DIYDollhouseBlog

A single girl's home adventure

How To Buy A House, Part 2

Now that you’ve got everything in order and know what price range you’re comfortable in, you can start the fun stuff – looking for a house!

Wait, no. First you have some decisions to make. What areas/school districts/neighborhoods are you interested in? How many bedrooms and bathrooms do you need? How many do you want? Are you able and willing to do any repairs or looking for move in ready?

Unfortunately you have to do this for yourself. It’s time to decide your needs, wants, and deal breakers. I didn’t actually put down a list until I had looked online at some houses in my price range to figure out what would and wouldn’t be possible. But there was a lot of internal debate – do I really *need* Central Air? Or is the second bathroom more important? I tried to keep my absolute needs list pretty short since I didn’t want to budge on the districts and areas I would buy in.

While I was just browsing what was available I found exactly what I wanted – a fixer-upper in a great school district. Three bed, two full baths, great square footage. But it was a short sale. So I got a recommendation from a friend for a realtor, who set up a viewing. I put my offer the next day.

A side note about your realtor: get recommendations from friends but make sure to ask what they liked and didn’t like. And make sure it’s someone they’ve actually used – not their friend’s son who just got his license. My realtor came highly recommended as a great negotiator, but I was warned that the buyer had to do the searching more independently.

Back to the offer. After a week or so the seller accepts. Great! Right? No, now we have to wait for bank approval since it’s a short sale. After more than a month of waiting I get the news- there’s a ton of liens on the title and the seller and bank won’t pay them. With all the major work needed on the house, I had to walk away.

So back to the search. I talked with my realtor about what I was looking for and he set up an email to me daily showing all listings in my price range in the towns I was interested in. I did a lot of looking online and sent him a list of about 15 houses I wanted to see. At this point I was living on a futon, and included houses I originally dismissed. Might as well look, right?

EXACTLY. Keep an open mind. And remember, pictures can be very deceiving on a computer screen! Case in point: one Saturday I had 8 viewings lined up with my realtor. I kind of had a mental ranking for them before we left. At the end of the day one of my top two choices was taken completely out of consideration. It looked great online, but in person it looked like a half blind chimpanzee did all the updating and painting. Nothing was straight, nothing looked good, and nothing made sense in the house, except the kitchen – which coincidentally the online listing focused on.

It ended up that one of the bottom two houses became my favorite, and the more I thought about the “feel” of the house and it’s character in person, it became my top choice and the house I’m now buying!

So the moral of the story is to know what you absolutely need, what your wants are, to be flexible, and not to dismiss (or fall in love with) a house just based on the pictures online.

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How To Buy a House, Part 1

During my house buying experience I spent a lot of time confused and frustrated by a lack of information. I consider myself a fairly intelligent person. But this was my first time buying a house. I am a planner – I like lists and being prepared and knowing what’s coming next. I don’t jump into things blindly. Very very Type A. I struggled with the process this far though- the only information I could find online was very vague. And asking a coworker who recently bought a house was funny, but frustrating. Her response? “Oh it was so stressful I had my boyfriend do most of the paperwork”

Disclaimer: In no way am I a real estate or finance professional. The following is what I experienced and what worked for me. I hope to provide others in this situation an idea of what to expect.

The first step is NOT looking for your dream house. The first steps are boring, grown-up stuff.

For me first priority was putting myself in a financial situation where I could AFFORD to buy a house. This meant paying off what debts I could (like credit card balances), building up my savings (for closing costs and repairs), and making sure my credit score was healthy. I know everyone reads and hears to check their credit reports regularly, and if you’ve been ignoring this I’m not going to yell at you.

I understand. I was young and not incredibly responsible at one point too. But once I did check all 3 full reports I did find a discrepancy with one if the big 3 reporting agencies and had to go through the resolution process. Which was a pain. And took a while. Not something you want to deal with when you’re trying to schedule a closing so do it early!

The three big credit reporting agencies are:
Equifax

Transunion

Experian

As far as paying off debts, I still have a monthly car payment and student loan payment, but no credit card debts. I used Dave Ramsey‘s snowball method to pay off all those little debts that build up. I borrowed his book Financial Peace from a friend, but I know its available at my local library.

