The Results

So I spoke to my mortgage broker, finally, and it’s as I thought: alone, I qualify for very little. But he gave me very good advice on how to spruce up my tax returns, and how to make myself look as a better candidate for a mortgage perspective.

The house plans are still on. The “how I’ll get there” plans are going to likely change, but right now, I’m learning the importance of keeping my options open. There’s a lot to be done here, there’s a lot of work to do. But the good news is, the broker told me, “Keep doing what you’re doing; you have a great and responsible plan.”

That was encouraging. I’ll be honest, I don’t feel quite so responsible when it comes to my finances, because I have a very pervasive – obviously!!! – traveling habit that does tend to eat into my finances, more often than not. But then again, I’m looking at where I am in my student loans, where I am as far as debt payoff, and I realize: I am doing miles better than I think. Even if it means depriving myself of a few things, I more often than not get to my goals. I finally opened my first IRA, which I’m pretty confident I won’t be able to fund fully within the calendar year, but is still a hell of a lot better than having no IRA at all. I may qualify soon for my company’s 401K plan. Also not much, but also very good. And these are all pretty fantastic benchmarks, because not for nothing, but how many people in their twenties are in the position of contributing something to their IRAs?

No matter how broke I’m living now, no matter how little it seems I have insofar as cash-on-hand, I am doing really, really well in ensuring my financial future.

And that? Is good news.

Kat G

Homebuying Adventures: The Pre-Q.

Prequalification for a mortgage. Necessary first step regardless of whether or not you ever use said mortgage, and nothing could be more important if you’re setting out to buy a home…of any sort.

Well, that’s the threshold that I’m about to cross, having sent off my materials for the prequalification stage of things. And I’m a little terrified, and a whole lot of anxious, because this makes the entire process very, very, very real. Yeah… I’m staring right down the barrel of homeownership and it’s more than a little scary. There’s a lot of financial outlay on the line here, and a mortgage ties you up for 30 years minimum. More or less depending on your finances and refi situations.

So, what goes into a prequalification packet? I can tell you this from both sides, having put together the documents for some of my first job’s tax clients, and now having to do so myself as a potential buyer. To prequalify for a mortgage, you need:

1. Tax returns

2. Paystubs or W-2s and a constant, consistent history of employment

3. ID

4. Bank statements

5. Credit score.

Yes, it’s personal as hell, but think about what a potential lender wants to know. The lender wands to know your spending habits – bank statement – which will tell them just how good you are with the money you earn, how far it goes, etc. W-2s – are you employed? Are you making the income that will back this mortgage? Tax returns: are you paying taxes and are you on time with them? In other words, they want to assess you as a risk factor. What sort of a risk is the lender taking with their money, shelling it for you to have the house, and will they get to see that money returned?

Now I do worry for my own prequalification result. Why? The student loans. The credit cards I’m not worried about; I am diligently working on those and, for once, have my spending under control (and that, trust me, is an accomplishment). But the student loans are a very major impediment; I have one loan with a steady payoff target looming close in sights, but there’s another sitting in deferment. But – if I have one loan to worry about rather than two, then I don’t foresee an issue in my budget in pulling a mortgage as well.

The problem is, of course, will a lender see it that way?

Fortunately, I have a mortgage broker whom I’m working with, and he is fantastic in answering the questions that I have.

The one thing I cannot tell you folks enough, especially if you’re my age and only now climbing out from under the loan quagmire is this: until you ask you will never actually know. Do I know if I can pull a mortgage within a couple years on my own? No. I don’t. I think I might, but I am an accountant, not a mortgage broker. I can stretch a small budget to where Nadia Comaneci would be impressed, but would a lender see it that way? I do not know. But what a mortgage broker can also do is put together a plan.

That counts for a lot.

Find a mortgage guy, folks. Even if you’re not buying a house right this minute, if you at least put enough together to get an idea for how much you qualify for, that’s one big piece f the jigsaw puzzle in place right there. Down payments, interest percentages – that’s all a whole other gamble. But first, find out what your financial picture looks like from the mortgage perspective.

I await my own results with trepidation, I must confess, but it will go a long way in me getting my own place.

K.G.

House vs. Apartment?

Considering my price range and affordability, I have to ask whether or not an apartment would be better than a house as a starting point.

So let’s think about the pros and cons of each:

House

Pros:

– No immediate neighbors on top or next to you, unless you’re buying an attached property

– Backyard – plant a garden, hell yes.

– More space

– Less restrictions on what you can do with the property (ideal for handyman types)

Cons:

– Higher property taxes

– Bigger maintenance expenses (boiler goes bad, termite damage, roof replacement…the cost can be outrageous)

– HOA issues (if applicable)

– Price (Really? 200K+ fora 2br split-level? Are you out of your mind, NJ?)

– More repair/insurance issues in case of major natural event (flooding, snowstorms, hurricanes)

– Building. Believe you me, I know that if I do not build quickly, it will become a complete and total drag. I want to enjoy the renovation projects if I have any, not have them become a headache in their mere existence.

Apartment

Pros:

– Comparable/less in price (and in the area where I’m looking, it’s pretty damn cheap to buy a co-op)

– Much less repairs/renovations

– Less maintenance (flat fee usually handles it)

– Utilities often included

– Less property taxes

– I grew up in apartments all my life and know how to handle most apartment-related matters.

