Things I still don't know

Well, I'm closing on the house in 2 weeks and one day. It seems safe to assume it's really happening! It's weird to me that I can be this close to the deadline and not know some super basic things like:

• I close on the 4th, but when do I sign the papers?
• How much will my total closing costs be? 

One person told me that "closing" on the 4th means everything gets signed 24 or more hours before that, but I haven't gotten that confirmed. The title company will come to me and I'm around that week, so I guess I'll just be ready when they tell me to jump.

My mortgage lender says that the escrow people are the ones who come up with the final closing costs so I have to wait to hear it from them.

The majority of my down payment & closing costs is at Vanguard, not at my bank. I guess I'll transfer it all over to my bank sometime next week, so it's ready and waiting to wire whenever I find out where to send it.

I've also started looking at refrigerators, washers, dryers, curtain rods, shower curtains... it's weird to me that I haven't spent enough time in the house to know what color metal (if any) is in the decorative elements of the bathroom, so I don't know what color shower curtain rod to buy. Ditto on any curtains, actually. I guess I just have to spend time there before I can make those decisions - but some will be done sooner than others as I DO want to shower there sooner rather than later!

Aside from two mattresses and a desk chair (and a lot of terrific restaurant meals), I haven't been buying stuff for myself for months. It's going to be really weird to open the floodgates starting in January, though I do intend to do it all mindfully. I don't need that much stuff to get started. What I WANT may be another matter altogether! 

Still sitting tight

So, where are we on home buying? It's still looking good.

The inspection was good, and the seller addressed all the minor things we found and asked to have repaired. I say "minor" but I'm glad he opted to do them all, as they are outside my skill set. They were things like: remove the moss from the roof, caulk the nails on the roof, make the garage door open/close more smoothly, caulk the area where the gas line enters the house, make the pocket doors move smoothly... basic for a handyperson but beyond my skills at the moment.

The appraisal came back fine, they agree the house is worth what it's listed for, which is a relief.

I do think it's down to my lender. I've given them everything they asked for, I think, and am SO grateful we live in the day of online banking and pdf files. The only physical things I had to send them were my W-2s from last year and this year, two very recent pay stubs, and a copy of a letter from my employer verifying that I'm allowed to work remotely (they issued it this fall, so I guess it's a standard thing to give remote workers, probably for this very situation).

I close the first week in January and the title company has agreed to come to me for the signing, and they will accept a wire transfer. I was worried about that because I don't have a local branch for my bank, and didn't know how I'd get the closing funds in a certified check. I'm sure it would be possible, but this way I don't have to go down that path.

The final thing to do is plan the move-in, and I've just booked a truck and sent an email to a bunch of locals. Here's hoping I get a good turnout!

All set for the moment

I think I've done everything I have to do in this house-buying carnival. I completed all the to-dos from yesterday's post. I heard from my agent that the seller's agent says our to-do list was "reasonable" (his word) so hopefully the seller will do all the items. I can already think of something I left off and wish I'd asked for, but it's minor - and hey, maybe it'll be my first fix-it job.

So I think I'm in wait state. I also think I've paid for everything I need to pay for at the moment (credit check, earnest money, inspection, appraisal). So now I sit, at the ready to react when acted upon, but my to-do list is clear.

I think.

Oh crap: Christmas.

More to-dos

Boy, I know people buy houses without agents but I am SO glad I'm using one. I wouldn't have visited this house, and I wouldn't have made an offer, for two things. True, that's not the end of the world - as one friend accurately told me after my first bid failed, there will always be more houses. However this house meets my criteria in many ways and I will be happy if I get to be done with the house-hunting stage for a good decade or so.

Back to my agent: She also went over my inspection report in detail and worked with me to write up the addendum we sent to the seller last night. She reviewed the title packet from my title company to assure me there wasn't anything too unexpected there. She let me know I need to get on getting house insurance like today.  Yesterday, if I can swing it.

That bit surprised me - really? I need it now? But it's true both my lender and now my title company have requested that information. So I guess yeah I need it now.

So today's to-do list:
- Get house insurance
- Contact inspector to have him write up something certifying the house is pest-free (my lender insists, weirdly)
- Send in title information once I have insurance
- Contact my lender to give HER the insurance info
- See if my lender needs an image of the processed earnest money check.

