July has been a busy month for me, and I haven’t been posting as often. My absence was influenced by many factors, but the major one was the fact that my husband and I bought a home, and we’ve been devoting our time and energy to preparing for our big move.
What About Saving $40,000 For a Home Down Payment?
I’ve talked at length on this blog about my goal of saving $40,000 for a home down payment, and the last time I updated my house fund, I’d only saved $33,000. Many of you may be wondering how I was able to swing a home purchase if I hadn’t achieved this goal yet. No, I didn’t go with the dreaded 5% down payment. The answer is simple: the home was affordable enough that $33,000 was sufficient.
I’ll go into the nitty-gritty financial details in a later post, but I assure you, all is well on the financial front.
Taking Our Time House Hunting
My husband and I weren’t even technically looking to purchase a home. We weren’t in full home hunting mode, we weren’t viewing properties with every spare moment of our time. Back in April, I’d applied for mortgage pre-approval and contacted a realtor to look at one very specific property that was well within our price range, but it had sold before we could arrange a viewing.
With my mortgage pre-approval and realtor in place, my husband and I adopted a casual approach to home hunting. We weren’t in a hurry to buy a home, and I had a very clear vision of what we were looking for, so many, many homes were nixed before we ever set foot in them.
I didn’t want to waste our time viewing homes that I knew wouldn’t work for us, and, secretly, I knew the longer we waited, the more we’d have saved.
Over the next three months, we viewed four properties. He loved one, I thought it was too far from the city centre. I loved one, but it’s backyard and basement were underwhelming. Two were a complete bust.
Finally, we looked at the house that would become our home.
Why We Bought a Home Ahead of Schedule
While my husband and I weren’t officially house hunting, I had been watching real estate listings in this city the past three years. Over those three years, I got to know what was available, where our ideal neighbourhoods lay, and how rare it was to find a home that both my husband and I would be happy with.
This home popped up in my email alerts in early May, but I discarded because it was on a rather busy street. It wasn’t as busy as the street we were currently living on, but it wasn’t a quiet, peaceful residential side street either.
The home had been on the market about 40 days when I pulled up its online listing for a second time and decided to schedule a viewing with our real estate agent. I was skeptical of this home when we pulled up to it on that early Friday morning, fresh from a viewing of an underwhelming townhouse with a postage stamp balcony as the only outdoor space.
But as we walked through the property, I was surprised to find that it was in very good shape for the asking price. The kitchen and bathrooms had been renovated in 2000, and although they’ll need renovating again, they are entirely serviceable for the short term. The charming front room and dining area had original hardwood floors and a fireplace, and the partially finished attic was just begging to be turned into a master suite.
The busy street also turned out to be not so busy. There are no bus routes that run along this street (though many run on nearby streets), and it’s not a main thoroughfare for large vehicles, so the street noise is kept to a minimum. At the same time, there is enough pedestrian activity that I would feel comfortable walking home late at night from the bus stop. The location is also excellent, close to a grocery store, coffee shop, farmer’s market, and about 15 minutes walking to all major North End hotspots.
My husband could also see the potential, but for different reasons. He, a former professional landscaper, was taken with the small backyard that was bursting with plant life, and the partially finished basement, ideal for his wine-making hobby.
At this point in the heat of early summer, my husband and I had been attending open houses for over a year. He and I value different features in a home, so finding one that checked all of our “must-haves” had been a challenge. This was the first home in about 20 that we were both very excited about. We could both see the potential to make a home here, me because of its excellent location, walkability, and price. Him because of the yard, the basement, and the renovation potential.
I didn’t know how long it would take before another home like this would come along, which is why we decided to buy this home, even though it didn’t fit with our schedule.
The Vetting Process
It was a sunny Friday morning when we viewed the home, and we were about to set off on a three-hour journey to New Brunswick for a camping trip. We spent that car ride discussing the various pros and cons of the home, and that Sunday I sat down and made a list of the property features. Here are the specifics:
- 1,000 square feet
- Two bedrooms, one bath
- A partially finished, walk-up attic (future master suite)
- A partially finished basement with three piece bath and separate bedroom
- A fully fenced backyard with storage shed and a variety of plant life
- Parking for one vehicle
- Fireplace (not working)
- Original hardwood floors in some rooms
- Forced air oil furnace (ideal for conversion to air to air heat pump)
- Reasonably new roof and some windows, updated wiring and plumbing (2000), insulation under siding, LED lighting
- In a good location near parks, restaurants, transit and grocery stores (walk score 76, transit score 67, bike score 97)
- On a medium-busy street
- The home is 87 years old
I also obsessively ran the numbers on this home, modelling a future budget, calculating closing costs and figuring out if we could make this home work with our finances. The verdict was yes, it could work, but it would hinge on the selling price.
Our Offer, Counter Offers
The home was originally listed at $289,000. This was out of our price range given our current home down payment fund of $33,000. The home had been on the market for 40 days and had one offer that had fallen through. My husband and I knew that it was unlikely we could convince the homeowner to lower her asking price enough to get an accepted offer, but we decided to try anyway and made an offer of $265,000.
The homeowner countered at $279,000, which was still too high for us. We countered at $270,000 and made it clear that while we loved the home and were excited to restore it to its original glory, that is the absolute most we could pay. We prepared ourselves to walk away from the home.
Fortunately, the seller had a soft spot because she accepted our lowball offer. After that, we set a closing date, and the rest was a whirlwind of appointments and fees, which I’ll go into detail in a later post.
Finally, on July 27th, we got the keys to our home.
Topics to Address in a Later Post
Of course, there are a great many topics that I didn’t address in this post, but you can expect me to go through them in detail in upcoming posts, including:
- Our decision to buy a small home
- How buying a home affects our financial goals
- A complete breakdown of our mortgage and what this home did/will cost us
- How we unlocked instant equity by paying less than this home is worth
- A complete breakdown of our closing costs
- The due diligence we did when buying an old home
- The timeline of buying a home from viewing to closing
- Why we won’t be paying off our mortgage as quickly as possible
- A complete list of the renovations we’ll undertake in the next five years and how we’ll pay for them
That said, if you have any questions, feel free to ask in the comments below.
Woot! We’re homeowners!