Reflections on Home Ownership: 6 Months In

I’ve now been a homeowner for about six months and it has been a little over a year since I started the home searching process. Am I happy with the condo I have now? Absolutely. Do I think that I should have started the home searching process last fall and actually purchased a place? No.

Why do I think I wasn’t ready last fall? I didn’t have enough in savings. Here are what the numbers looked like:

  1. Down payment savings: $24,709.14
  2. Next vehicle: $3,213.54
  3. Vacation savings: $2,458.49
  4. Emergency reserves: $18,037.51
  5. Taxable investments that are currently at a loss: $2,901.60
  6. Miscellaneous savings that would take some significant effort to retrieve: $7,005.37
  7. Taxable investments that are currently at a long-term gain: $2,587.44 (selling would cost $168 in long-term capital gains taxes in April plus $9 in commissions) – post-selling value would be $2,578.44
  8. Auto loan payments: $858.94 (not available – will use to make the last payment on the auto loan this month)

That adds up to:

  • Emergency reserves: $18,037.51 (~6 months)
  • Money available to buy a place: $33,411.72 (down payment savings, vacation savings, taxable investments currently at a loss, taxable investments at a long-term gain)

So when I first started looking at buying a place, I had only $33k in cash available to me. But a realistic budget was $250-400k for a condo. $33k would only make a 20% down payment on a place worth $165k and that is ignoring closing and moving costs. The first places I looked at were clearly not places I wanted to live (though they were quite nice) and the process was quite frustrating. My parents gave me a sum of money that made the decision actually a viable one, but I really shouldn’t have gone ahead with the process last fall. Instead, I should have re-signed my lease and kept on saving for another year. I would have had about a $73k down payment fund right now and I would have had plenty of time to look for a place. I would have saved myself a lot of stress, about $4k in moving costs, and many months of lost social life. (All those dates I went on in the first half of 2012? I think I would have had better luck had I not been so stressed out with the condo hunt. That said, I am thankful for my now-boyfriend and wouldn’t change that part at all.) Sure, my rent would have been almost as much as I’m now paying for my condo per month, but I would have had more time to find what I was interested in and I would have known better questions to ask so I didn’t end up with a super pushy real estate agent who just wanted a quick sale.

Things worked out in the end, but I don’t think that I was ready financially when I started the process. If I’d lost my job, things would have been disastrous. Surprisingly, that’s about how things went when I bought my car as well…

I always, like Krystal, thought that I would buy a place with someone. I also thought I would be at least in my late twenties before I even considered buying a place. After university, the pieces fell into place quite nicely: I finished university somewhat young with an amazing salary, a job that I love and is quite stable, and made the smart decision of moving to a city where I would consider staying long-term. The piece of a significant other isn’t there, but that’s okay. I can most definitely afford this on my own with my income. – Buying a place: Property Search and Life Decisions (November 5, 2011)

Now that I’m in a serious relationship, I’ve questioned my decision to buy a condo on my own. It’s definitely weird trying to build this place into my home at the same time as my boyfriend and I are building our relationship. If he owns his own place, we would be in a weird situation of owning two places and if he doesn’t own his own place, we would be in a weird situation of me building equity and him not. (I’m looking at it from all directions so as to not discuss his financial situation whatsoever.) Also, I picked this place, but it’s possible that he never would have picked it in a million years. There are a few ways this could go/could have gone:

1) We eventually get married and move in together. We could buy into each other’s place(s) or declare them separate property in a pre-nup if the other party doesn’t have the funds to buy in.

2) We eventually break up and date other people. I keep my condo, he keeps his if he has one and nothing is really lost or changed. The situation would repeat with my next potential partner.

3) If I hadn’t bought a place and he didn’t have one, we might have moved in together in a rental some day, saw how that went, and then if we wanted to get married, bought a place. This probably would have meant several years out of the real estate market since I wouldn’t buy a place by myself while serious with someone, but I wouldn’t buy a place with someone without being married. Estimated down payment fund (just me): $73k (2012), $114k (2013), $165k (2014), $216k (2015). This wouldn’t have really been the end of the world. I/We probably would have skipped the “starter” condo/house phase and gone straight for a long-term house.

