Just went to go see a loan officer at my credit union, and as I was digging up paperwork so that I had all my financial info in place, I found an old prequalification notice for $560k. Single, living on a decent income, but still, 560k??! That’s oh, $3,600 per month. Extend the 30% of my income rule, and that means I’m making $144k per year after taxes! Wow, I can dream.
But then consider I left my job because I was really unhappy, and where would I be. I’d be sitting in the same position as a lot of people today. Sure that prequalification was really just to see what the maximum I could afford was…but wow! I’m glad I didn’t go crazy.
Anyway, about the free credit monitoring…if you’re interested, check out www.listclassaction.com. This was featured in Kiplinger’s, and is basically a settlement with Trans Union which can give you a minimum of 6 months of free credit monitoring. If you had a credit/loan account from Jan 1, 1987 – May 28, 2008, you’re eligible. This offer ends Sept 24, 2008.
My Home: Feedback From Readers Convinced Me To Make Some Changes…New Housing Requirements and Saving More For the Down.
My Home: A series about the home buying process through the eyes of a first time home buyer.
Sometimes reality sucks doesn’t it? I’ve done some analysis on the real cost of ownership on my future home, and it hit me like a sledgehammer. Sorry Freedumb, try again. I got some great feedback (I was even told I’m “spoiled“). Before I go on, I’d like to refer to my post on why I want to live here in Hawaii.
I realized I really needed to think about it again (an argument for blogging!). The most basic question I asked myself again, do I even really need to get a home right now? The answer? No. I’m not going to throw away my dreams of getting a home, rather I’m going to take a step back and change my requirements and my timeline. CityGirl has a great post about knowing thyself that would be worth checking out.
Originally, I was excited to get a home because, well, it’d be my own place, the American Dream, blah blah blah. My dog would have a yard to run around in. I’d have something to take care of and watch as my investment grows. Then reality hit, and I got great feedback. I realized how much it would really cost to own what I want. I don’t want to be living paycheck to paycheck, nor do I want to dig my own financial grave.
So, that being said, I’ve decided to put off my home purchase even beyond next summer for as long as I can wait. Why? Well, I’d like to save as much as I can to have a bigger down payment so that I don’t have to borrow too much. (Thanks NCN for making me think about credit a little more) I’d also like to observe the housing market longer.
I’ve decided to do a couple of things:
1. Create a designated “house fund” that will be for my down payment. This is so that I’ll have some extra cash for everything else. I can’t drop my whole savings into the house, that would be dumb. (Madame X made me think about this a little more)
2. Reduce my requirements for my house. See below.
~ 1200-1500 sqft living space
- A decent sized yard, with a portion fenced off for Brownie to run around.
- Early mail delivery. Yes, I like having my mail delivered early!
- Hands free faucet in the kitchen.
- Target price of around $500-650K
- Off major streets
- Level lot
- 2 car garage
- Fairly up to date electrical system, if not then the ability to upgrade easily.
- 10′ ceilings
- 4 Bedrooms (Maybe a split, two level house, so I can rent one and live in another)
- Wired for CAT 6E. I’m pretty sure this is something I’ll have to setup myself.
- I would like a location about 15 mins from town.
- Friendly neighbors…who wouldn’t want that!
- Decent amount of street parking
- Breezy and cool location
- Fairly close to freeway
~ 800-1200 sqft living space
- Target price of around $450-600K
- Off major streets
- Level lot
- 2 car garage
- Fairly up to date electrical system, if not then the ability to upgrade easily.
- 2 Bedrooms
- I would like a location about 15 mins from town.
- Decent amount of street parking
- Breezy and cool location
- Fairly close to freeway
Originally, I wrote:
So, my monthly mortgage? @ 6.85% 30 yr loan would be $2,621.00/month. Now, to estimate everything else. I’m going to estimate on the high side.
1st year total without mortgage = $26,850.00 (or $2,237.50 / month)
Thereafter = $19,350.00 (or $1,612.50 / month)
1st year monthly costs with mortgage = $4,858.50 per month
Monthly thereafter = $4,233.50 per month
I’m going to adjust costs to more realistic levels based on feedback received and comments from friends and family. With the same monthly mortgage @ 6.85% 30 yr loan = $2,621.00/month.
1st year total without mortgage = $19,350.00 (or $ 1,612.50 / month)
Thereafter = $15,350.00 (or $ 1,279.17/ month)
By the way, I am considering once a year fees as part of my monthly expenses just for a better picture of my total expenses.
1st year monthly costs with mortgage = $ 4,233.50 / month
Monthly thereafter = $ 3,900.17 / month
Hmmm, still a little high, so I’ve increased my down payment to $200k, which would reduce my mortgage loan to $350k. My new monthly mortgage @ 6.85% would be $2,293.00 / month.
With the same other expenses I wrote about before:
1st year monthly costs with mortgage = $3,905.50 / month
Monthly thereafter = $ 3,572.17 / month
Better. Still high, but at least that’s manageable considering my current income. I’ll keep trying to save even more for a down payment. The more the better. The journey continues…
Posted in Comments, My Home (series)