A new opportunity has come up that has caught my interest. I have been tossing the idea around in my head for the past day or so and need to kind of vent about it to see how I really feel.

A foreclosure has come on the market in my town. It is not advertised for sale yet- my realtor friend told me about it because I have a friend who is interested in investing in the area. The friend is interested in this property too- but I don't think it will work out for him.

I kind of want think it is a very good deal and am not sure if I shouldn't invest in it.

This is a 2 unit property- very similar to my own- but a little smaller. Shotgun style with a double balcony-one unit upstairs and another unit downstairs. Foreclosure asking price is $115,000. It is bringing in $1600 a month in rent.

Pros:The property is similar to my current property and asking price is $85k below what I paid less than a year ago.
The house is in good condition. Same condition as my current house. The property is in a better location than my current home. The property is currently rented with existing leases. The property is about a 10 min walk from my current house.

Cons:
Although the unit is in good condition- It might need 5-10k for hidden fixes/non emergency stuff I would want to take care of. Wont know that till an inspection.

BB is not very handy and fixing stuff is not his forte. I will need to hire out for any fixing problems.

Having 2 more rental units increases our chances of getting sued. We have 2 rental properties now and knock on wood we are all good- but adding 2 more might mean I will need to start an LLC and there would be legal/financial/stress costs around that.

Having 2 more rental units kind of throws the "stay diversified" rule into chaos. I don't know how to measure what my diversification will equate too- I will have 5x as much real estate value as stocks/bonds...

I will be getting into further debt. I mean, it will be a mortgage- so that's good I know. But I will be taking on $95k of additional debt (assuming I put $20k down- around 18%). It seems kind of insane to be walking around $200k in debt (including my house mortgage) when I earn just over $30k a year.

I was not prepared or expecting to go in this direction. We bought our home less than 1 year ago. We have just barely started to get back on our feet recovering from the purchase of our home. We talk of buying another property- buying rentals as our way to financial freedom- but talk about it off in the future. I wouldn't even consider this if it wasn't such an insanely cheap deal.

Financially we are strapped-BB is "in the market" for a job- but not employed- don't know if he will even have a job in 2010. If he does get a job- it will be starting around $30k which would push us into such a good financial position we could afford this property easily. Right now my income covers our expenses but not much left for savings. The money for the down payment would come from my inheritance that has been earmarked for retirement.Currently the inheritance has $200k in stocks and bonds it could come from- but I worry that it wouldn't be the right thing to do.

I worry because we have already made so many big purchases in the past year. First we had the wedding about this time last year-then we bought our house and put in about $25k to "make it ours"(including a new 10k roof). I worry that if we buy this...we are just getting in the habit of buying big ticket items and maybe getting high off the excitement or something. I worry that we will spend ourselves broke if we are not doing a financially smart thing- but telling ourselves we are because we like spending money.

I worry because there are all those real estate investors declaring bankruptcy because they over-leveraged. Why would I be any different? If I lost the renters I would have to pay for the mortgage out of savings. Right now MY emergency savings would only cover a month or two- then I would have to go to those stocks and bonds. But that's because my savings is only cushy enough for our current situation- I could beef it up by scrimping more pretty easily in a few months to cover the possibility of needing to cover a 2nd mortgage.

What would this do for us in terms of our goals? We wanted to convert our current 2 unit property into a single family home within 5 years- eliminating the rent we earn off it. We also want to do some home renos in the $50k range when we convert the property. We wanted to have the 50k saved up to pay in cash. We wanted to be in a position to pay the mortgage ourselves (right now the renters upstairs are paying it.)

BB has 130,000 miles on his truck. We have not started saving for a new car for him yet. I guess a car is an insignificant expense when you are talking "$15k car or $115k rental property"...but a car is also a necessity and a rental property is not.

We also wanted to have a child within 5 years.

So will buying this property put us in line to accomplish those goals- or make us unable to achieve those goals?

I don't know- I don't think it is a good idea with BB unemployed. I keep thinking we shouldn't do this "now". If we could just wait till BB had a job and was working a few months...but then who knows what the real estate market will look like and if we will be kicking ourselves regarding missing this deal. No. I think we should wait, save up the 20% ourselves and then look around for a good deal. We might not get the best deal from waiting- but we will be using our own money to spend.

New month- New habit forming time. No more blogging 3x in one month. Must. Blog. Regularly.

I did my monthly spending calculations for Feb and we fell off the wagon big time.

Income $3589
CA Rent $1150
Ebay $134
Baseball school $430
GA Rent prorated $1875
Store Rebates $239

Bills Total: $1679.00
HOA $500
Groceries $149
Gas $140
Electricity $0
Health Ins $0
Water $0
Internet/phone $100
Pest $650
Car Ins $76
Security alarm $64
Total $1679.00

Moving company Total: $1680.00

Home Improvement Total: $9497.00
Home depot/Lowes $1442
Home decor $1267
Wood Floors $938 (312 sq ft)
Plantation Shutters $1800 (8 windows)
Contractor labor $4050 (1 window, floors, pocket doors, spackling)



Fun Total: $850.00
dining out $217
Fast food $151
Video games & movies $57
Hair $41
Gym $30
Shipping $21
Fax $19
Gun $230
Clothes $84

We finished off the month spending $13,706.00. We incomeded $3589.00= $10,117.00 in DEBT.

Lucky for us we had the money in savings because we did not have to put down as large a down payment as we had been expecting, and our unit of the house is DONE! We took care of all the big projects for our unit (except the kitchen). So although we spent so much now, we can get back on the savings train and work on building the savings back up.

During the last 2 weeks I got really behind on recording my spending (but I saved about 70% of the receipts) and now I need to get back on track and feel overwhelmed. And shame.

We spent so much on fast food. We spent so much on things that we could have done without.

Its like buying the house gave us a "reason" to give in to our desire to spend. Not even buy things we have been wanting...just to buy because we could.

We purchased new flooring and bought 10 extra feet "just in case". Now we have an extra box of flooring under the house.

I wanted 1 outlet cover for 1 outlet and bought a whole packet. Now those are in storage.

I went a bit crazy buying paint. At first I bought 2 gallons of paint for a room- got home- hated the color. Went to the store bought 2 gallons of a different color- still didn't like the color. So I bought some samples. Went sample crazy- bought 6 samples @$4 each- then bought the paint I liked by the gallon. Well come to find out each room needs about 1/2 gallon (plaster takes less paint than sheetrock apparently). So I have gallons of unopened paint.

We bought a swiffer for the floor. We were told a different brand would work better and bought that one (it didn't). We still were not getting good results and paid $60 for a steam shark (swiffer with hot steam) and it works GREAT! but now have 2 swiffers hanging in the closet never to be used again.

Stuff like that makes me angry with myself.

Okay, I've been MIA for about 2 weeks. You guys are not the only ones who noticed, my friends were neglected to. But the house is nearly done, and I'm lovin it!!

We took on many time consuming projects and when we were not doing that we were to tired to communicate to anyone but the dog.

And...in the interest of honesty...things were adding up. And not all 'needs' either. I didn't want to feel guilty about purchases because I waaannnttted them!

But the house feels like home now, and I'm including pictures.

One big learning lesson: Thank the heavens we purchased a duplex- we spent just over $9,000 renovating ONE FLOOR- no way could we have done both levels at once; financially, physically or mentally. We finished 'our unit' and when we outgrow the bottom floor and take over the top floor...we must do everything all over again. But thankfully that's a few years away.

I was concerned about cutting our living space in half when we moved- but 950 sq ft is nice. Not to bad to clean and no wasted space.

