Hey everyone! Welcome to The Thrifty Redhead. My name is Cali and I’m a 23-year-old living in Michigan’s beautiful Upper Peninsula.
My crazy life has inspired me to start this blog. In the past six months I’ve: gotten married, started a career as a TV reporter, bought a house, gotten a new car, graduated college, and adopted a new puppy!
Being a recent grad, I often struggle with money. So, I’ve had to sacrifice a lot and come up with thrifty solutions to get my life , and my sh!t, together.
My goal is to help others through home ownership while on a budget. I’ll feature DIY’s, products, and my journey to home ownership.
Thanks for joining me on my journey! I’m super excited to share my life and tips with all of you.
You’ve found a house that you absolutely LOVE! Now what? The first step is to schedule a showing with the listing agent. If you still love it after seeing it in person and you are serious about buying it, go ahead and schedule a home inspection!
Home inspections are absolutely necessary! Inspectors can easily spot problem areas of the house that you will probably miss.
For example, you might see a crack in the wall and think “oh, no big deal, it’s probably just the drywall,” but the inspector will be able to tell you if that crack is the result of something serious like a foundation issue.
For us, we didn’t have to think twice about getting one. The home we fell in love with (the one we bought) was built in 1917. That’s a LONG time for problems to arise!
We were a little nervous about getting an inspection. What if there was something majorly wrong? How much do inspections cost? Do we have time to look for another house if this one falls through?
Those were only some of the questions running through our minds before the inspection.
To ease our minds a little, we decided to accompany our inspector as he did his thing, which brings me to my first point of this guide.
Follow your inspector as they do their thing.
This is huge! Make sure you grab a pen/pencil and some paper and write down EVERYTHING they say.
It doesn’t hurt to take pictures of things, too. Also, don’t be afraid to ask questions! YOU’RE paying THEM to make sure your future house is safe and worth the investment.
What questions should you ask?
We personally made an outline, section-by-section, of questions to ask. Here are some of the things we asked (feel free to ask more or less, this is just what we did!):
Foundation: Any foundation cracks? Are the floors even? Any leaks? What type of foundation is it?
Electrical: Are the outlets grounded? Is there any knob-and-tube wiring? How old is the wiring? Is the panelbox organized and labeled? What type of fuses are in the panelbox? Do all of the outlets and lights work? Are there GFCI outlets in the bathrooms? The rest of the house?
Water/Plumbing: What kinds of pipes run through the house? Was the home winterized? Are there any leaks? How old is the water heating system? Where is the water meter? Is it city water or well water? Do all of the toilets flush? Do the sinks run? Does the hot water work? What’s the water pressure like?
Windows: Are any windows cracked? How many panes of glass are there per window? What are the window energy ratings? Do all of the windows open and close with ease?
Doors: Do all of the doors open and close? Are exterior doors able to be locked?
Heating/Cooling: What type of heating? How old is the heating system/furnace? Does the heat work? Is there central air? Does the air conditoning work? Are the air ducts clean? Do the thermostats all work?
Applicances: Do they all work? How old are they? Will they need to be replaced soon?
Roof: How old is the roof? Does it need to be replaced soon? What type of roofing is it? Does the roof leak at all? Is there any evidence of ice dams during the winter?
Insulation: Is the home well-insulated? How much insulation is in the walls/attic? Would this home be efficient in the winter?
Mold/Water Damage: Is there any mold in the house? Is there any dampness or water damage?
Sorry if I forgot any questions! Feel free, again, to ask your own or ask your inspector to narrate everything they do. Most of them are more than happy to get you involved!
What are some major things to watch out for?
If the home has any of these issues, you might want to reconsider purchasing it:
Electrical problems: Not only is re-doing the electrical on a house EXPENSIVE, but ungrounded and faulty wiring can cause major fire and safety hazards.
Foundation issues: If the home has foundation issues, you might want to steer clear. These issues can lead to collapse, wall/floor sagging, and foundations cracks can lead to water damage, which can be expensive to resolve.
Roofing: Unless you have a bunch of money to re-do the roof right away, stay away from damaged and old roofs. They are expensive to replace, and they can lead to water damage/roof collapse!
Heating/Cooling problems: Again, HVAC is super expensive to re-do. and fix!
Again, not all of these issues are a death sentence! If you have the money to fix these potential problems right away, go for it! But most of us don’t, and since this blog revolves on staying within a budget, I highly recommend NOT buying home with these issues.
How do you find the right inspector?
Research, research, research!
Do a quick Google search on inspectors in your area. Google Reviews are a great way to find out if a company is reputable and does good work. Most companies will also list their inspection costs on their websites, too.
You can also call around to figure out cost, availability, etc.
I’ve found that most home inspections cost less than $300. Sure, it’s a pretty penny, but it’s definitely a MUST when going through the home buying process.
Final takeaways:
Remember, inspectors aren’t perfect. There’s a chance that they might miss something, but if you do your research and compile questions to ask during the inspection, you should be covered!
Also, don’t stress if the house you wanted ends up being a hazardous and broken-down mess. There are HUNDREDS of other houses you can get within your budget that have fewer problems.
If you’re reading this in order to prepare for an upcoming inspection, then good luck! I hope everything works out for you!
I graduated from college in December of 2018 and by April if 2019, I was a homeowner!
