Category Archives: House

Home Ownership Emotional Side

I have a weird emotional connection to home ownership.

Maybe it’s the immigrant attachment to owning hard valuables you can touch or fulfilling the American dream? The truth it is I keep running the numbers behind whether we buy a home in the new city or keep renting. I know renting provides flexibility to move wherever, whenever. But owning a home in Texas didn’t stop us from picking up and moving last year. We bought a house where the numbers made sense and we are now renting it. We have 3 years to figure out what to do with the home, although we are leaning towards keeping the house forever.

 This is all me and my random thoughts….

 So, now I want to buy another house. My husband looks at me goofily; he is not sure whether he wants to buy another property right now. He thinks the market is too high, but market timing is so iffy. So, I’ve been running the numbers and thinking about why buy a house. NY Times Rent vs Buy calculator is pretty useful. From my perspective, I feel like buying a house would keep me motivated. I need a carrot to keep running on the treadmill. Financial independence should be the carrot that keeps me on the treadmill? Yes and no. Yes, it keeps me motivated long term (in the decades horizon), but not necessarily in the near term (5 – 7 year horizon).

Our apartment is nice, no maintenance, and yet…I want to own 20% of my walls around me (the bank owns the rest until the house is paid off). In order, to run the numbers, I have been trying to get a gauge for the real estate and what we can get.

Criteria 1: Stay within walking distance to work. Save gas, miles on car, and time. Which means city living.

Criteria 2: 2 Bath, 2 Bed Min.

Criteria 4: Single family home.

 Criteria 5: No big updates to do, no carpet, energy efficiency windows, furnace/HVAC fairly new, good location, single lot (no townhome), place to park the cars. Gosh, our tastes sure have gone up.

So looking at $250K price tag for 1500 square feet, 2 bed,2 bath, carport. Whoppers. It’s going to be hard to pull off a 15 year mortgage. Actually it’s going to be more beneficial to get a 30 year mortgage. I never thought I would say that. By the way right now, our monthly rent is $965 for a two bedroom apartment, 890 square foot apartment.

So yeah, the only hesitation is the amount of debt we will have to take on. So glad we don’t live in California or Portland. But if it’s within walking distance, I could take 50% of what I have budgeted for gas and allocate to the home budget. Oh if we stay within walking distance to my work (which we are right now), my car will last longer, potentially delaying my car needing to be replaced until my 30s. Do you see me playing with numbers? Trying to figure out what I could reduce in the budget to make the numbers work.

Let me tell you we have kept our budget pretty consistent ever since we graduated from school. So, I’m trying to NOT increase the budget. This way we can still travel, have money for unexpected items, etc.

 Sometimes I want to be like YOLO…especially when you heart wants something and your brain is skeptical. 

 Open for comments, questions, telling me I should stop being emotional, continue look at numbers.

The Itch To Own Again

It’s weird a feeling. The itch to own a structure, to have a mortgage. To say to people, this is is my house!

There are a lot of opinions on the rent versus buy. Financial practicality aside, owning your home is very emotionally charged.

While we are not ready to buy another home in this new city, a part of me is getting the itch to own again. Sigh…such an irrational itch!

Darn HGTV and your house hunters collection!

Owning the last home (oh wait we still own it) was both satisfying and exhausting. It’s really changed our perspective in terms of what we would want in our next home.

We are enjoying being renters for now. Our apartment is very cute.

Need to remind myself about the downsides of owning a home – the maintenance, the down payment and costs, the permanence. It would limit our ability to move due to a job. Although switching to another company is not an option right now. I need to stay with the company for 3 years to vest my 401K match!

ahh..irrational feelings. Maybe it’s because I’m an immigrant. My immigrant parents are also very attached to their real estate. My mom’s dream is to own a nice little home.

New Couch Purchase

I have been wanting a new couch for a really long time. But as usual I have champagne taste with a beer budget. After buying a couple of couches that I ended up not liking because they were “more affordable,” I decided I was going to save up my pennies to buy something I really liked.

We spend much of our free time on the couch. We relax while watching tv, I love reading a book on the couch, etc. A couple of years ago I decided I was going to allocate all of our credit card rewards to the purchase of a couch. I saved every single penny. Many people say they don’t have the patience to save the money and they usually spend it, but I had a goal.

I really loved sectionals with down feather wrapped cushions. Looked at Pottery Barn, Mitchell Gold, Room and Board. Did I already say I have champagne tastes?

Well, then I found out about Interior Define. Interior Define has a unique business model. Custom sofas at the right price. Their process bypasses unnecessary middlemen and markups. they pride themselves in offering well-crafter, highly custom pieces at an uncommon value.