Now that things are quieter- I will be back to regular blogging.


our 'found' floor that no one would restore so we had to buy new


our new wood floor for the 2 side rooms.


main living area floor...shined up nice.


living in a construction zone for 2 weeks- pushed me to the end of my patience at times.


Starting to paint.


Dining room


Entry way


living room


our bedroom

That's it for now, on to read ya'll's blogs!

I'm checking in a bit. Things have been...different. But good different. BB and I have had lots of memorable experiences since my last post on Thursday.

WE CLOSED ON THE HOUSE!! It went so smoothly. Done in half an hour.

Then the memories began. We closed on one of the coldest days of the year. At 5pm. On a Friday. Me being an apartment girl didn't think that the electric and water would be off when we moved in. I thought we would just change it into our name.

Nope. no heat, no water. On a Friday night.

We bought candles, bundled up, slept on the floor and rationalized that the discomfort was worth it.

Over the weekend we actually reset our internal sleeping clocks. Up at 7am with the sun...getting sleepy about 6pm and in bed ("bed" or blankets on the floor) by 7pm. (It's so dark with only a few candles!)

But water, electric and cable all came on Monday (now dubbed "The Greatest Day Ever" by BB and me...modern conveniences...oh how did those cavemen and settlers survive without them??)

Anyways- everything is going well. The house is wonderful. We got right to work destroying it on day 1.

We have sanded the plaster walls of almost the whole downstairs unit.

We pulled up carpeting and ordered hardwood for the bedrooms (original hardwood ended up being to damaged to restore .

Pruned the backyard.
Swept the front porch,

and talked talked talked about our future. That's all there is to do when you are sanding walls for hours and have no TV or radio to listen to.

AND! We met our upstairs tenants. 3 college boys, very cool. Somehow BB's job proceeded him and one boy had already looked up BB's stats online. They already said they want to stay in the unit for the rest of their college years (2 more years).

So a few observations...
1) I feel like I have been on a MAJOR SHOPPING SPREE! Oh my it's so fun to let loose and buy buy buy. Even unloading that huge down payment...just handing people money has become fun. It's been so long that I have been limiting my spending- now I am free to BUY! (BB and I are reviewing the numbers tomorrow to see just how much damage we have done.)
Since we did not have to put down as much $$ as we were originally planning..we did take 10k and put it away in savings for an emergency fund before going crazy at Home Depot.

We bought a starter house that will turn into a forever house! I think I have touched on it before- but it hit home for me this past weekend. The units are about 1000 sq ft each, and our bottom unit is a good fit for our 2 person family. But once we have one kid walking age...I think we will be bursting a bit (look at me planning for kids, not even planning to get preggo yet) and then we can go upstairs! Our sq footage will double and we wont have to move! I didn't plan on that bonus feature when buying a duplex- we were planning to move out and buy a SFH...but we love this one. I don't want to leave.

When we first moved in- it felt like a rental. Didn't feel like ours at all. It just felt like it was another baseball season and we have moved again, taking only bare essentials, setting up cable, power, all that. But as we started ruining the walls (that's what I think sanding does to the walls- BB assures me we are going to be pleased with the results), the place felt more like ours. By the end of the weekend...it felt so much like home. I never ever want to leave. I'm so attached. Even if it looks 10x worse right now than it did when we moved in.

I am very very afraid that we don't own the house. We closed. We handed over our money. But I keep imagining getting a letter in the mail or having a policeman knocking on the door telling us there was a mistake and we must vacate the property immediately because it's not really our house. Worse still, that the real owner is requesting we return the house in the condition it was when we moved in. :P

Anyways, I will get up some pictures soon! I am sorry I have not been reading ya'lls posts- we just got internet yesterday...but I was so thrilled to have WATER that I didn't even turn on the computer yesterday. (using bottled water to wash your hands and planning your errands based on what store has a bathroom is humbling!)

I think this whole week is going to be crazy as we demo the house and put it back together again. (not really but it feels that way) So next week I will be back to regularly catching up on WhiteS home purchase, Texe's dilemma to stay or move to CA, monkeymamas updates on tax changes, coanegigs(sp?) green kitchen countertop, DisneyS' ebay and survey updates, BA and Merch's stock strategies and everyone else's daily posts.

We're closing!! It's done! the seller signed papers today- we drive up to Savannah and sign tomorrow and get the KEYS!! It's done for sure. I think. We got the settlement statement and learned we got a CONVENTIONAL LOAN (No PMI!!) at 5.5% fixed 30yrs. Our closing costs are $7,900...slightly high I think but don't care at this point. Our taxes are $1,000 less than I anticipated they would be...and our monthly payment is $940.00 a month including taxes and insurance!

And we close tomorrow!!!

No rescheduling movers!! No more whining!

We set up the cable/internet guy to come out on Monday- so it may be a while before I'm back to report on the closing...but I am hoping it's all sunshine and daisies from here on out.

I am exhausted. But getting more and more excited.

Well, I'm still in total housing mess right now.

There has been no more talk of the foreclosure short sale issue- Mortgage people believe they resolved it/ seller stated his side= someone is lying but I don't think I will know the true story anytime soon.

My underwriter called me yesterday morning to tell me her part of the process is done, she's handing off the closing details to the closing attorney.

Closing attorney called me in the afternoon to tell me he is meeting the seller today to sign the documents, collect the keys, and he needs to set up a time/place to meet with me on Friday for me to sign everything.

YIPPEEE!! Closing is finally here! I set up movers. I filled out a change of address card. I gave my health insurance my new address. I set up a cable man to come out Monday morning ($70 month for TV & Internet).

Then last night Underwriter calls me in a panic. She called BB's last place of employment and does not understand how he only worked for them for 1 month.

I'm not panicked because that's true. He was traded late in the season, only played in TX for 1 month.

I don't know what Underwriter had in her notes or on the application but she thought he played for 1 team for the last 2 years. Maybe she misunderstood when I told her BB just signed a 2 yr contract with the team. Or that he's been a ball player for the last 7 years.

So underwriter is in a tizzy and wants me to email her immediately BB's places/names/addresses/phone numbers of employment for the last 2 years. I was able to get her the information in about 10 minutes (thank you internet).

So that went down around 5pm yesterday. Since then...silence. No phone calls, emails, nothing.

Raise a hand if you think I'm moving tomorrow. Anybody?

Guess it's time to cancel the movers AGAIN!

So for those of you following my first home purchase saga...here is an odd twist I am trying to wrap my head around.

Yesterday the mortgage underwiter sends me an email saying: "I have great news, I have been working with the Attorney and the
Seller to save the house from foreclosure and we were sucessful. They have given us an extra 30 days. I also have approved
your loan."

Since BB and I were not buying a foreclosure I immediately called my Realtor who confirmed he had not heard about any foreclosure and this was news to him.

I called my mortgage broker who told me the property was in foreclose and due to foreclose TODAY (1 day before they 'saved' it). He told me that his attorney discovered this and was working all last week with the bank to stop the foreclosure because the property is in the process of a sale. The seller actually owes "quite a bit more money on the property than my purchase price and I am getting a spectacular deal." He and the attorney saved me from having my purchase contract be voided out and having to start the purchase process all over again and negotiating to buy the property from the bank. The bank was happy to hear there is a buyer for the property and extended the broker 30 days to get the property to the new buyer (me). There is no way my Realtor or I would know it was in the foreclosure process because it was a pre-foreclosure or short sale and that information does not need to be disclosed to the buyer.

So I call my Realtor who told me he asked the seller if the property is in foreclosure. The seller explained a story about a foreclosure mix-up. "It had to do with miscommunication last year when he got behind on payments -- he actually had everything caught up, but the bank didn't have the payments in the right account -- it was just a matter of getting the payments in the right place. He said this underwriter had nothing to do with "saving" it from foreclosure. He's a little pissed off and we really need to close this deal by Friday."