Phew. Glad I don't do this on a regular basis.

As promised...

Well, the house inspection went well. He pointed out lots of little things but nothing that seems to be nightmare-worthy. My agent and I will ask the seller to fix a bunch of little things and then it seems like the sale will proceed!

Things that could still go wrong:
- seller could refuse to fix anything
- bank could disagree with valuation of house
- bank could decide I'm a sketchy proposition
- bank could decide the flip isn't kosher enough for them (though they've checked on it twice; since it wasn't a foreclosure they say they are not concerned)

In short, it's looking pretty good. So, a few pics, even though I don't think they do a good job of showing the place. It'll be easier with furniture, I think, and when I have all the time in the world to stage it.

exterior - the family room that was half the garage, and the living room. also - yard that needs plants!

 

looking from the living room past the front door and into the dining/kitchen area. I think that space needs an awesome work island/seating area sort of thing.

in the family/tv/party room looking into the kitchen area. to the left is the remaining single-car garage.

The kitchen: where the magic happens! I know a big 'ol fridge is going to make the place seem a lot smaller but it can't be helped. I'll try not to go TOO epically big. Also to the right of this pic is the hall to the 3 bedrooms and the 1 bathroom.

I dunno. This thing might happen. We'll see!

Paperwork

I've compared my two banks' mortgage paperwork. Bank A (the one that has lower closing costs but charges PMI) may not work anyway: the paperwork says that part of their title work is making sure the seller has held the title on the property for 180 days. This seller hasn't, and I know it - it's a flip. I'd called that bank and asked if it would be a problem and they said no, but maybe that person was wrong.

Anyway Bank B (higher closing costs, no PMI) has twice told me that won't be a problem. We'll see.

I took the mortgage packets to the coffee shop in the neighborhood belonging to this house, and afterward I walked past the house and through the park. I could be really satisfied there.

Still, I've felt strangely reluctant to delve into signing my name and assembling all the documents I need. I think I'm just afraid to get my hopes up.

Inspection is tomorrow - if it goes well I will schedule the appraisal. If it does not go well... well. No need to go there just yet I guess! But I will say: if it goes well, I will post pictures.

Crunching numbers

I'm deciding between two lenders for the mortgage on this house. It's interesting; I'm putting down 10% and getting a 3.375 interest rate from both banks, but their closing costs and monthly payments differ a bit.

Bank A will charge me PMI (since I won't have 20% equity) and slightly lower closing costs.
Bank B will not charge me PMI but they have higher closing costs.

After 1 year/12 payments, Bank B is 7% more expensive

After 3 years/36 payments, Bank B is 1.2% more expensive

After 5 years/60 payments, Bank B is .36% less expensive

After 7 years/84 payments, Bank B is 1.47% less expensive

I can't go a lot further than that though - because somewhere around year 7 or 8 the house would probably have 21% equity and PMI would be dropped. I did run some numbers assuming that PMI would drop after year 7, but Bank B still comes out a bit ahead (after 30 years it would be 1.3% less expensive), and goodness knows the house has plenty of room for me to grow into.

So as long as I stay in the house more than 5 years, Bank B seems like the ever-so-slightly better bet. I do have the cash, though it would be nice to have lower closing costs since I will have a lot of start-up costs... but I think I will keep my eye on the big picture.

Am I missing anything? Is it vitally important to keep closing as costs low as possible?

WELL.

I've made an offer and it's been accepted. It's a lot more house than I was looking for - 3 bedroom, living room AND family room; one-car garage. Only one bathroom, which is fine by me as I'm not a fan of cleaning those anyway. The kitchen is smaller than I'd like and the house was built in the 70s and isn't particularly cute.

But. It gets great light, with several skylights. It was recently remodeled and they did a solid job - even the closet doors are sturdy, real-wood affairs. There's room for my dining room table (heck, there's room for a MEGA dinner in the family room). There's a small outside patio off the kitchen, perfect for grilling. The front yard is ordinary now and will be a great place for a garden, and perhaps a patio or stone path or something to get rid of all the grass.

