Wednesday, June 13, 2012

Great Adventure: Buying A First Home

The Great Adventure of Buying A First Home
(a guest post)

My daughter recently started walking, or rather, shuffling about with an adorable unpredictability. Once she became mobile, I began to notice a lot less space in our small two-bedroom apartment. Her army of toys has literally taken over. My husband and I are thinking it might be the right time to find a larger home. While we have rented ever since we moved in together years ago, the current low interest rates have made buying a home an attractive option. Enter the uncertain world of house hunting.

While my husband and I have reliable income and a fair amount of savings, we try to lead a modest lifestyle. My husband and I want to impart sound values about money to our daughter, even at a young age. We avoid living above our means and are doing everything in our power to not saddle ourselves with debt, and that includes a large mortgage. That means we’re are priced out of certain metropolitan areas (for instance, New York City, where we both grew up, is not a viable option).

Excluding NYC, there’s still a wealth of possibility out there, And luckily, our daughter is still young enough not to be unsettled by decisions about schools, cost of living, or general culture shocks. I’ve decided to look at our search for a new home as the next great adventure after marriage and motherhood. We’re diving into the great unknown and it’s exciting!

We’ve found there are lots of (free!) resources at our disposal, such as the recent Forbes article, “The Best Cities for Raising a Family,” which ranked cities by median income, overall cost of living, commuting delays, crime statistics, school quality, and housing. We found that with a little research, and a few helpful resources, you can find affordable homes in virtually every city throughout the US, as well as compare the cost of living in your current city to other areas you are considering.

Obviously, the cost of the home is one of our main considerations as we search for our new home. We’d obviously like the keep the down payment as low as possible. We’ve been exploring different options that would minimize upfront costs, including Private Mortgage Insurance (PMI), an insurance that places most of the risk on the lender instead of the borrower. PMI makes it possible for first-time buyers to clear the biggest hurdle to homeownership: coming up with the traditional 20% down payment, which is a very attractive option for my husband and I. Even if you’re not a first-time buyer, PMI allows you to consider a wider range of homes and leverage your investment in your current home. Both first-time and move-up buyers can benefit by putting less money down and keeping cash for other uses: your child’s education fund, investments, paying off debt, home improvements or an emergency fund. We have yet to find the home of dreams just yet, but when we do, it’s nice to know we have options!

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This guest post was brought to you by the financial experts at Genworth Financial
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