So that's the story. Really I guess if the house was in foreclosure or not it does not effect me. But someone is lying here.

Either the mortgage broker is trying to look like a hero after all his delays and outright deception on getting this deal closed in a timely manner- or the seller of the property is lying because he does not want to look like a bad businessman or deceptive seller.

Both sides have their merits. How can a property owner be receiving foreclosure notices from a bank and not get that information fixed immediately? Wouldn't his credit score be tanking, wouldn't he be getting hit with all kinds of overdue/non payment late fees month after month?...Wouldnt he be motivated to make sure his monthly mortgage payments were actually paying his mortgage?

And if it was indeed a short sale and he owes more on the property than I am purchasing it for...wouldn't the seller have had to go to the bank to ask if he can accept my offer? Wouldn't I have found out immediately it was a short sale because the negotiations would have dragged out while the bank interfered with our negotiations. Instead the seller and I reached an agreed price on the same day I made an offer.

But if it was not a foreclosure then how is it that the attorney spent several days working with the bank to stop the foreclosure- unless they were flat out lying to me? How can a person successfully work with a bank to stop a foreclosure if the problem is that the money was placed "in the wrong account" for a few months. Wouldn't the bank admit it's actually not a foreclosure but a banking error that they have corrected? What would be the broker's motivation for inventing a foreclosure story? To make me grateful to him and forget about all the inconveniences and unfulfilled promises he made me? Can/do brokers actually just invent entire stories to save face or hold onto a client?

If it was a banking error and not a foreclosure did they waste a week of my time doing nothing with my mortgage and are covering it up with this foreclosure story...or did they really spend a week working on a problem that did not exist but they believed did exist? I don't know which option makes their business practices look worse.

And finally...do you think the attorney is going to charge me for this? I am guessing yes. But I don't want to pay for services I never asked to have done, was not told were performed until after they were finished, and may or may not have been needed.

Can anyone offer any suggestions here? I feel like someone is lying and I don't know who to trust.

Still no mortgage. I'm kind of talked out on this subject but lets see if I can gather some energy.

We are still in Florida. All the boxes are stacked around us. BB has been unemployed for 2 weeks now. I have had ebay shut down for 3 weeks now. We spend our days checking our email for news, watching T.V. and complaining.

Our purchase contract had us closing by Jan 20th. After Jan 20th we were given 7 days extension. Now, as of 4 days ago- the seller is available to take any other incoming offers on the house.

I don't know when we are closing. I don't know why we have not closed.

As you guys remember we were denied a mortgage by the first guy. He told me this on the 14th.

Same day I find a new broker who PROMISED he could get it done by the 20th. "What would you say if I told you I could get this done by the 20th? Would you be happy?" were his exact words.

And he did work day and night on the mortgage. On the 19th he calls me to tell me he ordered an appraisal and the company cant get an appraisal done for a few days. We are now looking at a Friday the 23rd closing. "Well- our movers are coming on Friday the 23rd so that will complicate things but we'll make it work." -I think to myself.

On Wed the 21st I call concerned because I don't know who to make the down payment check to. I also need to know how this closing will play out with me living out of state. They tell me "We're still waiting on paperwork, we are not closing on the 23rd. I am aiming for a closing by the end of the month."

So I call the movers and reschedule for Friday the 30th. I'm very disappointed by now and BB and I spent the last week bored and annoyed at life.

The following Wed I call to get the specifics of when we are closing. I am told: "we are still waiting on the appraisal that was completed last Wed. It has not been faxed to us yet." I call the appraisal company. THEY are still WAITING on the appraisal order to be resubmitted to them so they can complete the appraisal. They said they have emailed mortgage company 2x for the order. So each company wasted 5 DAYS waiting around for the other company to do something. I called and got the glitch fixed in 1 day...but alas- it was to late to get a Friday 30th closing.

I called the movers AGAIN to reschedule and they told me to NOT reschedule, just call them a day or two before I need them.

On Friday the 30th I called the broker who promised me the world and acted really offended and ticked off when I told him I also had another bank working on the mortgage. He was so offended that I halted the banks efforts way back around the 22nd of January. I asked him when we were closing because our purchase contract had run out, the seller is really aggravated with us, we have rescheduled movers TWICE, and that if I was in a rental/lease situation then I would be living in a hotel right now. He tells me "this is the natural time line it takes to process the mortgage. You are not in danger of being denied but even if you were Donald Trump himself you cannot speed this up. It always takes 12-15 days to qualify and be approved for a mortgage."

WHY DID HE NOT TELL ME THIS BEFORE??!!

All along he kept acting like closing was just around the corner. The bank we were working with told me they could close by the 30th and I canceled their efforts because this broker promised he could do it by the 20th.(then the 23rd..then the 30th..now who knows.)

I am frustrated and so so over this. BB and I had so much enthusiasm to get to Georgia and refinish the floors..we wanted to spackle and paint the walls...take the popcorn off the ceiling- and now I'm so OVER moving. I just want to get there, unpack and return to a normal routine where furniture is in it's proper place, clothes are hung in the closet, and dishes are in cabinets.

I am also OVER having no income. BB and I planned for unemployment to last 1 month. We had enough in savings to cover repairs and living expenses for about 4-5 weeks before we would need an income to start coming in. Now we have been hanging around here in FL unemployed using up electricity, gas, utilities and not getting anything done. Come February we'll be paying hefty FL bills and setting up our GA bills (deposits and all that).

Oh and here is a kicker: When Mortgage guy said we could close on time on the 20th I was so grateful that I told him we will go to Atlanta (where he and coincidentally, the seller, is located) if that will make the process easier. He told us it's unnecessary as he will overnight paperwork to us in FL to sign and do it that way. Well on the 30th I call him and get that "natural process" speech and he sums up by saying; "and I think it will be best if you guys come up here to Atlanta to close so we can meet face to face." Atlanta is over 7 hrs from where we live in FL. It's 4 hrs from our new house in Savannah. It would use up about 13 hrs of our time to close in Atlanta and cost us over $150 in gas (2 cars). Its fine to close in Atlanta if he produced a miracle..but aint no miracle going on right now so why am I being inconvienced MORE? You know why?? Because BB plays baseball. It is so aggravating when people learn that BB is a ball player because suddenly they stop what they are doing to talk baseball with BB. Our vet spends more time discussing SEC baseball than he does explaining what he is doing to our dog. Our TV repairman did the same thing. The mortgage guy requested to talk to BB 1 time and the whole conversation was about different minor league teams mortgage guy knows about. No mortgage information at all. Mortgage guy just wants to pal around with a ball player and is disguising it as a necessary step in the mortgage process.

AAARRRRGGGG!!!! Ok, bitchfest over. I know it will all be worth it in the end.

Mortgage update: things are going...alright.

New mortgage guy is on the ball and had me convinced up till last night we were closing on Friday (tomorrow).

Then he drops the bomb that he cant get the place appraised for 3-5 days.

So no closing tomorrow.

I suppose there is a higher reason for all this but when you have already attended goodbye dinner after goodbye dinner with friends, your husband has quit his job, you have movers lined up for Monday, ebay has been shut down for weeks in anticipation of moving and everything is packed and boxes are everywhere...I don't see any bright side to this.

Maybe Obama will increase the home buyers credit. That would be worth all this hurry up and waiting.

And its TOUGH to have $$ in the bank but you cant spend it! (Total selfish whine here) but it's hard to want to go out to eat but tell yourself you cant afford it when you have major money sitting in a savings account. I just wanna pay my down payment and get rid of this "rich" feeling already. It's a very intoxicating and powerful feeling to see the $$ sitting in the account day after day after day. (yes- I am paranoid of identity theft and obsessively check my account online to make sure the money is still there.)

