Thursday, January 7, 2010

2010: The Year We Buy a House

I am going crazy out of my mind with excitement about it and cannot (will not!) tally the amount of time I spend on Redfin.com. I’ve come up with all sorts of searches to whittle down to what we want. Our budget is constrained so at first we thought it had to be condo. A condo is good in theory, but one of the few drawbacks to our living situation now (apart from it being small) is that we have to be considerate in terms of noise. This isn’t the biggest deal for me, but it often stymies Cute Man when he’s really into a game or a movie. It would be nice to not have to think about it when we have our own home. Also, I’d hate to pay large condo fees that aren’t tax deductible like the mortgage payments.

But could we even dream of buying an actual house on our budget? The answer, is maybe. I’ve discovered that it may indeed be possible for us to buy a townhouse or even a single family home as long as we’re flexible on location. Of course, we need to feel safe wherever we move, but it might be more of an up and coming area, rather than a neighborhood we’re already familiar with.

We really need to be within walking distance of the Metro (train) due to being a single car family, so that puts a lot of constraints on things. We also want to stay as close-in as possible, but really, anything that is walking distance to a metro isn’t going to “too” far out anyway, I guess. We definitely need to stay below $300,000 and would prefer something more in the $250,000 range. Depending on where you’re living, that might seem high or crazy low and impossible if you’re from this area. But in my searches, at least online, it is theoretically possible. I’ve found a dozen or so move-in ready homes that look good online that are close to a Metro station. It makes me wonder each time if there’s something wrong with the place or neighborhood, but that will only become apparent when we start actually going out to see them ourselves. It’s just good to know that options are out there.

My absolute favorite discovery is a new construction development of townhouses out in Landover near FedEx Field. I couldn’t believe they were in our price range. We might have to be somewhat considerate of neighbors with our sound levels, but not to the extent it would be with a condo. And I like the whole townhouse set-up which will have a garage (!) and Cute Man’s “man-cave” on the first floor, the kitchen, dining room, living room, and powder room on the second floor, and two bedrooms plus two full baths (one being a Master Bath!) on the top level. I also love that the washer and dryer are on the top floor with the bedrooms. Trucking down to a basement to do laundry never made sense to me. To top it all off, it’s only a 5 minute walk to the Metro!

Of course, I’m slightly ahead of myself and we have a couple hoops to jump before actually getting an agent and going out to see places. First, we have a meeting on Monday with NACA to finalize our approval to go through their first time homebuyers program. I had to clear up a couple mistakes on my credit report first, which I’ve done, so we’re good to go. Then, we have a home buying class to attend… Once that’s out of the way, we’ll find an agent and get rolling. The goal is to be on track to take advantage of the federal tax credit before it expires in April.

It’s getting harder and harder to contain my excitement. I keep reminding myself to slow down and just go through the process. Now that things are starting to pick up, I plan to chronicle the process here. If anyone has any home-buying advice, please chime in!

10 comments:

notesfromthefrugaltrenches said...

Oh Amelia, I really hope and pray it happens for you!

HEALTHY AMELIA said...

Thanks, FT. At this point, I'm trying to be patient. It is a struggle!

SavingDiva said...

My only advice is to make sure you have a good real estate agent. Mine was horrible and made the process extremely difficult.

HEALTHY AMELIA said...

That’s an excellent point, SavingDiva. We’re going to try an agent we met at the NACA meeting. At the very least, he knows how to navigate the process with the program we’re using and he’s personable. How competent he is will become apparent pretty quickly. I just can’t wait to get past this paperwork part and get going already! Working on the patience…

Anonymous said...

You should check out Bostongal.com she has great advice on home buying and what she did to get into her first home. Think about getting a place with an apartment attached so you can have an income stream. Save every dime and put as much down as you possibly can.

HEALTHY AMELIA said...

Thanks for the tip! I will check out Boston Gal again. I haven’t popped in on her site in awhile. We’re not really up for being landlords right now, but I totally get how it would be an awesome way to offset mortgage costs. We’ve thought about it but we’re not ready for that.

As to having a lot to put down, we won’t be doing that. I know, it sounds crazy, but we’re going through a first time home buying program (NACA) that does not require it. Despite not putting money down, we’ll get below market interest rates, a 30 year fixed loan, etc… They even cover closing costs, which is awesome. They basically want to remove barriers to home ownership while supporting and encouraging the things that will make us successful as homeowners in the long run (a PROVEN ability to budget, save money, etc. is required).

This is a smart move for us because we can hoard our savings and investments as a large cushion/emergency fund instead of sinking it into something that’s not liquid: our home. We also plan to stay put indefinitely so we’re not worried about falling home prices and not having enough equity.

NACA certainly isn’t for everyone. It requires a lot of jumping through hoops, patience, and a volunteer commitment throughout the life of our mortgage (they’re also an advocacy organization). There are also limits on the price of the home ($360,000 or so in the DC region), which would price out a lot folks. But for us, it’s the (only) way to go and really worth the effort, at least so far

Notes From The Frugal Trenches said...

Do hope you are OK Amelia as it has been a while :)

HEALTHY AMELIA said...

Everything’s OK. Just preoccupied! I have another meeting with the NACA folks on Wednesday, so the house-buying process is poking along at a frustratingly slow but steady pace!

mapgirl said...

Be careful buying in PG County. They have a really high rate of foreclosure. Boyfriend has a rental property out there and his taxes in MD have skyrocketed in the past year.

Boyfriend has property in DC and in MD and he pays twice as much in taxes in MD for a house worth half as much.

Make sure your good faith estimate is accurate. I nearly passed out when I saw the one my mortgage banker prepared using MD tax rates vs lower VA rates. My realtor sent it back saying it was too high in taxes for VA which was true.

If you aren't living in MD already, look into your income tax rate, property taxes and your auto insurance rates. MD has particularly high auto insurance premiums.

HEALTHY AMELIA said...

Hey Mapgirl, thanks so much for the advice. I have definitely heard about the property taxes being high, especially in PG. I didn’t think about the other stuff, though, so that adds another layer of concern. It’s a trade off – it might make more sense to pay a bit more for a place in DC to save on the taxes, etc. There’s a lot to think about.

I’m still enamored of this development in PG – it’s the “nicest” place we’ve found in our price range in an area we’d be willing to live in. Our ‘walkable to Metro’ requirement really limits things.