Category Archives: Home Purchase

Stock Pile Fail

Over the last few years, I have worked off and on to build a stock pile. Usually I would be more focused on the stock pile when I am also focused on couponing but, due to the amount of time and energy it takes to coupon, I realistically add to my stock pile once a month or so.  Lately some of the items I have focused on building were meat and dairy. Chicken, cheese, and butter, when on sale, would be purchased in multiples because the latest news of drought all say that it will drastically increase food prices.

This mortgage fiasco, however, has ended in an epic fail for my stock pile.

I had a decent sized fridge and a small chest freezer at my last place. The original plan was to just tape up the chest freezer from my old rental to the new place but the delay in the mortgage closing and having to move out of my rental has meant placing everything in a storage unit. Having a storage unit in the city also means the storage space does not have electricity.  I have decided that asking my friends to keep my freezer is too much to ask, which means I had to let go of the freezer storage items. I am disappointed that I had to let those items go since they were all waste of money in the end.

In hindsight, once I knew that I was moving I should have worked to reduce the stockpile. In my defense, since I was moving only 6 blocks away, I did not think reducing my stockpile was really an issue. The problem was the mortgage not closing on time and there is very little I could have done to prevent that. Once I am moved into my place, I will need to start rebuilding it again, especially since the food price hike isn’t too far away.

Have you had any issues with stock piles? Please share!

Love,

C

 

My Ultimate Test In Minimalism

It seems that minimalism and personal finance blogs seem to go hand in hand. It makes sense — the less you purchase the more money you can save or invest. Over the years the number and volume of items I own have definitely decreased.I remember having enough clothes to fill up my current closet, but I have only taken up half after numerous donations and sales (I use e-drop off).

But it is still amazing the sheer number of items I own. Although I feel like I am constantly purging, each time I move I realize it is still too much.

Due to problems with our lender, the condo purchase is being significantly delayed. I need to move out of our current apartment since the landlord already has another renter lined up beginning Aug 1st, but we are not sure when we will be able to move in. Until we do move in to the new place, we will be staying with some friends who consider us family and have graciously offered  their guest rooms to us. We are so grateful and the last thing I want is to make them uncomfortable at their own home.

One of the ways to ensure I do not inconvenience them, I have decided to take only two carry-on bags for clothes and work related items. This is a bit more complicated than it sounds since I do not have an office and I need to have items that are travel ready in case I get shipped off at the last minute to some client engagement (oh the joys of being a consultant!). I also need to make sure I have all documents necessary for the mortgage, just to be safe.

So for the next two weeks, I will practice extreme minimalism. Maybe this will end up being a lesson in learning to live with much less.

Love,

C

Why I Am Not Sure About Owning Rental Properties Anymore

We are literally days away from the closing and I am still on the phone every day, having to deal with my mortgage broker. As I mentioned in my previous post, the mortgage approval process has been an absolute nightmare. I tried to be nice by not mentioning which “Big Bank” I was going through but, at this point I will just share it with the readers: my nightmarish experiences are all with Chase.

At this moment I am thisclose to just walking away from the property because if Chase is putting me through this much problems, I would rather walk away than to give them money. Yesterday we should have had answers but we find out today that they “hope to get a response” by tomorrow? Response? Tomorrow is the friggin mortgage approval deadline!!!

All this is making me realize, maybe rental property portfolio isn’t for me. If you can get something in foreclosure and can pay cash, great. But if financing is involved, it is getting way too stressful to do this every 2 years. I love the idea of having passive income but there is nothing truly “passive” about this.
Love,

C

Buying A House Is Like A Full Time Job

This is my third day being “beached,” which means I have been working from home. I am always slightly worried about these time off because if it is extended I begin to wonder about the economy, the viability of the firm, etc. but I think it is a necessary mental break for the consultants to take a breath, regroup, and work on some non-client related matters. I had so many tasks and goals — finish my certifications, write a presentation and white paper on a business topic, etc.

Unfortunately, thanks to my mortgage broker, I am more frazzled than ever before and completely unable to focus on anything aside from the home purchase. Now I am really glad that I am beached because I can’t imagine dealing with this mess while being on a client engagement since stepping away for 2-3 hours a day during business hours would be a huge no-n0.

I found my mortgage broker through one of the top four evil banks in the US. I called to receive a pre-approval letter and spoke to him for over 30 minutes or so. He seemed attentive and funny so when the home purchase happened so much faster than I ever anticipated, I decided to give him a call for the mortgage. I should have realized that he might not be on top of his stuff when he would seem lost about what documents I had submitted to him during our conversations.

As we went through the attorney reviews, inspections, etc. I started to notice he just plain sucked at communication. I would send him an email with two questions and he would only answer one of my questions. Some questions I would bring up daily and it would take him three or four days to respond. Mind you, he would email me about something else during this time so I know he is reading my emails and in the office. He also would request certain documents “ASAP” and have me chase the document although they should have known they would be required earlier on. I notified my real estate agent that I was not confident about his competence and that we need to stay on top of him to ensure we can meet our deadlines.

