Home Ownership

Last week I signed the papers and received the keys. I’m OFFICIALLY a home owner.

It’s been a pretty crazy week. Having to hand over a nearly $10,000 check was quite an experience.

Since then it has been a whirlwind. I hired a guy to replace the popcorn ceilings in the house. But I couldn’t afford the whole house, so he’s just replacing the ones in the living room/dining room/kitchen and in the master bedroom and bath. The other two bedrooms, basement, and other two baths will have to wait and just get put on the “to do” list that seems to be ever growing.

I’ve invested myself into project “remove all brass” – which thus far has entailed the purchase of 14 new door knobs, two ceiling fans, one dining room light, and 3 fixtures for the 3 bathrooms. The door knobs are now installed (that was last Saturday’s project) and the fans and dining room light are being installed by the guys doing my ceiling.

I am just now starting to pack up my apartment and remembering very vividly how much I hate packing!

Just like every move I’ve ever done, this is a great opportunity to go through my things and assess if they’re worth keeping. I’ve got a few bags of clothes to get rid of and some books so far. I know that the “give away” pile will get bigger as my rate of packing increases.

I feel very strapped for cash and Mr Woodpecker and I have both agreed that after the ceiling is replaced we’re going to put a hiatus on new projects until our savings account is at a comfortable level. For me this is around $3,000 now.

Being a home owner is so far great – well, it will be greater when I finally get to move in!

T-minutes 2 Days

I close on my house in TWO days. TWO.

I’ve called all the utility companies. Let them know that my closing date is the 9th. Now I’m just waiting to find out from my lender EXACTLY how much I’ll need at closing so that I can get my cashier’s check tomorrow.

I’m very nervous. Nervous about how much I’ll be paying each month, the changes to my budget, increased utility expenses. Everything. Everything is very nerve wracking. 

I feel so very unprepared for this now that the day is almost here. From what I’ve read this is a very normal feeling.

I’m feeling all the more how much more important it will be for me to get a hefty savings account as soon as possible.

Two days… unbelievable!

Weight Watchers

My best friend in Kansas is getting married in June. And guess what! I’m her maid of honor!

We’ve got our dresses (she let me pick whichever dress I wanted as long as it was a certain color) and everything is going really well.

Except, she’s been very sick the past 3 months and was recently diagnosed with hypothyroidism and fibromyalgia. The net result is that my former workout partner has been out of commission for the past 5 months. Last week she told me: I can’t fit into my wedding dress. I’m going to join weight watchers.

Well, being the good maid of honor I am (and having about 25 pounds I wouldn’t mind dumping) I immediately offered to join with her. That day we were at a Weight Watchers meeting and I had forked out $42.95. (gulp)

We vowed to give it three months of weekly meetings and monitoring points.

I had my first weigh in (162.8 lb) last Thursday and have been following the Weight Watchers plan diligently since Thursday night after the meeting.

Some things I’ve noticed:

• I feel way more hungry when I track what I eat than when I don’t. Thinking about tracking my food makes me hungry.
• Weight Watchers is a lot like budgeting. You get a certain amount of points (dollars) and you have to decide if what you want to eat is worth the points (money). I find myself frequently looking up the points values for foods and saying “Woah! Not worth it!” and choosing something different. Other foods I look up the points values and say “Well, I really want to eat it, so I’ll just have to take those points and cut back in other areas.” Yeah, it is pretty much just like budgeting.
• With Weight Watchers all fruits and veggies (with corn, peas, and white potatoes as exceptions) are 0 points. Oh you sneaky Weight Watchers – I’m on to your ruse! Here’s what they do… First, eat less than you normally do but you still use all your points. Then, you’re still hungry but you’ve used up all your points. Next, you decide to eat some bell peppers or a banana to make you feel full because you’re still hungry. Finally, YOU’RE EATING MORE FRUITS AND VEGGIES! They’ve sneakily added fruits and veggies to my diet and that was very clever how they did that. I’m eating more fruits and veggies now than I ever have. Jerks.

I’m very happy so far about joining even though it is costing a pretty penny.