Back to my place, I definitely love this place! There are a few things I would change or would have done differently myself, but they’re not broken, so I won’t do anything about them. I’m definitely keeping notes on what appliances I will buy when the ones I have die a tragic death. I like the settling down feeling, I like the nesting feelings of wanting to make lots of little changes here and there. I also love the cost so far! My monthly costs are lower and more stable, so ignoring the cost of selling the place, it was immediately cheaper to own. I’m also really enjoying the location – I think it was a perfect choice for me.

27 thoughts on “Reflections on Home Ownership: 6 Months In

  1. The first thought that came into my head when I heard you locked in on a condo was that you’d soon be attracting strong relationships.

    I think holding until you find a home you like and with enough of a down payment is the smartest move. Yes you could have pulled resources but that would have left you thin on cash and presumably unhappy. Also, you would not be able to prepay as you’d like because the need to build up your other funds. Therefore, I’m not seeing any advantages to have bought early, and in retrospect home values in 2012 have decreased and so have the rates compared to 2011.

    • Really? Why did my locking in on a condo make you feel like I would be soon attracting strong relationships?

      Yup, the way I had planned things last fall, I was definitely going to be somewhat thin on resources. By the time I bought in June, I was in a pretty good financial situation to buy. I look at what’s been selling in my area and I don’t think home values have decreased here, but it’s possible in other areas. And the rates dropping is why I’m refinancing!

      • Why I thought that is because home ownership exudes feelings of accomplishment and independence. That is attracting at least to me it is.

        Don’t forget that you told us you place a high priority to having a home that makes you happy. Even if you only stay two years being happy over that time should make you feel that it was worth it, no?

        • Ah, that makes sense.

          And a very good point! Since interest + property taxes + HOA dues + difference in electricity is so much different than rent, I think that selling in two years isn’t even the end of the world probably.

  2. there’s always him moving in and paying rent (or more likely, the utilities/food), or both of you selling your condos and buying a house (I think that’s what marriage counselors recommend)

    • Utilities/food is pretty cheap compared to the other costs… My HOA dues cover most utilities, so I just pay electricity and internet.

      The problem with the buying a house idea is that I have zero interest in living in a house unless I have a plan to have > 1 kid. I can understand why marriage counselors suggest that. I think I’m going to go back to not what-if’ing now :)

      • Well, then a new condo. (And keep in mind that if you’re not married, the rent cost you should be comparing to for “fairness” is the interest and upkeep, not the part going to principal. Alternatively you could demand the market rate, though not the one for a roommate who has hir own room.)

        Yeah, purchasing this one is a sunk cost. But you can always sell it.

        • so many options, head exploding! (adding to the side of “shouldn’t have bought while single” – we’ll see how this whole thing turns out!)

  3. I’m so glad you love your place so much. And I do think it was a blessing in disguise that your first place fell through. You are in such great financial shape now.

    I hope you don’t worry too much about the relationship/condo stuff, everything will work out over time.

    I bought my condo by myself right out of business school and definitely felt strapped and miserable. Partly bc I owned my place, mr NTF didn’t move in until we were engaged. We made a deal that we’d live there for a year and if at that time it didn’t feel like home to him, we’d move. We ended up staying there for several more years.

    Does your BF know about your blog? I can’t remember if you’ve mentioned this or not?

    • It definitely was a blessing in disguise! I actually wonder if after a year in that first place, I might have rented it out and come and lived in the area I’m in now instead. I don’t think I thought about physical area outside of the place nearly enough when I was first looking.

      I don’t worry about it too much, but I do occasionally think about the possible scenarios and we talk about them too. I like your deal about trying it for a year (I’m assuming since it made more financial sense than selling or renting it out and renting a place together?) and then moving if it doesn’t feel like home to him.