Even then, no looking for houses. Next I estimated out how much I could afford to pay monthly for my mortgage, taxes and insurance (since I was putting less than 20% down an escrowed mortgage is necessary). I wrote out my monthly income and subtracted out all of my monthly bills, estimated utilities, my usual grocery and gas budget, my monthly discretionary budget (aka fun money), a set amount to savings, a set amount to retirement, and an extra cushion. Don’t forget your cushion! We’ve all been there – walking through the mall after buying a gift and see the perfect pair of boots. What the heck? There’s a little money leftover this week and tighten the belt next week, right? Then the next day cut the tags off and wear your new boots, and promptly blow a tire on the way to work. Now you’re eating saltines and drinking water for 2 weeks. Or is that just me? Don’t answer that.

Some banks offer monthly summaries to show where you spend your money by category, or use a service like Mint. Personally, I used a few months worth of checking statements and pen and paper, but I’m old fashioned I guess. However you do it, figure out what you spend a month on things that aren’t bills.

Around this time I met with a mortgage consultant from my bank to discuss what types of loans were available to me as well as what the bank thought I could afford. I was surprised that the bank’s answer was significantly higher than my answer. Awesome, right? I can get even more than I thought!

When I got home I ran a test scenario at the bank’s max through a mortgage calculator to see what my monthly payment would be and realized that if I spent as much as I was pre-approved for I would have barely enough leftover after all my bills to cover gas to get to work and $40 of groceries a week.

I don’t know about you, but I don’t want to eat pasta alone on my floor every night. It was important to me to not make myself “house poor” – to not get myself into a mortgage payment so high that my discretionary budget was too tight to live the lifestyle I enjoy. What’s the point of buying a house if you can’t afford furniture to fill it?

To make sure that wouldn’t happen I estimated how many times a month I went to a girls’ night or bought things to pursue my hobbies (my indulgence- books and knitting supplies), and I made sure to account for that continuing while I owned a house.

I used the mortgage calculator linked above and tried different sale price scenarios to get an idea of how much the sale price and my down payment would have to be. I also made sure to keep in mind that closing costs would run between $7,000-$9,000 – the required down payment percentage would be ON TOP of that. I ended up with a range I would be comfortable in. It was considerably lower than what the bank told me but I knew I wouldn’t be putting myself in to a position to fail.

And during the search I had to keep reminding myself of this limit. It’s hard though – you see these beautiful homes that look perfect, and they’re priced a little higher or have higher taxes than you originally budgeted for but only a little bit higher. And I would try to rationalize it – “But if I had this updated en suite master bath I wouldn’t mind not going out to eat!”. But I really I would keep going out to eat, and just rack up debt.

So be realistic during this step. If you don’t cook now, most likely a bigger, more expensive kitchen isn’t going to magically turn you into a gourmet chef who enjoys cooking. You’re going to continue to enjoy your meals out. If you pride yourself on always looking fashionable and having nice clothes, that’s fine. No judgment – I have actually had need of an entire clothes room when 2 double closets couldn’t contain my wardrobe. But you can’t pay more for a master suite with a walk-in master closet and not be able to afford to stock it. Budget accordingly. This will help you in the next step (and next post) – looking for a house, and defining your needs vs. wants.

Another (not really) pro-tip: while you’re doing all of this work keep copies of EVERYTHING. Yes. E.V.E.R.Y.T.H.I.N.G. Especially if you can scan everything, it makes things go much smoother later!

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Inspection Results are in

Saturday morning I went to “my place” – feels weird to call it my house, since it isn’t really mine yet.  My very nice inspector, Sam, was very patient with me asking a million questions.  He very thoroughly explained everything he was looking for, any issues he noted, solutions for any issues, and a lot of great advice on home maintenance.

There were a couple things he found that I had no way of knowing about prior to inspection.  Namely, moisture in the basement and mildew on the underside of the roof.  He told me what could be done for both, and I’m comfortable with that.  He also said that a lot of houses that age in this area have similar issues.  Homeowners try to insulate basements and attics and completely cut off airflow – this leads to a build up of moisture and mildew.

In this case the vents in the crawlspace basement had been covered with foamboard insulation and bricks.  I’m going to have to get down there and crawl on my hands and knees with all the spiders, and pull all that insulation off.   There’s a ton of junk down there too – rusting paint cans, wooden ladders, and just junk.  All of that has to come out.  I’m NOT looking forward to that job.  I’m already thinking of who I can pay to do it for me cheaply.