2012-2013 Contract

Yesterday I got my contract for next year’s school year. I was a little worried I’d get bumped down to a 10 month contract from the 11 month that I currently have. This would be a decrease in pay of around $5,000. Because of how academic contracts work, while it would be a decrease in pay it wouldn’t be a decrease in my salary rate. Instead of getting $5,000 per month for 11 months I’d get $5,000 per month for 10 months. So less overall money but not a change in rate of pay. It’s weird and sometimes confusing, but I also have the opportunity to work in months that I’m off contract, so it kind of works.

ANYWAY, I was afraid that I’d get bumped down to a 10 month contract so I was VERY excited to see that I will be staying at an 11 month contract.

However, they are still not contributing to our retirement (we lost this benefit March 2011 and still haven’t gotten it back) and no one got any raises this year. Well, somehow this years contract was $900 more than last years. But I think this is based on promotion from a second year professor to a third, not a regular raise. Again, this faculty contract thing is weird.

The moral of the story is I was exceptionally pleased to see that, despite my fears, I won’t have a decrease in my salary next school year. Yay!

$10,000

One of the things that constantly surprisesme about money is my ability to somehow get large sums of it when I really want something.

For instance, three years ago I needed to save $2,000 for a trip to Europe with my grandma. I had 3 months to save up for the trip and was able to get $2,000 with a lot of hard work and very little effort.

Now, I’m saving for a house down payment. I need to get $10,000 for down payment and closing costs. And, as of today, I have $10,119 (withOUT touching my emergency fund, folks!). With nearly a month to go until closing I’ve done it. Which is pretty amazing. I only decided one month ago that (indeed, after 2 years of pining and indecision) that I did in fact want to buy a house.

Yet, somehow, after 4 years of blogging I still haven’t managed to pay off this last credit card debt of $12,000.

That’s right – 3 years ago I could get $2,000 in 3 months, now I can get $10,000 in a single month – but somehow in 4 years I haven’t been able to get $12,000? (Anyone else see the Math irony?)

It’s like, getting something for my money that is tangible and immediate is so much more of a reward for me than getting out of debt. I know, I know, I know about all the awesome things I can do once I’m out of debt. How all that money will be mine and working for me, but somehow that isn’t as exciting as a vacation or a house…

I guess once this house thing settles I’ll have to somehow find the motivation to get an extra $12,000 to pay this darn thing off once and for all.

Help!

The House Wishlist

All I can think about lately is this new house (and the new puppy I’m getting this weekend, pics to come!).

There is so much that I’ll need to buy and get done. It is a bit overwhelming!

I’ll have two people living with me when I move in, so they’ll be paying me rent. While I can afford the home on my own, the extra cash will help make living in the house a little easier monetarily. The plan is that all money that I get from my “tenants” will go to a savings account for the house! Between the two tenants I’ll be getting between $600-1000 per month (it is variable because one of them is my dad who pays me by the time he will spend in the house. $100 to store his stuff, $100 per week he is in town). The other “tenant” is Mr Woodpecker who will be paying $500.

So here is the “order” by which I’m planning on buying new things for the house:

1. Refrigerator - the sellers are taking their fridge. So the first order of business is a new fridge. We’ll be sporting a little portable fridge until I buy my new fridge. Since I have to buy a new fridge I’m going to buy a nice one that doesn’t break the bank. I’m thinking a stainless steel in the $750-900 range. This guy from Nebraska furniture mart is on sale for $900 with a $75 store reward card – that could be pretty useful! Time frame: 1-2 months from purchase.

2. House Emergency Fund Part 1 – The down payment, while I’m not using my emergency fund, is using the cash that I’ve had saved up for years as my back-up, super safety net, emergency fund. As such, I’m already feeling a little exposed not having it. So the second thing I’m saving for is a home emergency fund of at least $3,000. This is in addition to my personal emergency fund at $2,000. Time frame: 5 months from home purchase.

3. Backyard fence – One of the reasons I’m getting a house is to have a place where my puppies can roam in the backyard without me putting them on a leash. So a fence around the backyard is a pretty high priority. The approximate cost will be $2,000 for the fence I want ($18/linear foot, $90 for a gate). Time frame: 7 months from home purchase.

4. New kitchen table – Well, “new” is a misnomer as I don’t own an “old” kitchen table. Mr Woodpecker and I love playing board games so I’ll want a table for eating meals together and also for having friends over to play games. Approximate cost will be $600. Time frame: 8 months from home purchase.