Today was the deadline for the mortgage to be approved. Yesterday I received a list of 11 items, stating that if they cannot receive those items by the end of the day they will not be able to approve the mortgage prior to our closing, which is 1.5 weeks away. Of these documents, 3 were not applicable to me (they were internal processes), 3 I had already submitted, and 5 which had never been requested before. Some of these were really standard items he should have provided me earlier to complete, like social security number verification. Seriously? Because every document like the tax returns, W2, credit report, etc aren’t plastered with my SSN? And some were ridiculous requests, like wanting a copy of my diploma or transcript from my MBA program. Uh, I graduated over 3 years ago and I have no gaps in my employment for the last 4 years! This list came after weeks of me asking him if he has all the documents he needs.

I finally called his boss (his email signature always said if there are problems to report them to his boss and had the boss’s contact info) to express my anger, frustrations, and concerns. Movers are coming on the 29th and I need to vacate my unit by the 31st. If we are unable to close by the 27th (Friday), I am screwed. And I refuse to have to live in a hotel or friend’s couch and having to deal with my items temporarily being in storage because of my mortgage officer’s incompetence. Now I have been promised a daily update from the boss and I can tell the agent is more careful in reviewing what documents I have already produced to him before he makes new requests.

Lesson learned here: shop around and interview your mortgage brokers for some time. See how they communicate with you over a few weeks and how they answer your questions, etc. In hindsight the moment I started to think about purchasing a place I should have interviewed mortgage brokers for comparison, before even meeting with the agents. But, had I done that, I would not have been able to purchase my condo since I assume someone else would have made an offer (it was listed only for 10 days when I made the offer). I guess now I know what to do for our next home purchase.

Love,

C

 

Negotiating: Tougher Than Your Average Girl

I’ve created an eloquent post on this previously, which then got lost. Please bear with me as I try to remember the gist of the previously written post.

My guy friends constantly tell me that one of the most interesting traits about me is what I am not. They say visually, I seem like a stereotype of a tiny (being a size 0 doesn’t help) woman — light hearted (I read this as “air-heady” although they deny it), reliant on others, and probably submissive. Whenever I tell them some story on how I would stand up for myself, they laugh saying they doubt anyone would look at me and think I’d be an alpha, fighting and pushing back to represent my interest.

I wasn’t always this strong or forward but as I have gotten older, I have enough experiences that have taught me only I am interested in the best scenario for me.  I push back and negotiate hard, whenever I deem stakes are high, and have come out ahead each time.

First time I discovered this was when I was accepted by my MBA program. I received a hefty scholarship package already, which is somewhat unheard of in top business schools. I was telling my friend from undergrad that attending that school over my dream schools would be much easier with more monetary incentives. She asked “why don’t you negotiate?” Huh, I had never thought of that! So I wrote a letter to the dean of admissions, restating my qualification and noting that while I would love to attend more scholarship money would make it easier for me to accept the admission. I had asked for additional $10k a year, anticipating that we will settle on additional $5k a year. I received a letter back stating all scholarship monies had been allocated to accepted students but I will be put on the list to receive any scholarships as they become available. In the meanwhile I was given additional $10k/yr of 0% loans. I accepted.  A few months later I received a letter stating more scholarship monies had become available and I was given additional $5k/yr. For writing one letter, I ended up receiving additional $10k of scholarship monies and additional $20k loan at 0%. That is what I call a great ROI!

When I accepted my summer internship for a full time position, I again negotiated hard.  When I couldn’t push the salary any higher, I started to push for sign on bonus, relocation costs, etc. I ended up with a package worth $20k higher than the original offer.

With the recent condo purchase, it was more of the same. Already my realtor had negotiated the terms hard for me but I negotiated further after the inspection report was available. Because the condo was old and no updates had been made in over a decade, I used these as areas of contention. I reached out to my inspector to ask for estimates to change the problem areas and received high level estimates. When I researched those specific issues, the estimates came in much lower. Even when the seller made it seem as if they were willing to walk away due to this cost, I held firm and made it known I would be willing to walk away due to the disagreement as well. In the end I was able to receive costs of my closing waived at a greater amount than the fix estimates.

I think often times we assume that certain items (like scholarship packages) cannot be negotiated. I regret that I didn’t think of negotiating sooner (like my undergrad scholarship package) and with all major steps in life I try to negotiate. One area that has really helped in negotiations is to know my range of acceptance (min/max) and being ready to walk away if that range cannot be met. I never would have walked away from my condo just because of those disagreements because it was within my range but pushing hard made me come out ahead.

Do you have any negotiation stories you would like to share? Any tips?

