Buying Our First House—Price & Other Costs

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On Monday, I mentioned that we found our first house. Now, it’s time to dish about the financial side of buying our first house.

Price For Our First House

I’m not really sure whether posting about this is going to end up being a good idea or not; I get a lot of crap for posting our weekly spending already.

Seriously, how many people need to tell me that we should quit smoking or just complain about it in general? Of course we would save a ton of money and improve our health—I would be amazingly stupid if I thought otherwise. I do want to quit, it’s just not that easy. *Okay, my mini-rant is over, back to business*

So I’m crossing my fingers that I’m not going to regret this. 😉

List Price of House: $169,000

Our Offer: $170,000 with closing costs paid by seller (gave them 24 hours to decide)

I was always hoping to get our first house at a steal, you know all the negotiating and saving thousands of dollars, but it’s just not possible at this time in our area. I still feel like it’s a great deal for what we’re getting, where we’re getting it and the overall feel of the house.

Since Mr. Investor (the seller) already flipped our house, there really isn’t anything we “have” to do to move in. Of course, there are a few things we want to do to make it a bit more enjoyable, but if we can’t afford it, it won’t kill us to wait.

I didn’t want to go above $175,000, even though our lender said it would be possible to borrow a lot more. Who wants to get into a house and struggle just to pay the mortgage? Not me.

The seller accepted our offer and agreed to paying our closing costs, so we were pretty happy. It’s funny though, because we don’t know anything about buying a house. We’re still not really sure if this is going to work out right to where it’s ours. Our realtor (who is freaking awesome, by the way) sounds like it’s our house, so I’m feeling pretty confident about it.

Earnest Money

Our first official cost of buying our first house was earnest money. I had no clue what in the world earnest money was, I still don’t entirely. Apparently when you make an offer to buy a house, you need to give money to the seller. Depending on what stipulations you noted when making the offer, you can receive your money back if you don’t buy the house.

Is this money gone forever? It sure feels that way for us, but it really depends on your lender. Our lender will not allow us to have our money back at closing, like some people are able to do. Instead, he said it will go towards our loan. That’s not so bad, but it sure would have been nice to have that money back to cover other expenses.

Total Earnest Money Paid: $1,000.00 (out of pocket)

Home Inspection

Our realtor was going on vacation for a couple of weeks, so he worked really hard to get things moving before he left. He hooked us up with a home inspector who could come out the next morning (it was late evening when our offered was accepted) and send us the report a few hours later.

The home inspector guy was really nice and helpful, he even went above and beyond his job and checked out stuff he wasn’t required to check. He gave me lots of great advice and even tried to explain many things to me—not that I really understood what he was talking about, but that’s okay.

He was really impressed with the house and how little he was able to find. He said that we were getting an awesome deal and was really happy for us. He did find a couple of things that needed to be done, but just small things. Mr. Investor was still finishing things up and hadn’t replaced a few things, so we made sure to put that into the agreement thing. Mr. Investor agreed to make sure those things we done and that was that.

Price for home inspection: $330.00 (out of pocket)

Appraisal

We need to have an appraisal done to make sure we’re not paying more for the house than it’s worth. This can go a couple of ways:

1) The house appraises for the $170,000 we offered or more and everything goes smoothly.

2) The house appraises for less than we offered and we need to renegotiate the selling price with Mr. Investor.

The second one could get a little interesting. Let’s say the house only appraises for $150,000. If that happens with us, it would happen with somebody else. Lenders don’t want to lend you money to buy a house that’s worth less than you’re paying—just common sense.

So Mr. Investor’s options would be to renegotiate the selling price or hold out for somebody who wants to pay in cash. If somebody had the cash, I couldn’t imagine them wanting to waste it buying a house for way more than it’s worth.

So that’s not really bad, except for the fact that we want him to pay for our closing costs because we don’t have that much money readily available. Either we would have to borrow the money for closing costs or say goodbye to the house.

An appraisal was ordered yesterday, so we should find out soon; no use worrying about it now.

Price for Appraisal: $400.00 (out of pocket)

Up Next—Flood Plain Survey

Assuming the appraisal goes well and any issue is dealt with accordingly, next comes the flood plain survey. The flood plain survey appears to be standard procedure (and not just a USDA home loan thing) for all loans according to a few sources, but I’m not entirely sure.

Price: Unsure (we’ll just have to wait and see) <—- I’ll try to remember to update this after we pay for it.

•••••••

Total out of pocket so far: $1,730.00

That’s a lot of money to me, so it’s really going to suck if we don’t end up getting this house now. I know we will most likely get the earnest money back, but still…what about the other $730.00?

 

How much did it cost to buy your first home?

About Jen Perkins

Likes: saving money, being debt free (aside from our house), zombies, travel, getting money, blogging and dogs. Dislikes: debt, being broke, bunnies, wasting money, not having enough money to travel the world and paying interest. Facebook  ♥  Twitter  ♥  Google+  ♥  RSS

Comments

Buying Our First House—Price & Other Costs — 37 Comments

  1. I had no idea about a lot of these things and I read a good many “buying a house” posts. You wrote this for people who have no idea about the process (like me!) Thanks so much-great post!!!

