Location Location Location

With all the changes and improvements I am making to my home, it is easy to forget why I chose this house in the first place. It would have been so much easier to buy a house already fixed up or even new construction. The construction process has been enlightening and fun, but it is also starting to get old. I want to be in my house!

My neighborhood is older, but not too old. The houses are all pretty cute, and we are within walking distance of many awesome things--including a park with a measured walking trail. Today, I timed how long it took me to walk from my front door to the park: five minutes. You can't beat that.

If you are still looking for a home or considering it in the near future, I cannot stress enough the importance of location. You have heard the old realtor's mantra 'location location location' many times over, but really consider it. Not only does it matter when you go to sell your home, it matters while you are there. Yeah, I might have paid a little more for my house because of where it is, but I am also saving $90 a month by giving up my gym membership in favor of using the park. And forget $30 drunk cab rides, I will be stubbornly stumbling home when I need to since it is only about six blocks away. So assuming I indulge in a few of those nights a year, right there I am saving $1260 a year... just because of where my home is. Add to that the gas money I am saving by being close to work, and I think the slight increase in price was totally worth it.

Now, all that might be negated by my proximity to Graeter's ice cream, but that's another story altogether...

Battle of the Sexes

I am a child of the millennium, according to the women at my office at least. I prefer to communicate through electronic means, such as emails, tweets, and (duh) blogs. I am attached to my Blackberry and my MacBook Pro is my child.

Part of growing up in this generation is believing that women and men are equal. However, I am also a Southern girl, which means I expect a man to hold the door open for me as he ushers me through the glass ceiling.

But I digress. The point is, I am naive and expected to be treated as an equal by contractors... after all, I am a strong, capable, single woman who has purchased her own home and is going to be paying someone to do some construction for me. However, I was mistaken. Despite being the one making the calls, scheduling appointments, sharing ideas, and writing checks, I have been treated like a silly little girl by several potential contractors. While I understand that I may not be the most knowledgeable individual when it comes to construction, I am not an idiot. I am coming to these men with well-drafted plans and an open pocketbook, and they are treating me like a simpleton.

Now, I need to be careful not to generalize. Two of the four contractors I have met with have been very respectful and will be more likely to get the job because of that fact. However, one I met with yesterday blew me away with his condescending, misogynistic attitude. All was going OK until we started discussing his bid for the job. He actually asked me if he should call my dad or my husband about the numbers. I wish I were kidding.

I informed him that this was my home and that everything regarding construction would go through me. Whatever. Good riddance to bad rubbish. Really, I am not trying to make a generalization about contractors, but let this serve as a warning to young female home-buyers: you have to be assertive. This is your home, you are in charge, and you call the shots. Be strong. Be proud. Be a homeowner.

Sign on the Dotted Line

The hour is upon us. Tomorrow morning, at 8:30AM EST, I will fork over my savings, my time, and my status as a debt-free member of society to enter into the land we know as home ownership.

I am over the moon. I know I was having doubts, but tomorrow, this thing I have worked towards for almost a year will become a reality.

Now, here comes the tricky part. While I am closing on the house tomorrow, I don't actually get possession until Sunday. Sucks right? Well, with the state of the banks and the mortgage world right now, institutions have become more stingy with 'bridge loans'--loans they give to cover a seller's costs in the few days between the time they buy their new home and sell their old. So a lot of sellers are writing into the contract a few days' cushion before possession. Essentially, instead of borrowing more money from the bank, the sellers are using the money directly from the sale of their old house to purchase the new. Even though I am signing my life and money away tomorrow, I don't get to actually possess the house until Sunday. Rough.

In other news, class is going well and so is work, despite being super tired this Monday and working my fingers to the bone drafting and typing. Such is life. I know you're jealous!

All About the Benjamins

Disclaimer: I am not a banker, an economist, or even really smart when it comes to numbers. Therefore, the following is simply my pedestrian interpretation of mortgages as I understand them. Ask a professional if you have questions, and good lord, do not take actual financial advice from me.

As I am sitting here with Hoot, the boy I nanny during the year (and yes that is just a nickname, creepy internet stalker people), I figure writing a blog is a better use of my time than counting down to the start of the new Wizards of Waverly Place movie. Obviously.

Yesterday, I spent about two hours chatting with my new personal banker. Who am I? Anyway, although I don't want to share a lot of personal financial information, I did want to give an account about the whole mortgage process.