The attic had blown-in insulation put in a couple years ago, and it looks like the baffles (to keep the insulation from blocking the soffit vents) and the power fan (to turn on and pull hot moist air out) had been installed at that point so further moisture shouldn’t be a problem.  The existing mildew does have to be treated though.  This presents a problem – the blown-in insulation makes it impossible to walk up there.  So I’m going to have to lay down as few planks as possible across the rafters and squish down as little insulation as possible in the process.  Then either have professionals come treat the mildew, or get a solution to kill and prevent further mildew and do it myself.  Then once that’s done, put some insulation over the boards I’ve placed to make up for the squished insulation.  Squished insulation = ineffective insulation.

But anyway – on to the pictures!  I’m actually really excited to have such ugly “before” pictures.  I love decorating and remodeling, especially if I can DIY as much as possible and get good bargains in the process.  Something about being thrifty, and turning something other people would never consider living in, into a comfortable and inviting home.  I just can’t wait.  And this house is U.G.L.Y.

First, a layout:

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Using floorplanner.com I created this.  It is by no means accurate.  I’m somehow missing a couple closets, etc.  And I don’t actually own a lot of the furniture, I just put it in to make it apparent to my family what the rooms were.

The top is the front of the house and the bottom is the back.  The 3 rooms along the left are the bedrooms.  And yes, that block in the upper right is supposed to be there – it’s the coat closet.  The dinette and table in the kitchen need to be built (yay -future project!).

Here’s the Tour:

First we approach the house from the street

Front of House

Here is a closer view

Front of House

Front of House

I guess this is the “garden”.

"Garden"

Here is the living room

Living Room

Living Room

Yes, the carpet matches the drapes…

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Looking from the living room back into the dining room (and towards the family room):

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Closer view of the medallions on the dining room wall.  Don’t get too attached – those won’t be staying:

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The family room overlooking the back yard:

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Back to the front of the house.  The smallest bedroom, in the front of the house.  Notice the continued use of paneling:

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This bedroom is the biggest of the three, and is off of the dining room:

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Here is the back bed room.  The pink bedroom.

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Let’s get a closer look at that wallpaper (excuse my crappy camera).  You can kind of tell that the wallpaper is METALLIC.  Gross.

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Over to the laundry room.  To the left is the door to the carport:

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Here is the full bathroom in the front of the house:

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The half bath is between the laundry room and the family room, in the back of the house:

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I’ve been saving the best for last – the kitchen.  Here we are, looking into it from the living room:

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Here you’ll notice 2 microwaves.  The built in one above the stove doesn’t work.  So they left it there and put one on the counter, next to it.

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Let’s get a close up of that tile counter and backsplash….

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Here is the eat-in area.  I have big plans for a banquette, with storage under the benches.  I actually acquired the perfect table from Craigslist yesterday.

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A close up of the flooring.  Like a kaleidoscope.

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Leaving the kitchen, going through the laundry room to the carport:

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The half garage behind the carport.  Used as storage/work room by the previous owners:

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The big backyard for Dolly!  It is her house after all.  I have some plans for this yard.

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As you can see – there is a LOT of work to do.  It’s not even a blank canvas – it’s an outdated, ugly canvas that needs a lot of imagination and TLC!  I think Dolly and I are up to the challenge.

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Anticipation

Tomorrow is the big day – inspection day!  I charged up my camera’s battery, and need to buy a new tape measure on the way there since my current one is in my storage space.  And I was just in my storage space today, to get necessities like my curling iron and favorite cashmere sweater.  I even moved my toolbox to get to things, but forgot to grab the tape measure.

I plan to take tons of pictures to share and maybe even try to draw up a quick floor plan.  I tried using floorplanner.com, but without measurements it wasn’t really working.  If worst comes to worst, I’ll use my good friend Microsoft Paint.

Fingers crossed that everything goes well tomorrow – no surprises!

 

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In the beginning-

I just found out my offer was accepted!  Pending inspection, I will be the owner of 1.400 sf mid-century ranch!

