Girls Just Wanna Have Funds » House

First-Time Homeowner Regrets and Resolutions

Ginger — Wed, 19 Mar 2008 10:00:42 +0000

I finally admitted to myself that I don’t really like our new neighborhood. The house is great, so are my neighbors, the community etc. But I hate where we are located. While we were sure to choose a home near the metro and 495/95 and got more house for the buck, I miss our old neighborhood. Someone please tell me that this is temporary! I get nostalgic every time I visit where we used to live, and I’ve even asked hubby to consider renting out our current home while we go back to renting in our old neighborhood.

The Old Stomping Ground

If there ever were a perfect place to live in DC metro this would have been it. The metro was across the street, night life and restaurants a 2 minute walk away, good schools, great residential neighborhood with young couples and established older folks, Costco, Harris Teeter, Target and the shopping center and the mall are within walking distance and the highway is but 4-5 blocks away. It was perfect.

But the reality was that we weren’t going to pay $650k for a 3-bedroom condo or the same for a 2br older home. While our mortgage is the same as what we were paying for rent, I would happily rent out our home and move back there to rent a 2BR apartment. Happily. In fact, I’m drafting up a plan for hubby to consider later this week as I put a tester ad on Craigslist to see how many people bite.

Our Current Diggs

Again, the house and community are great. But I really miss the convenience of our old neighborhood and lifestyle. I dislike the county government because they, well they suck. No organization, taxes are being raised even as our property values are going down, utilities are going up even after notifying us of the first increase when we closed last summer and the schools are horrid. We knew about the schools but the other issues are still playing out which has really turned me off from the area as a whole. I hate having to drive to another county to go to Trader Joes and Whole Foods and frankly, I’m over the “area”. Folks tout where we live as being where all the upwardly mobile black folks live and frankly I’m over it. Talk to me when the county government has all my files in front of them and I’m not waiting for things to show up from 30 days prior and government workers answer the phone as if you are bothering them at home.

The Plan

I’ve already consulted with my attorney/real estate agent girlfriend about the ins and outs of land lording specifically in my state. I know that the landlord tenant laws favor the landlord and how much time I’d have before I can kick a non-paying tenant out. But this is where researching tenant employer, rental and backgrounds come into play. During these hard times, I need to make sure that we get someone with a clean history.

If hubby agrees to this we will also have at last 3-4 months of mortgage payments saved, we already do but I’d want this to be a separate account from our emergency fund.

The Numbers

I crunched numbers briefly last night and we would still come out on top and at the very least break-even. Our mortgage is $2400 a month including taxes and the rental unit in our old neighborhood ranges between $1500-$1800 depending on if we catch them on a special or take over someone else’s lease. Craigslist is good for this as this is how we got our first lease on the cheap by taking over someone else’s lease while they were still on a promotion. So at the high end we would still save $600 per month and if we had to go low because the average rents for our home are around $2200 we would still save $400 per month.

I’m still mulling this over and plan to talk with a CPA/Financial Planner this coming weekend to help us figure out if this would be a good move for us. So if you’re in the DC metro and know a really good CPA that can file our taxes and give us personal finance advice then please contact me. This would be our second consultation with a financial adviser but the first wasn’t a CPA, but an attorney.

I know some of you are gasping and clutching your pearls about giving up our home in exchange for renting but the fact is all homeowners are paying rent to the bank. That home isn’t yours until you pay the last dollar back to the bank 30 years from now. Besides, we still get to claim the interest on the home while saving at least $400-$600 a month and being totally happy with the neighborhood and lifestyle we value.

Should we have bought in the first place? I honestly don’t know, we just knew that we didnâ€™t want to continue to pay so much money for a one bedroom apartment with no real benefits. So its a trade off and perhaps this new arrangement will be the silver lining as we try to make the best of the situation.

I’m sure I’m missing a few things that I haven’t considered, feel free to address any concerns in the comment area and tell me what you think. Do people normally give up their home in favor of renting? I know that Millionaire Mommy Next Door has but I’d love to hear from others who took this route.

House Lust and our Marriage

Ginger — Fri, 22 Feb 2008 10:00:01 +0000

photo credit: Hamed Saber

I got it bad! Everyday I search real estate listings looking at McMansions. I know that we don’t plan to be here for very long, but, my husband wants to be in Upstate NY upon our next move. I on the other hand wouldn’t mind staying here in the DC/MD/VA area.