One thing I have learned- closing costs are EXPENSIVE. It is EXPENSIVE to buy a house. I don't know how people can afford to regularly buy houses. I am wondering if people factor in their closing costs when they determine if they "made money" off their house.

Our good friend is in the process of buying a house right now as well and he is rolling the closing costs into the loan- not understanding that the 8k will cost him about 18k after 30 years- "he would rather save himself 8k now" was his line. So since he is not paying closing costs out of pocket he is really not concerned about their cost. We are paying them upfront and I am totally aghast at the prices. How are banks failing after they charged these prices and made such a profit during the market boom!?

BB and I are hoping this is our "forever house" because I never want to go through the mortgage process again, and I never want to pay closing costs again.

If we eventually turn this duplex back into the single family house it once was- it will be plenty big to raise a family and I think we will come out much much richer if we don't have to buy a SFH down the line.

I have not been posting the last few days. Yes I lurked and commented on a few posts..but no posting of my own.

I have been embarrassed and ashamed.

It's possibly premature to even discuss now but I think we are out of the woods.

BB and I were denied our mortgage 3 days ago. Our income does not meet the lenders formula.

It happened by accident- me finding this out. I was having a mounting feelings of "uh-oh" by the lack of communication with our broker and the increasing emails from my Realtor asking "what is going on?"

So I flat out asked my broker if we were in danger of being denied the loan and he responded "yes. Two underwriters have rejected it and I will be submitting it to a third tomorrow."

This was on Tuesday. Closing is next Tuesday. We have 5 business days to get it worked out after 3 weeks of doing nothing because my original broker was avoiding my emails and phone calls.

So jumping into overdrive I contacted a bank that had previously reluctantly told us they could probably approve us- and then I bitched to my sister about everything.

Lo and behold her coworkers husband used to be a broker in Atlanta and swore up and down that his former boss is the man for the job. I called old boss in Atlanta and left a voice mail. I got a call back that evening and after talking he says "You are the perfect candidate for an FHA loan. Nothing you say has alerted me that this will be a problem. I will call you in the morning and I think we can have you approved by the end of the week."

The guy is a smooth talker and it made me nervous- but he has held up to his end of the bargain so far. He devoted a whole day to creating my application- he calls me 2 or 3x a day with info or questions and told me I was "informally approved" 2 days ago. He called last night asking if I want to escrow the taxes and insurance...that sounds pretty far along.

So I did some research on my own for this FHA loan (federal govt standard loan for first time homeowners- for everyone not familiar).

Some pros and cons. Pro is the standards are less strict with income, you only need to put 5% down, closing costs are less, and we fit the criteria. I have since learned that banks don't really offer this loan because they don't make $ off it.

Con is it is more expensive than a bank loan. I found out that I will have to pay PMI for 30yrs...and will have to pay a MPI fee that is rolled into the loan (about 1.5% of the loan amount). And I thought "uh-oh. That doesn't sound cheap."

But beggars cant be choosers and so I sat down and got to work about calculating how to minimize the damage.

BB and I decided to put 40% down. It's a luxury that most people cant do but we are very lucky I had the extra money from an inheritance sitting in a MM fund not earning much interest. With 40% down we are cutting the PMI down 35% (originally the ATL broker wanted us to put down 5%.), and we are cutting the MPI charge down 35%. As well as our interest payments over the life of the loan.

A benefit of this FHA loan is that our closing costs will much lower because our broker is charging us 1 point of the loan amount (about 1%) and the other broker was estimating closing to be about 3k...and the bank (that we are also still working with...just in case) wants 7k for closing costs. So essentially us telling the broker we want to put down 40% rather than 5% means his commission is severely cut since he is making money off the loan amount.

We were worried he would fight us on this point, but he didn't. He just said he would need an extra day to rewrite the application to reflect the new down payment amount.

Now- if you are still reading this long ass blog you are wondering why we didnt just suggest to the ORIGINAL broker we would put 40% down and we could have averted this whole mess. Well- we never told the broker we would put down 40%.

We told him we would put down 50%.

yup. That's what we needed to get "approved" in that guys mind. I never mentioned in the blogs that I was preparing to put down 50% because I would either get comments like "If you have to put down 50% then you cant afford that house"...as well as in this present economy many many people are struggling and I guess I still see it as somewhat "showy" to say I am putting down 50% when others are struggling to save up 3%.
BTW- that 50% was us scraping the bottom of the barrel to create. We were going to be left with single dollars after closing and planned to live off credit cards till our next paychecks arrived within a few days. Wasn't a good plan- I didn't like it- but it was our only option.

ANYWAYS- imagine this mortgage brokers surprise when he is talking to me initially and I tell him we cant get approved for a mortgage with 50% to put down. He was like "do you have credit card debt?" "no." What about child support, car payment, do you have another mortgage, did you have a bankruptcy?"

Then I told him the 50% was going to be really tough for us and if he could get us a mortgage where we would need to put down 48 or 45% I would be GRATEFUL.

So he comes back at me the next day and is like "I got you a mortgage and you only have to put down 5%. How wonderful is that?" And I later tell him we want to put down 40%...imagine his surprise again.

Anyways, he told me he wants to see the official rejection letter when it comes in the mail because he cant figure out why we were denied in the first place.

So things are looking up. Now that I wrote this we will probably get rejected.

I was awake all night last night worrying about this impending home purchase.

My Realtor has been asking me if we are on schedule for a Jan 20th closing...and everyday I email my lender who replies that the application is still in "underwriting and maybe he will have an answer for me tomorrow."

Then, I don't know exactly how much we will need to put down or what our interest rate will be. Is that crazy? Talking to my lender before negotiations for the home started, we had several discussions about what down payment amount will probably get us approved...and settled on an amount he liked and sent us a pre-approval letter. When asked what interest rate we could get he emailed back "probably under 5.5%." So besides having no clue what the interest rate will be, meaning I cant predict my mortgage bill- I have started wondering if "underwriting" will come back and say they want MORE down than what was estimated.

Maybe it sounds irresponsible but BB and I have almost EXACTLY the amount of money needed for movers, the banks "estimated" closing costs, and the down payment. We will both get another paycheck in 1 week after closing to alleviate the burden of having basically zero balance in our account, but I am just freaking out that at the closing table they will give me a bill for a grand or two over what was expected.

And I keep wondering if we are paying too much for the house. Sounds silly- but in this down market where houses depreciate every month I now wonder if we couldnt have eeked a few grand out of the final price.

And I have had many items in storage for so long I was up all night trying to remember where the screws to my trundle bed are; "if I never find the screws to put it together will Lowes have screws to fit but look nice? Can screws be painted?" (my bed frame is white). "Do I even have any sheets to fit a twin bed? Maybe I should buy some now- but what color? What color will we paint the guest bedroom- does it matter what color because they are sheets?" "Do we bring our shower curtain and floor mat from here even though I think Maroon is too heavy a color for a bathroom? The floor mat is pretty worn out, but the shower curtain was very pricey and I remember all bath stuff being rather expensive-maybe bring it for the first week till we get our paychecks and then I can go to the store and get new stuff."....you see! I was worrying about insane things! I was up till after 4am! I cant go another night of that!

I have been getting the run around by Allstate about insuring our home only to find out yesterday that they wont insure duplexes.

That's too bad because when I added BB to my car insurance with Allstate it was only $10 a month extra! I was hoping for a great deal by adding homeowners insurance too.

Geico wont insure duplexes either.