5. New TV – Neither Mr Woodpecker or myself have a nice TV. Mine is old and we can’t even read words on it when playing video games or watching Netflix the resolution is so bad. Mr Woodpecker has a newer one, but it is the size of a computer monitor. As Mr Woodpecker and I both enjoy watching movies and television shows together and playing video games,  the next thing on the list is a new TV. Approximate cost will be $1000. Time frame: 10 months from home purchase.

6. House Emergency Fund Part 2 - I’ll already have saved $3,000 in my home emergency fund (step 2). After I get the things above I plan on saving to get up to $18,000 in my home savings fund (approximately 10% of my homes value). The savings fund can be used for home repairs, maintenance, etc, but like a regular emergency fund, if it is used it needs to be replenished as soon as possible. Time frame: 36 months from home purchase.

New House

So, it turns out that if you’re trying to figure out how much home you can afford and you’re trying to figure out what sort of homes fit in that price range that you’re going to find yourself in a position where you are pre-approved for a loan and find the perfect house at the perfect price.

And that’s really how it all started.

My realtor showed me quite a few places (about 25) that really made me doubt that I would ever find a home I loved in my price range. And then… he showed me THE house. He took me there on Wednesday. On Saturday I brought Mr. Woodpecker to see it. We both loved it and that day I made a very low ball offer ($5,000 less than list, the fridge stays, seller pays almost $8,000 in closing costs). They countered on Sunday saying the fridge goes, $4,000 less than list, seller pays $6,000 in closing. By Tuesday we have the inspector out to look at it and my dad came then to take a look at it. He said the house just blew him away.

So now I’m in the process of pulling together all my money for a closing date of May16th.

I did take the advice of my blogger friends and decided to go with the 30 year mortgage. Not because I couldn’t afford the 15, because I can, but because ultimately I liked the flexibility.

I’ve decided to pay the 30 year mortgage amount until the debt is gone and my savings is up to $5,000. Then I’ll start chipping down on the home mortgage by paying $500/month over.

Also – this is the best part – I’m only putting 5% down. HOWEVER, because of the option to pay upfront PMI at closing, I will actually not have to “suffer” through losing money every month to PMI. Why? Because that is part of what the seller is paying at closing. They’ll be paying $3,000 towards my upfront PMI and the rest of my closing costs. That will save me about $80/month for approximately 5 years.

The house is beautiful. It was one of those moments where I walked in and I just *knew* I was in MY home.

It passed inspection with flying colors. The A/C, furnace, water heater, roof and half of the windows have all been replaced in the last 2 years. There are a few minor issues, like the garage door spring need a safety coil and the painters painted the outside dining room windows shut. But these are very fixable issues.

The house is a 4 minute commute to my work and in a wonderful neighborhood. I couldn’t be happier.

Now we’re in the phase of me getting all the money from my personal mutual funds so that I can lock in my interest rate at around 4%. I couldn’t be more excited!

The 15 Year Mortgage

I just had a wonderful conversation with Mr. Woodpecker about why I wanted to get a 15 year mortgage instead of a 30 year.

See, 15 years seems like an imaginable time frame to me. I can imagine working at my job 15 years. I can see living in a house for 15 years. I can see being with the same person for 15 years. 15 years, well, it doesn’t seem undo-able.

30 years? That is just about my entire life. That seems unsurmountable. I can’t even imagine – I’d be 60 by the time that loan got paid off.

By taking a 30 year loan I feel like I would be resigning myself to also having house payments. Always.

15 years? I can imagine the day where I finally send in that last mortgage payment. The house is mine. And then? That ~$1,000/month that I was paying on my mortgage – it becomes MINE. I could go sell the house, take the money and use it as a FATTY down payment on a new $300,000 house. Giggity! I could save that money every month for 5 years and have a kick ass $60,000. Then use that money to pay for a  nice home in cash. Or I could take that $60,000 and put it as a down payment on a beautiful home in the mountains that I can spend my summers at! Or I could buy a vacation condo in Mexico that I can visit in the summers. Or I could just invest it all and make gobs of money to spend in retirement or for a kick ass car or whatever the heck I wanted.

I could do… so much… because then my money and interest rates… they’d be working FOR ME!

I can’t imagine NOT doing a 15 year mortgage. I can afford it. And the possibilities at the end of the 15 years? Well, they seem ENDLESS!

