That’s right; we are finally all moved into our first home. Meaning I am officially a homeowner! Check it off the bucket list.
How I Did It
After I became debt free in 2017, I began planning my next move. I built up my emergency fund, increased contributions to my 401k, maxed out HSA/Roth IRA, contributed to taxable investments, and started saving cash for short-term money goals. One of those was buying a house.
I was putting away $1200 a month ($600 every paycheck automatically) into my high-interest savings account for about 15 months to be able to cover the down payment and additional house related costs. Paying off debt back in 2014-2017 put me in a proper mindset to live on less and prioritize saving (before it was for debt payoff, now its actual savings).
I built up my credit score through the years by lowering my debt/income ratio, always making on-time payments in full, and opening new lines of credit (travel credit cards) and not canceling them. I was able to hit an ~800 credit score when I was starting to look for houses.
With my credit score and cash reserves, I was able to be pre-approved by multiple lenders without any issues. Most lenders approved me for much higher than I was looking for, too.
If you’re interested in hearing why I bought my house this year – check out some of my previous posts where I go into more details here and here.
Closing
The closing process of my house went relatively smooth. I had to send in some pay stub information a few times and previous tax returns, but nothing too crazy.
One semi-stressful part was transferring my downpayment from CapitalOne360 savings account (where my downpayment money was stored) to my bank account. Typically it takes 48hrs (business days only) for transfers to clear. My closing date was a Wednesday at 8 am, and I didn’t realize that the Monday before was a bank holiday (Veterans Day).
I started the transfer on Thursday night before (after hours) and thought I would be fine. However, Tuesday came, and the money wasn’t in my account. I still needed to get a Cashiers Check for closing. I called both banks, and there wasn’t much they could do to expedite the transfer process.
Luckily, the money showed up in my account Wednesday morning around 5 am. I went to the bank early, and they were kind enough to give me a Cashiers check in the drive-through window. I got the check about 15mins before my closing appointment.
Note to future self: Give at least a week buffer when transferring large sums of money that need to be paid on a specific date.
The Numbers
Cliff notes: The house I bought is a new build, 1570 sqft, 3 bdrm, and located just north of Austin city limits. Location is close to large corporations and in a growing area.
House Cost – $243k
Interest Rate – 4.75%
Down payment – 5% – ~$12k
Closing costs – $0 – Lender paid
Mortgage (Including PITI) – $1738 per month
Previous Apartment rent – $1270 (split with fiancee – $635 each)
Goal – Fill remaining rooms with roommates and be able to live for free or at least close to free
Large House Related Startup Expenses
Home Inspector: $325
Washer/Dryer/Refrigerator: $2236
We waited for Black Friday pricing on appliances at Lowes, I bought discounted gift cards online (6% off $1000 gift card) and bought Lowes 10% coupons on eBay for $2. This strategy worked great and saved us a ton.
Sectional Couch w/ ottoman – $1713
We spent the money on this, so we didn’t have to buy any other furniture. The cost was inflated a bit because we purchased the 5-year protection plan, and delivery charges.
Water Softener & Plumbing for Soft Water – $2446
In central Texas, the water is very hard. With the water having so much calcium/iron/magnesium it can cause damage to appliances, plumbing, and kitchen/bathroom fixtures in the long term (plus its harder to clean). After speaking with other experienced homeowners, I decided it was worth getting soft water.
The only issue was my house wasn’t “pre-plumbed” for soft water. Meaning a plumber would need to dig in my yard to lay down water piping, install a “loop” (needed for soft water), drill through my garage for piping to get to the water softener, and then install piping to the drain behind my washer inside the house.
It was a big job. I got quotes from a lot of places, and most were in the $4k range. I ended up calling the company I bought my water softener system from on Amazon ($546). They had a recommended a company they work with in Dallas area. I called that company, and they were willing to drive to Austin and do the plumbing job for $1650 + $250 for the water softener system install. So I decided to move forward with them.
Overall, I’m glad I did soft water. It was a substantial expense upfront, but I feel it will be worth it long term. Its easier to clean the sinks/showers and we can feel the difference in the shower (our skin was getting very dry before). I also have the peace of mind that our appliances will last for many years without issues from hard water.
Other home purchases:
Ring Doorbell, front door keypad (not giving out keys), Ceiling Fans (2)
Next Steps for House Hack
For December we have been still unpacking, and assembling things around the house. I have also been traveling for the holidays. So we have been enjoying the home to ourselves thus far.
The plan for the house hack is the following:
AirBnb
January – Spare room is live on Airbnb. The listing has already been set up and as of today, we have 3 guests who booked so far.
However, our listing has been up for a few weeks now, and it doesn’t appear we are going to hit our house hacking goals with Airbnb at this time. Since we are new, our prices are pretty low to try to attract people to stay and are not going to make a big enough dent in our mortgage payment.
I think I would need 3-6 months to get enough reviews to get more people wanting to stay to make Airbnb worth it. Also, after talking with my Fiancee, we would rather have one or two full-time roommate(s) rather than different people coming in throughout the month. If we lived in downtown Austin or next to a College campus, I think Airbnb would be the right move, but right now we believe a full-time roommate is the better option for us.
Roommate
Since we have a few Airbnb guests in January we are planning to allow roommates to move in Feb 1st.
Right now we are in the process of taking pictures and creating the listing for the rooms.
I have two open rooms that I am planning to list. One room is already furnished with a bed, nightstand, shelves, mini fridge, etc. The other one I will leave unfurnished.
Our goal is to finish the listing before new years and then start interviewing people for the rooms in January.
I am in a few Facebook groups (Traveling Nurses,
I am excited to put everything thing I learned from the House Hacking course into action.
Final Thoughts
I am excited to finally be moved into my house and finishing up unpacking and getting ready for roommates. The large house expenses are behind me and now I can look forward to reducing my housing expenses through house hacking.
I will keep you updated on my progress monthly, as well as details around the process of getting roommates and monthly income/expense.
Question for You!
Any tips on how to market to potential roommates?
Do you have any advice or tips for me as a new homeowner?
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Gary is the author behind Debt Free Climb, a blog that shows how to live intentionally, pay off their debt, build a side income, and travel the world
Gary's favorite free financial tool he’s been using since 2017 to manage his net worth is Personal Capital. Each month he uses their free Investment Checkup tool and Retirement Planner to track his investments.
His favorite way to save automatically is Capital One Performance Saving, a bank that allows him to create multiple high-interest savings accounts and create an automatic savings plans for each account. He uses these features to meet short and long term savings goals.
His favorite way to save money on car insurance is by using Root, an app-based car insurance service. He saved $240 this year after switching from Geico to Root
- DebtFreeClimb v2- Our Debt Freedom Progress Report - June 17, 2020
- Trip Report: Our Honeymoon (not on a budget) - February 7, 2020
- My 2019 House Hacking Review - December 26, 2019
Glad to year you are getting settling in to the house! Wishing you luck as you begin working the house hacks.
Congrats for closing on the house! I like how you saved money on the appliances.
Thanks! Yea I was happy that the gift cards worked out. Lowe’s coupons were also big savings if your buying appliances.