I finally got a quote from "Foremost" (who?)for $700 to start the policy and then $290 a month for $223k coverage. I told them I did not pay $223k for the duplex but they need to add debri removal and cost of replacing the structure to the policy, and that is the coverage amount I need based on the location, material, and heating source. ...Does this sound expensive? I was assuming it would be about $100 a month. Our taxes will be about $250 a month...seems weird the insurance will cost more than the taxes because everyone always complains about the cost of taxes.

I have a call in to State farm...anywhere else I can try?

ummmm...I JUST BOUGHT A HOUSE!!!! I did!! They accepted!!! I own the pretty pretty teal house with a big front porch and lead glass windows!!

I just got the call! What do I do!? Do I tell my friends? Do I start running numbers? I am all alone cuz BB is at work and I feel like I should DO something!












Extra pics for Joan!! The fireplace!

So we sent in our offer this morning. It was for exactly 15% below asking price. They immediately countered with 3.5% below asking price and said it was their final offer, they don't want to counter and stuff.

To be fair, they did recently drop the price 7.5% before we even made our offer. And if we end the deal at their counter- they are only walking away from the place with a few thousand in their pocket after paying realtor fees because they purchased the place 4 years ago in an inflated market.

But I just countered anyways...1.5% less than their counter. I phrased it as "A done deal at xxx price"....so now I am keeping my fingers crossed!

I am making an offer on the duplex today. I actually wanted to do all this yesterday but my realtor kind of took an entire day to write up an offer and send it to me to sign. So when everything opens in an hour I'll fax it back to him from my local printing store and wait for the news.

Everytime BB and I go to "the south" we get so irritated at how everything takes forever. People truly work on "southern time". We remind each other about "southern time" once we start bitching about the customer service- it takes us a good day to get on their time schedule.

Anyways- I am stuck in that flux of time where I am too frightened to tell any of my friends the news in case we don't get it-but wanting to allow myself to be excited and enjoy the process. Apparently I cant get very excited without a bunch of squealing and questions about decorating.

BB is terribly excited. He is so emotional/in love its all he thinks about and it's all he wants to talk about. Talking about it to me is fine if he wants to talk about prices, or taxes, or moving vans, or forwarding mail.

But no. He has never thought of such things. He is trying to figure out furniture placement. He has already told me he wants to move the kitchen wall to open it up and "it should only be a few thousand dollars." He is spending in his head all the money we will earn from our first time home buyers tax credit (if we get one- but he assumes we will). He is such a girl in this process.

I am not even getting into how he thinks we need a big screen TV. It's like a necessity to him. It's expected. Forget that we have 2 TVs, one 30 something inch he just got LAST YEAR for Christmas.

I have already created a defense plan against his spending though. Since I oversee the money- once he starts talking of going to best buy or hiring someone to move this wall that is perfectly fine where it is- I can just tell him that we don't have the money. I mean- we probably wont. But rather than argue about how I don't want another TV..I'm just sticking to an automated "we don't have the money to do that right now honey. Maybe in a few months or next year."

I am not allowing myself to think of such things and only think of everything in stages. We are almost completed with step 1- placing an offer. He asked why I am not all excited about decorating and such- but if I get the way he is- I think the process of getting the place will get messed up or we will end up making mistakes because we are both to emotional.

So I am allowing him to keep his head in the clouds while I oversee all this "stuff" to do first. It keeps me satisfied "that I have control" of everything; I have a big fear of being "taken advantage of", or screwed, by people. Plus I am a little happy/surprised that he respects,and believes in me enough to just hand me the power regarding this step and trust that I will do it all correctly and I will make this dream happen.

I got the lease information. Top floor is in month 4 of a 12 month lease. Bottom floor is month to month and needs 30 days notice to vacate.

Now I am going back n forth with the lender to try and lock in a "primary residence" loan even though once we close I will have to give our bottom floor renter 30 days to get out. I don't think they are going to go in my favor- and that means we miss out on the $7500 first time buyer tax credit too (we can refinance to a primary residence loan 6 months after closing...we miss the July 1st deadline for the tax credit).

I am going to request that the current owner vacate the bottom floor unit by the time we move in...but with house sales falling through all the time I doubt the current owner will be agreeable to that.

Now...question is...what to pay?? Owner has property listed for $32,000 over what he paid for it in '04. He bought it as an investment property and lives 4 hrs away in another city. He has several investment properties for sale in the area. He did not put any improvements into the property at all. (Previous owner did all the work.)

If I get this place for what he paid for it in 2004...am I getting a good deal? Months ago (last year?...amazing what sticks in your head) Suze said that if you can capture 2005 housing prices- you are getting a good deal- but housing has since dropped lower.

I am a bit stuck because the current owner paid during the housing boom- and so although he might have paid an over inflated price- he wont want to take a loss on the property.

Any advice? Suggestions? I think we are going to make an offer today. (Ack!!) Where should we start? What is reasonable to expect to end up?

I might need the tax pros help here...and the landlords help...and well, all of your opinions!!

BB and I found a house (duplex) that we want to make an offer on. I LOVE LOVE LOVE it. I actually saw it last month when we went house hunting but BB talked me out of it and so I agreed to move on...but my heart never really moved on. So when we looked at it again this weekend, BB instantly fell in love too. (I have no idea why that happened - but he loves it now.)



Sooooo....the only drawback is...Both units are currently rented. We are investigating how long the lease is and if there is a kick out clause for change of ownership- but I am betting the place will be rented until this coming August.

So if we buy this place- we must buy it as an "Investment Property" in the mortgage paperwork which bumps our 5.5% interest rate to a 6.5% rate for 30yrs fixed.

Once the leases have ended and we can move in- we are told we can refinance it and call it a "primary residence" mortgage to get a better rate.

Questions:

1. First time home owners tax credit- will I get it if we buy an "investment property?"...If not, will I get it if we refinance into a primary residence? How about if we refinance in August and the tax credit is slated to end in July 09?

2. Fully rented, the units create $2,000 income. Going from a 5.5 to a 6.5% interest rate is $100 a month difference. Will it be worthwhile for us (me) to buy the property now and continue to live in FL but landlord in GA? I guess I need to run the numbers myself...but I am just thinking to myself "what if something breaks? What if there's a problem? Landlording from so far away...paying higher homeowners insurance (have not gotten quotes yet)...paying to live in FL...what $$ amount would make this a worthwhile venture?

3. Depreciation/improvements write offs...I will be able to deduct depreciation from the whole building now for the year...but how bout if we make major improvements while the property is still an "investment property"? BB and I would like to redo our kitchen and add a back porch on...should we do all that after the renter has moved out and before we refinance it into a primary residence? Or does improvements/depreciation cancel each other out?

4. Will we be able to refinance? We are putting over 40% down...but I have heard nothing but cries of "we cant refinance!!" coming from the media.

5. Is this a financially dumb move??

BB is just...pressuring me. Arguing with me. Arguing his point over and over again. He never ran any numbers, he did no research. I don't trust his input because I know it comes from emotion and not clarity. He says "you were ready to commit to 5.5%...whats $100 a month(at 6.5%) for 8 months when we are pulling in $2,000? Then we can refinance. We can save the extra income and put on that back porch you want." But I cant help but have ringing bells in my head screaming that this is a bad bad idea...is it??

I hit $40,000 in savings today!! I made my goal!! Only took me 3 years! I never set a time limit on hitting the goal (because I never thought I would get there), but 13k a year is good in my book.

And honestly I cannot act like I did it all on my own. I did start out with a bounty of items that I inherited that needed to be sold on eBay.

The money ALL came from eBay...but it was blogging, other sources of income and discipline that kept me from raiding the eBay account time after time.

Anyways, I'm thrilled with hitting the goal, it's a bright spot in this housing thing.

