Offer on House Accepted & Our Plans
We started house hunting about a month ago to see how the market in the area is and what we can qualify for. We qualified initially for $225,000 with 20% down when inquired at Bank of America. Unfortunately, we are near the bay area (still an hour and a half away) so it was a pretty interesting month of looking through houses with torn walls, deteriorating foundations, shady neighborhoods, and even a 1880 house in foothills of Sierra Nevada! Even the 1880 house in the foothills in small town was $245,000. Holy Smokes!
Our real estate agent referred us to a mortgage broker and we decided to do a second loan pre-approval. We knew the closing costs might be higher if we went with a broker but she was able to get us a 2.875% interest rate on a conventional loan where as the other lender offered us 3.5% interest rate.
Let's just say.....we got carried away.....................realistically, we knew we wouldn't be able to get anything around Low $200,000s in the area. But....we did get carried away.
We put an offer on a $325,000 house that is a bit closer to the bay area, where Koa will be commuting to. An hour and a half commute one way is a little easier on him, especially when it's a physically strenuous field, than a 3 hour commute one way.
One note though is that we only got pre-approved on single income, Koa's income alone, and he was pre-approved for $375,000. However, we knew that we did not want to get the highest loan amount just because he could qualify for it.
Our offer was accepted and now, we are in escrow. We like the house and the big backyard, where we plan to grow some vegetables and fruit trees ....hopefully. It's not as old as the other houses that we have contemplated on; 1989. The house does not need too much work done but it does need major maintenance and replacements since all of the systems have not been replaced since construction.
Tru's parents were generous and offered to help with the closing costs and additional $15,000 to the down payment (this was rejected, however, by the lender, due to gift letter restrictions).
If the house is closed successfully, we plan to put an extra $500 toward the loan principal every month and save some to fund house projects. This puts us around an early loan payoff date of 19 years versus the 30 year period.
Rebuild Emergency Fund:
Firstly, we want to get back to around the $13,000 mark in emergency fund, which is approximately the 6 months worth of expenses (with the unemployment $450/week offset).
DIY House Repairs/Future Replacements:
Koa is a carpenter so he wants to take on most projects by ourselves except for electrical, plumbing, and roofing repairs. Tru has never done anything like this...and is a bit excited as well as stressed about this. We just need to remind ourselves that projects can be prioritized and tackled one by one over a longer period of time because we are not going get back into consumer debt. For this, we would like to save around $6,000 for us to start our first major repair project. We estimate this to be around late 2021.
We never thought we would be able to own anything together but the deal is not for certain yet. It might fall through or it might not. Stressful and exciting either way!
Our Journey Continues.