Meet the Realtor

This morning Mr. Woodpecker and I met with the realtor to go through the entire home buying process. I explained to him all of my hesitations with buying a house at this moment and he was very reassuring and understanding about why I wanted to wait, which I appreciated.

He gave us a step by step through the process from getting pre-approval, to when I would be writing checks, to walking in the front door for the first time. Mr Woodpecker and I were both very excited, but I was also very happy to know that I had a realtor who understood why we wanted to wait at least a year.

The main thing I want to know at this point is: How much house can I afford? This gives me a better idea of how much I need to save for a down payment, whether this is feasible, and where I’ll need to look.

This of course requires a credit check. And so I wait… not so patiently… to hear back from a lender about what I can get approved for. I wouldn’t want to spend over $150,000 on a house because after that I wouldn’t feel comfortable affording the monthly payments.

Mr Woodpecker and I are excited, anxious, and motivated to get to the place where this house thing can be real and we can have a home with a yard and all that good stuff.

Now we just need to get the financial deck of cards in order!

Growing Up Fever

The last few months I’ve been itching for something. It as if my body or mind or very nature has been craving something to prove I’m not longer a child but instead a “grown up”.

I keep wanting those basic things that you think about when you think of  ”adulthood”.

A husband.

Kids.

A house.

The husband thing I obviously can’t run out and go get. I’m currently in a wonderful relationship with Mr. Woodpecker (if you’ve read Still Life with Woodpecker, you’ll understand why this is his nickname). However, we’ve only been dating for 9 months. And while it is serious, for both of us, we’re not at the point of thinking of marriage in the short term. Which there flies out kids as well.

So what is left? A house.

Thus why you find Mr Woodpecker and myself looking at open houses on Sunday afternoons. Doing MLS searches during the week. And tomorrow morning we’re meeting with a realtor to find out the entire process of home buying since we’re both property virgins.

Here’s the thing:  I’m the girl who has written post about post about why someone shouldn’t buy a house. Look, this post I even made a LIST of reasons why someone shouldn’t buy a house. No, I’ll wait, go look. And what do you know? I STILL fit just about every “do not” on that list.

I still have debt.

I want a house to feel “grown up”.

I don’t have 20% down.

I don’t even have a full emergency fund.

I know that all the signs point to “No, you can’t afford a house!” But there is this emotional, gut feeling that says “You want a house. You need a house. Go get a house, it will all work out in the end.”

So I’m looking. 

Last night I was reading Dave Ramsey’s The Total Money Makeover before I was going to sleep and of course as “fate” would have it he talked about buying houses in the section I was reading. And again it was reaffirmed to me: He said that saving for a down payment on a house should come AFTER you pay off your debt and AFTER you build up your emergency fund. Exactly what I knew 2 and a half years ago when I wrote the darn post about not buying a house.

When Mr. Woodpecker asked me how much of a down payment I thought I could afford I said “Well, I have about $8,000 in mutual funds, and if I bought in August I should be able to come up with $10,000 total for a down payment”.

WHAT THE HELL?!

I can imagine a scenario where I can have $10,000 IN CASH by August for a HOUSE, but I can’t come up with $12,000 to finish paying off my credit card?! What sort of backwards world am I living in?

So here’s the plan:

Step 1: Get out of debt. (DUH) Use the money that I thought I would be able to get as a down payment and use that to pay off my stupid debt.

Step 2: Save for emergencies. Without the debt monkey on my back, I can get to $5,000 in 4 months after I pay off my credit card debt. Maybe even sooner. (If I get fired, I have to be notified a YEAR in advance, making job loss a situation that isn’t as concerning for me as it is for most people because I’ll have a year to find a new position before the income stops.)

Step 3: Save for a down payment. I can get to that $10,000 down payment in another 8 months. I can start looking once I hit $10,000 and then keep looking until I find MY house after that. Depending on how things go with Mr. Woodpecker in the next year, who knows, maybe he’ll be contributing to this as well.

What this means is that instead of getting a house in August of THIS year I could get a house in August of NEXT year. However, by waiting a year I can eliminate debt and have a larger emergency fund. These are great “peaces of mind” for going into a home ownership situation.

I still want a house, badly. However I’ve decided I’m going to use this home desire to fuel my motivation to get out of debt and get my savings bumped up.

Here’s hoping…