But that’s not really the beginning.  The beginning starts with me, landing on a futon in my bestie’s parent’s house, figuring out where this 31 year old’s life should be going.  After a breakup I had to move from my previous living situation.  Hence, the futon.  And what 31 year old, college educated, world traveled young adult doesn’t picture herself living on a futon in her best friend’s parent’s house?  In an 8×6 room, with a small dog?  Oh wait, that would be no one.  It’s a pretty dismal place to be at this point in my life. (not that my hosts are anything but wonderful – seriously, so welcoming and accommodating and helpful!)

I looked into renting, but anything I would want to actually live in is going to be $1,000 a month or more. So – buying, right?  If I’m going to be spending that much a month, I want something to show for it.  Besides, how hard can it be?

This being me we’re talking about, I start the lists and the planning.  Lists of neighborhoods (not even areas or school districts) I would buy in, lists of wants vs. needs (an ever-changing list), lists of deal-breakers.  I have to have a plan for something this major.  I can’t just fall into something, can I?  My hard and fast criteria weren’t that complicated: 3+ bed; 1.5+ bath; at least 1.000 square feet; good school district (for resale value); able to buy well below value, preferably a fixer-upper, but with good mechanics.

Immediately I find what I think is my dream home – great school district, in need of some TLC, has been on the market for a while, 2 blocks from one of my dearest friends.   My realtor finds out it’s a short sale, but I’m willing to wait if I like it.  I walk through and there is considerable updating needed, so we bid lower than asking.  Imagine how lucky I felt? The first house I saw I loved.  So I sign the offer and wait. And wait. And wait.  And finally the bank responds – they’re not budging.

During all that waiting, what was I doing?  Pinterest.  I had all the future renovations and wall colors and furniture pinned.  I was committed to this house.  I had plans for this house.  I seriously debated increasing my bid, but the taxes and necessary repairs would’ve been tough to swing.  So I deleted the pin boards, and tried to move on.

New search, expand my potential neighborhoods, and take a harder look at what I really need vs. want.  After looking online for a long time and walking my dog through several neighborhoods I have a list of several houses to view.  There’s a couple I think are really strong possibilities.  There’s a couple that are on the list because they’re near other possibilities.  There’s a couple where I don’t know what to expect because the pictures online don’t give much away.

And wouldn’t you know?  The 2 I thought I would like the most I hated.  The pictures didn’t really give the details and the feel of the houses, and both just felt choppy, cheap and wrong.

One of my “eh, might as well take a look houses” had really strong potential though.  It was a typical “storybook ranch” for this area, with a big addition.  But it was seriously outdated – the carpet is a turquoise/royal blue in most of the rooms, there’s paneling in 2 rooms, and the kitchen has tile counters and linoleum floors that may be original to the house.  It is UGLY.  But there’s hardwoods under most of the carpet, and the major mechanicals are all fairly recent.  There’s a couple issues – a minor electrical upgrade needed, the windows aren’t vinyl (but do have storms), and the roof has maybe 5-7 years left in it.  It’s actually the ugliest house on the street.  But it’s listed at a reasonable price for the neighborhood and it’s liveable – nothing HAS to be done right now.

After thinking on all the houses I’ve seen to this point, I wait another 2 days before I tell my realtor I want to go for it.  But I would be more comfortable with a lower sale price (seriously – mushroom pictures on the tiles – those HAVE to go).  He works his realtor magic, and today I signed a contract and sent it to my attorney for $13.5K lower than asking – and the mortgaged amount will be almost half of what I was pre-approved for, leaving enough money left over each month to do some work on the house.  And the final price is about $30,000 lower than most of the surrounding houses, so I know that I can put quite a bit into it without making my house the most expensive on the street.

So I’m feeling pretty darn good today – there’s a light at the end of my futon-sleeping tunnel, and I know I’ll be able to swing this financially.  Especially since my bestie is looking to rent a room – instant extra income and grunt worker —- I mean reno assistant.  My little dollhouse dream is becoming a reality!  I love love love decorating, so I’m excited to have a whole house of my own to do whatever I want with.  And I’m excited to try out all the DIY tricks I’ve seen over the years.  Since everything needs to be updated I’ll have a lot of “canvas” to work with. Of course, I’m expecting some set backs and disappointments, but it’s all part of the journey, right?

Now to start some new Pinterest boards while I wait for the inspection 4 days from now.  And then the waiting for the closing… oh patience, I wish we were better acquainted…

 

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