Now, my understanding of the so-called "mortgage crisis" is very limited, but apparently things are very different now that the banks are recovering from giving out a bunch of sub-prime mortgages. Basically, banks started giving loans to people who weren't necessarily able to pay the monthly payments... thus people falling behind and all the foreclosures we are hearing about.

The result? It makes it even harder for people to get a secondary market mortgage now. There are about fifty requirements, and if you don't meet all of them, you don't qualify. Everything from your credit score to your employment history and even the fiscal responsibility of your new neighbors comes into play. Seriously... if you are buying a condo and your neighbors in the building are behind on their homeowners' association fees, you are out of luck. Additionally, parents are no longer allowed to cosign for a child as they were in the past. Hardly seems fair, but banks are concerned about the bottom line now, no matter its disappointing ramifications for the soon-to-be-homeowner.

Guess who doesn't qualify? Me! I understand, considering my lack of full-time employment within the last year. It doesn't matter that I am making enough money now, it matters that I wasn't last September. So am I shit out of luck, as the saying goes? Luckily, no. Apparently, these days, you just have to be creative as far as securing the funds for your new home.

After talking to a banker, we figured out a way for me to secure a traditional loan (as opposed to a mortgage) with the same payments as a mortgage for the next five years. After five years (or sooner, if my personal financial situation becomes more secure in the next few years), we look into 'refinancing' and making a new advantageous solution. I had to settle for a slightly higher interest rate, but it does not make a huge addition to my monthly payments.

So don't be discouraged, soon-to-be homeowners! It might be a little more difficult and you may need to jump through a few more hoops, but securing financing for your new home is not impossible.

My biggest piece of advice is to keep meticulous records... recent pay stubs, records of cash income, and tax returns. Boring, but necessary!

IT IS OFFICIAL!

Today, at 5:57 PM, my realtor informed me that the sellers have agreed to pay our requested amount ($3200... so not just pocket change) for repairs to the house, which means... all systems are a go!

I am so relieved! This whole time, I have been holding back my excitement, convinced something was going to go wrong. I wasn't trying to be negative, I just didn't want to be let down or to make a bunch of plans just to have something fall through at the last minute.

So now, the work begins. I get possession of the house on September 21 and starting then, we will have contractors and painting and decorating and everything that you can follow along. I am working on my list of things I want to do, and while I want to do most of it myself, I am not exactly a roof repairman or a certified electrician. I will need to hire a contractor to complete the big projects.

I am off to get a good night's sleep as a soon-to-be home owner. There won't be much time to sleep once I start working on making my new house a home!

Talk Dirty to Me

In my opinion, no two words are more terrifying to a home-buyer. The mere mention of these repugnant invaders will send a chill down your spine and bring drops of sweat to a savvy spender's brow. The first is merely a nuisance when it crops up on spoiled food. The second is a product that used to be considered a miracle... until scientists discovered that it gets into your lungs and kills you. Awesome. Our culprits?

MOLD and ASBESTOS

I never thought I would one day need to know what either of these things are, but guess what? They are part of the bargain when buying a home, especially one built over sixty years ago.

Today, we went back for a second round of inspections, mainly to check on things that the first inspection brought to our attention. It is always a good idea to get a specialist to come and have a closer look at any potential problems and he or she can also give you an educated estimate in case you are negotiating with the seller. Most of these guys will come at no charge in hopes of winning your business should you decide to continue with the purchase and fix the problem. Win win win.

So we had a chimney specialist come check things out and got the necessary information about the cost of fixing the chimney and the surrounding roof. We also had an HVAC (which stands for "Heating, Ventilating, and Air Conditioning" in case you were wondering) specialist come check out the 40 year old furnace. The bad news? The furnace is almost twice as old as I am. The good news? It can be replaced pretty easily for a good price thanks to some tax incentives with energy-efficient machines (more to come on that later).

Nice Mr. Zipper (the HVAC specialist) poked around and then almost nonchalantly waved his flashlight around and asked if I knew about the moldy asbestos tape on the ductwork. Ummm excuse me??? The what???

My heart sank. My stomach flipped. My vision went fuzzy and my head pounded as my dreams of home-ownership plummeted around me. Mold and asbestos? Nothing could be worse, right?

