Sunday, July 31, 2011

Getting Caught Up in the Frenzy - Budget Increase Round Two

It's starting to look like I need a budget of $300k to $330k for a "move-in ready" 2br/2ba condo in my area. At this price range, I've estimated that my housing cost will be around $1,914 - $2000/month = mortgage (P&I only) $1,274 + associations fees around $300 + property tax $340 + insurance $10. (The reason why my "insurance cost" budget is $10 is because I'm only taking into account the increased premium from a condo-owner's policy vs. my current renter's insurance policy.)

I'm currently paying $1,175/month in rent, so this is a jump of $739-$825/month in my cost of living. Of course, I'm currently only renting a 1 br/1 ba apartment, so it's not really an apples-to-apples comparison. If I were to rent a 2 br/2 ba apartment at my complex, I would be paying approx. $1,600 - $1,700 month. So I concluded that buying makes sense, even with the significantly increased cost of living.

With this conclusion, I made two offers:
1.) $300,000 back-up offer on a townhome for which the seller had already accepted a $300k cash offer from someone else. The buyer, however, has a date certain that they need to move-in. With the townhome being sold as a short-sale, the property may not close in time for the buyer. In the event the buyer drops out, my back-up offer will be considered.

2.) $329,000 on a short-sale townhome. The seller countered yesterday with minor concessions, which I accepted. The seller is entertaining multiple offers so I'm not sure whether I'll "win" the bid yet.

I have mixed feelings about this process. On the one hand, I hope I can buy the $329k property. On the other hand, the thought of the increased cost of living is giving me heartburn.

Saturday, July 30, 2011

My Budget Round One: From $231,250 to $275,000

My initial, "What I Can Afford" budget was a condominium up to $231,250. I based that budget on a cursory review on Zillow for 2 BR/2Ba condominiums in my area. There were a couple of apartment conversion units with upgraded interiors (i.e., granite countertops, stainless steel appliances) in the $229,000 - $230,000 price range. Poifect!

My agent sent me an updated MLS listing with a search criteria of 2+BR/2+Ba up to $235,000. I got 9 hits. The 2 condo conversion units were still on the market. Yipee!

Unfortunately, when I did a "drive-by," I quickly discovered why those units were so cheap... errrr.... I meant affordable. The units' balconies and windows face a major freeway. Semis and trucks drive through this freeway all day and all night. The noise pollution from the freeway is overwhelming. There's no way I can sleep at night. *Sigh*

Okay... Maybe if I increase my search criteria to $275,000? Yikes. That means I need to come up with a $55,000 down payment and my loan amount will be $220,000. My monthly mortgage payment will go from $890 to $1,066. I tell myself, "I can swing it! It's still less than my monthly rent!" (I'm conveniently ignoring property taxes and COA fees.) I instructed my agent to increase the search criteria.

I got a couple of more hits. There was one unit for $257,000. The MLS pictures were kind of dark and depressing. But the location is great, so nothing a little paint, extra lighting and some elbow grease can't cure, right?

The walk-through was scary... errrr... I meant enlightening. Everything from the common area to the living area screamed 70's kitsch. Imagine a generic Motel 8 structure with an age-worn Brady Bunch decor. The unit doorway had a tiki-like, wood panel embellishment. I like tikis well enough, but at Disneyland or Trader Vics. Not my home. And since the ugly tiki is in the common-area, I can't just rip it out.

Once inside, it was bright and spacious, but everything was soooo dated. The prior owner appeared to have started DIY removal of the acoustic (popcorn) ceiling in the kitchen. But they stopped a little ways into the living room area, probably saying, "F*#k it. This $#it is too much work." The fireplace had some weird, orange-ish psychedelic tiles above it. When I got close, the tiles had a picture of a flamenco dancer. Egads.

*Sigh* I'm coming to the realization that even in this economy, a 2BR/2Ba for <$275,000 will only get me a fixer-upper. If it's move-in ready, I have to be prepared to wear earplugs at all times while at home. I'm getting depressed...

Friday, July 29, 2011

I'm In the Market to Buy My First Home

The US economy is on the brink of crumbling and I've decided now is the good time to buy my first home. I've always had a knack for good timing. Like that line from the movie Airplane!: "I guess I picked the wrong time to quit drinking."

I won't be writing about stuff like "How I found my agent" (friend referral), "How I found my first mortgage" (credit union), "How I determined what I can afford". Other (much knowledgeable/experienced/smarter) people have already covered that territory ad nauseum. I'm just going to write about my personal experience. My posts, for all practical purposes, will be of no use to anyone but myself.

I started the process on Monday. So far, my emotions have ran the gamut of hopeful, excited, optimistic, scared, ambivalent, dejected, sad, frustrated, anxious, impatient, depressed, etc. I don't deal with stress very well, so these extreme fluctuations in emotion have immediately manifested into cold sores (plural) on my bottom lip. Nothing exudes and inspires confidence like outwardly visible herpes sores.

I've already had to adjust my "maximum" budget twice in the span of a week. *Sigh* Not a good sign. For those who like witnessing a train crash, you may be in for treat.