Ever wanted to take a peek inside someone else’s home buying journey? Well, you’ve come to the right place. We’re lucky that Carrie S. Nicholson, one of the 15 partners in the Down Payment Movement has agreed to share her own story as she begins the process of buying a home. Keep reading to hear her story.

The home buying process is different for everyone, especially when you move to a new state. I was born and raised near Dallas, Texas for 30 years while my husband was born and raised near Denver, Colorado.

After living in Texas together for several years we decided to move to Boulder, Colorado to be closer to his side of the family. We’ve been here for just over two years and absolutely love it! The scenery, outdoor activities, and lifestyle continues to be some of the main benefits we enjoy every day.

For those reasons, we’ve decided to put down roots and transition from being renters to becoming homeowners. The only problem is that the Denver, Colorado area real estate market — specifically in Boulder — is very expensive. We may not be able to afford to live here after all.

Our Home Buying Process

Since 2012, Denver housing prices have steadily increased around 9.5 to 11 percent every year — and there are no signs that the market is slowing down. The median list price per square foot is $345, according to Zillow, which means that the average price of homes in Denver are listed at $479,000.

In Boulder, the real estate market is even higher, where the median list price is $483 per square foot, according to Zillow. And the average price of homes listed here is $799,000. Eeek!

As I’m sure you can imagine, all of this comes as a big sticker shock for this homegrown Texan! I purchased my first home when I was 22 years old for $98,000. It was nearly 2,000 square feet, with 3 bedrooms, 2 bathrooms, and a two-car garage.

If you’re doing the math, that means I paid about $49 per square foot for my first home (2,000 square feet divided by $98,000). However, that was 10 years ago and the market has changed quite a bit since then.

Right now, we’re in the beginning stages of feeling out the local market, and determining whether or not we’ll be able to stay in this area. We’re also trying to figure out if living here is just too expensive or not a smart investment for our finances.

In the end though, choosing to stay in Colorado inevitably means that we’ll be paying more per square foot. Colorado’s tourism and population has grown dramatically, and we have to face the facts — if we want to live here (and we do!) THIS is what it’s going to cost.

Home Buying Goals and Savings

Since moving to Colorado we’ve rented a small 675 square foot apartment for $1,800 a month. We’d like to be able to have a mortgage payment for that same amount, but with a little more space and possibly a small yard.

At the beginning of 2018 we officially decided to start the home buying process by opening up a separate savings account specifically for our down payment. We know we’re going to have to look at starter homes like condos or townhouses, since a single-family home in this area just isn’t within our budget.

What We Can Afford

Using the calculator on the Unison website, we know we can afford to purchase a home for about $400,000. Our goal right now (since we have such a short time frame) is to save up a 5-10 percent down payment of $20,000-40,000 giving us around a $2,024 per month mortgage payment.

Our goal is to spend between $1,800-2,250 for our monthly mortgage payment, which will be about 25-30% of our income. However, this figure also has to include estimated homeowners insurance and annual real estate taxes.

What We’re Saving

So far we’ve managed to save $5,400 with the goal of saving as much as we can over the next 5-6 months. Since my husband and I are both self-employed, the amount we can save varies every month depending on our income.

However, we do have a basic savings goal we’re trying to hit, which is about $1,000 every month. This is thanks to being on a shopping ban — where we only purchase the essentials and nothing else — pausing all travel, decreasing retirement savings, and taking on a second job.

My business operates where I receive large chunks of income several times throughout the year. In the past, I’ve used these funds to pay cash for LASIK eye surgery, and a down payment for half of our new car’s value.

I expect to receive another large chunk of income in the early summertime that will be around $7,000. Obviously, this will get us close to a decent down payment, but we’d like to save up more money if we can.

But since our current rental lease expires September 1, 2018, we don’t have a lot of time to continue saving. So we’re saving like crazy as fast as we can! There is the possibility to extend our rental agreement, but it’s not something that we want to do unless we have to.

With my consulting business growing so quickly, and my husband’s personal chef business taking off, we’ve completely outgrown our space. We need to upgrade to a bigger home sooner than later!

Challenges and Home Buying Fears

One of the biggest challenges is that time is not on our side. We’re hoping to get into a house by late summer, but we know that may not actually work out since our down payment may not be large enough.

We have several backup plans though. We’re open to the possibility of renting-to-own or becoming location independent for a few months. We have also thought about withdrawing $10,000 from our Roth IRA thanks to the first-time homebuyer clause.

And of course, Colorado residents have the option to apply for an FHA loan instead of a traditional mortgage. This type of loan only requires a down payment to be 3-5% of the purchase price.

There are caveats to our lower $400,000 housing budget as well. The main one being that we haven’t officially been pre-approved for a mortgage yet, so we don’t know IF this number is something we can actually afford.

We’re hoping to continue improving our credit and gathering important income documents (since we’re both self-employed!) to better prove our creditworthiness. We plan to get pre-approved for a mortgage in the next month or two.

Another challenge we’re facing is that we may not be able to purchase a home in Boulder for $400,000. Decent starter homes here are usually listed for $500,000 or more. And they tend to sell for over list price!

We’ve gone to a few open houses in the area, as well as signed up for notifications on real estate websites, and I’m a bit worried. There’s definitely the possibility that we will have to make a lateral transition from our apartment to a townhome or condo with the same amount of space.

At the very least it, owning a home is something that we can call ours, and that’s the first step to building equity and hopefully upgrading in the years to come. Everyone has to start somewhere!

Joining the Down Payment Movement

I personally joined the Down Payment Movement because a collective saving effort makes things more fun, and also more attainable. Saving up for a down payment on a home is no small feat, and it’s encouraging to know that there are other families and individuals out there saving along with us!

My husband and I just started taking the first steps to owning a new home together. We will still have many more steps ahead of us. But in an effort to reduce the stress and unknowns that come with purchasing a home, we’ve decided to take our time.

We aren’t planning on signing on the dotted line until late summertime, so that leaves us many months to prepare, save, build credit, and find the best mortgage offers. We’re also keeping our options open and aren’t limiting ourselves to a certain type of home.

Plus, as someone who works with a lot of financial startups, I’m open to the opportunity of thinking outside-the-box when it comes to our down payment!

Stay tuned for the rest of our home buying process as the months unfold!

If you are looking for more resources as you begin your own home buying journey, don’t forget to check out our Resources page

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