It’s important to realize:

  • They only have one showroom in Chicago. To keep costs down, they cut their retail supply chain. If you don’t live in Chicago, you don’t sit on the sofas.
  • Order online or with the help of a rep.
  • Custom choices
  • 365 day return
  • Delivery is “free.” It’s basically included in the price of the couch.

I started looking at the sofas in the fall and tried to read as many reviews as possible. I ordered fabric swatches and started talking to a designer specialist. Over the course of a few weeks, we emailed back and forth and discussed fabric, dimensions, sofa, and leg options. It was a really, easy experience. The rep was really responsive. The experience was very personal. No corporate responses with them!

Finally, I pulled the trigger. I had enough money saved up from credit card rewards and decided to purchase the Ainsley sectional. It takes 8-10 weeks for the couch to arrive because the couches are build to order and custom. It won’t arrive until the end of February or early March. I am super excited! I will share more once I get the couch.

Check out Interior Define. This is not a sponsored post by the way. Interior Define doesn’t even know I blog. The post is based on my personal opinion.

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EOY 2015 Kitchen Reveal

Almost 1.5 years later, I think I have made some great progress renovating my kitchen.

I wrote my kitchen update plan in April 2015. Check out my Kitchen Update Plan.

This is the before picture of the kitchen.

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This is a picture of the kitchen after I finished the kitchen backsplash.

Screen Shot 2015-12-29 at 11.01.59 PMCan you say complete makeover?

Here is a list of the items that were changed:

  • Changed the lighting to recessed lighting – Cost not sure – Didn’t keep track of it.
  • Added Under Cabinet Lighting – Cost about $250?
  • Added Pendant Lights Above Sink – Cost about $150 from Amazon.
  • Painted Cabinets White – Cost about $100? Rollers, paint, and tons of sweat equity.
  • Added Cabinet Hardware – Cost about $110? Home Depot hardware. Chose the most affordable ones, but we have tons of cabinets, so it added up.
  • Painted the Wall 2x – I painted the wall twice. After two gallons of paint, tons of paint samples because I didn’t want to paint 3x, this came to about $100? Now it’s a light grey. I love it!
  • Added cabinet trim – If you notice from the before picture, the trim was black. I added white wood trim. Cost about $15?
  • New Window Shade – $85? Bamboo shade from Lowe’s.
  • New Dishwasher – Upgraded to a Bosch dishwasher. We thought our old one was broken, when in reality, the reason it was not draining was because we never took out the plug in the new garbage disposal. We bought a new one and had the same drainage problem, and that’s when I figured it out. Oops! Well, I got a super, fancy new dishwasher. Our old one was just a drying rack. Now I use the new one all the time. No more fights over who gets to do the dishes. Total Cost – About $600
  • Kitchen Backsplash – I finally decided on a kitchen backsplash. At first I was going to go for a glass mosaic but it was just too expensive. I decided to do a simple white subway tile. I love it! it makes the space so much brighter. I borrowed a lot of tools. Cost – less than $200. It took a couple days to finish the project. I tiled 55 square feet. It’s not perfect. Some lines are not super straight, the grout lines are not the best, but I did it! Just don’t look too closely. I laid in pain for 2 days straight because my body hurt so much.

I love my new kitchen look. I keep going in the kitchen and just staring at it.

It’s not even the same kitchen!

 

Year 2 of Home Ownership

Owning my first home was a dream come true. We are in year 2 of home ownership and have learned a lot.

–          An older home is exactly that, older. Everything seems to break or I seem to break it somehow. Expect for an item to break every month or so. I started budgeting an extra $100 for home improvements, but in reality this $100 is being used for maintenance. So when you are budgeting for your house, think holistically. Mortgage + property taxes + home insurance + maintenance + renovation budget.

–          15 Year Mortgage vs 30 Year Mortgage – I think one of the best decisions we made was choosing a 15 year mortgage over a 30 year mortgage. Yes, it means our budget is tighter every month because our payment is higher, but it also means we will have our house paid off way faster. Actually as of right now we have 13.5 years left in our mortgage. Sounds way better than 28.5!

–          Less House – Since we chose to go with a 15 YR mortgage, it meant our home budget price was lower than most. If you are going to choose a 30 YR mortgage, you can usually “afford” to buy a more expensive house because your payment for a 30 YR mortgage will be similar to a 15 YR payment, except you will pay an extra 15 years of interest on the house. By buying a more affordable house, our loan was smaller, even though I wish it had even been smaller. I definitely get jealous when I see my coworkers’ new build homes with upgraded finishes, but I take in stride, and figure out how can I implement at my house DIY. If I lose my job, we can keep up with most of the bills with hubby’s paycheck for a couple of months at least.