Mortgages are complicated right now...we are primarily working with Bank #2 and we have a preapproval letter. We worked it down to a 5.5% interest rate, so yea that! The funny thing is, Bank #2 told us that if I moved to the city and got a job making $20,000 I just need to show them 2 paystubs and the preapproval would have been sooo much easier to get. Seems like kind of flimsy way of evaluating ability to make future payments...but once I knew how their game worked, I was able to fit my numbers into their formula and make it work. So we did work it all out without me having to move out of state, get a quick job and pay rent on an apartment just to get qualified.

So tomorrow we are driving up to GA to see if there is anything worth spending our 40k on.

We'll see. 3 duplexes went on the market yesterday for 30k less than the one we are hoping to buy...but they are not as nice either, but they are all in about the same location. So the housing market is still in a slight decline, good for us. It encourages me to be patient and wait for the place we want for the price we can afford.

That's it for today. I'm tired. Honestly, all this mortgage stuff has just worn me out.

Well, all is not well in the lending industry. But we all knew that. I just thought I was immune to the banking problems. hahaha...guess not. Heres an inside look at what I learned today-

Bank #1 called me back wanting to know why I was bothering them when I clearly don't qualify for a mortgage.

Empowered by yesterdays lending tree approval, I stated my case. Banker at bank #1 hands me off to her boss.

Boss says I cannot even touch a "normal" mortgage based on our measly income...but let her see what she could do.

Calls me back with these lending parameters:
If I put 25% down (50k)...they will loan me 150k. Interest rate is 7% for 5 years- after that it balloons to whatever the current mortgage rates are...and it must be a 15 yr mortgage...and I must liquify at least $80,000 and transfer it into their bank into CD's or something so that- they get the business? or they can seize it if I don't pay?...they kind of lost me there because I had loud ringing bells going off in my head and a smart librarian girl was screaming "DONT DO IT!!"- they kept stressing this was an in house loan and they were trying to work with me and around my situation. When asking why I cant get a 30 yr fixed- they said they NO LONGER OFFER THEM??? I don't know. Whatever. It's not going to work so I just said that I would think about it. I think they were qualifying me for a commercial loan because they were actually counting the duplex rental income on this loan...

Bank #2 (Broker guy from lending tree)...all is not well there either. I thought yesterdays 16 pg document was an approval, but he called me back today saying he was meeting with his boss to discuss my case. I guess he compiled all my info into a mortgage and sent it to me to verify that the info was correct- and perhaps added in the 6.653% interest rate to scare me away. It didn't work and so now he's stuck in a meeting to "discuss my case" with his boss.

Bank #3 is "still in underwriting" (where it has been for well over 2 weeks). No decision there.

BB is telling me he does not want to lose the house because of 1/2% interest point. I have my pride. I refuse to pay as if I have a bankruptcy or foreclosure in my background. I'm not going to agree to over pay for something everyone else is getting cheaper. I'll wait if I have too.

BB says we can always refinance later. That's what all the people now losing their homes thought too.

So we have compromised. I want an $850 a month mortgage. If we must go with a 6.5% interest rate (or higher) then we will have to negotiate harder and knock ANOTHER $20,000 off the cost of the house. Then my payment is at $850 plus all the other crap like I was planning all along when I assumed I would be able to lock in a decent interest rate.

BB accepts this plan. Poor BB. There's no way the seller will go that low on the house. But I will let him try...

PS. Congrats Monkey Mama on your awesome refi today!! Instead of discouraging me- your post made me dig in my heels and stick to my pride harder.

After my day long rant about getting rejected for a mortgage...bank #2 just sent me a commitment letter for $140,000 @ 6.5 interest rate!! It came out of the blue, suddenly I have an email in all kinds of legal-ese with 16 (16!!) attached documents for me to sign!

Seems my own argument against their first rejection was well stated. I triumphed!!

Now I gotta work on this 6.5% interest rate. That sucks. They think I cant afford the payments so they tack on a higher rate to make it more unaffordable!

Anyways, my head is spinning. BB is at work and doesnt know any of this yet. I had already divorced myself from the idea of home ownership so suddenly seeing seeing 16 documents to sift through is overwhelming.

I need to take a day to decompress.

Thanks for all your support though...it helped me feel better about the rejections...
....but being accepted FEELS SO MUCH BETTER!!

Just got rejected by bank #2 about applying for a mortgage. Bank #3 application is still in "underwriting" where it has been for several weeks. So that option is not dead yet but may need some resuscitation.

After telling BB about bank #2 rejection- we tried to figure out what areas we needed to improve to get an approval. Bank #1 said that our mortgage payment would be 80% of our monthly income and they would only approve 45% of a monthly income. So we would need to put down $130,000 for a $200,000 house. The woman from bank #1 called me with the rejection info while I was in an airport and didn't have much ability to absorb her numbers. I knew they were crazy off...but we already had bank #2&3 working on our applications so I just let it go.

Bank #2 gave us no formula to work with. I just got an email stating, "After further review of your documents, the debt ratio is still too high and we are unable to approve you at this time."

So BB and I tried to find our weak links. We have gotten conflicting information about my rental income counting as income. I have heard the full amount applies towards my income, 70% applies as my income, or the full amount minus HOA fees counts as income. I have heard that BB's lesson income will or will not count because he is working in a state other than he will live.

But no matter how we tally up the numbers, if we put 30% down, our mortgage payment will be 20-30% of our monthly income at the current 5.5% interest rate without accounting for the additional rental income from the duplex we want to buy.

So I wrote bank #2 with my calculations. I asked where we needed to strengthen our numbers because right now we are offering:
credit in the 800's
$0 debt
30% down
assets that could be liquidated to pay for the house in full
mortgage payment will be less than 30% of our income.

Bank #2 wrote back that he will re-review our paperwork with his manager.

Inspired- I called bank #1 to argue our case. Have not gotten a call back yet.

And bank #3 is not dead yet either.

BB and I have hotel rooms booked to take BB's father to look at the duplex we want to buy this weekend. We thought we might make an offer this weekend. Now everything is on hold until we get a positive confirmation from a bank.

I just feel like a loser. I feel like no one wants to 'work' for us- they want to wait for the easy applications to come in rather than get their hands dirty with us. And I feel like all this being responsible with credit scores, no debt, no student loans, no car loan, full down payment is MEANINGLESS. I am frustrated looking at the homeowners from "easy application days" where anyone was approved. And everyone did get approved! And now we cant with all we are offering? Why are we being punished for other peoples irresponsibility?

And you know what annoys me? Once we buy this rental duplex...we will have 5 sources of income. 5! Now if Joe Schmoe gets a mortgage because he makes $80,000 a year and then loses his job 2 months after moving into his house- he's screwed. His income went down to whatever severance his job provides. But if we have 1 renter who loses their job and cant pay...we still have 4 other sources of income to cover that loss.

And my renter who has paid on time for the last 6 yrs is more reliable than some job obtained a year or two ago. And even if she was a new unreliable renter, If she loses her job, In this economy, I bet it's easier finding a new renter than a new job.

This duplex we are buying near a college has hundreds of potential renters. This place will always be rent able and has a rental history of 4 years with the same renter. I bet the country is losing jobs faster than schools are losing students.

And anyway, why is depending on a renter for payment considered more of a risky income than being dependent on a company for income when our country is in the middle of massive layoffs?

I still have my own human capital capabilities to seize in the event that my renter runs into problems. With a rental income there are 2 potential bodies able to create an income rather than 1! (does that make sense to you?)

I feel like the banks are telling me that my money is not as good as other peoples money because of where it comes from.

I just argued my own point so well I no longer feel like a loser. I feel like the banks are losers for missing out on my business.

I hate obsessing about my housing situation. I know it either bores you all or I sound wildly optimistic about my economic situation in the face of all this doom and gloom. But bore or aggravate you I am about to do.

