Saturday, June 2, 2012

Frugal House Buying

I'm sorry I've been such a slacker about this blog.  Although the reason for my slacking is a good one:  we finally got a house!  *happy dance* 
Now you may have read the title of this post and thought I much be crazy. there is nothing frugal about buying a house.  Well I agree, but there are places to cut costs and ways to compensate. 
Here are a few things we have done to save money in our house buying process:

1.  If one of you is a veteran, apply for a VA loan.  They are by far the least expensive I have seen or heard of.  However, make sure you talk to the VA themselves about eligibility.  Banks can do VA loans without the banker you are talking to knowing every finite detail of the eligibility requirements.  We had been pre-approved for a VA loan because I'm a veteran, but it turns out that I didn't have enough time in the service to be eligible, so check on that.

2.  If you can't get a VA loan, get an FHA loan.  This is what we ended up doing, and we got the same interest rate, but had to pay a 3.5% down payment (you don't have any with VA loans) and since we payed less than 20% down payment, we have to pay mortgage insurance (another thing that would have been nice about the VA loan).

**DISCLAMER:  It makes more sense financially to save at least 20% for a down payment, we did not have time to do this because we were in a two bedroom apartment and they have rules against having 6 people live in a residence with only two bedrooms (so we had to get out befoer the baby comes), plus when our lease expired, rent shot way up, so we needed to act before our money was all gone!  Also, I am just a person with an experince, not a financial advisor, take my advice at your own risk (hmm, I guess taking my advise at your awn risk applies to more than just financial things).**

3.  Time the house purchase for when you have some money, if you can.  For us, this time is always right after we file our taxes.  Yes, having three (soon to be four!) small children can get pricey, but the nice thing is that even when our income went up, we still got a healthy tax return.  This not only helps with the down payment and closing costs, but it also helps when the bank looks at your account to decide if you're worthy to owe them money for the next few decades, and pays for a home inspection, earnest money, options fee, not to mention gas to drive around a look at all those houses, and lunch because your brain hurts from looking at houses and making offers and getting your hopes up and all.  Then you of course need money to move, pay the fees to change your address on your car registration and drivers license, fees to have your utilities switched over, buy a lawn mower and a fridge, the list is endless!

4.  Have a conversation with your utility companies.  I talked to ours about our options and found out that we could get our electricity rate lowered from 12.4 cents per kilowatt hour, to 8.8 cents per kilowatt hour, if we agreed to stay with their company for 24 months.  We're not going anywhere, so we made that switcheroo (very important since it's getting hotter and I know we want to run that AC!).  I also found out that we could get phone for the same price, but add caller i.d. and call waiting!  Bundling our internet with our phone made the internet bill go down by about $20 a month too!  We also got a discount on our car insurance for having home owners insurance with the same company! 

5.  Ask friends to help.  We put the word out in church that we needed help moving and we needed trucks.  Several people with pickups or suburbans came and loaded our big stuff up!  It was a very short distance move, so that might not go over a well in a cross country move!  We also had people at church who volunteered to watch our kids for free while we moved, which was an enormous help.  A good friend of ours came and made the repairs we needed in the apartment as long as we payed for materials.  Since I can't do any heavy lifting due to my motherly way, I was to gofer to get materials, pack and tape up last minute boxes, and direct movers what to do next.  My husband was also directing movers, but he was one of the heavy lifters so he wasn't in the apartment half the time.  

6. Go second hand.  When we moved in we needed a fridge.  Unfortunately we didn't have much money to spend.  We tried unsuccessfully to get a scratch and dent at the major home improvement stores (by the way, if you need customer assistance in the appliance section and no one you ask has the time to help you, start measuring the $1700 and up fridges.  Someone will be at your side in a jiffy!)  We tried second hand appliance places, they didn't have anything in our budget and they had horrible customer service!  So we finally found some on Craigslist.  I emailed everyone that had a fridge within our price range, except one, because I just got a strange feeling about it.  My husband said the ad gave him the same strange feeling (he told me this before I expressed mine) and in our experience, that is a sure sign to stay away.  We had to wait until payday to get the fridge, so we used a cooler filled with ice in the meantime.  Which is another thing to ask around about, it's amazing how many people have coolers, and bags of ice they're not using in the their freezer!  A friend from church helped my husband move the fridge, in a truck borrowed from another church friend, using a dolly borrowed from another church friend!  It's nice to have so many people around who are willing to help!  By the way, once you get settled, it's nice to have these friends over, which we are working on right now.

7.  Borrow 'till you can buy (may not apply to a fridge).  A lawn mower had stayed out of our budget, but my husband is a very friendly and talkative person, and has already talked to several of the neighbors, one of which let us use his lawn mower.  I have been checking out garage sales, Craigslist, and second hand stores (long shot, but I had to try) but no success yet.  A friend just told my about a place that fixes and sells used lawn mowers, so that is my next stop!

8.  Start the decorating with what you have.  I badly want to get lots of new nice things for our house, but that's just not practical right now.  We're using what we have and making the most of it.  It also helps that we get a better feel of living here and know exactly what we want to do or not do with it!

I will update you more as we do more with our new house!  Yay for being homeowners!

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