I don’t necessarily feel that great a tie to NY, whereas he does because he has family there. I do too but I still love the DC metro area! I wouldn’t say that it’s a sore topic for us but let’s just say we’ve learned to debate pros and cons in a civil manner.

The truth is I see the sparkle in his eyes at the prospect of moving back there and I don’t want to be the one that stands in the way of his dream. We’ve been here since 2003/2004 and I think we’ll be ready in a few years. Say 3-5.

*hush*

But something changed my mind tonight, well my interest has peaked.

I’ll preface this by saying I LOVE new construction homes but part of the turn off around buying something in NY was that you get some tiny little box for 500k that’s 20+ years old. I am not a fan. After buying our first home last year I already have a list of things that we want in our next home. I think being first time home buyers we were so eager to get into our home. And, we were limited by our price point, we aren’t stacking it like that just yet.

Anyhoo, while searching the Westchester, NY real estate listings I saw this house and fell in love!

Aint she perty? I have been here ooohing and aaahing for the last 30 minutes, scheming on how we will afford this house! Of course he saw it and started with the “I told you so!”. Yada yada yada LOL!

Indulge me for a few minutes.

So the other house I’ve been looking at here is this one in Cameron Station. This is one of the better master planned communities in Alexandria, VA that I am still in love with after a few years. I’m not sure of the date of their most recent settlement but I do know that as of last Spring they were still settling on new condos. Well, if we bought there I would only take an end unit town home OR a single family home. If we bought there last year we would have gotten a

Here’s the other one we debated tonight, LOL! Yea I know, as if we haven’t only been in our present home for 8 months, but we’re looking forward to what the future will hold.

The only thing that upsets me about this house is the lack of a backyard. Folks, this is a patio, not a lush green backyard where kids can run and play. *sigh* Why is it that you can pay 1 million + and STILL not have a backyard? Madness.

The verdict?

In a few years we will be moving back to NY. I don’t think I could with good conscience force us to stay here because he would be so unhappy. Until then I’m satisfied with my daily dose of house lust! *snicker*

Weekend Budget Busters and Lessons Learned

Ginger — Sun, 03 Feb 2008 15:37:46 +0000

It’s my fault, I totally didn’t budget for any off these expenses. I knew that my hair appointment was coming up but didnt factor that in, didnt think the cat would get sick again so soon, and decided on a whim that we needed to get the carpet cleaned in the whole house. *sigh* But I’m learning the important lesson of thinking/budgeting ahead, so read on.

Scotch, ~~the Alpha Cat~~ our beloved kitty

Scotch is quite the rambunctious cat, always has been.

[Exhibit A: , yes that would be Scotch on top of the closet door trying to get to the high shelf in the closet :), mmhmmm yes ma'am ]

You can guarantee that he will get into something at least every 3-4 months. Well this time was no different. Since getting a new kitten, Max, we’ve been keeping Scotch and Max separate because Scotch is rather aggressive and often tries to hump Max when he thinks we aren’t looking. After a few solo nights in the cat room, Scotch in his infinite cat wisdom started digging up the carpet in an effort to dig under the door. All that is left are the exposed nails, and you guessed it, while digging for freedom he got a nasty little cut on his front paw. By the time we noticed, it was already swollen, smelly and crusted with blood and pus. We took him to our trusted vet, Capitol Hill Veterinary Clinic and they patched him up. [Sidebar: They are the absolute BEST vet in the DC area IMHO] My mom and best friend scoffed at the cost just to have him seen and given a few meds but after the scare we had in October I think the cost is well worth it. I wasn’t blogging back in October 2007 (well about personal finance) but we spent over $1000 on his vet bills in 6-8 weeks. No insurance because we just didnt think we would ever need it. But I am happy that we didnt resort to using the credit cards, all cash baby! However, its now February 2008 and we’ve already spent $237.50 on his new litter, meds, vet bill and shots. I want to rip my hair out for not getting the vet insurance sooner but we will sign up on our follow up visit on Monday.

Damage: $237.50

Lesson: Plan ahead for vet expenses, and sign up for pet insurance. We didn’t have pet (medical) care as a line item on our budget this year as we only factored in their food and toys. I think this will call for $40/month in an ING sub account for things like this but I want to see how much the vet insurance will cost us and what it covers. At this point we need it to cover routine visits and “I’m being a bad ass kitty and need help” visits. *sigh* While administering Scotch’s meds last night and treating Max for pink eye, my husband said “Baby, we’re parents now, LOL!”. He has a point, they are like our kids, never quite saw it like that, but hey I wouldn’t have it any other way.

