AAR17 - Our Home Buying Experience

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2:17Andrew Sather:Greetings, everyone, and welcome back to At Any Rate. My name is Evan Wright, and we're here to help you make sustainable financial changes without breaking a sweat. And for an early start this morning, I've convinced Andrew Sather to come back again and join us again. How are you doing, Andrew? I'm good. I'm excited. This is going to be a fun topic. yeah i'm excited i'm excited to discuss it so for this early morning we're going to be discussing we're going to be getting a little bit personal and i'm going to have as much of a transparent discussion of my wife and i's process of buying a home from the before to looking to the buying and then any mistakes that we feel we made along the way in hindsight and the kind of format for this episode that i discussed with andrew is that it's going to be a bit of a story time it's going to be a bit of a rant going kind of chapter by chapter through it but my plan is to have andrew stop me you know anytime he's got any questions or anything that he wants me to expound on and then my future plan for this as well is that once this episode comes out do you guys send me any questions you have comment any questions you have email me any questions you have and my goal is to have a follow-up episode that'll go through any details that you guys want some more knowledge on because as much as possible i'm gonna open a book on on this entire process so any additional info you guys are looking for i'd be more than happy to share yeah this is cool it's like like a real life kind of breakdown of buying a house that I don't see anywhere online.

3:40Yeah, we definitely want this to be as applicable in real world as possible.

3:44Andrew Sather:You know, I'm not out here earning a mil plus or something buying a new house every two years. So this is a more realistic discussion from a quote unquote normal person. So to start off, we're just going to start in the first chapter. This is basically when we were living in an apartment after we graduated college in about 2021. We were just living in an apartment, no real plan, short-term or mid-term plan of buying a house. We were lucky enough to, from then after graduating until now, be saving around 30 % to 40 % of our total income since graduating college. A really good number to be at. One caveat to that is I did have a custodial account handed down by my parents.

4:23Andrew Sather:Not a massive account or anything, but a good little jumpstart to help us get going. And that was directly saved in the long run towards buying the house. So that was definitely a help there. The only large purchase that we've really made since then was my pride and joy car. So that's the only debt that I've picked up along the way or large purchase I've made along the way. And in terms of investments and where we've been putting our money, we both have maxed out the employer match that each of our employers offer. we've mostly maxed out our Roth IRA. And then we initially had some money going towards a taxable investment and some towards a high yield savings.

4:58Andrew Sather:Over time, I moved it fully over to the high yield savings account. And the only reason I did this was I did this about one and a half years ago, I believe. I moved it over knowing that we were probably going to buy a house within five years or something. It wasn't quite five years, but that was my plan. So I pulled out taxable investment because the last thing I wanted was to find a house we loved. And then the stock market goes down and now I've got 20k less than I thought I would have ready to spend on it. So my goal was to pull it out and have it in a much more stable position, but still growing.

5:31Andrew Sather:That's always what I want from it. Yeah, that makes sense. And that's a very smart move. You never know when the market's going to take a dip. How did you arrive at 30 to 40 %? Was that a conscious decision or was it something that just kind of played out as you guys did your budget? So I would initially definitely wasn't a conscious decision because nothing about our finances was a conscious decision. But a little while not not too long after graduating college and moving to the apartment. It was okay, maybe this budgeting thing is something we really need to do sitting down just having all the numbers laid out.

6:09Andrew Sather:And we're not the kinds of people that budget down to the dollar, you know, I don't go through and say, Oh, well, I bought Chick-fil-A for 638 or something. And that needs to be added in there. it's just okay approximately food is this much approximately electricity is this much water is this much blah blah blah and tallying all that up and seeing some places we could shrink seeing okay there's there's definitely more money going to eating out than we thought there was or okay my my habit or or hobby of making coffee is you know i'm buying more things than i thought i was and so more money is going there than i expected and so kind of auditing ourselves i guess you could say feels like a serious word but doing a bit of review to see where we stand and by the time we were able to stretch it a little bit more that's the number we laid we laid at we were probably closer to like 20 to 25 percent without putting any effort or brain power into it but then once we kind of just trimmed the fat a little bit then yeah the 30 to 40 percent fluctuating a bit over time is is how we got there yeah and that's a huge difference was there anything you guys did to make it feel like a team activity was there give and take or like how did that work for you guys that's a really good question i would say it's it's just always being it's always being honest and transparent about things with each other and that that sounds very basic and obvious but it can be easier or harder than you think it is at times to express what exactly you want in the long term, for example, to say, I want to be ultra rich, or I want to live off of as little as I can so that I can be free as soon as I can, and then the whole spectrum in between that.