Also, it's in a great location - about a mile from a few of my friends, and under two miles from several really great neighborhoods. The neighborhood this house is in ("my" house? really?) has a small but great little business district - a garden shop, a brewpub type place, a slightly higher-end restaurant, and a great coffee shop. It also has an amazing and lovely park only a block or so away.

Also, the taxes are low and it looks like the principal & interest will cost about what my former rent was. I will have more expenses in terms of insurance, utilities, taxes, but I think it's going to be okay. 

So now we see what other roadblocks I run into. I'm oh-so-cautiously optimistic! Even though it's going to be nearly-empty for ages and ages! The inspection is Saturday. I'll take pictures.

omg house hunting

So, the owners of the last house now aren't sure they want to sell. They haven't given me the courtesy of telling me for certain, and the house is still listed, but it's more than 24 hours past when they were going to decide so... I guess the hunt is still on.

I appreciate that I'm getting a lot of sympathy from friends and acquaintances, and at the same time I find it irksome to hear that the market is crazy right now. I guess I can't think of a good way to offer sympathy, and the bottom line is I just have to deal with the market that I'm in, or get out of the market. Phooey. No wonder people went a little crazy during the boom time.

The value of a second visit

I revisited both houses dissected in my last post. If my house hunt continues, I will now require myself to visit every house twice before I make an offer, because the second look was very illuminating!

On second visit WOW was the small house small beyond reason. There is no way I could live there long-term, and in fact I probably would have had a panic attack after unloading my possessions into it. The living room could hold my dining room table OR my small couch, and it would have been hard to have guests stay longer than a night or two. That's just now how I see myself living.

On the other hand, the bigger/newer house continued to impress me. I had a friend along who talked about these new-construction homes with a contractor friend of his, and was assured they're built solidly because of all the codes. It's true this house was finished with mid-grade stuff like cheaper doors and lighting fixtures, but those aren't fatal flaws. The light inside is nice, it feels really spacious, it's got nice views of trees, and I think it would be plenty of house for me without being overwhelming. Of course I can't furnish it fully but that's okay - no rush on that front. And major bonus - the small front and back yards. I have been clear from the start I don't want to have a lot of yard to deal with. But the  yards are still big enough to each have a few raised beds, and I think I'll get a friend to design a pretty fence/seating area for the front to make it more welcoming to the neighborhood.

Another bonus is I already know people in the neighborhood - it's 2 blocks from where I'm staying now, and is around the corner from my real estate agents, who I really like. They're talking about throwing a party so I can meet the other neighbors they know. Exciting! 

In short, if it's not obvious, I'm putting in an offer on the bigger/newer house. I probably won't know til tomorrow since it's a bank holiday today; if the seller insists on seeing my pre-approval before accepting the offer, that will have to wait. So, we'll see.

Speaking of price/location

Today I saw five houses.
1) was nice and in a good location, but it's a big higher than I really want to pay, and we both think it'll go for even more than list. So I'm not going to invest any energy in it.

2) was surprisingly nice for the boxy boring house it looks like from the front, but it's not really in an interesting location, nor is it near friends, and then we realized it's near a not-so-nice housing complex (probably as bad as it gets in Portland, i.e. not so very bad) and my agent said we should forget it. I wasn't sold on it anyway so that was helpful.

3) a poorly laid-out newish construction home with just really weird layout and features... like a garage behind the house that you access from an alley, and there's a door to exit the garage by the sliding glass door of the house..which you can't unlock from the outside. So it would be useless as a come-home-with-the-groceries thing.

I did however see two houses that have me interested. They are about as different from each other as it is possible to be. Both are under my mental price cap.

House 1 is newish-construction, only three years old. I have a possibly irrational dislike of these houses, and my agent said she did too, but being inside is an eye-opening experience. It was built with quality ingredients like real hardwood, decent tile, granite in the kitchen, etc. It's got a small but nice backyard. The living room has a gas fireplace in it, and the main floor has a nice flow of kitchen/dining area/living area, and a half-bath. Upstairs are three bedrooms and 2 more bathrooms. In short it is way more house than I need.

