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my last post-I bought a house.


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2012 May 28, 1:12pm   10,876 views  24 comments

by edvard2   ➕follow (1)   💰tip   ignore  

I've been on this and other similar sites for a long time. As in probably since 2004 or so. I was on here for perhaps many of the same reasons as many of you- that the cost of housing is ridiculously expensive, and particularly in the Bay Area and of course other coastal areas. I moved to the Bay Area around 12-13 years ago with about $100 to my name. I worked my way up the ladder career-wise and despite making more and more money, the housing bubble kept going up and up. I then started looking for information about real estate and its then seemingly irrational pricing, which led me to this and many other sites that were full of people who also shared my thoughts and frustration. In hind-site, I realize that the housing bubble was a pivotal part of our history, when many of us were struck with the realization that despite leading rational, financially responsible lives, the real estate market was prone to behaving irrationally.

I spent years on these forums. Years of frustration and irritation perusing. Reading story after story from those who simply wanted to live an ordinary, normal life with an ordinary job and the means to afford an ordinary house in which to live a decent life. In places like the Bay Area houses have become a bit precious. The cost of even the most basic house has become almost obscene.

Where am I going with this? We spent the better part of a decade saving. We still drive the same old crappy cars. We seldom ate out. We saved and saved and as we did so the bubble came and went. Prices rose and fell. The market went from white hot to cold.

Bottom line: a house came up for sale that was within our price range, we bid and won. In an instant we went from being renters to home "owners" in an instant. I say owners in parentheses because the bank still "owns" the house. But nevertheless we are now "owners" of a house that we will move into and live in. I do not nor will ever view it as an investment. I've always maintained that stocks and investments in the general market are far more effective in regards to overall return. I still believe this. The home we bought is a place to simply live in- the same as the home we rented for over 10 years except we pay it off over a long period of time.

Now what the market is doing now or will do in the future is seriously not my concern. I suppose that is why this is my last post. So now I begin a new phase of my life: working as I have, paying off a mortgage, and saving for retirement as I always have. Am I smart for doing what I did? I don't think there is a proper answer for that: we simply bought what we could easily afford and bought what was appropriate for us.

Good luck to the rest of you who also want to buy a house.

#housing

Comments 1 - 24 of 24        Search these comments

1   inflection point   2012 May 28, 1:41pm  

Good luck to you and your family.

2   Patrick   2012 May 28, 1:56pm  

No need to make this your last post. We'd all be very interested to hear how things turn out.

3   WillyWanker   2012 May 28, 3:18pm  

I hope you and your family enjoy your home. There is a great feeling when one can paint and make structural changes for a home if one has bought it at a price one can afford. If you are planning on being there for a long period of time, you won't be hurt.

Please keep us posted on your purchase.

4   realitycheck   2012 May 28, 4:52pm  

Congrats for becoming a home loaner.. I too bought a house recently (Still waiting on escrow) and became a home loaner.

5   BayArea   2012 May 28, 5:02pm  

I'm puzzled as to why this has to be your last post

6   Kiki   2012 May 28, 11:11pm  

Congratulations!

7   TMAC54   2012 May 28, 11:40pm  

Congratulations.
The financial difference between owning and renting are harder to discern than they were half a decade ago. All existing owners will hold out on those overpriced units as long as they can. And institutional owners will sell units as the market will bear. Not everyone on this site is intent on buying for the purpose of enjoying a 25% appreciation rate by next year. If incomes remain secure and you have not committed over 30% of your gross to debt service, you SHOULD at least break even by 2020.

I also hope you keep us posted.

8   bubblesitter   2012 May 29, 12:03am  

Why last post? It'd nice to know how do you feel few months from now compared to renting? It definitely helps knowing the feedback from person like you then from Realtors. Congrats. :)

9   edvard2   2012 May 29, 12:53am  

Thanks for the kind comments guys. This is of course was a big decision. Like most big decisions there are risks and part of making that decision is having the understanding of them and accepting it. I guess to me it feels really different now. A lot of things change in perspective.