7:55Andrew Sather:Having an honest discussion of where you want to land eventually helps align you both towards similar missions. Even if the places you want to end up are a little different, you can definitely find middle ground so that you're both happy with the end goal. But having that end goal aligned makes it feel more like, okay, I don't care if I'm earning more than you or you're earning more than me. I know that as long as I'm saving, you know, quote unquote, what I'm supposed to be saving, then I know that I'm contributing towards what makes you happy and what makes me happy. Because if I'm living based on, oh, this is my money and I get to spend it how I want and I have my own end goal, screw Jen, she can figure out her own situation, then that is never going to make you feel aligned or happy.

8:38Andrew Sather:And in my opinion, that's where financial, you know, marital relationship issues or whatever arises is you just don't know what the other person is doing or why they're doing it. But when you sit down, you have all the numbers laid out. You, one other thing that I'll say is I'm a big proponent of if you're not earning the exact same amount of money, then I don't believe that you should be spending the exact same amount on things that you're sharing so for example rent if rent is a thousand bucks a month and one of you is earning twice the amount the other is then my opinion you should be paying you know 666 a month and the other person is paying 333 a month i believe that that makes it that's that's more equitable and that allows both people to feel like they're able to contribute at a good rate instead of feeling like okay one person feeling like i oh i i could be saving more if this person was you know keeping up their weight or the other person feeling like oh well i'm stretching myself to make this payment and i'm not able to save as much and now the savings is lopsided or whatever i'm a big proponent of making it as as equitable as possible whatever each person's situation is and that makes it feel like both people are sort of on a level playing field and able to contribute at the same rate instead of trying to keep up or keep down if that makes sense yeah totally i'm picking up that having that time to to talk seriously about this gives you the space to share what you care about i don't see that happening just sitting around the couch watching netflix like an organic kind of conversation yeah you got to be having the difficult long-term life goal life-based conversations they don't have to be super grand but it's just like you know i want to have this size backyard I want to have, I don't know, this kind of flooring, whatever.

10:26Andrew Sather:Just like these little details that also, as I talk about a lot, your why's. Like, why do you want to have money? If you want me to be saving 30 % of my income, why do you want me to be saving 30 %? I say, oh, because that's what you want? Okay, that makes perfect sense to me. I actually want this. And then now it's putting reasons behind all the numbers and knowing what the other person's reasons are as well. Yeah, that's cool. so can you take us now down the timeline what what what's the timeline for you know you've got the money and then what made you feel like all right we're ready to take the next step for the home buying process yeah we started thinking more about what we were going to do not any earlier than like mid or late june or something like that and and then for timeline since our lease was up at the end of july we're now early september at this point because obviously went through the whole closing process but our the lease at our apartment was going to be up at the end of july and we we knew that we wanted to move in one way or another it wasn't the exact area that we wanted to end up in we we didn't want to keep renting forever but also if we were planning to just okay we'll go rent somewhere else somewhere that we do want to live and we just kept putting that off we assumed we would eventually sign find somewhere else to rent maybe it'd be a little bit cheaper but like we'll find somewhere to move we'll figure it out we'll figure it out and then suddenly we're left with like a month or a little bit over a month before our lease is up and we weren't planning to stay there and continue about paying what we were paying for the area that we were in it was a very nice apartment that i would say is was easily worth the money that we were paying but just because it was you know worth it quote unquote didn't mean that that's where we want it to be so we kind of got we kept pushing pushing it off over and over again and now the the rubber was meeting the road and we had to make a decision in one way or another and so that leads me to the second chapter of us actually looking at homes.

12:21Andrew Sather:So we saw an open house in a nearby city. We decided that we wanted to start looking at some other places because again, the end of our lease was coming up. We realized, you know, maybe living in a house is something that we want. Maybe this is an experience that we're ready for. And we realized that we were interested in going down that road and living that lifestyle more or less as soon as possible. And so I had actually had this calculator that I had built a while back for myself. I legitimately built this for myself two years ago, basically exactly what it is now. I tweaked it a little bit over time, tweaked the few variables that I could add into it over time.

