In early 2009, I lived in a one bedroom apartment. It was an older but nice (to my low standards) apartment, I got along well with the manager, and it was was more affordable than many others in the area. It was my first time living without family or roommates and I was loving it.
Except for the noisy neighbors. And the noisy street. And sometimes even the neighboring complex was loud. I spent at least 6 months getting up at 3am to start work at 4:30am, which meant early bedtimes for me. Sometimes even ear plugs weren’t enough to drown out the thumping bass. Still, I learned to cope.
Then my idiot neighbor robbed my apartment. That was the final straw.
I had 6 months before my lease was up but I started looking at craigslist ads anyway, looking for basement apartments, carriage houses, garage apartments, or even small houses that might be affordable, anything where I’d have my own four walls. I didn’t find much, even carriage houses smaller than my apartment cost $200 more.
It was a good thing I’d started looking early because that gave me time to consider buying. I stumbled on some articles talking about FHA loans, which led to mortgage calculators showing how much I could afford, and eventually I took a plunge and talked to a mortgage broker at my bank. The result? I could afford a house!
The above process took several weeks. On one hand, I loved the idea of owning and being able to do whatever I wanted to the property. I helped my parents with enough house projects to know I could handle quite a bit of maintenance myself and having a yard would be worth having to mow. On the other hand, I was still a student with two years left and didn’t quite know what I’d do for a career when I graduated – what if Google wanted to recruit me? There are several clusters of tech employment in and around the city, if I stayed local I had no idea where I’d end up working.
Eventually I decided to pursue buying a house. The odds of Google calling were practically nil and having my own four walls and a yard was worth a commute. There’s enough work in the tech field locally that my chances of employment were very good. I also like the region and have no desire to move anywhere else.
The house hunt process was pretty bumpy. I bid on a few HUD homes but kept getting outbid. I worked with one agent who was totally clueless and lost me one house. Finally I found someone who knew what they were talking about and was actually interested in working with me despite my low budget ($100,000). That’s a tip I give any first time home buyer – get a referral if you plan to use an agent. And not just “my cousin is an agent,” but someone they’ve actually worked with.
Finally we found my house! It was listed at $92,000, my agent put a bid in for $80,000 plus help with closing costs, they countered at $88,000 plus closing with a note that there was another offer but mine was first so I got first crack at the counter offer. I accepted, and the house was mine!
I bought the house with a 30 year FHA loan and put 3.5% down. I’ve been paying $36/month for Private Mortgage Insurance (PMI) on top of the principal, interest, tax and insurance (PITI) payment. The PMI can be removed this summer when the mortgage is 5 years old and my loan to value ratio is at least 80%.
I love owning my own home. There’s a certain freedom in knowing that it’s yours (and the bank’s) and being able to make changes as you want. There’s also more responsibility, when something breaks you’re the one who has to fix it or pay to get it done, but I even enjoy that part of it. My insurance company told me to replace the roof or they wouldn’t cover the house, so I did the job myself. I’ve impressed quite a few people with it, even the city’s inspector.
Even though the market was at the bottom there wasn’t a lot of inventory in my price range, but I was still picky about certain things. I knew I would have a hard time affording major repairs so I avoided houses with shoddy work visible, clear signs of foundation troubles, or just big question marks, as in “what will it take to get rid of that smell”. My house was a “toucher upper” with good bones and solid construction. It fit all my needs and most of my wants with enough room for future growth. It’s near 3 interstates giving me easy access to most of town. In short, it wasn’t my dream home but it was someplace where I could settle in for a while. I also got it for a great price and expected to build equity quickly.
There’s an element of luck in there, but I was right about all of the above. Especially the equity – after less than five years my house is now worth at least $150,000. Looking at recent listings, maybe even $160,000.
The short version of all the above?
- I got tired of apartment living and wanted a house.
- After a tumultuous search I bought a house for $88,000 with 3.5% down.
- That house is now worth $150,000-160,000.
- I’m getting ready to sell. Wait, I haven’t gotten that far yet.
I like my house, but it isn’t where I want to live for the rest of my life. I want space, privacy, elbow room, trees, fresh air, a yard large enough I don’t have to worry about throwing dog toys over the fence. I want views, nature, and no light pollution so I can buy a really nice telescope. Do I have to get it now? Of course not. But if I believed in astrology I’d say that the stars have aligned to make this the right time.
And so I’ve been getting the house ready to sell and should have it listed next week. Once I have a contract I’ll start looking for my next (and hopefully last) house and try to time the closings so that I buy right after I sell. Is taking on a more expensive mortgage the best financial decision? Nope. Will it be good for my mental health and well-being? Absolutely. And for that, it’ll be worth it.