Why I Abandoned Every Money Rule to Buy My Home

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Street view of a row of houses with dollar signs on graph paper background


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Here’s what: Sometimes you have to throw out the financial rule book

First of all, hello! I’m back from parental leave and will be returning to your inbox every other week. Thanks for reading.

While I was out on leave, my husband and I had an epiphany: We needed to move — ASAP. We bought our Philadelphia home in December 2020, sight unseen, while we were living in Los Angeles. It was affordable, and with a 2.9% mortgage interest rate, I had financial stars in my eyes. We’d be able to live the kind of life we ​​wanted without worrying about money. And so we moved.

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

We weren’t exactly in an ideal position to buy the next home, though. We have savings, but they were earmarked for things like house and car repairs and our emergency fund, and neither of us has family money we could borrow for a down payment. At the same time, we knew that if we wanted to move to our dream neighborhood, we had to do it now. Home values ​​had gone up 11% there in the previous 12 months (compared to 6% in our area) and with interest rate hikes on the horizon, the cost of borrowing was only going to rise.

So, even though it felt oh-so-wrong to me as a personal finance editor, I tossed out the home-buying rule book to make our move happen. Never use your emergency fund for a down payment? Nope, out the window. Don’t borrow from your 401(k) unless it’s an emergency? Bye-bye rule, hello 401(k) loan. Don’t sell if you’ve lived in your home for under five years? Put it on the market! I even started shopping for homes before I had a mortgage preapproval in hand. Blasphemy.

I could do these things for a few reasons: First, I know the rules, so I felt confident that I could safely break them. Many first-time homebuyers make expensive mistakes because it’s hard to assess the risks of something you’ve never done before. Luckily, I have some homeownership experience. Second, I knew our savings would rebound. We have an asset (our current home) and even if it only sold on the lower end of its market value, we would still walk away with cash in hand. Finally, we’re privileged to have stable income. I knew money would keep coming in while we make this massive transition.

And you know what? I’m happy to tell you it’s all working out so far. We’ve accepted a higher-than-asking offer on our current home and close escrow on the new house in a couple of weeks. Our new house is in a great neighborhood we know we love, and we have no sadness about leaving our current home behind.

Homeownership is not always the most sensible money choice, since it can be massively expensive and you’re never guaranteed to make money on the sale of 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 conditions are right, you have to ignore dollars-and-cents logic to get where you want to go.

— Stephanie Hallett, senior editor of Personal Finance Insider

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