Good things about it: it's walking distance to 3 friends' houses, it's walking distance to light rail, and it's got a nice garage (good for my car and bike; I don't really care that much about it otherwise). It's nicely set up for me to have guests visit. It has really good light inside it.

Downsides: you can hear the highway from it. It's not that pretty and it won't appreciate as fast as other houses do. Its taxes are a bit on the high side compared to other (older) houses. It's not near much in terms of a cute neighborhood/restaurants, but it's a half-mile from a grocery store, and has easy highway access.

House 2 - I mean come on - just looking at it, it's SO much cuter! It's also a lot smaller - only 700 sf in the main floor, and another 700 sf in a dry basement, accessed via an outside door. It's also been completely gutted and rebuilt and looks amazing inside. It has a main living area that flows into the kitchen, and two bedrooms that are connected by a bathroom.

Upsides: it's walking distance to a booming/up and coming part of town. It will appreciate much faster. It's cute. Much lower taxes - in all this house will cost $250 less per month than the other.

Downsides: huge yard. on-street parking only. much further-flung so it'll be a bit of a trip to visit friends (a 15-minute drive to the closest ones).

On paper, the bigger one makes sense. In reality I'm leaning toward the smaller one. I'm revisiting both tomorrow.

Further adventures in house hunting

I saw a few more houses earlier this week - four or five, I guess. They tend to blur together, mostly because I can tell right away I'm not interested in them, so I don't spend a lot of energy committing them to memory. Also, my memory is crap.

I'm seeing more today. I really like my agent - she knows that my price point is on the very low/competitive end of the market, so she's being creative. She is going to get in touch with real estate investors she knows to see if they're planning to sell any of their rental houses, and she's also talking to a contractor she knows who buys really sad old houses, refurbishes them from the beams out, and does a quality flip job. He's working on a house that is in a good-for-me location (and boy was it SAD when he bought it - I found the listing) but we both think he'll probably sell it out of my price range. But she'll ask and see!

Today we're looking at a house next door to the one I most recently didn't get, and then we'll look at a few houses that are in a much more far-flung part of town.

I have to admit I resent the fact that most of the areas and houses are too expensive for me. It's not anyone's fault, so it's an undirected resentment, but it just doesn't seem FAIR. Ah well, them's the breaks, and I guess I'll try to focus most of my energy on the price/expense/location questions.

House hunting: Strike two!

Someone offered 200k cash for the house. That's 25% over asking and was 28k more than my upper offer. Good gravy, how is a person supposed to compete in that kind of situation? I guess the answer is, they don't. Back to the drawing board.

House hunting: possibilities

I'm a decisive person and I find being in the deciding stage very uncomfortable. I like to make a decision and move on, thank you, and have no problem revisiting and changing the decision later if necessary. But right now I'm in the middle of a decision that is NOT easy to revisit, and it's painful!

I've put a fair amount of thought into what I want and why I want to buy. I've been saving 27% of my take-home salary (and now that I'm renting a room from a friend, I'm saving 42%) towards the down payment. I have been watching the market and have already made (and lost!) my first attempt to buy.

In the three-plus weeks I've been back I've done lots of driving, biking, and walking around looking at neighborhoods and absorbing being back in Portland.

I even visited the condo group I've been stalking eying for the past year or so, and got super close to making an offer before realizing they are facing a lot of complex problems AND I can save myself several hundred dollars a month by buying elsewhere. I do have hopes of joining that community, perhaps ten years from now, but maybe I'm kidding myself.

Anyway, Sunday night I came home from the condo association's open meeting just feeling so disappointed and not at all sure I should take the plunge and make an offer. I saw a little house online that was in a great location (not as great as the condos), four miles from downtown Portland, 0.9 miles due east from three of my friends' households, 1.3 miles from one of my favorite breakfast spots, and 2 miles or less from several other really great locations. The price was even lower than the condo I'd been so set on, with a quarter the taxes and no built-in HOAs.

I was a little concerned I was acting in a rebound mode, and wondered if it would be indecorous to buy so soon after spending time with the condo people, but I arranged to see the house midday Monday. As far as I can tell it would cost about what I was paying in rent for all my fixed expenses (mortgage, interest, utilities, taxes, insurance), and I would be able to continue to allocate about a third of my take-home pay toward an emergency fund and home maintenance/projects/mortgage paydown.