12:57Andrew Sather:But all of you know how obsessed with Google Sheets and spreadsheets I am. So of course, this was a Google Sheet that I was using to track things over time. And I didn't even consider offering this spreadsheet as available until I was actually outlining this episode. And I realized, crap, this was a big part of the process for me and it would definitely be helpful for other people so just as a quick side note we have actually turned it into something that you guys can pick up for free same as the budgeting spreadsheet you can head over to einvestingforbeginners.com slash home or slash home buying one word either of them will work comes with instructions how to use it and the end goal of it because exactly how i used it is just to be able to put in some general parameters for a home put in some general parameters for what you have saved how quickly you're saving it and what kind of rate of growth you're expecting from it.

13:44Andrew Sather:So for me, I had put in four and a half percent because I was expecting most of my money is in a high-hold savings account. That's about what it was earning at the time, even if I'm pulling a little bit from the market, maybe somewhere else. Four and a half or four percent was the rate I was able to put in there. And then you can get a timeline for how far away you are. So I could see previously, if I want to put this much of a down payment into the home, I know how long it'll be before we can reach that and what percent of the way we are to get there. The only tweak I've really made since when I used it, because I realized how important it was going through the home buying process, is I include equity in the calculator.

14:18Andrew Sather:Previously, I just had a mortgage payment spit out of it, and that wasn't the end of it, but that was just the end of that calculation. But now I've added in there that will also approximate how much equity you're going to be building each month. And that's important for me because in my calculations, I am including equity in the savings rate. I do think that that's an asset that you're building up that's value and savings in one way or another that you are building up just like any other place that you would put your money and so i included the equity in the calculation and i'd recommend spitting that back into your savings rate and i would definitely say it worked for us because nowadays the average age to buy your first home for people my generation or near my generation is like 35 years old so for reference i'm 26 i'll be turning 27 in exactly a month from now.

15:03Andrew Sather:But 26 or 27 years old to be able to buy a home is a fantastically privileged and joyful place to be in. And this calculator was no joke. I'm not doing this to be like, you go buy this or whatever. It's entirely free. This is just genuinely something that had a drastic impact on our ability and progress to be able to buy a home. And I think it's worth anybody out there who's interested picking it up. What if you could get a 25 % match on every dividend you earn. Well, now you can. When you earn dividends on the Plink app, you'll receive a 25 % cash boost up to$250 bonus per year. That means if you earn$1 ,000 in dividends, that's$250 more in your pocket.

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17:28Andrew Sather:I use this and you should too. Check your health the way I do. Function provides 160 plus lab tests for a dollar a day and member pricing on MRI and CT scans. Join at functionhealth.com slash beginners or use gift code beginners25 for a$25 credit toward your membership. What's the best way to get started than the market, download my ebook for free at stockmarketpdf.com. Do you think the biggest benefit to you, I mean, obviously it had lots of benefits, it sounds like. Do you think it was like a mental or an emotional, psychological, or just super logical benefit to having this calculator? I would honestly say probably 70 % mental and 30 % financial.

18:12Andrew Sather:Only because it would be more financial if we didn't already have a budget laid out if i didn't already have my automated money going to different places that's growing and blah blah blah then yeah walking through this and getting a getting an end line goal there and then kind of working backwards and budgeting from that or something then yeah this could be 70 financial and 30 mental but since we already had that going it was 30 financial to give us a more accurate kind of focus in on what exactly our end target it was going to be and what was feasible and blah, blah, blah on the financial side of things.

18:45Andrew Sather:But then 70 % realizing, oh, you know, that 500 bucks that I put away in savings last month took down or raised the percent progress that we've had by like 3 % or something. I'm just making up numbers here. But seeing your contributions and seeing the growth of your investments or savings, whether it's in a stock market or whether it's in a high-end savings account or something, seeing that financial growth actually contributing towards, oh, now I can buy a home x amount sooner i'm x percent closer or i'll be able to maybe you know buy x percent more expensive of a home or something like that that's a very as always i'm very big on the tangible side of finances so instead of just seeing my budget and being like cool i'm putting x away a month but i mean what does that really mean for what kind of a house i could buy this turned it into oh that that's what it means it means that i could buy it in you know october instead of november or something like that.