      My boyfriend doesn’t know about my blog. I don’t want him to have the URL unless he knows everything that I’ve written on here and we haven’t gotten into exact numbers like I do here. We would need to be more serious before I shared it with him – I don’t want any ex-boyfriends knowing about it. And I’m slightly worried that he would want me to shut it down completely like Meg of “World of Wealth” (her blog is now gone, but her Networthiq is still up:

      • Yes, made the most financial sense.

        Hopefully he won’t want you to shut it down.

        On a side note, thanks for sharing all the numbers with us, it’s great see specifics. Sometimes I wish I could do the same but it’s harder once married and some friend and family read my blog. Although I am tempted to start documenting our mortgage payoff!

        • You’re welcome! I find that personal finance blogs can be easier to understand someone’s situation with real numbers and no one really talks about real numbers offline. I understand that it’s harder now you’re married though. I would love to cheer you along on your mortgage payoff!

  4. Leigh, good article. I am about to close on my home tomorrow!! So its an interesting read. I looked at townhomes, but not condos. I’ve been in this process for over a year now, and when it began I was dating a lady pretty seriously, I was going to buy in a nearby city to be closer to her, and she was set to move in with me…sure enough, we broke up, for what I considered a very petty reason, so the next day I came back to my small town, and put down some earnest money on a home here…sure enough again, we got back together, and my GF tried to talk me into walking away from this deal, and looking again in her area…I said no, sorry, love you, but that wont work anymore…actually, our relationship now is stronger than ever for some strange reason, and she is planning on moving to my town now, lol. She knows about my blog, but really isnt interested in personal finance stuff. As far as the financial stuff, when it comes to home ownership, I looked for a place I can pay for even if I lose my current job, and have to take a big pay cut finding a new one. I think thats the biggest key. I have a lot of friends who bought expensive homes based on their current salary, but when that job, and salary disappeared, they fell on hard times.

    • Congratulations!!! This is a very exciting time for you. I could probably afford my place on my starting salary and I can definitely afford it without my bonuses, so I think that I’m in good shape. Sounds like you made a good financial decision with your house!

  5. Hmm… that’s really interesting! I didn’t give it much thought at the time, but I guess buying a home on your own isn’t the most conventional path for most people to take. Most people fall in love, get married, and then buy a house together.

    I’m now thinking about buying a second property, and I’m not sure how that will impact my future, should I meet that special someone and have to start thinking about settling down. I could potentially have two rental properties, and not enough money left over to fund another residence. Then again, since I’m not in that place yet, I can’t really just stop living my life in the now, trying to accomplish my own goals… though these choices will probably lead to a more complicated future…

    Thanks Leigh! Now I’m questioning my own real estate decisions ;)

    • Haha yep. But us young professionals, we buy places on our own!

      I think I would be less worried about rental properties since it’s just a financial thing rather than a life thing other than the fact that that special someone could convince you to move to another city or state or country ;) I don’t think that having two rental properties and no cash to fund a primary residence is the end of the world since your FI plan includes enough income to cover rent, no?

      “Then again, since I’m not in that place yet, I can’t really just stop living my life in the now, trying to accomplish my own goals… though these choices will probably lead to a more complicated future…” THIS. We have to keep living our lives, planning if we’re single, though not making things too tricky if we end up getting married in the future. Having money sure seems to make things more complicated!

  6. I was just going to ask you whether your BF is aware of your blog, and someone else beat me to it. The things you post here… better keep it quiet.
    Have him pay for your HOA and utilities if he moves in. But only if you two get to that point. If you do get married, I think what the other poster meant about buying a ‘house’ is more that you should move to a ‘new place’ together so that it is not YOURS or HIS. But then again my BF moved into my apartment and it has been fine. I do most of the decorating, but will consult him if there are any major purchases. He does the same, such as buying a beer brewing kit that takes up space or a TV.