The house is small (I actually laughed when I got inside and saw what an amazing job the photographer had done to make it look bigger than it is), but it's big enough for me. It's not perfect but I can see living there for the foreseeable future, and would likely be able to resell or rent it out without a lot of problems. The neighborhood has some really interesting businesses in it and is still being discovered by the city residents. 

So to sum up: I'm making an offer today.

What I'm using for house shopping

Since I haven't yet moved (and don't get me started on the process of packing...), I'm doing some long-distance online house shopping, mostly to get a feel for the market*.

I've got three different apps loaded on my iPod touch: redfin, realtor.com, and zillow. I'm using the favorites feature in both redfin and realtor.com, which helps me keep track of different houses. I also like that I can tell it to NOT show certain houses, so I'm not revisiting listings for houses I've discounted (because they need too much work, usually).

Once I've found a house I'm curious about, I use Google maps to zoom in closely to check out the neighborhood, yards, and surrounding houses. Then I use street view to "walk" up and down the street a little (and as a bonus, I think I found a sour cherry tree near one house! I'm definitely planning to do some walkbys in the spring/early summer to see about harvesting some cherries). Anyway, cruising through the neighborhoods is kind of fun and gives me a small feel for the area.

Finally, I use walkscore.com to assess the general area. I currently live in an apartment that gets a 91 (walker's paradise) and I really love that I can spend an indefinite period of time in my 'hood without having to drive. Right now I can walk to the grocery store and library, and there are at least 20 restaurants and four coffee shops nearby - and a yarn store, post office, and movie theater! I can't hope to afford to buy something in such a great neighborhood in Portland, but I DO want to have at least a couple coffee shops and restaurants nearby, and would prefer to have a grocery store within a half-mile if possible.

A personal factor is that I have three friends who live quite near each other in one part of town: two houses within a block of each other, and a third person less than a half-mile from the first two. I currently live walking distance from four friends and would like to have something like that in my new life too. I really do want it all!

So, my criteria are: price, location, and condition - like every other buyer in the world, I know!


* Oh, fine, I'm not really "getting a feel for the market" I'm totally torturing myself by stalking certain houses...

House hunting: first offer - check!

Now that I've established that I'm looking to buy a house, let me tell you all about my first foray into the market.

First of all: as soon as I knew I'd be moving back to Portland, I applied with my credit union to be approved for a mortgage. Then I did some emailing with a friend and he recommended his mortgage lender so I also applied with that bank. In both cases I was approved for up to 250k. So, yay.

Of course personal finance 101 tells us not to max ourselves out on housing costs, and I don't intend to borrow that much, but it at least gives me a framework. No surprise: my frame is the very bottom of the real estate market in Portland.

I did start poking at the market a little bit: I loaded the redfin and realtor.com apps on my ipod touch and started doing searches... all the time. As I feared, my price constraints limit me to a ring well outside the close-in parts of Portland, but one of the approachable areas is near houses owned by three different friends, so that's kind of awesome.

The real estate searches I've been running are helpful, even if they make me feel silly. Last Wednesday I saw a listing that really made me sit up and take notice. It was an adorable beautifully-finished house just over a half-mile from my friends' houses. The location was otherwise crappy - extremely close to the highway and a freight train line. However it was just so amazingly cute I couldn't stop looking at it.

Long agonizing story short, I used miles to book a flight to Portland and arranged to see four houses with a randomly-chosen agent. I liked the agent quite well. One of the houses was a nightmare pit that is going to be on the market a LONG time; one had a fussy yard and an icky inside; one had good bones but was going to be a pretty big project. The fourth house, the cute one, was every bit as amazing as I thought.

My agent said they were reviewing offers that night (after a whopping 3 days on the market) and that it didn't hurt anything to offer if I wanted to. It costs nothing and takes ten minutes. She said if I thought I'd regret not making an offer, then I might want to do it. She also said it was going to go higher than the list price.

So after futzing with a calculator a bit, I decided to make an offer for 10k more than the list, with a 10% down payment. We offered 45 days to close and free week to get out of the house after that. The agent and I parted ways, and I went to my friend's house to sit by my emailbox.

