I have a story for you guys, which any first time homebuyer should read, just to get an idea for some mistakes that you can make. And maybe anyone who has already bought a house or two might want to read this and see if they can offer some pointers!
I wrote a post a few weeks ago about a house next door to where I’m renting. That house is for sale, and in dire need of rehabilitation. Out of curiosity, I went to look at it. Then I started to price-compare in the area. Then I realized that I could afford an already-fixed-up house!
It was an exciting moment, especially because I am really just biding my time in the house I’m renting. It’s a cheap place to live, but comes with two roommates who like to have the TV loud at all house, and as you can see from my post on our $800 gas bill last month, we have more than a few insulation problems!
So I started looking at houses, and things started to move quickly. Too quickly.
I found a house that I love. It has the best location of any house in the price range I was looking at. This is a tricky area to buy in - my central focus is a large, popular city park. The area is “up and coming”, generally being great and quite pricey near the park, but get a few blocks away from the park and it could be a good or bad area. The house I fell in love with is almost on the park, has a great yard, and you can see the police station from the front porch, which is reassuring.
Unfortunately, my agent and I picked my price range assuming that we could get the seller to drop the price $20,000. So I was looking at houses in the $140,000 range, thinking that I could get them for $120,000. Well negotiations aren’t going well with this house. The seller got us over $130,000 in the first set of offer and counteroffer, and then this morning made a counter offer that is actually ABOVE the list price, in exchange for paying more of the closing costs.
So then, and this is an embarassing part, so don’t be too harsh on me! I contacted my lender to get a better idea of how much these “closing costs” would be. The schedule she gave me also had my estimated monthly payment on it, including property taxes on the house. I’m not sure why I didn’t have this valuable information before I made any offers, but it turns out that the property tax on the house is WAY more than my happy little mortgage calculator was adding in. So I was thinking that I was at the upper end of my limit, when the real monthly payment was $300 beyond my upper limit.
So, last night I was looking at numbers, calculating my monthly payment to the lender as $1,000/month, thinking that I could rent out the extra rooms to someone for $500, or maybe even $600, and then I’m paying less to the mortgage lender than I’d have to pay as rent for a nice 1br 1ba apartment in Atlanta.
Today, I’m looking at paying $1,300/month, plus cashing out all of my stocks to pay these damn closing costs that the seller won’t pay. (For some reason, everyone I dealt with in the beginning of this process brushed the closing costs off as something the seller would more than likely be paying.)
I keep trying to come up with a way to make the numbers work, but I just don’t think that I can afford $1,300/month during times between renters, and even paying the difference of $700 with a renter paying $600, it would be tough to save up and replenish my savings and stock accounts. I keep re-reading my article from earlier this week on living within your means … but the house is still calling to me!
My agent and I will be going out this weekend to look at some more houses, in worse locations, but much cheaper. The wind is definitely out of my sails though! Stay tuned for more updates, or potentially some sharing of calculations to see whether I can force this house to be a good idea!