19:37Andrew Sather:It turns all the vague numbers into tangible ideas and makes it all feel much more achievable. I don't know if you've ever had to wait for something to load and it had no progress bar, but that can be infuriating. 100%. Yeah, it'd be like saying, oh, you know, I'm going to buy a house. I'd love a house, you know, probably about this size or something, but you know, I'm putting money away and whenever I'm ready, I'll do it. But instead it's, oh no, I know pretty damn close to when I'm going to be ready. And I know that I'm, that I'm not there yet or I'm getting there or whatever. That's, it's, that's a very big mental shift, especially for a purchase this large.

20:14Yeah. That's cool. Almost like you knew all along.

20:17Andrew Sather:Yeah. Almost, almost, almost. So yeah, take us, take us down, continue your story down your path, please. Yeah. So after we, after we started doing some more in-depth math again, I kind of had this calculator as a, as a background. It was just being fed from my budgeting spreadsheet. So I wasn't doing a ton with it necessarily. Instead of just kind of peeking at it periodically or tweaking it a little bit and kind of looking at some variables. Then we realized when we were looking around how many places would be outside of our price range. Just kind of having to filter out and be like, we can't live.

20:50Andrew Sather:We'd love to live there, but we just can't live there because that's just not feasible for us anytime soon. And we're not looking to have to wait another six or seven years to buy a home. and again that was a conscious decision that the two of us had to make together is not oh well we'd like to go get that mansion so we're going to wait 10 years you know we had to together make the decision we don't want to wait that long so let's figure out what what we can actually afford and one big pivot for us was realizing that we both wanted to buy a new home obviously there are pros and cons to everything 100 but the pros for us that that outweighed the cons is is things like a warranty being able to move in and if any issues crop up initially then you're able to get it resolved for you know essentially free and we would do anything we can to fight if we have to moving into a new home and not having to worry about well the hvac is 12 years old it's going to be replaced soon or the roof is 15 years old and they're saying that it's going to be need to be replaced soon because these kinds of charges if you're not a home buyer maybe you're not aware these kinds of charges are easily 10 20 30 000 for some of these these fixes that's just something you have to do.

21:54Andrew Sather:They're not getting any new value from it or anything. It's just money you have to sink to upkeep the home, essentially. And buying a new home, not guaranteed, but put us in a much more secure position that we know that for the next dozen years or something, we're going to be able to learn little pieces of upkeep as we go, still focus on our careers and everything, and not feel like we're spending 24-7 trying to fix things or meet contractors or learn skills or risk trying to fix things that we probably shouldn't be fixing and risk having a bigger issue pop up, blah, blah, blah. That protected us from a lot, gave us, gave slash gives us a lot of mental solitude.

22:34Andrew Sather:That's probably not the right word, but mental comfort to be able to go focus on other things and know that the house is within reason going to be okay. In addition to, at least nowadays when you buy a new home, especially when you do a mortgage with the company that's bundled with the builder and blah, blah, blah. They give you a lot of bonuses because essentially they're making money on you from two places. And so it's easier for them to put a discount on it because they're already making a lot of money from you, you know, from multiple angles. And so in our area, I was able to get an interest rate down to 4%.

23:06Andrew Sather:The market range is like 6.7 or close to 7%. When you actually look at the final APR rate, ours was 4%. We were also able to get a good chunk of money taken just off closing cash, essentially just straight up. We also got a bunch of upfront bonuses like blinds we got smart home tech we got you know smart garage door opener blah blah all these little things that would easily add up to you know another several thousand or something if we were to actually go and do it all ourselves and that just came with it and again it was all just a great match for us a very good fit and the the big financial comparison that i was doing for homes nearby was looking at the price per square foot that absolutely does not tell you the whole story you know what's the quality of that square foot how big is the yard how big is the garage blah blah blah but if i'm looking at comparable homes especially like other comparable new homes or something with about the same lot about the same garage and similar quality or whatever that price per square foot was was a big comparison to get an idea of what kind of deal we were getting we of course then toured it multiple times once we found one that we loved and we actually the first one we found we fell in love with it we we told ourselves oh you know we're not that committed to it you know we really like it we're not that committed we had a tour were scheduled on Wednesday.