About 15 minutes later an email came in; the link in it took me to an electronic version of the offer letter. I had to click to initial 11 times and that was it! (Yes, I did skim it before sending it in.) By 3pm I'd made an offer; by 9:40pm I knew I was their second choice, and by 8:30am I knew I didn't get the house. The winner(s?) had a bigger down payment and had offered the same price as I had, so it's nice to know my guess was decent.

It was disappointing but I'm mostly glad. I've decided it was an A+ house in a D+ location. I think I'll shoot for a B location and a B house and hope I can make that work. But I should probably stop monitoring the real estate sites because I can't fly up for another weekend jaunt! I can do this in earnest starting in five weeks.

House hunting: why I am considering buying

I'm starting what may become a saga of house hunting, so I thought I'd begin by stating why I'm pretty sure I want to get into the market. I may need this for moral support in the future!

Financial picture: 
I'm moving back to Portland in about a month. Since I left six years ago I've paid off all my debt (car + credit + moving + grad school all came to approximately 25k; it was never at scary levels but it certainly took a long time to become and stay fully debt-free), have continued saving aggressively-ish for retirement (18% + 4% match, fully vested now that I've passed my six-year anniversary), and have started saving for a house down payment. I've also managed to do quite a bit of travel and a lot of local exploring as well. In short, life's been good.

Why I didn't buy already:
When I lived in Portland before I didn't think I could afford to buy. With retrospect...maybe I could have, if I'd gotten in before things got crazy. But my head wasn't there and it's just as well I didn't buy, given how my life has been more mobile than I expected!

I've known that as long as I was in the Bay Area, I wasn't interested in buying: anything I can afford would be in a pretty rough neighborhood, would be pretty icky, or would be very far from work. All that and it would cost a lot more than my apartment! The final factor was that I never had any intention of staying in California permanently. So that's been a non-starter (though I have looked, and despaired, occasionally).

Buying for retirement stability:
A few years ago I had a conversation with a friend that was pretty illuminating. She was looking at her retirement plans a few years down the road and was despairing. As long as she keeps working she can live a great life, but once she retires, she can't afford anything like her current life. Her rent alone will take most of her social security check, she doesn't have a pension, and I inferred that her retirement savings aren't that robust. So that was certainly food for thought. If I didn't have to pay rent, my retirement might be smoother.

On the flip side, property taxes and maintenance are no joke. It's impossible to know if the monthly outlay post-mortgage would be equivalent to or even more than rent would be. There's also the responsibility involved in owning a home. That tilts me toward a condo, but then you run into HOAs and the possibility of special assessments in the future if problems crop up. So in short, it's certainly not a given to me that buying is the right and only choice.

What I'm looking for:
I had my eye on a particular condo development for a long time, but their HOAs and taxes are so high - nearly $800/month!! - that the sales price is going to have to come down a lot before I can be tempted into it. Honestly I think they're going to go into foreclosure soon for the 40% unsold units, and then they'll likely be cash sales, and therefore not for me. That's all a guess though.

At any rate, I definitely want 2 bedrooms. I would prefer low- to no-maintenance requirements for the yard. I very much want to be near friends and would also like to be near a neighborhood center: library branch, coffee shop, perhaps a small grocery store. I want my mortgage/interest/taxes/insurance to be about what I'm paying for rent now, since I know that leaves me breathing room. I want the place to be move-in ready - I do NOT want to have to manage and finance projects in the first few years of ownership. Finally, I view this as a potentially lifelong commitment - it's not an investment but a home.

Why I may not be ready: 
I do have concerns about being the responsible party if anything goes wrong. I have currently saved enough to cover a 10% down payment and closing costs, if I pillage my savings accounts. My parents have offered to lend me some money, which is great, but I wonder if I should buy if I need to borrow to make it happen. At this point I'm thinking I will try hard to buy without assistance, and will keep their offer in my back pocket in case something goes awry before I've rebuilt my savings. And of course being the lone earner is scary. I'd want to keep the mortgage low enough that I could recoup it in rent if I lost my job or took a big pay cut at some point. But life just keeps happening, and if I'm going to retire with a paid-off mortgage, I've got to get started.