Love,

C

Mortgage Debate: 15 vs. 20 vs. 30 year loan

One of the most frustrating part of the mortgage process has been the sheer amount of paperwork I am bombarded with. Certifications, contracts, slew of documents from the mortgage lender… it never ends.

I finally took some time to comb through the mortgage documents with a fine tooth comb. I was surprised to find that my mortgage was set as a 20 yr loan, which I did not expect since the standard is 30 yr or a 15 yr.  It got me thinking and I started to request the different interest rates and monthly payments from the mortgage lender.

I found that the 20 and 30 year loans have the same interest rate but the 15 yr loan will drop the interest rate by 0.5%, increasing my loan only by <$200 than the 20 year loan. Which loan makes more sense? Doing the math and learning what the interest rates paid would be, it seemed like 15 year loan makes most sense. But I have been feeling the extra stress lately, realizing that my emergency fund is nonexistent thanks to the new condo purchase.

I chose the 30 year loan. This article by Len Penzo made me realize that since my biggest concern is the lack of emergency fund, having the lowest payment allows me to build up my emergency fund much faster (we are talking ~$500/month). Although I am selecting the lowest monthly payments available, I still have the option to make over and/or extra payments.

Other major consideration was our intention of the condo. Our goal was always to live in the space for a few years, take the time to make the upgrades, and then rent it out when we finally move to a single family home in the suburbs. We know that the rental prices of similar units in the area go for about $1700 which is less than the monthly payment for the 30 year loan, about the same as the 20 year loan, and a few hundred dollars less than the 15 year loan. If the economy continues to stall in 2 – 3 years, which I think it might, we may try to refinance then when the upgrades should have improved the appraisal value and the emergency fund should be built up.

I find that when it comes to most of my money debate, I am risk averse and will almost always choose to beef up my emergency fund. Now only if I can put emergency fund over silly purchases…

Love,

C

Case of the “I want”s

Although I may have had an epiphany with my mind shift, it doesn’t mean that my desires to spend money have disappeared. As I try my best to ensure I have enough cash for the down payment and closing, I am seriously being hit by the case of “I want”s.

I want a new wardrobe. After recent purge of stuff to eDrop Off for sale, my closet seems so bare. I hope that I will feel better once I have received my sales check.

I want a new work purse. Mine is literally falling apart at the seams. I would love a Neverfull but, at that price tag, I am hoping that I want it only because I am feeling deprived of spending. I carry my laptop with me everywhere so it would be silly to purchase such an expensive bag. If anything, I feel like I should sell some of my purses since I have so many (although, none are daily work suitable).

I want new furniture. The new place is a totally different look and feel than my current place so I need new stuff, right? No, I have decided that until my EF is fully funded again, I will hold off on spending any money on decorating. That will also give me some time to utilize and analyze the space and design an intentional living space around it.

I want expensive ingredients. I want truffles and exotic produce and fruits. But I am trying to rely mostly on existing food in my pantry/fridge/freezer and purchasing only necessary ingredients.

I want to eat out. I want to enjoy the few lovely days I have left in downtown (I will be “beached” as of next Friday) and eat the fancy foods around my current client site. But I am being committed to bring lunch everyday, even if it may seem odd. Today I had hot crab dip with pita chips.

I want a vacation. I haven’t had a vacation since end of 2011 holidays. I have had a lot happen in 2012 and I deserve a vacation. I thought about using my miles to jet off somewhere but vacations always cost money. I will possibly reward myself after fully funding my EF by taking a trip somewhere.

So many things I want… but I am telling myself, I want a place of my own and that will bring me more joy than anything I’ve listed above. 🙂

Contract Submitted and Accepted!

Wow, for the three of you who actually read this blog, you may be starting to pick up the fact that my life moves fast. Less than three weeks since I have started the condo search, I have submitted an offer that was accepted after some negotiation!

I really didn’t think it would move so fast but the properties were starting to move a lot faster and there were many that were listed that I wanted to go and see, only to find out that there was already an offer in place. This kind of lit a fire under my butt and had me pushing my real estate agents hard to provide quick showings.  I had found a fairly established agent at first, then felt that he was too slow. He would tell me he’d contact me Wednesday, only to have me contact him on Thursday, and I would finally get the information I had requested on Friday. After a week of this and missed properties (yes, there were ones that I really wanted to see that got sold during this week), I fired him and got a new agent. She’s young and hungry and real “hustler” as my friend who referred us described.

On our second day of showing, this was the first building to see. I fell in love with the building, saw it again twice the next day and submitted an offer the following morning. It was originally priced higher than my goal price but, thanks to my agent’s tough negotiating, we ended up with the condo at just below my maximum price with appliance warranty.

So the real stressful part now begins. I have to make sure that the mortgage approval goes through without any hiccups, have 10% down payment + closing costs (approx $7,000!!!), and move out in a short period of time (4 day window). I will of course document the process so that my readers can know what to expect of the stressful process.

Love,

C