–          Endless Projects – I guess the fun part is I have an endless list of projects I want to work on around the house. Time and money are always limiters. Well, money is what usually slows me down. I’m still renovating my kitchen one year later because I’m doing it myself on a budget. Additional projects we need to tackle: Redoing flower beds in front yard; laying down pavers in backyard, master bathroom renovation, etc. All of these projects are pricey and I need to save up money as well as figure out how I’ll tackle the projects myself.I, also, have to consider there’s only so much my house is worth. So I can’t invest $20,000 when our house is only worth $150,000. Not that I have $20,000 to invest in the kitchen. I have champagne taste on a beer budget.

–          Home Price Experience – I also learned we most likely over paid slightly for our house. I think we should have negotiated an additional $5000, at least, off purchase price to cover all the work the house needs done. But the market in Dallas was starting to go crazy when bought our house, so we did not feel like we had a lot of leverage. Looking back we should have bought the year before, we would have paid less and our interest rate would have been even lower by half or a full point. But hindsight is 20/20.  The market continues to go up in Dallas, home prices are increasing every day.

Home Ownership Expenses You Might Not Expect

I had the chance to participate in an interview by Tali Wee at Zillow. I was able to share our experience as a first time homebuyer. I was one of a few bloggers who shared their experience including bloggers from Financially Blonde, Stacking Benjamins, Student Debt Survivor, Save and Conquer, Retire by 40, Fitnancials, and Wise Dollar.

Check out the article….

Below is more Q&A that didn’t make it on the interview.

1.      Tell me about the homeownership expenses you planned for prior to purchase. What saving strategies did you use and have you used your budgets as expected?

We planned for a 20% downpayment, closing costs, and an initial fund to do some needed repairs. We were very aggressive with saving our money prior to buying our house. We were saving over 50% of our income. We didn’t go out very often and we tried to eat home.

2.       What are the most costly expenses you pay as a homeowner that you did not pay as a renter?

Maintenance has been the most costly expense. So far, we have had to call a plumber to fix a leak, the exterminator to exterminate, and now, our garbage disposal is broken. $100 here and there adds up.

3.       Is homeownership what you imagined it would be? Please elaborate.

Yes and no. I thought updating the house would be a lot more fun. It is! I love the end result, but it takes time and money. I love having our own place and being a little further away from neighbors.

4.       What advice do you have for a prospective homebuyer budgeting to purchase a home and become a homeowner?

Plan to have a 20% down payment saved up, additional savings for closing costs, and shop for your mortgage. I found out later Capital One would have given me a small refund on closing costs. Don’t be in a rush to buy furniture and update your house. Take your time and save your pennies!

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4 Ways Mortgages Can Change Throughout Terms

A while back, Zillow contacted me to see if they could write a guest article for Savvy Financial Latina. I thought it was perfect timing, just recently purchasing a home. I asked Tali to write an article about 4 ways mortgages can change throughout terms to inform and educate soon to be homeowners about their future expenses.

WRiting the Check

The process of searching for and purchasing homes can take several months for most buyers. House hunters calculate their budgets, search for homes within their price ranges, visit open houses and assess properties – all before making offers. The lengthy process is both exciting and often emotional since homes are typically long-term investments, dictating buyers’ communities and lifestyles for potentially the next 30 years.

Buying a home is one of the most expensive purchases in buyers’ lives. Therefore, they’re apt to pay close attention to each detail and all of the fine print during purchase agreements and loan acquisitions. They build close business relationships with their lenders, and learn to trust the guidance of their agents. After documents are signed and keys are transferred, the agreements are final – but changes still can occur.

Purchase terms remain the same, but unsuspecting mortgage changes occasionally cause new homeowners to feel concerned, confused or deceived. Here are four mortgage changes that may occur throughout fixed-rate loan terms.

1. New Loan Servicers

After weeks or months of working with lenders prior to purchasing homes, buyers tend to form trusting bonds with them. Shortly after sales are finalized, it’s common for lenders to sell loans to other lenders or investors. Rather than carrying loans, lenders sell them to free up capital to make new investments, or for profit. These deals do not reflect on the relationships between lenders and borrowers. In fact, loan originators often stay in touch with their clients to foster loyal relationships for future investments.