Carpet Cleaning

We moved in here last June and we had the carpet cleaned with the Rug Doctor and another cheapie carpet cleaning service. At $8 a room, we got what we paid for and the Rug Doctor was garbage. I don’t think it made a significant difference in the overall carpet appearance. So I called up the company, Superior Fabric Cleaners, made the appointment and they came out yesterday. FABULOUS! They cleaned, sanitized, deodorized and treated the carpet, top to bottom! I came home and screamed! I can now say that we have a home and not a house. There’s something about having a CLEAN carpet that made everything else in here POP! So it was well worth it for me. Why is it a budget buster? It cost $450 not including tip But the house is rather large at 3000 square feet and the technicians had to factor that in.

Here are some pictures of the living room and basement:

Very pleased!

Damage: $550 including tip

Lesson Learned: PLAN PLAN PLAN for things like this. Could the carpet cleaning have waited? I’m sure, but with 2 animals and a broken vacuum cleaner it needed to be done.

Hair Salon

So I’ve had this appointment for months, LOL! This is one of the things I struggle with on my budget because it costs $150-$200 plus tip every 8 weeks. Sure, I could just do my own hair but yea not so much and I definitely wouldn’t change hairdressers because she does awesome work. If you’re a black woman reading this, then you know that we don’t switch hairdressers often and when you find someone you like, you stick with them. Nuff Said. BUT—>I should have factored this expense into the budget because with everything else it just hit me that this is way too much going on for one weekend.

Damage: $230 including tip

Lesson Learned: Budget hair appointments into monthly budget.

Total damage: $1017.50

As you can see my overall lesson here was to plan for things that I don’t normally think about with regards to our budget. They aren’t emergencies so it didn’t warrant dipping into the emergency fund but situations which sorta kinda warranted immediate action, well except for the carpet ad hair salon appointment. I’ve been bad I know, but February will be better. Wait, this all happened in February. Well, I’ll do better for the rest of the month, how’s that?

We still have to go to Lowes or Home Dept to get some stuff in order to increase our energy efficiency because Washington Gas and Pepco are getting out of control, more on that in another post. We’re going to seal all the windows and *gasp* turn down the thermostat to see how much of a difference it makes in next month’s bill. We do have friends staying with us so we are accounting for 4 people living here and not just 2. We also have random, somewhat planned trips to go down to the wharf and get crabs for the game later. SSHHH!!! This is soo not a good way to start February.
January spending coming up soon!

American Dream Reloaded

Ginger — Wed, 16 Jan 2008 10:00:15 +0000

I came across this article Dispelling The Myth That Home Ownership Is Your Best Investment over at Millionaire Mommy Next Door. Already, I can tell that this blog will be a favorite! She’s challenging some well established views about the road to wealth in America. One of those being that buying a home is the “American Dream”.

Wow! Get ready to be challenged because she kicks a$$!

Don’t get me wrong, I have no regrets in buying our home. However, given the current market trends, especially here in the DC metro area I have started to think about whether or not it was truly a wise financial decision. I love the house, neighborhood and stability of knowing that this is ours and I dont have to answer to a landlord but there are some truths in her main points. I think if we can move away from the emotional aspect of buying a home we will be able to dissect whether or not it is a wise decision. And, of course there are so many variables to consider: current market, market projections, status of the mortgage industry, economy etc etc.

But let’s look at a few of the more salient points:

The Motley Fool, The Worst Investment Ever:

“Think about it for a minute. What characteristics do Fools look for in a great investment? Positive cash flow, low expense ratios, low transaction fees, and historically proven returns. Using these criteria, the average house falls well short of the all-time best.”

We typically think of our homes as investment vehicles which will take get us on the path to wealth. But I would caution this line of thinking especially in a market like today’s. I think five years ago many of us were singing a different tune given the incredible real estate boom we experienced here in DC. However, when you factor in home inspection fees, Realtor fees (you should know that the buyer is really paying this!), closing cost fees, HOA fees, maintenance, taxes etc etc it really chomps away at your bottom line. I’m not advocating going out and selling your house, but think about what you are putting into it financially and how much you stand to make when you do sell.

