I’m back! What a whirlwind of a week it’s been!
In my last post I mentioned that John and I had an offer accepted on a condo. Since then we’ve had the home inspection, hired a real estate attorney, received and reviewed all of the condo documents, secured mortgage financing, and prepped for the purchase and sale next week. This has all happened so incredibly fast but we feel really good about everything and can’t wait to move into our new home.
Let’s back up for a minute though, shall we? There are many questions that usually come up when you tell someone you’re purchasing a home. We’ve been fielding those questions from friends and family all week. I wanted to articulate them here on my blog in case they are able to help inform others thinking about real estate.
For us, buying a home came down to four major factors:
- Equity – You know that rent check you write to your landlord every month? You may think that money just pays for your space, covers improvements and maintenance to your building, or helps create a cash reserve for some disastrous situation. It does. But it also primarily goes to your landlord/development company/whomever to contribute toward their ownership of the property. We work really hard for our money and the fact that it was going towards someone else’s equity was like a monthly slap in the face. It is time for our hard earned income to work for us. Here’s a good primer on equity.
- Money – We were fortunate enough to have been given enough generous gifts from our wedding to have ended up with a substantial House Fund. We told our guests that all gifts would go towards a home (not bills, vacations, or ourselves) and we wanted to respect that promise. There is no other time in our life when we’d be able to ask for or expect that kind of financial support. The days of a 20% down payment are over and to save that amount would take us another 10 years. Waiting and trying to get to 20% was not a realistic solution for what we could afford right now. The House Fund coupled with our current financial stability told us the time was right. We are in a good position financially to buy, want to do right by the investment our friends and family have made in our future, and didn’t see any reason to wait.
- An Amazing Deal – The condo were are purchasing had a too-good-to-be-true pricetag to begin with. We put in an offer slightly lower than the asking price and it was accepted. Another added benefit is that the seller will be paying our condo fees for the first year. Also keep in mind that we were able to secure a very competitive mortgage rate and solid financing because we both have good credit scores. All told, our mortgage will be pretty much the same as the monthly rent we are paying now. Amazing deals are not a myth, they really do exist! They just require a lot of homework and research. To give you an idea: we’re purchasing our condo for $56,000 less than the comparable properties in the area.
- Putting Down Roots – We feel very strongly about being part of a community, investing our money locally, and pride in ownership.
Isn’t home ownership scary/a lot of work/expensive/risky?
Yes and no. I think it depends on how much you take on when you pick the house you want to purchase. We’re buying a condo that has brand new appliances, floors, fixtures and a relatively new roof. The structure is sound and the land is safe. We targeted an older building with recent renovations on purpose. Most of the pieces of our home will last a long time before they start to wear down or need to be replaced. Thus, less labor, money, worry, and stress overall. You are the person determining all of the must-haves in your new home; the notion of your starter home being a requisite “fixer upper” is a thing of the past, especially in New England and especially in the city.
Why a condo?
John and I started out by looking at single family homes. However, we were consistently disappointed in the amount of house and the condition of most of the houses for the price we could afford. We had some serious discussions about exactly what we wanted a single family for (yard, basement storage, big kitchen) and found that if we adjusted our search to include condos, we may find something comparable. Once we started looking at condos we had much better luck. Turns out, a single family would have been too much space and we didn’t necessarily want to be responsible for all that house anyway (see above, bigger house = bigger risks/responsibilities/stressors).
One other thing to mention is the benefits of a condo association. Basically your condo fees go into a reserve that cover a myriad of things (for us it’s master insurance, exterior maintenance, snow removal, water, and sewer) but the leftover money can also be used as a rainy day fund to help cover anything shared that may break or be damaged. This also helps with the above question of home ownership being too risky, expensive, etc. Shared responsibility and savings will help me sleep better at night if the roof springs a leak.
Maybe you’ve heard that condo associations have crazy rules that are too strict and severe. I don’t know about you but quiet hours, common area obstruction rules, appropriate garbage handling, eye sores, a limit on dangerous animal breeds, designated smoking areas, and structured complaint policies and procedures all sound pretty fair to me.
John and I grew up in quiet suburban towns. And while that was nice at the time, it’s not what we want right now. We’re city folk; we can be to downtown Boston in 11 minutes by car, 30 minutes on the train, 30 minutes by bike, and heck only an hour and a half if we wanted to walk. Being in the city is absolutely something we didn’t want to budge on despite it’s obvious cost implications. And it wasn’t for lack of trying either; we looked at houses and condos in the ‘burbs and it just never felt right.
Other reasons for city living over suburb living, for us, include community, culture, people our age, transportation, and overall quality of life.
