Since the housing market began its dramatic landslide last year, I’ve been pushing my fiancé to buy a house under the impression that this may be the most affordable time for first-time buyers. There’s a lot of real estate out there for sale, most of which has been sitting stagnant for several months. The lenders and agents continue to harp that this is a buyer’s market. And they’re right—it’s the best time to be a buyer if you’re not trying to sell a house first and have 20 percent to put down.

Being 20-Something Today

I’ve learned a lot since I started looking at homes, and one of those lessons is that unless you can put 20 percent down on a house, you’re monthly mortgage is going to be painful. There isn’t a lot of incentive for young people just getting started to do anything other than rent, because renting is still much cheaper here in Maryland. Everyone tells me that I’m throwing my money away on the apartment I live in, and I know in the long run it’s true. What those people don’t realize is how hard it is for a young couple to afford a mortgage these days.

More and more kids are attending college, and not all of those kids have rich parents to pay off the debt that builds while in school. I’m pretty lucky, but not lucky enough. I had a $10,000 scholarship, and the rest of my debt was split between my parents and me. I worked part-time between classes, and after I got a decent job with my B.A., I started making payments on the other half of my debt. Five years later and I’m still hurting enough that when I looked at the mortgage estimate the broker gave me, I cringed.

Sure, I’ve got great credit, but can I handle a mortgage on top of my college payments, car payment, insurance, food, gas, phone, cable, Internet, electric, etc.? It’s a good thing that my work pays for my graduate studies, but I have to foot the bill until the end of every semester.

Just because I’m preapproved for a home loan doesn’t mean I can afford it, and that’s something many buyers don’t realize until it’s too late. I’m trying to keep my hopes up though. My theory is, even though we won’t be able to pass the bill off to someone else when the washer breaks, at least we’ll have something of our own—something to start our life together in and build equity toward our real dream house.

My fiancé and I have been touring homes since just before the holidays. We went in thinking we wouldn’t mind something that needed a little work here and there—we could make it our own and build equity at the same time. But when we started counting up the work that would need to be done and got a better idea of how much we’d be spending in fees just to settle, we changed our minds. You know, maybe we’d better go for a house that already has a washer and dryer. Perhaps we don’t want to worry about kitchen appliances for another two or three years. Maybe we should ask about including new carpet and windows in the deal.

House of Horror

You would be surprised how many of the homes we toured were poorly kept. One in particular smelled so rancid, we just had to follow our noses to the source. When we opened the master bathroom door, it was as if we’d walked into a horror film (no, there were no dead bodies). It was speckled head to toe in mold and cat feces. Other houses had laundry rooms piled high with dirty clothes—I’m sorry, but the last thing I want to see when viewing a home is the owner’s nasty underwear. At one house, the owner had left the alarm on; even though he was well aware we were coming with our agent that day. Boy did we get a surprise when we walked through the front door.

Sellers, forget what those shows on HGTV tell you about repainting the kitchen, furnishing the third bedroom with baby décor, or putting a pergola in the back yard. Paint is easy—and personal, so leave that up to the buyer. Worry more about keeping the place clean, well insulated, and fairly up to date. We were more concerned with the condition of rugs and windows and appliances than anything else because they become an immediate additional cost for the buyer if they’re in poor shape, and that’s not something first-timers can usually afford after putting all their money down at closing time. One of the best houses we looked at was super clean (despite the fact the owners have a baby and a dog) and the kitchen smelled like chocolate chip cookies. Turned out, the seller had actually baked us a plate full and left it on the kitchen table. The cabinets were new and the refrigerator was stainless steel. They were also offering to have all the rugs professionally cleaned before turning the house over. We were impressed.

Making an Offer

The second lesson I learned was about making an offer. How much could we ask them to come down? Several people, all long-time home owners, told us that it couldn’t hurt to ask them as low as we wanted. It’s easier to start low and work your way up, but you can never go the opposite direction.What we, and they, didn’t know could have hurt us. Our agent explained there are three types of offers: a matching offer, a low offer, and an insulting offer. If you insult a seller, there’s a chance he won’t come back with an offer of his own. I’ve haggled with car salesmen before and done really well with the game, but this was a new concept to me. Not only do I have to rely on my agent to do the haggling, but I have to consider the seller’s feelings? My fiancé and I decided that asking a seller to come down $10,000 is a fair offer, but as we go back to discuss the process with our agent in the upcoming weeks, we’ll find out if this is as reasonable as we think. Buying a house is a complex process, so you need to know all the rules.

What You Should Know Before You Sign

My best piece of advice for first-time buyers is to do your research. Do not sign anything with anyone (broker, bank, agent, etc.) until you’ve seen all the costs broken down and you’ve worked out your monthly budget to a T. And don’t forget to shop around on the loan rate. I found a significant difference between lenders in just a week’s time of looking. Some lenders will try to talk circles around loan programs, avoiding the important thing—the rate they plan to offer. Don’t feel uncomfortable about demanding rates and an estimate of all your costs. There are a lot fees that most people are not aware of until a lender breaks them down. A good lender will do this for you without a question and without a signature.

The government has some fair loan programs for first-timers, but don’t let the fancy wording fool you. While these programs will help cut costs, they won’t cut everything. You will still need a significant chunk of change to make settlement on a house. Your best bet is to be flexible. Not afraid of a little extra commute time? Not really worried about how hard it will be to sell in five years? Hardly miffed at neighborhood crime rate? Then you could probably find a nice house for cheap with property taxes that won’t kill you. If you think you can do it, great, but if not, don’t beat yourself up. The prediction in the media is that the market may not be making its way up the ladder for a few more years.

If you’ve toured some real house horrors or got your foot stuck in the foreclosure crisis, The Dagger ^[1]wants to hear about it.

UPDATE: Thanks to Jamie Smith Hopkins and her blog at the Baltimore Sun, The Real Estate Wonk ^[2], for linking to this article ^[3].