As many of you know, Matt and I recently sold our old colonial-style house and moved into a new build we bought a few months ago.
The past few months have been super busy with selling our property, buying a house, moving into my parent’s house while our house was being finished, and then moving again into our new home.
And the process is of course still ongoing as we work on actually unpacking and getting everything set up in our new space.
The whole experience has taught us a lot and I received a ton of great questions from you guys about the process of selling and buying a house.
So we thought it would be fun to bring Matt back on the podcast (things always get crazy when we do) for a Q & A to answer all your questions and share a bit about our own story and why we decided to move in the first place.
If you’re thinking about buying a house, curious to hear about real instate investment or even wondering about the process of building a home, this episode is for you, my friend.
So, without further ado, here’s some of the top Q’s we got asked.
Why did decide to buy a house?
Deciding to sell our house, which had such a unique character and history, was definitely a big decision that we talked through for a while. Buying a house is a a big decision, and there were a lot of factors involved.
But it ultimately came down to wanting to simplify our lives and reduce stress. The past year has really led us to take a step back and reevaluate our life and how we can simplify it.
Our old house sat on a big 3 acres of yard and gardens, which required a ton of upkeep. And so we had to really ask ourselves if that was what we wanted for this season in our life.
Was it the best use of our resources to either spend hours keeping up the yard or spending a lot of money to hire landscaper when we could be using that money for other things like investments.
With it being an older home, there were alos a lot of updates and improvements that needed to be done, which required money and work on our part.
When we got really clear on the lifestyle we wanted, we realized we wanted to simplify and reduce stress levels.
Of course, a part of the decision was also based on the fact that after two miscarriages, we felt like we really wanted a fresh start.
But we wanted to be careful and make sure we weren’t making an emotional decision, or trying to run away from anything, so we took our time before making any decision.
We looked at a lot of options, but eventually decided on a new build, which would offer us the simplicity and minimal upkeep we were looking for.
We were also able to refinance and take advantage of the low interest rates in the market right now. In fact, we ended up lowering our monthly mortgage payments and interest rates, which we’re now able to invest into other areas, and get less maintenance (so we can keep our sanity).
As Matt says, “The number one rule with real estate is to never fall in love with real estate.” We bought our first home as an investment and we were able to see some increase in value and use that money towards our new home.
Will Your Mortgage Be Less?
Yes! Matt explained it really well when he said that real estate is like a savings account.
When you’re buying a house, it’s not always about flipping it and making 20%. And you definitely want to be careful that you don’t end up dumping a lot of money into a house and not getting any return on it.
You’re probably not going to double your investment in 2 years, like you might be able to do with other kinds of investments. It’s really more of a place to park your money and let the value grow slowly.
But your old property can appreciate value and when you sell it, you’re able to make some profit off of it and bring more cash to the table when you buy your next home.
Our old property had appreciated value, some of it due to some renovations we had done on it, and so we were able to make a profit and use that cash to put more money down on our new house. We were also able to take advantage of the lower interest rates.
Because of that, our mortgage payment is 15% lower on our new house, so our move turned out to be a really savvy financial decision for our family.
How Long Were You In Your Home?
We lived in our house for about two and a half years, which is actually important because we didn’t have to pay capital gains tax.
Here’s the tea on capital gains tax.
If sell your hours within two years, you have to pay a good chunk of the profit you make on the house in taxes. I think it’s somewhere around 20% of the profit.
So, if you’re in your house and you don’t like, try to wait until you hit the two year mark before selling, so you can get a big tax savings.
How much money should you save for a down payment when buying a house?
I would recommend putting 20% down if you’re able, but it will definitely depend on your situation and the market.
If you’re a new home buyer, you’ll definitely want to be aware of Private Mortgage Insurance (PMI).
Basically, it you can’t afford to pay 20% equity in your down payment, then you’re gonna have to pay a mortgage insurance which can be a couple hundred dollars each month, depending on the price of your home.
You’ll have to keep paying that until the equity in your home meets the 20% mark. Since so much of your payment goes towards interest instead of principle, it can take a while for you to hit that 20% mark.
So, if you can do it, definitely put the 20% down. But if you can’t, it’s not the worst thing in the world.
And make sure to talk to your realtor and lender, who know the market and your specific financial situation, and can help direct you towards the best decision.
Is your new house cheaper?
Our mortgage payment is cheaper, especially due to the profit we made on selling our old house and the lower interest rates. But, it’s not like our new house is less value.
Honestly, it really comes down to what you want to prioritize. For us, it was simplicity and having a hosting space and room for friends and family to come and visit.
Some people want a homestead so they move to a smaller home with a larger lot. Or some people enjoy fixer uppers and so they buy an older home in need of renovations.
There are always trade-offs with any home you buy.
The more you can be intentional and strategic with how this is building your future based on the wants and needs you have, the better.
What’s the lifestyle you want?
Sometimes the value isn’t as much about the price point of the house as it is about the lifestyle you want in a home.
Any tips for building a new house?
When it comes to budgeting for a house, you can either work on what you want your house price to be or you can work backwards to figure out what you want your monthly payments to be.
Use an online mortgage calculator like Trulia to help you figure out your budget.
But our big piece of advice is to budget for more than the house price. Account for all the other expenses.
Depending on the type of build and the specific builder, you may have additional expenses that aren’t included in the house price, like hiring a moving company, the inspection fee, purchasing new appliances that don’t come with the home, getting new furniture, window treatments (which are crazy expensive BTW), a security system and maybe even a sprinkler system.
Do some investigation to figure out what you’re going to need to pay for on top of the house price. Also know that when you’re building a home, certain things will be add-ons and will cost additional money above the base price of the home. So if you want a specific type of kitchen countertop, that may cost you extra.
Learn More about selling and buying a house
At the end of the day, a fresh start looks different for everyone and a decision to buy a new home will really depend on your unique situation and the lifestyle you want.
For someone, that means leaving a loft apartment in an urban area to move to the country. For some else, it might be the complete opposite.
There isn’t one right way to simplify or get a fresh start. So know what your own priorities are before making a decision.
For us, this year is really becoming a year of refinement and being intentional about how we use our resources and time. It’s something we’ve talked about a lot, but are now really starting to lean into.
We had to remove things from the picture that were serving as stressors and weren’t aligned with what we say our priorities are.
Maybe that’s what you’re looking to do too, or maybe your reasons look different.
Either way, make sure to tune into this episode for some more advice on selling, buying, and building a home (plus some fun extras about our new home)!
- Why we decided to buy a new build home
- How real estate can be an investment
- Ways you can lower your mortgage payment
- How much money to put down on a new home
- What our new home is like
- Tips for building a home
- How to decide what to keep when moving
And don’t forget to let us know in the comments: what is your biggest piece of advice for buying a new home, or what is your biggest question about buying real estate?