Breaking The Silence

Looks like we are fresh out - please come back tomorrow!Sorry we haven’t been writing lately. It’s been lots of 7AM to 10PM days and just a short time at home. We didn’t do a good job ahead of time estimating how long we’d have to work on different tasks around both homes.

A quick update - we’ve been robbed! Our new house was robbed and the appliances were taken. The thief broke in and took the most expensive and easiest items to take. At least the thief was courteous and turned off the gas when he snipped the cable to the gas stove. We think it probably wasn’t his first time through this. We’re still dealing with that event but everything is being resolved. It was the builder’s responsibility to lock it up so they bought us new appliances. The only problem is the new microwave is broken. It’s getting handled through the warranty however. C’est la vie.

One thing to learn from all of that is to make sure to get things in writing. I trust the builder and the company to do the right thing, but when it comes to money sometimes people can be funny. It’s always best to get things in writing.

Another lesson - it may be cheaper to seal your own tile but it sure takes a long time. It took us nearly 4 days to get it done. We saved $1300 doing it ourselves, but lost all that time. Although I’m really happy we saved that money, I’m physically exhausted and feel like I’m behind in other areas.

We had a little debate about movers, too. We shopped around a little bit and found different movers estimate things differently. We were concerned about movers that estimated by the hour. Is there motivation to get things done quickly? If our move is done in 4 hours, then the hourly rate vs. flat rate turns out to be mostly the same. However, if the hourly folks take one more hour, that’s another $100. On the other hand, if it’s a flat rate, will the movers rush through and not be as careful so they can save time?

We decided, after some debate, to go with the flat rate. If we get any guff about the amount to move (they made us estimate boxes as well as the items we’d be moving) then we’ll move the small stuff ourselves. We’re not done packing our boxes yet so we don’t know where we’ll end up number-wise.

Here’s to hoping we’re done with the move soon and ready to get back into our groove. I need to get to studying and Melissa wants more time to write. We’ll get there in just a little more time…

Image Source: Mykl Roventine

Why I Bought My First House

Those look like nice homesWith our upcoming move, I started reminiscing about the current house. I’ve been living in this house for 10 years now and I’ve got a lot of memories from this home. Here’s the story of why I bought my first home.

When I decided to buy my first house, getting one was the last thing on my mind. I was really looking for an apartment.

My brother had just moved in with me and we were living in a reasonably sized 2 bedroom apartment at the time. For just the two of us, it worked out well. The problem was that his fiancee was moving in, and with 3 of us, the place might start to get crowded.

We decided to start looking at a bigger apartment. Nothing huge, but bigger than where we were. At the time, there was a pretty bad rental crunch, and it was tough to find a place to rent. When we did find a place, it was generally expensive, and there were many restrictions on renting (longer term leases, pet restrictions, etc…).

A good friend had just bought himself a house 6 months prior and highly recommended going that route. I really hadn’t considered that idea at all (or even the idea of renting a house). After his suggestion, I decided to see if I could even qualify for a house, and how much I would have to spend.

It turned out I qualified for a Federal Housing Act (FHA) loan. I was a first time home buyer and wasn’t buying a very expensive home. This required that I only pay 3% down. Luckily, since I was sharing rent with my brother, and I had some savings. My parents were very generous and helped me with the down payment as well.

Because I wasn’t able to afford to put down 20%, I was stuck paying for Private Mortgage Insurance (PMI). That was annoying because all it really did was cost me an extra $100 or so a month and I got no real benefit from it (well, except I guess that someone was willing to take a chance with my loan because it was insured). It’s a “necessary evil” (or you can pay some more up front on the loan to get out of it but it’s not generally worth it).

I got qualified to look at homes in a specific price range (not to exceed the amount of FHA). For reference, I had already searched for large 2 and 3 bedroom apartments for rent and found that it was going to cost us about $1050-$1500 a month. Looking back I should have checked home rental prices as well but hadn’t considered renting a home. To buy a new house, I wanted it to be on the low end of what renting would be.

We started with existing homes closer to town (and work). It was tough to find something in my price range that I liked. We kept searching though, and I found homes that would work, but were not exactly what I was looking for. My realtor then suggested that we look further outside of town, and that he knew of some new home construction that was in my price range.

Immediately I found a home I liked (damn model homes - they will get you every time). I figured for sure it would cost more than a pre-existing home. It turned out, with incentives from the builder, it was actually cheaper to build my own home! And the price, after the options I selected, would yield a payment of $1120 (including house payment, taxes, home insurance, and PMI). This was on the low end of how much I was looking at for rent.

Also, my brother and his fiancee were going to be living there. Instead of paying rent, I let them cover the costs of groceries and most of the utilities. We had plenty of room, and I was even able to offer a room to a college friend who helped out by paying the rest of the utility costs. Overall, I think we all paid less per month than we had while renting. It was a great situation. Especially for me of course, because I now have quite a bit of equity in the house that will help out immensely once we move.

My “renters” moved out after a few years during the dotcom bust and I decided to refinance the house because interest rates had fallen so much. I got an Adjustable Rate Mortgage (ARM) (yes, looking back that probably wasn’t the smartest idea but at least it did work out). The rates had fallen at that time down to 4.5% for that 7 year ARM (that means it adjusts after 7 years - I think that’s at least 2 years off). When I switched to the ARM, I also decided to put an additional $100 per month toward the principal (less than what I was saving on monthly payments due to the refinancing). It really helped bring the principal down.

So now here we are, about a week away from moving out, and seeing this current house go. I do have a lot more memories about the house other than the financial ones I’ve mentioned here, but because it came down primarily to money on why I chose to buy my first house, I thought the numbers would be interesting to see again. Looking at it again I realize I made the right decision at that time. I hope I’ve set us up for the right decision in our new home. We’ve done all the work we could to make sure it will work out, but only time will tell if it was the right decision to move now. I’m hopeful that it will be for the best!