  2. Great post! Glad your offer was accepted. We had our seller pay for the closing costs as well, so all we had to pay was the down payment (and of course that monthly payments).

  3. Congrats on having your offer accepted. That’s a hard offer to turn down and you probably had an advantage over other potential offers since you weren’t dependant on selling another house. Sellers hate that.

    Those costs sound about right. Keep the info coming.

    • Thanks Daisy, it’s pretty exciting. :-)

      I’ll totally have to post more pictures after getting the house and then after all of our stuff is in there.

      I hadn’t heard of earnest money before either, the first thing I thought of was Jeremy (Modest Money). LOL

  5. Congratulations on the offer acceptance. That is always a relief. We went though that when we bought our house and it was stressful. We really liked the house and wanted it and were stressed until we found out we got it.

  6. First off, CONGRATS! I’m super excited for you since I’m currently in the home shopping process, so right now I’m also living vicariously through you since you’re much further ahead than we are.

    I’ve been looking into all the real estate processes, too, and came across the earnest money. In some senses, I understand – they’re taking their property off the market, so your “deposit” is insurance if you back out and they lose out on potential sales because of your supposed interest. But, wowzers, it looks like we may need to start saving even MORE money than we had originally thought. I better let my husband know! Thanks!

    • Home shopping is crazy! We just started like 2 months ago and could be closing in a little over a month from now. Just nuts.

      I figured that no money down meant it wouldn’t cost us anything. Boy do I feel like a dumb*ss now. haha

      Good luck saving up to pay for all the costs of buying a home.

  7. Hopefully everything goes well and you wouldn’t have to deal with losing that $700+. That is a lot of money for a deal that could end up having some kind of hiccup. At the same time though it’s good that everything gets checked out thoroughly so that it doesn’t end up costing you way more to fix stuff down the road.

    • Yeah, I’d much rather pay $330 for a home inspection and not buy a house that would costs us thousands to repair down the road. But…since the home inspection went great, all I have to worry about is the house appraising. :-)

  8. I bought my first home in 1973 for $36,500. It was a3 bedroom , 1 1/2 bath home with a pool. It was run down and priced as much as $12K below market. I fixed it up and sold it 3 years later for $78K.

  9. I bought my first house (brand new) in 1993 for $139,000 and sold it 5 years later for $170,000. Today that house would sell for over $400,000. It was nice.

    The additional expenses add up quickly. I hope your new home appraises for the value you are paying. They normally do.

    I learned through watching Property Virgins that in the States you can ask the seller to pay closing costs. We don’t do that in Canada. The buyer and the seller have to include that in their own budget.

    As a seller, after paying Realtor commissions, I definitely wouldn’t want to have to pay the buyers closing costs too.

    • I keep forgetting that you’re in Canada, no clue why.

      That would suck to have to pay out all the commissions plus pay closing costs for somebody else. Thankfully, the guy who flipped our house got it for around $82k as a foreclosure and put in $20k-something and is making a huge profit—so I don’t feel too bad for him.

    • Thanks Holly. :-) I’m trying my best to understand all this stuff (and so quickly), but sometimes I swear the paperwork is in gibberish.

      Our lender said the appraisal is set for tomorrow, so hopefully we’ll find out soon.

      • FYI,

        When a relative of mine bought their house, they offered $155,000 but it only appraised for $150,000. So, they negotiated and the seller ended up having to lower the price to 150K in order for my family member to get the loan and buy it.

        So….even if it appraises for less it could turn out in your favor!!!

  11. Wow, that is great news. The bf and I have been house hunting for almost six months now. Detached houses in the area we are looking in, start at the mid $400s. Yikes! They aren’t even that decent.

  13. I can’t remember how much we really spent on the house but I know it was around the amount you’ve experienced.

    The biggest worry for us also came with the appraisal. It’s tough to really know what the person is going to come up with, especially with all of the foreclosures and short sells over the past few years.

    Good luck!

  15. I bought my first house (a 2br 2ba condo) in 1989 for about $32,000. It was a HUD home, so we got it in a blind auction. I think our current 3br home was $98,000 or so in 1997.

  17. Great post.. We have been through this whole process a few times.. Buying a home is certainly an exciting time! All of the inspections are so critical though.. You don’t want to find out that your house has a major structural or mold problem or something down the road. I look forward to reading the rest of the story as you guys go through the progress!

  18. It’s always been my dream of owning a home! I am in a state of doubt now, it’s a very tough decision whether to buy or not! I’ve done a lot of research about all costs and expenses of owning including the recent mortgage payment in the market and I think , that’s very expensive. I hate renting, I agree with this also, there are a lot of restrictions, you can’t remodel because you don’t own it. Right now,I still consider of buying a home.
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