When a loan is sold by an originating lender to a servicing lender, the borrower’s loan terms remain the same. The original terms agreed upon at closing stay intact. The only noteworthy change for borrowers is the new addresses they send their monthly checks to. Some servicing lenders accept online payments, biweekly payments or multiple monthly checks; others do not. Simply clarify the new payment options and any associated fees.

2. Revised Monthly Payment Breakdowns

After loans are finalized, borrowers are committed to paying their monthly mortgage payments. Although the price remains the same each month, the first few years of payments primarily reduce borrowers’ interest balances and slowly pay off principal balances throughout the later years of loans. This ratio of principal and interest is known as a mortgage amortization schedule. Homeowners should not be surprised to have lofty principal balances after 10 full years of loan payments.

Magnifying glass homes

For instance, a 30-year, fixed-rate mortgage payment of $1,500 would breakdown to $1,050 of interest and $450 of principal on the first payment, level out in the 12th year and the final payment would consist of $5 of interest and $1,495 of principal. Even though monthly payment totals do not change, principal and interest breakdowns vary throughout loan terms.

3. Homeowner Insurance Premium Increases 

In addition to principal and interest, monthly mortgage payments typically include one-twelfth of annual homeowners insurance and property tax fees. These partial payments accumulate in borrowers’ escrow accounts until they’re due in full. As with most bills, insurance companies often adjust their premiums for profit. Throughout 30-year terms, homeowners receive letters every few years detailing adjusted payments for increased homeowners insurance fees.

Proactive homeowners shop for insurance annually to find the best prices and avoid premium hikes. Some borrowers prefer higher deductibles to decrease monthly fees (emergency funds cushion steep deductibles), where others bundle homeowner and auto insurance with one provider for reduced prices. Other discounts are often available for highly-secure homes upon request. It is possible for insurance premiums to decrease in price, reducing borrowers’ mortgage payments, but increases are more common.

4. Property Tax Changes

Borrowers typically experience increased property taxes throughout ownership. Like insurance, annual taxes are portioned into monthly mortgage payments. In some areas of the country, property owners receive annual assessed value statements itemizing their property valuation details. In others, homeowners collect property cards at their city or county assessor’s office to determine valuation details such as property square footage, number of bedrooms and bathrooms, residential or commercial and other zoning information. Homeowners can file appeals on their property valuations.

Alternatively, homeowners can hire valuation professionals to assess their property values. However, appraisals aren’t free and outcomes may not reduce taxes – generous appraisals can raise property taxes. Before jumping into an appraisal, review local comparable sales to evaluate similar home values. If three or more comparable sales are significantly cheaper (8 percent or more), then the homeowner has substantiation for further research, an appraisal and/or an appeal.

Without fighting property tax increases, borrowers pay an additional lump sum to their lenders to correct deficits of annual taxes, with only slight mortgage increases moving forward. Otherwise, they might assume monthly mortgage payment spikes of a few hundred dollars for the remainder of the tax year to make up for the shortage in their tax escrow account.

These four scenarios demonstrate instances where a fixed-rate mortgage contract can change throughout the life of the loan. Keep in mind that adjusted-rate mortgages have changing interest rates throughout their terms, as agreed at closing. As long as homeowners are prepared for such circumstances, they’ll avoid internal panic, unexpected financial stressors and disappointment related to severed business relationships.

Mortgage Requirements for the Self-Employed

Congratulations on finding your first home! You found the one! At least the one for the next couple of years as your grow into it. This is a very exciting time of your life. Pinterest ideas are popping in your head! Ways to improve your home and gain some sweat equity! Sounds marvelous! But wait; before you embark on the journey, you have to figure out a way to pay for the house.

There are some people that are fully prepared to double down, and pay cash for their house. But most people don’t have the cash to do so, so they must get mortgages. Did you know the term mortgage comes from mort and means “death” (as in mortuary or mortality), and gage means “pledge.” Mort-gage means a “dead pledge.” In Bouvier’s Law Dictionary of 1856, Dead-Pledge is defined as “a mortgage of lands or goods.” It’s a pledge of death because it’s an engagement in debt, which is a neglect or violation of our duty; we’re not supposed to engage in those things. This is why we’re not to owe man anything.

When we applied for a mortgage, we had to show proof of income, our financial assets we would use for the down payment, our paystubs, among other financial things. Our credit scores were pulled. It was very interesting. As a young, married couple we don’t have super great credit. It’s ok, so we did not get the best mortgage rate. But what happens when you have unstable income? There are many people in the personal finance stage that have taken the step from working for the man to being the man. The self-employment stage!