Image source tofslie

More Big Purchases - Window Coverings

These bad boys can get expensive!!There seem to be a lot of big purchases that have to occur when you buy a new home. Many of them are things you don’t necessarily have to worry about with an existing home. We’ve planned for pretty much everything, but it can still be overwhelming to see all that money flowing out after saving it up for over a year.

Our latest battle has been with window coverings. We’ve been shopping around for the different kinds of window blinds that are offered.

We need blinds to keep some of the heat out during the summer months. It can get pretty intolerably hot down here. We also like the blinds for the privacy they give.  And they can’t have any strings for tilting or raising because our cats are mischevious.  We have learned our lesson with that one.

We’ve worked with three people directly to get quotes, and we’ve done some estimating on our own from catalogs and information from local stores. The last person didn’t work out due to some family problems she has been having, so we’re really stuck with 2 quotes to choose from. We checked some other local places and did our own estimates on how much it might cost there (based on catalog prices), but were never given a formal quote. We feel a little crunched for time because it takes a while to get the blinds into the house once you get the windows measured and the blinds ordered.

With this purchase, we don’t feel we have the time to search for the absolute best deal. I think if we felt we could spend another month getting people in and comparing prices,we might be able to find an even better deal than we have now. The problem has been that nearly everyone wants to come and measure for themselves before they will give a quote. And even if we find a better deal, for a month’s worth of time it had better be a really fantastic deal to justify the waiting.

We decided today to go with the best deal we’ve been able to find so far. Although I think we might find a better price if we shop around a bit more, we’re pretty comfortable with the price, and it’s beaten the others by a significant amount of money. The place was also much more professional, and offered much faster time frames than anyone else to get the blinds in. Faster and cheaper kind of sealed the deal for us.

Now the final decision we have to make is do we pay for it up front in cash, or take advantage of their financing and 1 year no payments and no interest? I really don’t like the idea of going into debt, but I see this more like the credit card arbitrage game. We’ve become very, very disciplined with our spending over the last year and I think we can handle it. We have the cash to pay for them (we anticipated this expense and have been saving for it) but the idea of getting to earn the interest on the purchase for a full year sounds good to me, too. We would put the cash aside and invest it in CDs or money market funds to get as much interest as possible before we have to use it to pay off the purchase.

Does anyone have an opinion on the one year no payments no interest arbitrage deal? I’ve personally never done it, but it sounds like a good deal as long as you remember the date things are due and make sure that you pay it off a little before that deadline to be safe.

PS - If you came looking for Tightwad Wednesday, it’s going to be posted tomorrow. Melissa wants to do some more work on it before it’s ready to go up and she’s busy cooking and preparing for Thanksgiving tomorrow. Check back in the morning for the post!

Image Source: markhillary

Pay For Professionals Or D-I-Y?

We’re gonna need a lot of sealant!This week we are getting bids on work that we want done for the new house before we move in.  After receiving a handful of quotes (many of which are higher than expected) we are starting to run into a dilemma. 

Do we pay someone to do the work or do we try to do it ourselves?

We are finding that the answer to this question is that it “depends”.  Most of the stuff we are doing to the home is somewhat specialized.  Although we would love to leave it to the professionals we are finding that the money we saved up by test-driving the new mortgage might not be enough to cover all these things unless we cut back.  So do we save the time or do we save the money? 

This is how we are breaking down some of our labor needs:

Professionals Only

Do It Ourselves

Still Not Sure

If money gets too tight we may just drop out landscaping until later, but most of the other things we are pretty set on.  If you have any suggestions or install know-how please speak up and let us know ways to save money!  We could certainly use the help!

It’s The Final Countdown!

Yes, folks, this is it! It’s the final countdown!


We have been given our closing date so now we are now in the final stretch.

The big day: 11/30.

So much for Thanksgiving! We had to call the folks to let them know we won’t be coming down to visit and cook. Unfortunately, we will need to dedicate that vacation time to packing now that the closing date is just days away.

Although we were hoping the house wouldn’t be completed until January they appear to have made our home a priority and are getting it done early. I guess we shouldn’t be surprised. They gave us a timeline of 6-9 months and it’s been over 6 months since we signed the papers.

Many people who are building homes complain of there never being workers on site and that the home just sits there. It seems like they had the entire crew in our home every time we drove by. I guess having ample workers on a project can speed things up considerably.

We are nervous now and feel the need to come up with a plan. Just last weekend we finally started the packing process. We were packing in anticipation of the 30-day notice, that unknown date off in the distance. Now, we have to pack “for real” and there is a sense of urgency around it. 25 days and counting…

From a financial standpoint, the first thing we need to do is choose a lender. With the closing date being official it is time to start shopping for a loan so we can get a lock on a rate.

Today and tomorrow we will be on the prowl for several good faith estimates. I have gathered all the information we need to prove our loan-worthiness. I am compiling the following information for our meetings:

We had already been pre-approved and received GFEs from two different companies in May. Now we have to get real bids for our loans and choose our lender. We have 10% down and want a primary loan for 80% (30-year fixed) and a secondary loan for the remaining 10% (30-year fixed). The secondary loan can be paid off with our current home’s equity once we sell it.

We have decided to get GFEs from:

We have managed to build great credit scores and pay down our debts so we are hoping to get really low rates on the loans. But with the current lending environment and the crunch on secondary loans we are curious to see how we will be affected. Once we are able to compare the GFEs we will make sure to write about it. It will be interesting to see who comes ahead with the best deal for us.

Now the stress is setting in. I can’t believe it’s happening so soon.

By the way - that video cracks me up every single time I watch it!

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