Buying our first home: Part 1

I'm sure some people - those organized, responsible people who have their shit together - enjoy the process of buying property. It's certainly exhilarating. There are moments of excitement and happiness. But so far, mostly what I've been is exhausted. Tim and I weren't planning on buying a place, or even looking really, until next spring. We just got through the wedding, which was so expensive. But we were out for a Sunday walk and saw a house for sale only a block from where we're living now. We thought we would check it out on MLS.ca just to see what the market in the area was. Only to find out it has a woodshop - a seriously nice woodshop. So we had to go look at it in person, right? I called the realtor listed and set up an appointment. Tim got in touch with an acquaintance who had offered to represent us when we did start looking to buy.

Lesson 1: The seller and the buyer don't usually have separate realtors.

What we should have done was call our guy and ask him to show us the house. He would have gotten in touch the the seller and set up the appointment. I had assumed both the buyer and seller had realtors, but when the two of them realized our mistake, it got awkward. They were both trying to be polite and offered to just let the other person show it, but it was obvious we had stepped on a few toes. We wound up seeing the seller's realtor and having him show us the house. I'm still not sure this was the best decision. While he seems like a really nice guy, he doesn't seem that motivated to answer the specific questions we've asked about the house, like closing date and actual cost. I guess I was expecting it to be more like the shows on HGTV, where your realtor tells you what he thinks the place is actually worth and gives you tips on getting the cost down. This guy priced the house to begin with, so he's giving us very little assistance in that regard. 

We did go to check it out, though, and there's more than a little case of puppy love. The woodshop is incredible. It takes up about half of the three car garage, but there's more storage in a shed out back. It has a wood-drying kiln. The shop itself is heated and ventilated. The whole garage is insulated. The house itself is a weird layout, but it's the right size for us at approximately 1,350 sq ft. The work that's been done inside is gorgeous. Some hardwood floors, great paint jobs, beautiful baseboard and crown moulding, a gorgeous custom kitchen. The lot is big, really nice, and in a great neighbourhood close to work.

Under the advice of friends, we ran numbers like crazy. The asking price is $259,900. We hope we could get them down to at least $250,000. I took the standard mortgage rates for a $250,000 mortgage and did all the calculations. 5% down would be $12,500. Okay, we could get that together. At a five-year fixed term rate of 3.59%, the monthly mortgage payment would be $1,131.49. We've been paying $1,100 per month in rent, so that doesn't really change anything. The mortgage insurance and property tax amounts would go on top of that, say another $300 per month. That's doable for us without any real stretch of the imagination. We would have to be a bit more responsible, but we're pretty irresponsible now, so there's room. So we went in to the mortgage meeting at the bank feeling pretty calm - our income can support the purchase and ongoing payments on a home like that.

Lesson 2: Your income only counts for so much. Your debt counts for just as much.

We have quite a bit of debt. To get a mortgage, your debt payments - including what your mortgage payments would be, because that is a debt payment - have to be less than 43% of your after-tax earnings. You get a little bit of wiggle room, but they'd prefer you be under 43. With both of our cars, our loans, our lines of credits, and Tim's student loan, we were around 45%. Oh - and here's another kicker. If you have a line of credit, they calculate your debt payment as the total you would have to pay if you maxed out your line of credit - not the payment you currently make. It's because you could spend everything out of that tomorrow if you liked. So annoying bank man, who told me years ago that it didn't matter whether he gave me a high approval limit or not? You lied, you jerk. It matters.

So we started making adjustments to get that number down. We can consolidate my loan and Tim's loan together. It's smart anyways to start combining our finances. We paid off Tim's line of credit with mine and cancelled his. We're going to drop the limit on mine. That dropped us a bit, but not enough to make the bank comfortable. The only other place that could give was to sell my car. It's been an option on the table since we moved to Lakefield to get our finances in a better place, but I was resisting because I'm used to the sense of independence that having my own car gives me. Unfortunately, sacrifices have to be made. I'm not making them gracefully, though. I try to catch myself, but selling my car instead of Tim's kind of gives me a bit of a "Why me?" complex. I need to get over it. Better decisions!! We don't really need two cars, anyways. I walk to work most days and Tim can drive me most of the time when I don't. We go in to Peterborough a lot, but we don't really need to and probably shouldn't. So I started the ball rolling to sell the car.

It's a 2008 Pontiac G6 GT coupe and I love it. It's pretty, it drives great. It's had a bit of a knocking in the front end that I've been ignoring for a while because my mechanic told me that it was probably the grease redistributing weirdly in the steering column. Apparently it's a problem in Pontiacs, and my Dad confirmed that their G6 also has some front end noise that they've deemed to be harmless. But it had a recall out on it for the shift lever anyways, so I took it in to the GM dealer in Peterborough to have the recall done, the fluids changed, and the safety and e-test done.

Lesson 3: The safety expires after 30 days. Don't get one done until you have a buyer.

I didn't really expect there to be any problems with the safety. However, what I think isn't always the case, unfortunately. I just heard back from the mechanic and there are multiple problems. Both upper strut mounts need to be replaced, as well as the right side lower arm bushing. That work, plus the necessary alignment afterwards, has been quoted at $1,162.06 plus tax. Apparently (and weirdly) it needs a new windshield due to sand blasting damage. No clue what would have caused that, but they're saying that's around another $350. Add the cost of the safety at $94 and the oil change and fluids at $39.95, and you have a total bill around $1,900. Ugh. Makes my stomach drop. We're supposed to be saving money to buy a house - not spending it! I've sent a message out to a mechanic friend of mine, I'm hoping that he can do the work for less than that. Sometimes dealers can be priced high. Until I hear back from him, I'm just stewing and stressing. Large financial decisions are not fun.