Homeowners typically only thinking about profit in terms of purchase price-resale price=profit. Not so fast. You’ll need to add in all of the above to really determine if you’re making a profit. Again, this is specific to local markets and individual situations. I just want you to be well informed.

Wall Street Journal, Your Home Isnâ€™t the Nest Egg That You May Think It Is:

“Mortgage interest is rent that you pay to your lender for the use of its money rather than to a landlord for the use of his house.”

“the costs of owning a home — buying it with a long-term mortgage and then paying taxes on it, insuring it, repairing it, renovating it — sap most of what most homeowners think they make in price appreciation.”

This hurt when I read it. Think about it, you don’t truly own your house until you pay the last dime on your mortgage. When you do pay off your mortgage you’re paying back a ridiculous amount of interest when you could be paying yourself first instead of the bank. When you consider that if you borrow $100,000 for 30 years at 8% you will end up paying the lender over $264,000 ($100,000 principal loan amount and $164,000 in interest). Isn’t that amazing? We’ve never been challenged to think otherwise!Â Just that buying a home=American Dream. If one were to take the same mortgage payment and invest in lets say the stock market which Ive read has average returns of around 7-10%, we could be paying ourselves that interest over 30 years. Of course Im not taking into consideration taxes and the like but I’m sure whatever you pay in taxes is less than the annual property taxes, insurance and maintenance on a home.Â This really revolutionizes Pay Yourself First school of thought.

“It may be late for a lot of homeowners to read this, but here it goes anyway: It’s risky and bad planning to have too much of your net worth in your principal residence. No prudent stock-market player would put 60% or 70% of a portfolio in just one stock, but millions will hold that much or more of their total net worth in just one house.”

Gosh I’m being slayed here. With the little I do know about investing, I know that you never put all your eggs in the same basket. so why do we do that in the case of our homes? We are often advised to DIVERSIFY our portfolios so as to avoid losing everything should one part of the portfolio tank. Right now I know so many homeowners are feeling the bite as the market slumps and the value of their homes depreciate.

OK. BREATHE!

What’s the lesson here? Think through each and every major financial decision and decide whether or not it will net a significant profit given your individual situation. The American Dream is great in that you feel invested in the economy’s growth and being a part of something larger, however will it truly take you on the path to wealth? If so, know when to jump ship. Right now I’m sure many wish they’d jumped ship 18 months ago and must wait for this slump to pull through. If you’re thinking about buying, ascertain what this will mean for you? Is it simply the achievement of buying a home or are you banking on the fact that your home’s value will increase and net a profit when you sell? Consider what you will put into the home after the purchase: taxes, insurance, maintenance, upkeep etc etc. I don’t know the answer as I’m still reviewing our own situation because I’m in total moneymaker mode right now. But, this isn’t to dissuade anyone from buying a house. Like the original author of this article, I am only here to impart information and hopefully educate in the process. Make the right decision for you, not one based solely on the “Dream”.

Have you bought into the American Dream?

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Technorati Tags: mortgage industry, The Motley Fool, Mortgage interest, American Dream, principal residence

ACORN changes

Ginger — Thu, 03 Jan 2008 13:00:35 +0000

I talked with our former ACORN representative today to get up to date information on how the housing crunch has affected their program. Prior to the recent sub prime issues ACORN had a pretty decent program, here are the details in a snapshot:

Now the program has been stripped to:

3% down
620 credit score (Wasn’t credit score driven prior to this change)
74k income limits (Limit was 106k prior to the change)

What does this mean for you?

SAVE SAVE SAVE!

For instance, if you are considering purchasing a 250k home, you will need at least a $7500 downpayment and funds towards closing costs and other items such as earnest money, home inspection, taxes etc.

Debt reduction and clean up is a must!

Let’s face it, debt isn’t hot at all. Owing thousands on various credit cards with nothing to show for it means you are throwing your money away and not steadily building for a secure future.

Lower your utilization rates and cut the credit card spending to a minimum. What’s the minimum? If you can’t pay it off by the end of the month then you can’t afford it and shouldn’t spend it. Idally they should be less than 30%
Pay off your balances on time
Pay more than the minimum payment each month.
If you have a decent FICO/VANTAGE score then transfer your balance to a low/no interest credit card and pay it off within that period.

The banks are tightening their belts and so should you. Let 2008 be the year that you get your act together and take it to the road! Your goal may not be to purchase a home this year, but it can be to save more, spend less and pay down debt!

