Tuesday, May 22, 2012

Sometimes Hard Work Pays Off


     I mentioned in a prior post that our daughter, in her twenties, has been looking for a house.  As those of you who are also seeking a rural property also know, this can be a difficult undertaking.  Before one takes on a mortgage, we need to be assured of a number of things.  One of them is that the structure is solid and safe, and two, that the price you are paying constitutes a reasonable long term investment. With the US and world situation as it is, this is more challenging that it ,at first, might seem.  Owing a mortgage is a leap of faith within itself, and requires some level of speculation. You are betting that you won't lose your job, and that if you do, you will be able to pay the mortgage somehow anyway.  A lot of people speculated and lost that bet in the last few years.  Our daughter decided that in our area, rentals were hard to come by, and that for the cost similar to a rental that she could buy, and this has fuelled her search over a fairly long period of time.  She has been saving money at her job, watching interest rates, and then she qualified at a mortgage bank which has an association with her realtor. She provided them with 1040s, and W2s, and they ran her credit report with her fledgling credit rating.  Then, the looking began.  Because some weeks she spends almost sixty hours a week at her job, I have been helping in terms of setting up househunting.  Our rule is that although we do not think it is constructive to help her monetarily with this, and that this must be HER investment and her home, that we will help her in terms of offering aid and our experience.  We receive e-mails of new listings and photos of new houses which have come to market. I immediately run out to do an exterior drive by.  Many can be ruled out almost immediately.  If it seems ok, I arrange an appointment with our daughter and the realtor, and then, we all take a look.  Our eldest son, the sculptor, is also a great set of extra eyes.  Many of the homes we looked at were damaged in the August earthquake to this region.  Many are foreclosures, and many in her price range are ,quite frankly, trashed.  We looked at a few with mold damage, or other issues which made the most reasonable thing to do, to bulldoze the structure and simply start again.  Our daughter showed an early leaning toward some of the small older farm homes, but she lacks the income and the time to really restore a house which could become more like a child. When we did find a house that was of interest to her, then there was background work to do. Each time we checked on this or that, or what it would cost to replace this and that, by the time she was ready to enter into a contract for such, someone else already had.  She lost several houses that had been her heart's desire, and over all the process seemed pretty discouraging.   The internet has also changed real estate in a lot of ways. A property which goes up on the market today, is on so many realtors websites and available to people all over the country by the next day.  Competition for the nice homes can be fierce. In addition, the process of entering into a contract or making an offer over the internet, with the aid of your realtor might streamline the process, but it appears to heighten the competition.  Finally, it was her turn.  A house came onto the market, and through automatic e-mail system was sent to me, I drove by within about an hour.  I e-mailed the realtor immediately, setting up an appointment at a time I thought Stephanie could arrive.  Then, we brought everyone to look.   My husband spent time on attic and essential systems.  I looked inside with her.  Our eldest son talked to her about the possibilities of replacing the carpet with oak floors before moving in, making it easier to keep clean.  Her boyfriend spent time looking at the yard and planning a vegetable garden. I rethought my stance of having her do this financially on her own, and thought that a good housewarming gift really would be a riding lawnmower. We really believed that if she wanted this home, that she should offer a contract at once. She was very relieved that she had been pre-approved for a mortgage.  She decided to make a full price offer on the home, so that a second party, who would be looking later in the day, would be more likely to be blocked, and would not "snipe" her, (as is so often the case on Ebay. these days)  The offer was made, and she signed it electronically at home via the internet.   Because the owner of the home is a bank, we waited for an acceptance for a time.  Rather than accepting, they countered asking her to pay to pump out her own septic.  We accepted. We have a contract !  The process to closing can be arduous, but the realtor seems to have a good team assembled, and so she is fairly positive.
          Selecting a home is a big deal. Our daughter understands that she will be locked into, even a reasonable payment, for years. She also understands the process by which to pre-pay such a loan. She plans to be frugal and complete the loan in a shorter time than normal.  Additionally, this home may be her permanent one. In the present financial climate, she is unlikely to move up putting more down on each home every four years or so, as we always did.  Her interest rate is also different.  When I bought my first home, the interest rate was 14 1/2 % and we were happy to get it.  She will have a loan between three and four percent.   It is also important to buy a home where you can stock supplies for hard times, perhaps raise a couple of chickens for eggs, and grow some vegetables and maybe fruit trees.  A large kitchen will be helpful for canning.  What is important is that finding the right house at a good rate, is possible, and it is important to minimize ones risk as much as is possible. I am pleased not just that she found a house she wants and has a contract on it, but that she was patient enough to gather the information, consider her debt carefully, and pick a home where she can realistically maintain it, eat, and live a life.  I could not be more pleased.

This is an earlier post on her househunting:



kymber said...

Jane - this is wonderful news! is the pic in the post a pic of her new house? if so, it is lovely! i am glad that you helped her by setting up appointments and being there during house looking AND not helping her financially except to buy her a lawn rider (i could use a tractor with a backhoe by the way - bahahahahah!). i really appreciate the way that you and your hubby have raised your children - and i am very glad that your daughter has found a home.

your friend,

JaneofVirginia said...

Thanks Kymber. I wrote to you personally. Have a blessed day.