Why I gave up every money rule to buy my house


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Here’s what: Sometimes you gotta throw out the financial rulebook

First hello! I’m back from maternity leave and checking your inbox every other week. Thank you for reading.

While I was on vacation, my husband and I had an epiphany: we needed to move – as soon as possible. We purchased our Philadelphia home sight-seen in December 2020 while living in Los Angeles. It was affordable, and with a mortgage rate of 2.9%, I had financial stars in my eyes. We could live the way we wanted without worrying about money. And so we moved.

But over the last year we’ve started to realize that we weren’t in love with our neighborhood, and there were some issues with the house that drove us up (like a neighbor’s tree pouring so much sap in our yard that he became unusable). The final straw was a shooting that took place two blocks away shortly after our baby was born.

However, we weren’t exactly in an ideal position to buy the next house. We have savings, but they were earmarked for things like home and car repairs and our emergency fund, and neither of us have family money to borrow for a down payment. At the same time, we knew that if we wanted to move to our dream area, we had to do it now. Home values ​​there had risen 11% over the past 12 months (compared to 6% in our area) and with the upcoming rate hikes the cost of borrowing would only go up.

Even though it felt so wrong to me as a personal finance editor, I threw away the home buying rulebook to make our move happen. Never use your emergency fund for a down payment? No, out the window. Not borrowing from your 401(k) unless it’s an emergency? Bye-bye rule, hello 401(k) loans. Don’t sell if you’ve lived in your house for less than five years? Bring it to market! I even started buying houses before I had a mortgage pre-approval in hand. Blasphemy.

I might do these things for a number of reasons: First, I know the rules, so I felt confident that I could safely break them. Many first-time home buyers make costly mistakes because it’s difficult to assess the risks of something you’ve never done before. Fortunately, I have some homeownership experience. Second, I knew our savings would recover. We have an asset (our current home) and even if it were only sold at the lower end of its market value, we would still walk away with cash in hand. After all, we are privileged to have a stable income. I knew money would continue to come in as we make this massive transition.

And you know what? I’m happy to report that everything has worked so far. We accepted an above average offer for our current house and completed the new house in trust in a few weeks. Our new home is in a great area that we know we love and we are not sad about leaving our current home.

Homeownership is not always the most sensible choice as it can be very expensive and you are never guaranteed to make money selling your home. If you’re thinking of buying a home, especially as a first-time buyer, talk to a financial planner first and make sure you can afford it. But for many people (myself included) homeownership is an emotional and lifestyle choice, and sometimes, when the conditions are right, you have to ignore the dollar-and-cent logic to get where you want to be.

— Stephanie Hallett, Editor-in-Chief of Personal Finance Insider

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