I got an awful lot of useful information from this and other sites, or at the very least got to share thoughts and opinions with others in a similar situation. Back in the "Bad ole' days" of the bubble it was encouraging that MANY people felt the same way and that what're more, many were also those who had similar opinions.

The one thing for sure is that real estate to a great extent is an emotionally charged topic and one heavily tied to basic human psychology. Mostly because it has been upheld as a symbolic representation of stability and permanence. People like that idea and therefor why so much emphasis is placed on it. In places like the Bay Area these feelings are amplified due to the extreme volatility of the market here.

Ultimately I hope that the market will return to a level that is stable and with a close relation to real incomes. Where if you work hard, save money, and do your homework you too can afford a decent home in an area of your choice. This in turn is good for everyone.

Anyhow, I hope that all of you who are searching for a home find what you want. Good luck to you all. I'll check in every once in awhile.

10   SJ   2012 May 29, 1:27am  

Congrats and keep in touch to let us know how it goes for you. Me- I am waiting another couple of years to see what happens at work and how stable my job is. Figure it has been almost 1.2 years renting here in the bay area and in spite of rent increases for me still cheaper to rent.

11   Tenpoundbass   2012 May 29, 2:38am  

The bank is going to grind you down to a nub by time you actually close.
Closing on my house was the single most stressful event in my life. It's like it was their job to give me a mental wedgie every day for the 45 day duration. One loan officer calls and asked for paper work, then my mortgage broker would call the next with second hand requests, followed by another day a complete different person calling, claiming to be the new loan officer, and this person asks for every document I've already sent in, with an urgent tone, suggesting that I haven't sent in any paper work yet. Several of the days really seemed like deal breakers.

Then rinse and repeat, and start the whole process all over again. What sucked was, after each and every call, it was left off like, I have met all requirements and see you closing. Only to be blind sided the next day. I actually wasn't a 100% sure that the loan was going to go though until the day of the closing. That's how hairy and precarious the whole process was. I really expected after the first bout of paper work, to not hear from anyone until the day of the closing, or follow ups on Insurance, inspection and other related requirements. All of which was cinch compared to the finance scrutiny.

12   CrazyMan   2012 May 29, 2:41am  

Congrats.

Where did you buy (if you don't mind telling us)? Fremont? Milpitas? IIRC you were in the east bay.

13   Tenpoundbass   2012 May 29, 2:45am  

And for the negative posters, I'll say that my house is worth 119 down from the 160K I paid. However, it doesn't matter, I couldn't rent this place for what I'm paying in Mortgage. Also I'm enjoying the year end escrow refund every year.

14   bmwman91   2012 May 29, 3:29am  

Hey edvard, congrats. I am glad to hear that you got what you wanted. You certainly waited a long time, and based on your posting here, I have to assume that you paid a very reasonable price for a house that you actually wanted. Good job! You serve as a good role model for others that are baffled by the housing market's irrationality...proof that one just needs to keep control of one's emotions and wait a while for the proper opportunity to appear (and spend the waiting time preparing financially).

15   edvard2   2012 May 29, 3:34am  

CaptainShuddup says

Then rinse and repeat, and start the whole process all over again. What sucked was, after each and every call, it was left off like, I have met all requirements and see you closing. Only to be blind sided the next day. I actually wasn't a 100% sure that the loan was going to go though until the day of the closing. That's how hairy and precarious the whole process was

Well, so far I've had a pretty good experience. There was indeed a TON of paperwork. It took about a month to get through all of the pre-approval stuff. Once that was done, it was easier. I'd also say that my experience with the Realtor we used was also positive. With any profession there are good and bad apples and luckily ours was really professional. The biggest pain in the ass is moving all the crap I've managed to accumulate.

16   burritos   2012 May 29, 3:45am  

congrats. No reason for last post. I have bought several SFH, and still post here intermittently.