It just helps me think and weigh my options...writing in this blog.

So I went away on vacation over Thanksgiving weekend. While in the airport on my way home- one of the lenders I am working with called with bad news. She said based on our income she could not approve us for our desired loan. She said she cannot count the $995 a month rental income from the duplex we want to buy as our income because it will be our primary residence. So...even though we will live in one unit and have renters for another unit...that will not count towards our income. She said she has to keep our mortgage payment at 45% of our income. I guess I can understand that. BB and I have an extra 10k saved on top of the 20% down payment for renovations and such...I guess we could apply that 10k to the down payment as well. So I asked her "how much do we need to put down for this mortgage to be approved for our 200k request?" She runs numbers and says we need to put down $130,000. ??!! I quickly ended the conversation because we don't have 130k. I wish we did because then our mortgage payment would be less than $400 a month! Anyways- on the plane I was trying to figure out where her number came from- but $400 a month is 20% of our current income. Not the 45% she said was our limit. Whatev.

BB and I are not deterred. We refuse to give up easily. I understand that rules are in place, I understand that on paper we look risky, But I also know that whatever bank decides to lend to us is going to get every single payment on time.

This morning I got a hold of a broker through lending tree that has been harassing me wanting my business. He needs all our paperwork and said he thinks we will need to put 30% down and can lend us the rest. So heres hoping.

We had plans to put in an offer in 2 weeks- but the plan is also to have concrete lending in place so everything goes smoothly after negotiations.

Since we will be putting down the money we saved PLUS our renovation money...we are reconsidering maybe offering on the house I have mentioned in previous posts that was BEAUTIFUL in a less than stellar part of town. The place is nearly perfect in my eyes- I could easily live in it and have no complaints. The house we were planning to make an offer in the better neighborhood needs some big work before we even move in.

So...it seems we are reconsidering our thought process now that we will no longer have "fix up" money. But as a plus; our mortgage payment will be smaller! We might be able to stretch the rental income to cover the mortgage AND insurance! Holy cow that would be great!

So that is where we are at. We are not taking the setback as a sign to not go forward- we are ready for this commitment and now we are looking to get creative in the financing department.

And in closing- the news has announced possible plans to DROP new homeowner interest rates down to 4.5% in the next few months. I think I am somehow blessed that it has taken 3 yrs to save up a downpayment...we have had minor stallings in getting a mortgage...because we might get incredibly lucky and buy at a time that the govt is offering a $7500 tax credit AND a super low interest rate for new homeowners!

I know it will all work out fore me. I'm just impatient!!

I paid off the computer on the 0% Bestbuy card. I have 10 more months of 0% interest, but I have the money now and don't want it on the credit report. So that's done.

Working on bank pre-approval for a mortgage. I initially went on lendingtree a few months ago and was pre-approved within a few hours...but it didn't feel legitimate. We are somewhat risky on paper and they just didn't ask enough questions... I don't want to start a house buying process to have the financing fall through.

So we went to WAMU and have the opposite problem. They are very non-personal and are only looking at a certain set of numbers and not listening to the explanations we provide around the numbers. After waiting almost 2 weeks I get an email asking me to provide an explanation for purchasing a primary residence in GA when BB is contracted to work in TX.They also asked why BB worked for 4 different companies in a span of 6 months...("its not companies! It's teams!") they are not really taking our situation into account. They keep saying BB was "fired" when he was traded...Thats a blow to the self esteem to hear (trading is good! Firing is bad! Dont label me fired!)...Then they also want an explanation for buying a duplex rather than a SFH. BB just got fired up at their emails and then no response attitude.

So we are now working with a woman in GA who so far is friendly, listens and works hard. We just priority mailed off our paperwork to her so hopefully we will have a pre-approval that I feel comfortable with in a week or two.

So that is 3 agencies who have checked our credit in the last 3 weeks...our excellent credit is our most valuable asset at this point and I do get nervous allowing all these people to check the credit but it is what it is.

The woman in GA of course asked all our income and sadly I couldn't talk about ebay without IRS problems-which is too bad because I have been earning a normal middle class salary off of ebay. oh well- I will keep earning and the lender will keep asking where all this money keeps coming from and I will just keep saying I am downsizing to move to the smaller space. Which is true. I'm just downsizing pretty hardcore.

Well, I just added a couple thousand to my house savings fund...and the house we want just lowered their price AGAIN! by $13,000.

Seller is suddenly motivated. $26,000 price drop in 2 months.

Our duplex is now at a very reasonable price and I am panicked someone will snatch it up. I was counting on that "just a tad unreasonable" price to scare away buyers.

We are still going through the pre approval process so we are not in a position to put in an offer yet.

Hopefully the stars will align soon.

Possibly ignorant question...but people always make remarks such as "oh you are only making interest payments at this point" when you say that you made a payment on your mortgage if you are a new homeowner.

Mortgages- why is it that you are paying primarily interest in the beginning of your loan, and more principal as you pay the loan down?

I would think that if you get a mortgage for $100,000 @ 6% for 30yrs...I would think the bank divided $100,000 by 360 months (length of loan) =$277 and then charged 6.0% interest on the $277.00....but the mortgage calculator says the monthly payment is $600.00...why??

Well, I got houses on the brain. Yesterday the house we are interested in buying dropped another 10k in price. The owner has dropped the price $24,000 since it went on the market over 6 months ago. Good news- but I think there is still room to negotiate.

I'm sure nobody cares to hear me going on about this house...but here I go anyways. Writing out my thoughts helps me organize my thoughts.

The house is actually a duplex. Baseball boy and I have been looking at duplexes since we discovered that actively rented duplexes are counted as your income when applying for a mortgage. We have always 'talked' of owning real estate and making our income that way...but we always talked of buying a house and renting it out later when we upgraded. Now we have our sights set on first a duplex-later a single family home.

For us it seems to make sense:
The 2nd unit will pay a majority of the mortgage (helpful when I am unemployed, BB is underemployed).

Both units can be easily rented out if we decide to travel, move, whatever.

Repairs, taxes and improvements made to the rental unit is tax deductible!

The income allows us to have an income..but not have to work 9-5 everyday so BB can continue to play ball.

If we mess up the fixing-upping of one unit we can rent it out and move into the other unit and try decorating again!(mess up- as in: choose bad paint colors or ugly tiles).

Duplexes tend to cost just 50% over the cost of a SFH...so you get 2 units for 1.5x the price.

This duplex currently has the bottom floor unit rented for the next 8 months for $995 a month. We are HOPING to get the house for about $210k...leaving us to just cover the remaining taxes, insurance ect by a couple hundred dollars.

This house is one of the uglier houses on the block. There are some uglier ones...but this house is by no means the biggest or most impressive. BB is talking a lot about changing the trim paint colors from brown to white...and claims that will really help the curb appeal. I think maybe some sod will help the curb appeal. Actually, I think re-boxing in the front doors will really help the curb appeal.

The house is in a very desirable area. I'm surprised we can afford this location. It's 5 blocks from the big central park in the city, 2 blocks from a grocery store and 2 blocks to a cute shopping area, and a few blocks from the local big college.

A bit about the house:
The house has an UGLY outdated kitchen and bathroom. This way there will be no guilt from ripping out cabinets just to put in cabinets to fit my taste. And the backyard is way overgrown with weeds and junk. There is a metal garage in the backyard that basically looks like it MIGHT fall down soon. BB wants to immediately redo our kitchen and bath...but I actually explained that if we buy this place then my first priority is landscaping the backyard and securing/fixing the garage up. I want to do these things FIRST because if you dont do them when you first move in...you just never end up doing it. Until it's time to sell and you realize "Gee! That garage out back would be a real selling feature for the house if only it was not overgrown with weeds!" But I figure the kitchen and bath will eventually get redone because every time we walk into the room we will have a replaying fantasy about hardwood floors and updated fixtures. BB actually understands my thinking and agrees with me.