Wrong. Turns out, small amounts of mold (unlike that seen in the picture) are not the end of the world. It is not good, but it happens. Now, if you have mold inside the walls and there are mushrooms growing in between your sheets of drywall... yes that is a problem. In general, however, keeping the area clean and dry is enough.

As far as asbestos, this material was once used in everything from battleships to hot plates. Mmmm let's cook with a material that has glass-like fibers that adhere to your lungs and kill you! In homes, you might find asbestos floor tiles, ceiling tiles, and even in duct tape. Is that ideal? No. But it can be easily fixed.

First, you can cover the asbestos tape with a layer of aluminum tape (stronger than plain ol' duct tape). The use a sealant primer paint (word on the street is that Kilz is the best) to cover the whole yucky moldy asbestosy mess. It seems overly simple, but apparently it is a legitimate fix for minor mold and/or asbestos infestation. Lesson learned: don't freak out prematurely. While you might hear things about bad bad bad stuff in your house, it is not always the end of the world. Almost everything can be fixed, and sometimes for as cheap as a can of paint and a roll of tape.

Special Note: Our friendly neighborhood home inspector Mr. B did NOT miss the mold or the asbestos tape. Turns out, an inspector can not tell a buyer that there is mold unless he is 100% sure that it what it is... and you can't know for sure without a $1200 test. If an inspector "scares off" a buyer by telling them that there is mold, he or she can be held liable for the sale. So open your eyes!

Deal-Breakers

So after touring no fewer than sixty-two houses around the Louisville area, I got pretty good at recognizing things that can be fixed and things that just aren't worth the time and money. For instance, one home I looked at was amazing... three bed, three bath, completely remodeled inside, well-cared-for, beautiful, finished basement and garage. It was priced for that too. Now, normally it would be totally worth paying the big bucks for something turn-key (that is realtor-speak for you can move right in, for those not obsessed with HGTV). However, if you look a little closer, there are some things that will end up costing big bucks... which you have to take into account in addition to the asking price of a home. This particular home needed a new roof (around $10,000) AND a new air conditioner (around $1500 plus installation and possible rezoning costs)... DEAL-BREAKER. Just goes to show that even if a house looks perfect, there is a lot to consider before buying.

Not to say that some things aren't worth adding or repairing. My cute little house only has ONE bathroom... pretty typical of post-WWII homes, but not ideal for everyday living OR resale. So before putting in an offer, I researched the average cost of adding a *small* bathroom to a home... around $15,000. While that is a lot of money, putting in $15,000 now will not only increase my enjoyment of the home, but will provide almost a 100% return on my investment when I go to sell in a few years. Additionally, my house was priced low enough because it has only one bathroom, that I can afford to take the money I have saved and complete the renovation.

So when buying a home, take into consideration the average cost of additions and repairs and decide whether or not an old roof or a lack of back deck is really and truly a deal-breaker. To help you out, here are some of the average costs of additions/renovations:

Kitchen remodel: $20,000.00

Bathroom remodel: $8000.00

Deck addition: $5000.00

Window replacement: $8000.00

Family room addition: $25,000.00

PS... thanks to CNNmoney for help with estimates!

Now, most of these prices are quoted based on doing things on the cheap (coughSWEATEQUITYcough), but not completely by yourself. Obviously, these estimates will vary based on your location and the quality of materials, in addition to how much you do yourself or contract out. But say you find a great house in a great location for a great price, it just doesn't have a family room... will paying an additional $20,000 be worth your time, effort, and investment in the long run? Make sure to check comparable homes in your neighborhood to see how much they go for with your proposed addition.

Hope this helps for those of you thinking about setting out into the world of home-ownership... and hold onto your hats, because me renovating a bathroom is going to be a wild ride!

I'll get you next time, Gadget!

Dum da dum da dum... Inspection day! I have been itching to get back to my computer all day. At noon, the general inspector (we'll call him Mr. B) and the termite inspector met me at my (hopefully) future residence. The termite inspection was quick and painless... no termites in the house, though there was evidence of past termite treatments in the detached garage. While the latter fact is not ideal, it is not uncommon in older homes (mine was built in the years following WWII). Check plus there!

Mr. B took about two hours to go through everything in the property, from climbing on the roof to flushing the toilet fifteen times in a row. He was able to check everything except for the crawl space because the sellers were kind enough to leave their monstrous entertainment center blocking the entrance (no worries, they'll have to move that and have Mr. B come back soon). 

