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40 T/D/Y #35: Homeowner
In 2004, I started thinking it was about time to look into buying a condo for myself, and I put that down as a goal for 2005. However, in late 2004 I also got braces for the second time in my life, to prepare for the bone graft I’d need in order to get permanent false teeth to fill in a couple gaps in my upper teeth. As I recall, shortly before getting braces, I was pretty much debt-free, besides maybe a few hundred dollars outstanding on my credit cards. In fact my finances were good enough that I decided to pay for my braces up front using a credit card, because I got a small discount for doing so, rather than paying in installments. I was confident that I would be able to clear that credit card debt within six months. But I also had some car repairs that fall, and I decided not to go home for Christmas that year specifically because of the expense of braces. So, I also expected that I would not actually attempt to buy a condo in 2005, just that I would make an effort to learn about home-buying so I’d be prepared when I had the financial resources available again.
In March 2005, I ran into some major car repairs, as first my radiator failed and then another engine part failed, costing me somewhere around $3,000. Between this unexpected expense and the braces I was still paying for, it was clear it would be a while before I could save up any money for a down payment on a condo. I also did an analysis of my finances, to see how I was spending my money and where I might be able to reduce expenses, but it didn’t look good. My biggest expenses were rent and my car (gas and maintenance), and although my rent expense would go toward a mortgage instead, it looked like the rest of my disposable income that was currently going toward my credit card debt would also be taken up by a mortgage.
But then at the end of April, I got news that pushed me to start learning about home-buying in earnest. My landlord told me that he had plans to renovate a couple of the apartments and that once he’d done so, he wanted to move into the apartment I was currently renting. So I went to a seminar for first-time home buyers, got a loan pre-approval, and got an agent. Over the next few months I looked at several places, and discovered that condos in my practical price range were all smaller and more expensive than my current apartment.
One thing I learned was that there’s a difference between what banks thought I could afford and what I thought. I might’ve expected the banks to be more conservative, but at least at that time the pre-approval process considered only gross income and outstanding debt—loans and credit cards—which resulted in a higher figure for monthly payments than I thought I could manage after taking into consideration my everyday living expenses. Condos of a size close to my apartment were at the top of my pre-approved loan range but seemed too expensive in monthly payments for my finances, and even condos that were just a little smaller and also much further out from the center of Seattle were still too pricey. However, I didn’t want to abandon my search, because I was still faced with losing my apartment within a few months and I figured the rent at a new apartment would be high enough that I might as well be paying a mortgage on my own place instead.
I made a couple offers on places that were smaller and further out than I wanted, but otherwise seemed nice enough. I was outbid for those. My search had a temporary lull in August as only one suitable place was on the market, and I didn’t like it. And then in early September my agent brought me to a place in north Queen Anne, quite close to the Fremont Bridge, which had recently dropped in price. It was roomy, fairly close to the size of my apartment, and I liked the feel of it. It was still expensive, at the top of my price range and high in monthly payments, but the seller’s agent was willing to work with me to drop the asking price a bit and roll in the closing costs instead, and my agent convinced me it would be worth the stretch in my finances. And so I became a homeowner.
Overall, I’ve been happy since then to have my own place. It’s still a comfortable size for me and I still like the location, within a short walk of Fremont and longer walks to Ballard or downtown, and also close to several bus routes downtown. However, I’ve been having doubts about my decision this year. The economic downturn has meant a serious lack of work for me, making it difficult to meet my mortgage and condo association payments each month; when I talked to my bank about assistance, they basically said that without regular income the best they can do is help me sell my place before I’m faced with foreclosure. Additionally, this past year my condo association has discovered that the buildings have a serious water intrusion problem and we will need to replace the outer walls, a very expensive process. Combined with my financial difficulties, I’m in serious danger of losing my home. On the other hand, the association might be able to cover the repairs, or a substantial portion of the cost, through insurance. And as I don’t have any good options if I lose my place, I’ll just have to find more work of some kind. I’ve already put effort, time, and money into being a homeowner and I like my home; it’s worth further effort to keep it.
In March 2005, I ran into some major car repairs, as first my radiator failed and then another engine part failed, costing me somewhere around $3,000. Between this unexpected expense and the braces I was still paying for, it was clear it would be a while before I could save up any money for a down payment on a condo. I also did an analysis of my finances, to see how I was spending my money and where I might be able to reduce expenses, but it didn’t look good. My biggest expenses were rent and my car (gas and maintenance), and although my rent expense would go toward a mortgage instead, it looked like the rest of my disposable income that was currently going toward my credit card debt would also be taken up by a mortgage.
But then at the end of April, I got news that pushed me to start learning about home-buying in earnest. My landlord told me that he had plans to renovate a couple of the apartments and that once he’d done so, he wanted to move into the apartment I was currently renting. So I went to a seminar for first-time home buyers, got a loan pre-approval, and got an agent. Over the next few months I looked at several places, and discovered that condos in my practical price range were all smaller and more expensive than my current apartment.
One thing I learned was that there’s a difference between what banks thought I could afford and what I thought. I might’ve expected the banks to be more conservative, but at least at that time the pre-approval process considered only gross income and outstanding debt—loans and credit cards—which resulted in a higher figure for monthly payments than I thought I could manage after taking into consideration my everyday living expenses. Condos of a size close to my apartment were at the top of my pre-approved loan range but seemed too expensive in monthly payments for my finances, and even condos that were just a little smaller and also much further out from the center of Seattle were still too pricey. However, I didn’t want to abandon my search, because I was still faced with losing my apartment within a few months and I figured the rent at a new apartment would be high enough that I might as well be paying a mortgage on my own place instead.
I made a couple offers on places that were smaller and further out than I wanted, but otherwise seemed nice enough. I was outbid for those. My search had a temporary lull in August as only one suitable place was on the market, and I didn’t like it. And then in early September my agent brought me to a place in north Queen Anne, quite close to the Fremont Bridge, which had recently dropped in price. It was roomy, fairly close to the size of my apartment, and I liked the feel of it. It was still expensive, at the top of my price range and high in monthly payments, but the seller’s agent was willing to work with me to drop the asking price a bit and roll in the closing costs instead, and my agent convinced me it would be worth the stretch in my finances. And so I became a homeowner.
Overall, I’ve been happy since then to have my own place. It’s still a comfortable size for me and I still like the location, within a short walk of Fremont and longer walks to Ballard or downtown, and also close to several bus routes downtown. However, I’ve been having doubts about my decision this year. The economic downturn has meant a serious lack of work for me, making it difficult to meet my mortgage and condo association payments each month; when I talked to my bank about assistance, they basically said that without regular income the best they can do is help me sell my place before I’m faced with foreclosure. Additionally, this past year my condo association has discovered that the buildings have a serious water intrusion problem and we will need to replace the outer walls, a very expensive process. Combined with my financial difficulties, I’m in serious danger of losing my home. On the other hand, the association might be able to cover the repairs, or a substantial portion of the cost, through insurance. And as I don’t have any good options if I lose my place, I’ll just have to find more work of some kind. I’ve already put effort, time, and money into being a homeowner and I like my home; it’s worth further effort to keep it.