Cons:

– Neighbors

– Co-op board apps/condo association fees

– I grew up in apartments all my life, and am just a little tired of apartments.

This is the thing: when I began looking at houses, I thought that finally, I will get out of living in apartments all my damn life! But truth be told, in thinking so, I have cut off a massive chunk of my own market. There’s nothing wrong with living in apartments, if I choose one with the right price, area, and square-footage.

Now. So far I’ve been browsing short-sales in NJ far as houses are concerned. I’ve seen some gems in there, some houses that need updating, need some new drywall in some places, etc. However: again, my finances are limited. My student loans may well be dealt with partially by the time I’m ready to close on the place, but I would like to get as much for my money as I reasonably can.

Which means that I need to come back to the drawing board for the search. Yes, I can still be a handywoman in an apartment. But it’s so much less hassles than a house. As a starting point, a co-op 1BR may well be a good place to start.

What I also need to think about is the location. NJ property taxes are higher than NY right now. So I need to really consider the possibilities. I get a credit if I work in NY but live in NJ, but that credit may not be worthwhile if the overall rates are higher. That creates A Problem. Should I continue to look in NJ? Possibly, if there’s a good bargain to be found; NJ has a lot more bang per square-footage than NY. But I also need to think about the areas in upstate NY. I can buy a house in Newark, but the crime rate gives me pause to worry. For the same money, I can get an apartment in New Rochelle, which I’m familiar with, with my mom having worked there for quite some time. In both cases, a car is required. But the value for the money is drastically different.

So what’s it gonna be?

Not sure yet. But I think that apartments need to figure into my new dwelling decision.

K.G.

My Next Biggest Endeavor

Well, you know I have big ideas. So far, they had ended up panning out, to whatever degree that may be. I got my books written, and they’re doing reasonably okay, for the lackluster advertising – which is 100% My Own Fault. I became a pretty decent photographer, now with magazine credits to my name. I said I’d see the world and I would.

But right now, in light of the fact that my mother is about to retire in a couple of years (which will fly, if the past few are any indication), and because I have to really think about how I will survive in a city that’s pricing out anyone who’s under a certain income range, I have decided to take a couple of Very Deep Breaths and plunge myself into a new endeavor. I may have touched on it before, more or less speculatively, but right now I’m getting ready to make it A Real Thing either before Mom retires or shortly after..

I’m going to buy a house.

Yeah. It’s a huge thing. It’s a very huge thing, considering that 1. student loans are in the picture, and 2. for all my realtoring earlier, I know next to nothing about homebuying. This I will partly blame my brokerage on; I know the laws concerning the homebuying side, but I have never gone through the process – obviously – and the bulk of my real estate experience had focused on renting, not purchasing. And of course…I do not know how equipped I am to deal with the financial rigmarole of it all, especially considering that, for obvious reasons, I will not be living in NYC itself. Within the area, yes; I know very well that because my job is currently pretty damn awesome, then I should keep it. But I cannot live in NYC and that is a sad thing.

You know what this city means to me. I mean, can I really, honestly have any home but NYC? Truly, I’m kidding myself if I think to contrary. However, I think that living somewhere in New Jersey or in the Putnam Country/Westchester area of NY would be far friendlier to my finances, and far quieter in regards to everyday life. I have all the excitement at my fingertips in the realm of music and traveling, but I want to come home and know that no one can take it away from me. That this is something my own, that I can work on it and make it better, and maybe, eventually, bring someone else in who will take as much pride in having this thing as my very own as myself. Whether Mom will live at the house with me, I’m not yet sure. She talked about retiring to somewhere cheap and warm, so who knows if she’ll even stay in the Northeast… I’d like to have her with me, but a huge part of me feels that this is going to be my journey first. If she joins me, also great.

So, in part because I’m of the newer generation, and because I think that it is something that people need to know how to do, I have decided to blog my journey to homeownership.

So far, what have I determined?

I determined that I will likely not be able to afford much. That’s just how it is, and I’m aware of it. But I also determined that I would like something that needs some updating and/or work. I like to build. I love to build, actually, and all the furniture I have right now, including the bedframe I’m sleeping on for the third year, is all put together by my own hands. Instructions for IKEA never bothered me; I figured out how to build stuff up on my own when I was about twelve. So I wonder: just what and how much can I do if I had my own house to fix it in?

So that is for sure: I want something that’s Not New. Something that’s been around. Outdated appliances? OK. Bathroom needs a new faucet? OK. Floors need to get a spruce-up? Bring it. Basement needs to get cleaned up and finished up? Sure. Transform a laundry station into a Laundry Station? Make a walk-in closet? Build the book drawer stairs I keep seeing on Facebook? Sure. If the foundation is sound, the wiring is up to code, gas is working, boiler is sound, and the roof doesn’t leak – I can do the rest.

The rest becomes a matter of working with people who can get me the house that I want, for the least possible amount of money, with the least possible hassle. This will take a while, I know. This will be painful, likely financially too. But… It will pay off. I know it will. I will make it so.

That and…I know that when my  friends come through town, I would like to offer them a homecooked meal and a crashpad. :)

K.G.