Make it happen!

Let me upgrade you!

Ginger — Thu, 20 Dec 2007 16:30:00 +0000

Lifestyle Upgrade: Making more money brings added expenses you didn’t previously consider.

When I moved to the DC metro area in 2003, I barely made enough to pay all of my bills, let alone shop a little or even go to a happy hour every now and again. I lived in a not so great area of town, couldn’t afford a car and my mom bought all of my clothes. 4 years later I own a home in a safer, nicer part of town, drive a car (with insurance!), shop more (ok Iâ€™m damn near shopaholic status) and will even admit to going to happy hours and dinner a bit more than I used to.

Touchdown
Upon moving here I was hit hard with the realities of paying rent and earning a meager salary. I couldn’t believe it, here I was with a college degree and barely making ends meet. I was dodging calls from my credit union seeking payment for a CC bill I hadn’t paid for the last 3-4 months and couldn’t even afford cable from the evil twits at Comcast.

Four years later, life has changed for me. And, while I am now a homeowner, drive a car and have cable. I also realize that certain lifestyle upgrades were made (most necessary) along the way.

Lift off
In the Being Poor is Expensive post I pointed out that your circumstances force you to make hard decisions about money. I wasn’t thinking about how the 90+ days delinquent credit card might affect me until the credit union representative caught me on the phone one afternoon and gave me a strong talk. I’ll never forget it. I remember rolling my eyes as she told me how the delinquency might affect my buying a house down the line. I was barely paying the $700 a month rent for my 750 sq ft apartment in Le Hood!

Letâ€™s look at my recent upgrades:

Mortgage
The mortgage is 3-4 times the amount I used to pay for my first apartment. Tack on paying home insurance, property taxes, home maintenance, utilities (included in rent) and the cost of furnishing the house since we started from scratch when we moved in.

Car
I couldn’t afford a car until I got a well deserved and needed raise. Prior to that I took the metro faithfully and risked walking home late at night from that dreadful station by myself. Now I still drive the same car but that’s because I can’t truly justify a new car until I drive this one into the ground. Takes a lick and keeps on ticking. Insurance, car note, maintenance, emissions testing, license registration and renewals are all associated costs with the upgrade of buying a car.

Cable
I had a short stint with cable when I first moved here and canceled it because at the time it wasn’t worth watching. Now our cable hovers around $80 depending on whatever “special” we can snag from Comcast.

Cell Phone
In college my cell phone bill was no more than $60 a month. I had 400 minutes and made it work! Now while I recently made the switch to AT&T which resulted in a drastically lower bill (more on that later), my bills were around $300-$400 on average for both of our cell phones with Verizon. Mad.Ness! What’s changed? I’m not exactly sure, other than I’m all grown up and just seem to talk more.

Lifestyle upgrades people! Are the needed? In most cases, yes. I wouldn’t NOT buy a house because rent is cheaper. Did I NEED a car? Yes, in order to consider job offers outside of the metro rail system. But there are some that are questionable and up to the individual. Some people (like my husband) canâ€™t live without the NBA League Pass and HBO boxing. Can I do without cable? Yes. Can he? No. So itâ€™s different for everyone.

Make the appropriate upgrades for your lifestyle keeping in mind its function and necessity. Unfortunately, as we make more we tend to spend more.

The House

Ginger — Sun, 17 Jun 2007 00:03:21 +0000

I guess I should mention that we are closing on Tuesday huh!?
Yes, indeed we are closing on our first home this Tuesday. Our Realtor was a tad worried because we didn’t seem so excited. Well, we are, but a bit nervous at the same time. We have already been to the closing table once, entered into and exited 3 contracts before settling on this home. It has been a rollercoaster of sorts and I can safely say for the both of us that it won’t be real until we have the keys. So while we are excited we know that it isn’t over until all papers are signed and we are the legal owners of this home.

I wish I blogged here while going through the process but it was definately a learning experience, especially with the recent market down turns. Some sellers just aren’t tapped into reality and still holding on to the possibilities that the boom of 2005 brought others. Our seller was actually quite reasonable in his pricing but difficult in other ways, still it worked out in the end. We love the home we finally settled on. It is 3000 square feet with 4 bedrooms and 2.5 baths. I can safely say we will be here for a while even after 2 children. So for us this is the perfect starter home and I couldn’t be happier! I just need the keys!