The good news? The house isn't crumbling down around us! Mr. B found three things, however, that will be somewhat costly to fix and therefore must be negotiated with the seller.

1. The chimney. The chimney lacks a chimney cap and has suffered decades of water damage. Huge problem? Not now, if we fix it. We will have to cap the chimney and repair damaged bricks on the outside. Cost? Around $1500.

2. Shingles. Louisville, Kentucky has incurred the wrath of God in the past year with Hurricane Ike, a devastating ice storm, and, most recently, a flash flood. The result is tons of roof damage all around... including on my cute little house. Fifteen damaged shingles doesn't sound like a lot, but apparently it is. Cost? Around $400.

3. Electrical panel. Some genius one day decided to run two circuits into the same circuit breaker. I don't really understand that, but apparently it is bad. Cost? Unknown.

After Mr. B sat me down and explained his report, I had to take it to Joanne (my realtor) and decide what to ask the seller to fix. In a word: EVERYTHING. They either need to agree to fix the noted problems before we close, or they need to knock some money off the purchase price so that I can afford to make the necessary repairs myself. I would prefer the latter so I can make sure everything is done right!

Lesson learned: inspection inspection inspection! Never skip it because I would have no idea about chimney or roof damage if Mr. B hadn't gone climbing around on the roof. So now... more waiting. The sellers have three days to reply to my request. I just want us to finally get to a settled agreement so I can stop holding my excitement in check! 

One promising sign... the huge SOLD sign in the front yard!

Show Down at High Noon

I am sitting here in my spotless decluttered room having a minor panic attack. Tomorrow, at noon, I have my home inspection. General, radon, and termites. Obviously, this is something you absolutely have to do, but my stomach is in knots. I expect there to be some things in the house that need to be fixed, but I am terrified there will be a huge problem that will be too expensive to fix. If the seller and I cannot reach an agreement about price and who pays for what repairs, I may have to walk away from the deal altogether.

Not only would this suck because I would have wasted the money the inspection costs, I will also be so heartbroken. Unfortunately, I have let myself become attached to this home and I have spent hours dreaming about renovations and paint colors. I know that I will make the decision that is best for me, but I am going to have to watch myself to make sure I don't just try to take this house at any cost. 

So now I am off to try to sleep without tossing and turning too much. Because at HIGH NOON tomorrow, it is the showdown of the inspectors. And while part of me wants them to find nothing wrong with the home, I also want them to do a thorough check and find any little thing that could possibly need to be fixed. I will be ready for them with my spiral notebook and open ears.

Um, excuse me?

I was just watching one of my favorite HGTV shows, Property Virgins. GREAT show, all about the surprises in store for first time home buyers. At first, host Sandra Rinomato kind of annoyed me, but once I watched a few episodes, I realized that, like my dad says, 'she really knows her stuff.' She does a great job of taking first time home buyers and explaining the nuances of purchasing a home. Most importantly, she is very up front and blunt on matters such as budget and renovation benefits. I wouldn't mind having her to hold my hand through this whole process!

So there I was, lounging around, trying to decide on a topic for tonight's blog, and... I heard my name... and my age... Sandra was introducing first time home buyer, twenty-four year old Caroline. Um what? That's me!

It wasn't actually me, but it certainly got my attention. It was nice seeing someone very similar to myself going through the same process. I know other friends who have bought homes (many emailed/facebooked me to let me know about it after seeing the blog on facebook!) but I have never really been privy to the process for someone in my age range or my social demographic. Hopefully, some of my experiences will help others who are planning on buying in the near future.

Things didn't work out too well for the other 24 year old Caroline... she ended up deciding she couldn't afford a house right now. It is a little late for me to make that call, so I'll keep forging on... wish me luck!

Catch the next episode of Property Virgins with Sandra Rinomato Wednesday at 8:30pm eastern on HGTV. 

Something to chew on...

I heard an interesting fact today and felt the need to share it. Did you know that in 2008, 25% of first time home buyers were single women? Girl power!

I think it is so interesting how the shift in America's social climate is reflected in home-buying trends. Fifty years ago, women were expected to graduate, get married, and buy a house with their husbands. Now, not only are women waiting longer to get married, they are experiencing more financial freedom and the possibility to invest how they choose.