Our condo is amazing. It has the charm of an older building on the exterior but the renovations on the interior make it fresh and modern. It has two bedrooms, 1,000 square feet, central air conditioning, all new hard floors, all new windows, a brand new kitchen including granite counter tops and all new stainless steel appliances, we have about 200 square feet of basement storage, an in-unit washer/dryer hookup, a front and back balcony, one deeded parking space, ample street parking, all in a quiet neighborhood one block from an elementary school. I’m ecstatic, and am very proud of our choice.
What’s Next/Our 5 Year Plan
I feel like I’m always asking What’s Next. But, for us, it’s healthy and it works. Our 5 year plan for now is simple: put a lot of time into making our condo our home, travel freely, save as much as we can, keep advancing our careers, and no babies.
Disclaimer: Maybe I’ve written this as if finding and buying a home was the easiest process in the world. It hasn’t been. I totally understand that everyone’s life situation is different and that alone precludes a lot of this from being feasible. The stars all do have to align just so for this process to work, so to speak. You need to put in a lot of research and effort, on top of simply just being ready for the whole thing. We are very fortunate to have been in a good place to undertake home buying, I haven’t forgotten that.
Sounds like you guys had a relatively smooth process though! Definitely takes a lot of time and research to find the house that you want, but when you do, it just feels right. I will say, being a homeowner is a whole new world. Things come up and suddenly it’s your job to fix them!
But I wouldn’t trade it for anything. Having a space that is YOURS, that you own, that you put money towards on a monthly basis instead of thin air… It’s an amazing feeling. At times it’s overwhelming, but more often than not you stop yourself and say, “Holy shit, we OWN this place. This is our house!” It’s pretty awesome. :)
Welcome to the world of being a homeowner, and congrats again!
It was smooth, thankfully! I totally agree with everything you said. It also makes me feel really hopeful for the future and proud of John and I as a team. There’s not much we can’t do, you know? And that feels awesome.
Yay you guys! I whole-heartedly agree with almost everything in this post – especially the fact that you got your place for a steal! It’s truly beautiful, and at that price – too good to be true – i’m jealous.
The one thing i want to disagree with you on is that the 20% down payment days are over. As someone that went the 20% down payment route, i have to believe it’s still possible, and still makes sense for people sometimes. I can completely understand how it isn’t and should not be something that people are forced to abide by, because there are clearly situations where it doesn’t make sense. But i can’t go so far as to say that its days are over – there’s still a segment of the population that would be well served by following that guideline.
But back to the positives – so excited for you guys!
Just as you understand why I said it, I totally get why someone would disagree. It’s just A LOT of money, you know? And while having that amount of money in your 20’s isn’t impossible, I just feel like people spend more than they save so it’s hard to ever accumulate 20%. Or, in our case, we could wait another 10 years but who knows where the housing market would be then? We’d rather buy now, pay PMI for a bit, but be building equity immediately.
Thanks for the enthusiasm and support!!!
Yeah I’ll agree with that. If we wanted the house that we bought, and needed to save up 20%, um.. that would’ve been almost double what I make in a year. That’s kind of a lot of money and would take a really long time to build up. I didn’t want to wait another 10-20 years in order to buy the house that I want now. Plus I could not take the whole living in an apartment for much longer. I realize we could’ve rented a house, but why not put that money into the house vs. thin air now?
PMI isn’t too awful, you pay it for a little while and then it goes away.
I mean, if you’re able to reach 20%, I say go for it and more power to you. But the reality of the situation for most 20-somethings is that 20% isn’t all that easy to hit, unless you come across a really large inheritance or something… Plus, we didn’t want to completely wipe out our savings on the down-payment; you need to have a little extra money for all the things that cold possibly come up when owning a house (for us we ended up having to buy a new furnace and we’re going to have to replace a pipe to our sprinkler system
due to it bursting in the cold weather).
That’s just my 2 cents though. :)
Right, my thoughts as well. Plus we could let our House Fund money sit untouched in our account, trying to save a few more thousand $$ but, ultimately, it would make little difference on our monthly payments. You need to put down much more money to get that monthly amount to move in big leaps, not just little bits.
It sounds like you’ve discussed and given this a lot of thought. I’m very excited for you!
You have a wonderful blog, and your writing is enjoyable to read. Nice and friendly. :) I like how you’ve delineated the process of home buying — for me, we bought our first home in 2002, and it seems so long ago now! But reading your post brought back some great memories, and all in a good light.
I live in the suburbs, and for me, it’s perfect. But I’ve been married more than a decade and have two small children. I do see the allure of city life, though, even with children. My sister lives in a big city with her husband and baby daughter, and she’s loving it. As you know, it’s all about finding where you “fit.” And finding that out when, as you said, all the stars align, is what makes the magic.
May you have many happy years in your first home!
You’re so sweet, thank you for the comment! What a lovely blog you have too!