ll have additional expenses – such as home insurance – that you will be expected to cover. If you’re looking to budget for a home purchase, it’s important that you consider these costs as they can add up to thousands of dollars each year.

To help you make educated decisions when budgeting, we’ve compiled a list of the major home ownership costs in one free, downloadable guide. Get the Home Ownership Costs to Consider guide here.

Home Insurance

Home insurance policies help protect against serious damage and destruction, like fires, leaks, floods, or break-ins. It also protects a homeowner from personal liability. Some banks may offer home insurance products, although you can typically purchase a home insurance policy through a home insurance agent or broker. 

Tip: You may get better rates if you use a broker or agent. It’s also important to keep in mind that policies typically renew on an annual basis.

Condo Fees

The cost of maintenance fees should be taken into account when you’re buying a condo. This recurring cost is in addition to your mortgage and impacts how much home you can afford. 

Your mandatory monthly fee will vary by your building and square footage. It typically covers:

  • Utilities (such as water and garbage collection)
  • Building insurance
  • Maintenance of common areas (such as the gym, pool, front desk, hallways, landscaping)
  • Building reserve fund (covers emergencies and long-term maintenance projects such as a new roof or elevators repairs)

What Are Status Certificates?

If you’re looking to purchase a condo, you’ll want to look into obtaining a status certificate so that you have as much information about the building and your unit as possible before buying. A status certificate provides valuable information about the condo corporation and its financial

situation. It includes details on the budget, legal issues, the reserve fund, maintenance fees, and any fee increases expected in the future. 

Tip: You’ll want to carefully review your status certificate with your lawyer before making a purchase.

Property Tax

Property taxes are paid annually by homeowners to their municipality. These taxes are ongoing and are separate from your mortgage. Your annual property tax can often be paid in installments.

Tip: It’s important to remember that this cost is not due at closing, but is a recurring cost.

How Are Property Taxes Calculated?

Your property tax rate will vary depending on the value of your property as assessed by your provincial assessment authority. This is then multiplied by a rate that falls between 0.5% to 2.5%.

How Do You Pay Property Taxes?

You can pay your property taxes either through your mortgage provider or directly to your municipality. 

Your Utility Bills

When you purchase a home, you’ll have to set up or transfer your utility bills to your new home. If you live in a condo, these costs may be included in your monthly maintenance fee. Your utility bill will include:

  • Hydro (electricity)
  • Heat
  • Water and Garbage
  • Internet, Phone, Cable

For the full details on the home buyer’s journey including examples, advice, pictures and sample calculations, download a copy of our free Home Ownership Costs to Consider Guide here.