Thursday, March 24, 2016

The House Search

So, the house. It's a little 50's ranch, with three bedrooms and 1 and 1/2 baths, and a cute front and back yard and garage. So much house, especially for a person like me who has almost never lived anywhere but apartments. 

I started looking to buy a home a few months ago- the rental market in Portland is crazy, and I knew I would be priced out before too long and have to go back to living with a million roommates, or else move somewhere that is a terrible commute to work on public transit. Seriously, the mayor has declared a renter state of emergency in Portland because so many people are being displaced by rapidly rising rents.

I didn't think I would be able to qualify for a mortgage because my income isn't high especially as a single person, but kind of as an out there idea I met for coffee with a friend who works in real estate here in Portland. I knew Portland's housing market was in general far more affordable than the Boston area where I grew up, but also that things here are changing rapidly. Anyways, I figured she would tell me that it was unlikely I'd be able to buy. But she was actually pretty positive that if I was willing to look at fixer-uppers, and have a lot of patience, I could find something. She warned me that things move fast- most houses in desirable locations are on the market for less than 2 weeks, so you have to be poised to pounce the second the right thing comes up. This is particularly true for more affordable homes which seem get snapped up within days pretty regularly.

My parents and I had talked about my using the money they had saved for me for college towards a down payment- since I went to community college and paid for a lot of it myself, most of the money was just sitting there. (At this moment I must pause to acknowledge the amount of privilege in the previous statement. I am blessed with a family that not only wants to help me land on my feet, but has the resources and some savings to help me do so. I am very aware that this is not the case for many, many young people in this country.)

I saw more than a dozen houses, and found two I wanted to put offers on. They were both in a neighborhood that is further east than I live now, but on the same bus line. It's kind of an up-and-coming neighborhood, with new cafes and things starting to open, and a cool old theater and some restaurants on a main drag, but otherwise pretty residential. A funny thing about Portland is almost all of it feels like it should be suburbs of a bigger city- there are single family homes more often than apartment buildings or multi-families. My parents were urging me to try to buy a condo instead, but the truth in Portland is that usually a condo is more expensive (or equally expensive) than buying a whole house! It's super weird.

Of the two houses I wanted to put offers on, one was for auction due to foreclosure and I watched the bid price outpace the highest mortgage loan I was approved for, and couldn't do anything about it. The second one I put an offer on, for the highest mortgage I was approved for, which was 40 grand above the asking price for the house,  but even so, I didn't get it. I was warned by everyone I talked to that the housing market is the kind of crazy in Portland right now where houses regularly sell for significantly above asking.

I started to feel like it wasn't going to happen.

I went to see a few more houses that I might have been able to afford, but were in worse locations, or in terrible shape plus not a neighborhood I really wanted to live in, etc. I pretty much resigned to give up looking for a while. I focused on feeling grateful that I love my current apartment, and have no reason to want to leave besides the creeping fear that my building will be sold and my rent will skyrocket like I have heard happen to so many others in my neighborhood. But that hadn't happened yet.

Meanwhile, my partner Evan and I had been talking about moving in together for a while. It wasn't a concrete plan, we just talked about is as a what-if, mostly. When I started talking about my interest in maybe buying a house, he was excited for me, and told me that if I wanted him to, he would love to do projects in my new house with me, and we could work on a fixer upper together. We continued talking about living together, but always as if it was very far off. 

And then this house came on the market! It was in the same neighborhood where the two houses I had wanted were, though admittedly in a slightly less desirable part of that neighborhood- where many streets are not paved and the houses aren't quite as charming. Impressively to me, it was a 3-bedroom (the other two were 2 bedrooms).

 It was listed on a Wednesday, I saw it that Friday after work. Offers were due the next Monday. It was that fast. And the house is in ROUGH shape, so it didn't qualify for traditional financing. Meaning that the loan I was pre-approved for would not be accepted. There was a specific type of renovation loan that could work though, so on Friday night I called my lender, and left a desperate message about getting pre-approved for this other type of loan before Monday.

She called me back on Saturday morning, with bad news. My income was too low to qualify for the loan at the amount I wanted to bid- basically the renovation loans have stricter rules- the bank needs to cover itself because if you default and the home is still not in fixed condition, it will be hard for them to get much money out of selling it again. So I wouldn't qualify. I held back tears on the phone.

Then my lender suggested asking my parents if they would co-sign with me, as they were likely to qualify even though I couldn't. I called my dad immediately. We talked through options, and agreed on a plan that could work, which involved me borrowing money from them (borrowed against the equity line for their house- again, I realize that this would not be an option for so many people), and then refinancing the house to pay them back. I got together my offer, put it in, and waited.

I was so stressed out for all of Sunday night and Monday I barely felt human. I couldn't focus at work, or sleep at night. I was a mess. 

I really wanted the house. But I was also scared that I could actually get it. It is in terrible shape- having been vacant for 5 years after it's last owner died. The house was broken into and people stole the valuable systems: furnace, hot water heater, etc. There is extensive water damage in the bathroom after construction on the public water lines led to the sink backing up, which no one realized for a long time, as there was no one living there. And the sale was as-is without even a formal inspection. What if I missed something huge? Would the house turn into a money pit? Would I be unable to pay my parents back the money - and interest- they borrowed against their home? Was I making a terrible mistake?

 I'm glad to say now, that it seems this decision was not a terrible mistake. Yes, the house needs a new bathroom, all new appliances, new heating system, probable updates to the wiring, a new breaker box, new hot water heater...basically everything. But the foundation is good, the location was good. And 3 bedrooms means that I can charge rent to an additional roommate or two making my monthly payments easier. It has a great garage that Evan can turn into a workshop. It has rhododendrons and hydrangeas and a lilac bush surrounding it, and a beautiful old blue spurce tree in the backyard. There is a covered patio in the back just waiting for a BBQ. It has potential. 

I was so sure, that like the other house I had put an offer on, a developer or investor would buy it up with more money than I can pay. But they picked me. I found out two days ago. It was exhilarating. I am still terrified of something going wrong, but I am excited, too. 

yes, my phone is this pink.

So, that's the deal with the house. It will be at least a month before it closes. All will reveal itself.

1 comment:

  1. I agree that it's difficult for many young people to be able to afford a down payment. Starting to save early is key. In my 20's I was able to start investing in a CD with the help of my parents. I contributed each month and was able to buy my first home by the time I was 25.