More and more women are realizing the benefit of buying. While renting has its perks (most notably the minimal upkeep), home owning is a wise investment, especially in this market. While small, starter homes are more in demand, they are still ubiquitous. In addition, first-time home buyers are usually eligible for the $8000 tax credit... never a bad thing.

I am definitely not a radical feminist, but I support women getting out there and being independent. So girls, get out there and own a home... it is more within reach than you may think.

It feels good to be accepted...

FINALLY. Finally, finally, finally.

I have an accepted offer on the cute little fixer-upper! I am not even really sure how to express my feelings about this right now; I am so relieved and happy but still a little apprehensive. The house still needs to pass multiple inspections in the next few days, and then we have to negotiate with the sellers if there is anything disputable as far as radon mitigation and chimney stability. Doesn't that sound like fun?

Right now I have been on the phone with my mortgage broker trying to get the papers that say I can actually afford the house. HA. Actually, it just says that the bank thinks I can afford to go thousands of dollars into debt. Minor difference, right?

Counter Counter Counter

Did I mention that searching for a home is frustratingly trying? I don't think I have stressed the point nearly enough... I actually think my blood pressure is rising and Lord knows I missed sleep last night.

First of all, just the idea of having a mortgage. What a scary word! As I told Rogers earlier today, I believe it is derived from the French morte for "death." Because this monthly payment very well may be the death of me. Granted, it will actually most likely be less than what rent would be at any apartment, but something about the concept seems incredibly grown up and foreboding. 

Secondly, the process of offering and countering. This morning, I put in an offer on the cute little fixer-upper for approximately $17,000 under the asking price. Not necessarily a low ball offer, just starting out low, expecting them to counter. They did, for $8,000 under the asking price.

Which has led to the biggest headache of the night. Do I counter for another $2000 lower? That is what my parents suggested, but when you consider the amount of $2000 *relative* to the amount you are paying for a house, is it really that big a deal? Key word: RELATIVE. Two thousand dollars is a lot of money. I could buy a new computer and Adobe CS4 with that. But, when considering it in terms of a 30-year mortgage at today's rate (5.49%, in case you were curious), that $2000 turns into $10 a month. If I have to sacrifice getting take-out once a month or seven and a half songs on iTunes every month, I think I will choose paying an extra $10 on my mortgage while eating spaghetti and listening to imeem. Done and done.

I just never thought that buying a house would include seemingly meaningless squabbles about satellite dishes and window treatments. Apparently, it does.

So I am agreeing to the price they suggested and adding in some minor tweaks (about days for inspections and satellite dishes). Here's to hoping all works out for the best!

PS... if you are interested in playing with the day's mortgage rates and figuring out what kind of house you can afford, go to BankRate.com. Definitely the most up-to-date and comprehensive mortgage calculator out there.

The pursuit is half the fun?

I have been searching for a house for the past three months. I have seriously seen sixty-seven homes as of this evening (no, really, seriously, ask Joanne, my realtor). It is easily the most frustrating, exhausting, and stressful experience I have had in my young adult life. Yes, even more stressful than being unemployed... at least then you are not potentially going hundreds of thousands of dollars into debt.

Now, my situation is not dire by any means. Well, I guess that depends on your definition of dire. I am living - wait for it - in my parents' basement. Because really, when I was considering moving this time last year, I thought, 'how can I be the biggest possible cliche AND lose my social life and relative freedom?' 

Now, living rent-free is not all that bad, obviously. My mom buys groceries and sometimes even cooks for me. I definitely will not have my own 60" tv when I get my own place (let's face it, I'll be lucky if I'm able to afford cable). But for any self-respecting, wanna-be independent 24 year old single gal, the basement is just not going to cut it. I won't even go into what dating has been like the past year since I have moved in here. 

And, if you have been paying attention at all to the news, it makes so much sense to buy as opposed to renting right now. Not only do you get some great tax credits, but you are paying about the same for your mortgage as you would for rent and you are building EQUITY! Amazing! So if you have some pennies saved up that you can put towards a down payment, BUY BUY BUY!

So I *think* I am putting in an offer in the home pictured tomorrow. It is small (around 1500 square feet), three beds and (gasp) one bath. BUT the price is right, and there is room to add on. After all my looking, this house has stood out among the rest for it's affordability, character, and POTENTIAL. It is definitely not perfect, but there is so much I can see that can be done! Hopefully, this will be my canvas upon which I can build my own space and style. Fingers crossed!