17   EBGuy   2012 May 29, 4:17am  

edvard2, Give us a clue at least! I'm assuming you didn't 'buy for school district' as you've mentioned in the past that kids weren't in your future. At least a city for cryin' out loud... Milpitas... or Hayward?

PS - Congrats. Does it have a pit for working on cars?

18   AJ1201   2012 May 29, 4:18am  

Call it Crazy says

CaptainShuddup says



It's like it was their job to give me a mental wedgie every day for the 45 day duration.


I'm just trying to picture what the "mental wedgie" actually looks like???

OMG LOL.........I am going to have nightmares for a few months now....

19   dublin hillz   2012 May 30, 2:18am  

Congrats, man! We also bought a little over 1 yr ago in dublin. So far things have been awesome.

20   elliemae   2012 May 30, 4:05am  

I've been a homeowner since the early 90's. Bought the place in which I currently reside in 2001. While I "lost" $200k in phantom equity, I've still been able to keep my head above water by not buying above my means and paying my bills.

Congrats on the purchase. Sometimes I'm not thrilled that I own (maintenence time) while others I'm happy as a pig in shit. Overall, it's the best place I've ever lived and I hope to die here.

Just not soon.

21   Payoff2011   2012 May 30, 8:22am  

Congrats. I’m glad you were able to find something that worked for you. I’ve been reading, and occassionally posting here for several years. I seriously did not know there was a housing bubble until it crashed, because I had not paid attention to housing prices since the last time we bought, in 1991. Hubby and I are true homeowners now, having paid our last P&I in November 2011.

Here is my input:
Owning may not save you money, you will spend on decorating, replacements, remodeling, landscaping, etc. The key is buy what you can afford, and you did that.

A benefit to owning is the predictable housing cost. A fixed interest loan keeps the P&I level, though your tax & insurance will increase (ours doubled in 21 years).

My personal opinion FWIW, is avoid cash out refi unless you use the funds for something big that needs replacing and you don’t have or don’t want to use your cash. I would not refi a mortgage to update a kitchen that functioned. To me, that’s a want, not a need. We did a cash out refi once, to pay for a new roof. Roofs are expensive. I can’t speak about HELOC, never had one.

If you plan to stay in the home long enough to pay it off, be aware that you and your home will both be older. Home maintenance costs will keep increasing, and your housing needs will change at different stages of your life.

I wish I had started in the early years of all our mortgages, to pay extra on the principal. Once we started doing that, it makes a huge difference in the amount of total interest paid and in the payoff date.

You are now free to get any kind of pet you want (well, within municipal ordinance). We had a 100-lb dog for 12 years. Try that in a rental!

Enjoy.

22   PockyClipsNow   2012 May 30, 8:32am  

Lots of bad advice here.

I recommend getting HELOCed to the hilt and useing those funds to buy as much RE as the banks will finance. Then HELOC those houses into more houses. When you think the house of cards will fall (like 2006) then sell everything. If prices go down just squat and/or rent skim for free for 3 years then buy another house after forclosure and repeat.

Pretty much this is only way an average Joe can become a millionaire in a 3 year timeframe or so without working at AAPL or FB.

23   FortWayne   2012 May 30, 8:50am  

PockyClipsNow says

I recommend getting HELOCed to the hilt and useing those funds to buy as much RE as the banks will finance.

I know you are joking and all. But in seriousness you can't HELOC if you owe more than the house is worth... And banks aren't going to take chances on someone who has giant payments still.

24   PockyClipsNow   2012 May 30, 10:22am  

WELLLL its true I'm joking. BUT at some point the HELOC gravy train is gonna open up again. Who can doubt that?

I remember meeting tons of people during the bubble doing this exact plan. "Im gunna pull sumore money outta the house and buy _____". Havent heard that line in years. Also I havent seen a pickup truck with a new granite counter on the freeway on its way to be installed in years. I conclude there is a correlation between granite counter installs and HELOC withdrawals!

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