24:20Andrew Sather:And I'll actually mention this again when I go through my mistakes, but we had a tour on Wednesday. And then Tuesday afternoon, I get a text from the listing agent, and he says it's sold. And we both cried our eyes out that night. We had emotionally committed so much to that home without even realizing it, even though it was in such a short period of time. But again, our lease was coming up. We knew we had to make a decision. We found one we loved, and then it fell out, blah, blah, blah. It all turned out completely well in the end because we found a home that we loved even a little bit more, which is where we ended up.

24:51Andrew Sather:But we had to have very honest, transparent discussions about where we stood financially, like we already talked about before, but also our home-related desires. And what I mean by that is we had to discuss, okay, what exactly do you want from this home, or what do I want from this home, so that if something were to come about, both people know where the other person would realistically stand, and can not make any final decisions, but make sort of tentative decisions without always having to discuss with the other person so that things can move more smoothly, more easily, blah, blah, blah. And again, that'll come back up in the mistakes.

25:26Andrew Sather:But that was a big pivot for us when that first one fell through of realizing, okay, we can't be like, oh, you know, I'll go call Jen whenever she gets out of work or whatever, or vice versa. It couldn't work that way. So we had to make some shifts and that improved things a lot. that reminds me of because my wife and i also bought recently and i don't know if we did this on purpose but we didn't like write it out but we basically kind of went through a list of here are the three things that i would most want in a home and she said her three or four best things and so we kind of knew once once we saw a home that like i knew checked a lot of the top things my wife wanted it made it easier to kind of pull the trigger on that yeah that's that's that's a great place to a great place to put yourself and you're you were a genius even if you didn't realize it all right what was the next step after you had kind of done a lot of this looking so we so yeah we looked a lot we found that one that we loved and the next step was actually going through the closing process after that and i can't possibly cover every detail here because there was so many little things that happened along the way.

26:41Andrew Sather:But I'm going to try to cover the big points as much as possible. So throughout this process, I filled out more forms than I physically thought possible. Thankfully, they were all online up until the closing docs. So it wasn't that they were that difficult to fill out, but it was so many things for both me and Jen to have to fill out along the way. And for reference, we had a 30-day closing. So 30 days from putting down the initial deposit, which I'll discuss in just a second, to actually getting the keys and everything was exactly 30 days. So what we had to initially do when we did the tour and we told the listing agent we do want to buy this, we had to put down$2 ,000 through a debit card.

27:16Andrew Sather:That was the very first thing we had to do. And this was the first 2K towards what they call an earnest money deposit. Then within a week, we had to wire the 10K that was the remainder of the 12K, again, for the rest of the earnest money deposit. And what this basically is, is telling the buyer, obviously in this case the buyer is a big company builder or whatever, but whether it was a resale or a new home, you're telling the seller that I am committed to this I'm putting money towards this I'm not just going to walk away out of nowhere for no reason from this so that's that's a real tangible financial commitment to deciding that we want to do this and that took you know a lot of nerve to decide to do that not on the spot but at the time we did that was very very scary but we put down that 12k towards the earnest money deposit and then yeah it was three weeks of signing forms online reviewing them we legitimately probably called our realtor and listing agent and then just kind of other people to help us along the way over 100 times easily that's so many calls for so many little little questions along the way because this was also both of our first times through buying a home of course and no matter how many youtube videos or tiktoks we watched to prep beforehand there's so many little details and and concepts i guess i'd say in the forms that pop up that you're just like, I have never heard of this and I don't know what this means.

28:31Andrew Sather:Is this important? Blah, blah, blah. So many questions. I also got one detail that I never expect is I got dozens of calls regarding financial accounts. And what I mean by this is not only do they do a credit check or something like that, which is what I mainly expected, but they'll also dive into all of your financial accounts you have, which again, I more or less expected. But what I didn't expect is I would get a call and say, hey, it looks like your wife sent you a Zelle payment for rent a month ago. What is this? You told us that you didn't have a rental property, so why are you being paid rent?