BB gave me hope for buying the fixer upper yesterday. I have mentioned in my blogs that though he SAYS he can sheet rock, electric, lay tile and grout...I have never actually seen him DO anything handy. Well yesterday- we went to Home Depot, rented a carpet cleaner and cleaned our rented house carpets ourselves. Maybe that's no big deal for you experienced homeowners...but for the past 3 yrs that I have lived here, I have paid a company to come in once a year and clean our carpets. This year- we are saving for a house. We don't have $120 to pay for carpet cleaning. So we decided to do it ourselves. And we did it! It was only $40 and took 2 hours! I'm so impressed with us. Yesterday gave me hope that we CAN do household handy stuff!

And now when we move out of this house...hopefully we will be leaving it in the same condition we moved into it. And I can feel good about being a good renter. Since I will maybe soon have renters myself...I am improving my renter karma this way.

In other news-the other duplex we looked at that I LOVE!! dropped $7,000 off its list price yesterday as well. This house is larger, all upgraded, has STAINED GLASS WINDOWS, and WOODEN BEAMS in the ceiling..and a RENOVATED attic featuring a half bath!! All for 10k LESS than the other duplex...but its not in a good area. The surrounding streets are crime filled and the city projects are only a few blocks away...so sadly this house is not an option for us. I am so sad about that house. The block is lovely- all updated and big houses...but it's just 2 blocks of a GREAT neighborhood surrounded by crime...so we figured that for appreciation values- it would not be a good investment. I'm still sad about that house though.

You can see which house I like huh? Crime area house- I LOVE. This nice area house- eh. I like the area. And I like the unfinished attic potential (though a finished attic would be nicer)...and I like the potential for the backyard, the garage, the kitchen, bathroom...but that's a lot of work. And $$.

But I think this puts me in a better position for the negotiating..because I don't love the property. If I was negotiating for the crime area house- I would get really emotional about it. This place- I am more objective and it keeps me a little smarter. I hope.

And I have to keep telling myself that we are NOT BUYING A HOUSE right now!! I keep thinking about it and planning for it. But I need my patience right now. I want to see if this government first time home buyer package changes before we start making offers.

Ok, we worked out the housing issue...for now. Baseball guy (man? boy?) apologized last night for pressuring me to buy a house and he was proud that we "made our first decision together as a married couple." hmmph. I'm not to proud of how it was handled but I will let it slide.

Regarding the house, we decided we are going to wait a bit. President Bush has been talking about increasing the first time home buyers tax credit from $7500 to $20,000- and I guess he said he will discuss the bill on Monday. So hubby is content to wait for that news, and I have some time to relax and recover from the wedding.

I did email my Realtor asking if our opening offer of 30% below asking price is an ok place to start the negotiations with the hope of getting the place 20% below asking price.

My realtor said he does not think we will get 20% below asking price but it's a good place to start. I'm thinking that the place has been on the market well over 6 months and they only dropped the price 5% two months ago. In the last few months the prices have been dropping faster and faster...so if the seller does not want to consider our offer then we have no problem waiting a few more months and trying again.

I think we are in a good position because this place is not our dream place. Not even close...but it is the best place we can afford. The location is very good, and it has an untouched attic that can eventually be made into a master suite...but everything else with the house is PROJECT. My head grows weary when I start thinking of the cost for lumber, and sandpaper, and paint, and weed whacker and power washer...and on the list goes. So neither hubby nor I will cry if we have to walk away.

But I am getting ahead of myself...I did say we were waiting to see about this home buyers stimulus package first-right?.

Ok well- wedding has come and gone and the FINAL NUMBERS are in!!

I am not proud of the final numbers...but I am proud that SOMEHOW we paid for the wedding IN FULL!

Drum roll...final cost of the wedding...$23,630. I have done my part of keeping the economy humming along.

We started off with $8,000 in savings when we started wedding planning over a year and a half ago. Then I paid what I could as we went along. We entered the wedding weekend $11,000 in wedding debt but made back $9,000. After pulling a few thousand from the house down payment fund...WE HAVE NO DEBT!!

It's been over a year that I have been juggling numbers and budgets regarding the wedding...and entering into that type of situation all over again regarding buying a house just exhausts me. I am tired of debt. I am tired of giving people money. I am tired of having money in the bank but it's earmarked for something else.

For a little while...I just want the money sitting in the account to be sitting in the account. I'm tired of running numbers to see how far it will stretch for the next big purchase. I am tired of having faith that the money needed will come from somewhere when we need it.

I truthfully feel a bit pressured by Baseball man to buy a house right now. He comes at me with lots of rational arguments on why we should buy NOW (like this week)..and the only rational thing I can say back at him is that we need to wait and see if house prices come down a bit more. Or that we don't have enough of a cushion after we buy the house for emergencies. Then after he has listed his rational reasons why we should buy now he throws the last years worth of whining I have been doing about wanting a house back in my face. He gives me a guilt trip because I have been whining that I want a house and now he is mentally all ready to buy it and now I am pulling the rug out from under him.

I'm not sure why...but after researching weddings and doing all that work for so long...I'm just tired. I'm just tired of buying things. I'm tired of taking big steps in my life. I'm emotionally exhausted here. And he is raring to go.

And I HATE throwing this in his face...but it's MY MONEY he wants to spend on the house! He's not contributing a DIME! And it's our money now...but when he wants to spend it ALL in one lump sum without doing any research I tend to revert back to the "It's my money" mindset.

I went ahead and wrote an offer for my Realtor today to present to the sellers of the house we like after Baseball man wore me down. We argued and he just kept arguing his point until I had no argument. On PAPER we can afford a house...but I kind of think in my head that we cant. Well- we wont go into foreclosure...but I don't think he realizes how tough it will be. Because on PAPER we can do it (barely). But he's all counting on me getting a job and that extra income will be our cushion. I'm scared to depended on this imaginary income he assumes I will make assuming I can find a job.

Then he's talking about tapping into my IRA if I cant find a job, and I'm worried about counting on that as well because I just lost $25,000 in the IRA in October. 8 more months like that and IT'S GONE. Gone. Gone. Gone. I'm not even going into the guilt I will feel regarding losing all my parents hard earned money.

So that's where we are at. Maybe things will seem brighter tomorrow. We finally have his parents full support on this thing. Now that I got my wish (his parents realize we are capable adults and don't need to be babied) I am OK with sitting tight in this rented house...unfortunately I created a monster with my previous desire to buy a house.

That's my rant.

I know I need to start off my new blog entry discussing the wedding...but new hubby and I went house hunting over the weekend in our beloved city that we want to buy in (not where we live now)...and we found a property we think we will put on offer on!

Baseball Man is all set to go ahead and write in an offer...I am dragging my feet a bit. I know house prices will continue to go down...so we are going to offer 20% less than asking price to try and absorb some of the depreciation. The place has been for sale nearly a year and has only dropped in price 10% 2 months ago. We discussed that if we can get the house 15-20% off then we will always be happy with our price paid for the property no matter the depreciation.

HOWEVER...Have I heard that Obama is thinking of changing first time home buyers rules to allow first time buyers to lock in a 3% interest rate? I heard that there was talk of this. For Baseball man and me...that is nearly a $300 a month difference! ALSO, I heard there was talk of increasing the first time buyer tax credit from $7500 to $20,000. Once again...if that is coming..I want to wait to buy!

New Hubby is telling me those changes might be a year off IF THEY EVER COME...so I'm wondering what the likelihood is that I will be hating myself if we buy a property now.