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Stricter guidelines due to the new federal regulations require lenders to verify applicants’ ability to pay. Effective January 2014, lenders who make loans within the “qualified mortgages” parameters (low risk for both borrowers and lenders) are protected from legal recourse should the loans go bag anyway. Lenders will have to examine and over examine borrowers’ income and confirm debt-to-income ratio of no more than 43 percent. Borrowers who own their business or are self-employed will be analyzed even more. Self employed borrowers like full-time personal finance bloggers will need to show two years of personal and business tax returns, a profit and loss statement, and a balance sheet.

If you are planning to move from your first home to a second home and are self-employed consider your current budget. Look at any debts and clean up your balance sheet. You can use the loan repayment calculator to calculate how long it will take to various types of loans. If you are making the switch to self-employment, and want to get a mortgage, you may want to consider applying for a mortgage before making the switch to self-employment.

Have you applied for a mortgage while self-employed? Share your stories?

Source: http://www.nytimes.com/2014/01/19/realestate/new-snags-for-the-self-employed.html?_r=0

Kitchen Update Plan

Sometimes I wonder if we should have a bought a brand new house! It sounds pretty cool renovating a house, making your little updates, and so on, but darn do costs add up rather quickly.

The next room I’m planning on updating is the kitchen. I think it will really lift up our house once the updates are finished. I have made a budget for our kitchen plan.

Here is what our current kitchen looks like:

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Here is the look I am going for:

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Instead of the gray cabinets, I will be painting the cabinets white.

Budget:

  • Paint kitchen wall with Sherwin Williams Raindrop color – $50
  • Paint kitchen cabinets – In-laws donating a gallon of white paint
  • Pendant lights – $75
  • Bamboo Shade – $85
  • Tile Backsplash for 50 sq. feet – $300
  • Cabinet Hardware – $300
  • Extra Buffer for costs I have not account for – $100

Total Planned Cost – $910

I am going to use a West Elm coupon when I buy the paint. $15 off a $75 purchase. I am, also, waiting for a Sherwin Williams sale to save even more. I missed the last sale two weeks ago. 40%! It was sweet.

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I found these awesome mason jar lights. The plan is to buy 3 lights to place over the kitchen window. Make sure to sign up for the 5% off coupon.

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I’m in love with Young House Love’s choice of penny tile. It doesn’t break the bank like other options I have been looking at and I think it’s going to look great.

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Getting the paint on sale and painting the wall is the first task! It’s slow progress because I procrastinate every weekend. But, also, I’m waiting for sales so I can snatch up things. Every penny counts when updating a kitchen on a thrifty budget.

Applying For A Mortgage

You found the house you love, you made a bid, the seller accepted, house inspection went through, and now you need a mortgage.

When we found the house we wanted to buy, we thought we had gone through the hardest part. We saw dozens of houses. The process was pretty exhausting because we had to see the houses before more potential buyers saw the houses. The market was really hot. Supply was extremely low and there were many buyers motivated to buy. But getting a mortgage was even more exhausting.

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Let’s face it; even though the government “tried” to make mortgages more “understandable by the common folk,” understanding mortgages is comparable to deciphering hieroglyphics. We looked at three different companies for our mortgage.

  1. Online (Quicken) – We completed an online application. We then had a call with a Quicken representative. He was actually pretty great. He explained every single line item. When he didn’t know, he would say so and go ask a supervisor. There are other companies like Discover where you can start your application online.
  2. Personal Bank – We, also, talked to our personal bank. We received similar help. It is our bank, but at the end it was the mortgage branch of our bank that provided us information about interest rates, closing costs, etc. via the phone. Brick and mortar banks you can use include Bank of America, Wells Fargo, or Chase.
  3. Brokers – We, also, asked a mortgage broker. This representative came through a family recommendation. Usually these are LLCs. An example in the UK would be First Mortgage mortgage brokers.

Items you will receive when applying for a mortgage:

Interest Rate

Loan Years

Cost of the Lender making you a loan

Estimated Closing costs

Estimated Insurance Costs

Estimated Principal

Estimated Interest

The documents were confusing. It was stressful to talk to all three companies and try to negotiate a better rate. At the end of our negotiation, terms weren’t even really established until you signed the dotted line. What was also nerve racking was locking in our interest rate. We didn’t want to lock it in until we were sure we were going to buy the house. A couple days of hesitation meant we ended up with a slightly higher interest rate. Our realtor said it wouldn’t matter. Just a couple dollars difference on your monthly payment. But throughout the term of the loan we will end up paying about $4,000 more. Sure $4,000 doesn’t seem like a lot spread out over 15 years, but $4,000 could buy us a really nice international vacation.

Did you find applying for a mortgage as confusing as we did?

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