Granted, I live in an area that has a relatively cheap housing market compared to other places in the country, but regardless, I did it!
Before my husband and I bought our home, we were renting a SUPER small two-bedroom apartment. It definitely didn’t have enough room for us, let alone our two cats AND all of our stuff!
Even though Logan was still in school, I knew we needed out of this renting B.S., and we needed out FAST. It was nothing but a money pit! We were paying $900/month (plus electric) to live in what was basically an upscale cubicle.
So, desperate to find a house, I turned to Trulia.com. That’s where I made my first mistake.
If you’re serious about buying, contact a local real estate agent.
I typed in the area I was looking at and was IMMEDIATELY hit with over 100 listings! Since this was my first time looking at houses, I was definitely feeling overwhelmed.
Plus, over half of the houses were WAY out of my price range! Thankfully, most real estate sites have filters where you can select your prince range, square footage, etc. I selected my price range to be as low as possible, but was STILL hit with an overwhelming number of listings.
I scrolled through the houses, “favoriting” the ones I liked. But, you have to remember, the people that list these homes are listing them for one reason: TO SELL THEM. Again, I was feeling overwhelmed with vocabulary and technical talk that I just wasn’t used to. How was I supposed to know if gas or electric heating was better? How was I supposed to know what “knob and tube” electric was? My head was spinning.
Thankfully around the time I was looking for houses, I had a great boss that suggested I use a local real estate agent. Not only do these agents know the housing market, but they can also tell you which neighborhoods are good, what’s wrong with the house, etc. Plus, my agent actually made me my own website where he added homes that ONLY fit my criteria. He answered any questions I had honestly, and he REALLY narrowed down the search.
Have all of your paperwork ready.
This. This is what f*cked me up the most! Before you even look at a house, get all of your tax paperwork, proof of income, driver’s license, social security card, proof of employment, and ANY paperwork relating to money and your identity together! I can’t tell you how many times I had to frantically rip my apartment apart looking for my freakin’ 1098-T tax form from my university or my credit card statements from months ago.
Once you get all of that stuff together (your agent will tell you exactly what you need) go ahead and scan all of it and make a nice, presentable PDF document of it. I personally don’t have a scanner, so I used the FREE app called “iScanner” on my iPad. It worked wonderfully!
Getting all of this stuff together will save you a lot of time in the long run.
CHILL on the purchases!
Seriously, chill on debit/credit card purchases! Do this immediately! Perhaps the biggest thing that lenders look at is your credit score. If you have a high debt-to-income ratio, chances are, you’ll be turned down for a mortgage.
What exactly is debt-to-income ratio?
It’s basically the ratio between the amount of debt you’re in to the amount of money that you make. You can calculate your ratio by dividing your monthly expenses by your monthly gross income. Most lenders won’t accept a ratio of more than 50 percent.
Honestly, this was the hardest step for me! I LOVE shopping. And I LOVE my venti iced-vanilla latte every morning. But for a few months, I had to settle for making coffee at home. Mortgage lenders look at both credit and debit accounts, so the less you spend during this time, the better. They want to see fiscally-responsible behavior, and racking up $200 worth of transactions at Starbucks is definitely the OPPOSITE of that!
Remember, if your buying a house with someone else, they need to do the same. My husband was not happy during this period since he couldn’t buy any expensive guns or gun parts (his passion.) but I promise, it’ll be worth it in the end!
Save money for a down payment.
You’ve probably heard that you need at LEAST 20 percent of the home’s price for a dwnpayment.
I’m going to tell you now, this isn’t the case! We paid around 5 percent down for our house. Instead of taking a conventional home loan, we took an FHA (Federal Housing Administration) loan, which accepts lower down payments and lower credit scores.
The catch?
We had to take an online class and exam about home ownership. But don’t worry, it was super easy! We also took out a 30-year loan versus a 15-year loan. Sure, it’ll take us longer to pay back, but we can always refinance in the future if we need to.
As for actually saving…
We cut back on eating out and driving. That way, we saved money on the two things we do the most: driving and eating. We also sold things that we had lying around (like my Apple Watch) that we decided were less important than having a house! You can always reach out to financial advisors in your area, too. They’ll help you budget and stay on track for saving for that down payment.
DON’T use the mortgage calculators on realty sites.
Oh, man. I wish I would’ve known this sooner.
A lot of times on sites like Trulia.com and Realtor.com, there’s a “calculate my monthly payments” button. DON’T CLICK IT!
These buttons bring you to a third-party site that ask for personal information (like your social security number) where they then dig into your credit and everything to determine if you’re able to get a loan. You will eventually have to provide lenders with this information, but remember, multiple credit checks bring down your credit score!
My advice? Get a loan through a trusted bank or financial institution. I personally bank with Flagstar, so getting a loan through them was easy-peazy! They already had all of my information on file, so it was quick and efficient.
So, basically…
Save money, limit your loan preapprovals, and keep your credit score up! It’s pretty simple. Cutting back on expenses might seem hard, so I suggest starting an Excel spreadsheet to list your daily spending.
It’ll help you figure out what you can save on, as well as what your debt-to-income ratio is.
Thanks for reading! My next post will regard moving into and cleaning your new house in a budget.
The Thrifty Redhead 