    Good luck!

    • Well, my rule is that I won’t disclose his situation at all on here, which is why I provided multiple possible situations. I’m also not going to complain about him or really talk about him other than confirming his continued existence in my life. I would consider sharing my blog with him if he already knew everything I talked about here, which he would at some point if we planned on getting married, but not now!

      An ex owned a house and I would have happily moved into his house (great house!), so long as we worked through the decorating and what we were using each room for and rearranged some stuff. You’re right – the important part is to make a place ‘ours’ rather than ‘mine’ or ‘his’.

  7. Congrats on the big step Leigh! It’s hard to comment if you don’t disclose your BFs situation, but I think you can make it work anyway if you put your mind to it!

  8. Nice blog. I just found it and read through a number of your earlier articles — I’ll be following you going forward.

    I owned a condo by myself when I met my wife (she was renting a place at the time). When we decided to get married, we sold my condo and bought another (larger) condo (which is actually a house) together. It made it feel more like “our” place than “my” place. At that point we combined finances, since we were committing to a relationship together, so the assets that had been “mine” previously became irrelevant — at that point it was all “ours”.

    We also set a goal for ourselves to pay off our house in 5 years, and ended up completing the goal in under 3.5 years. Speaking from experience, it was the best financial move we ever made. Good luck to you in your quest — you won’t regret it when the mortgage is gone.

    • Thanks for sharing your story! I think that is important for the place to feel like both people’s, rather than just one person’s of the couple. Congratulations on paying off your house in 3.5 years! That’s a pretty awesome accomplishment.

  9. I think I’m in the opposite situation as you :) When I started looking for a place ~ 3 years ago, I had plenty of money saved up plus EF but I didn’t really know what I wanted. All I knew was that I wanted to buy a place ASAP so I could invest my money in the real estate market. I was patient though and my number one concern was getting a deal as opposed to maybe finding exactly what I wanted.

    Value has gone up quite a bit since I moved in though and I’ve done about 10k worth of renovations so I should be able to make some money when I sell. I’m not in love with my condo but it has helped me discover a few things that I really like and some that I don’t. Either way, I’m glad I found these things out now as opposed to later when I buy a much more expensive place. Financially, it’s all worked out well so far though.

    I’m curious to see what you think about charging your BF rent should he move in though. I charge my GF/now fiancee :) about 1/4 of the total cost(includes everything) and people are always shocked to hear this. I am shocked to hear that haha. Why wouldn’t I charge her?

    • I would definitely charge him rent! I mean, he’s paying rent to live without me, so why would he get to live for free if he lived with me? Plus, my place is currently just under $1,900 per month for a 1200 sqft 2 bedroom condo including all utilities and once the refi closes, it’ll be just under $1,700/month. Finding a two bedroom to rent for either of those amounts would be impossible, let alone and nice one bedroom. Someone’s comment above about him not paying any of the principal if we weren’t married was a good point, so I would say that all utilities + HOA dues + all food ~= 1/2 of my current monthly cost ignoring the principal portion of the mortgage payment. That’s still a pretty good deal considering that’s barely more than what a friend was renting out rooms in a 5 bedroom house for and this is only living with one other person…

      Do you and your fiancee plan to stay in your condo for awhile? Or are you saving up to buy a house? :)

      • Ok good I’m glad you agree with me! I don’t think principal should matter because you are the one who put up 20% of the value of the house, so principal should have nothing to do with how much you charge them :) But I’m callous in love haha

        We will most likely be in a new place in 6 months or so. My fiancee is applying to grad school so it may be in Socal or may not. Either way, we’re gonna move and rent or sell depending on if I can make money back or not. Should be able to rent for the exact cost of my mortgage + HOA. So as long as principal + tax savings – maintenance/vacancy costs > 0 every month I might even make a couple bucks by renting it out.

        • I’ve read that you should make sure the person only pays for the upkeep and not for the principal or for repairs since they could then try to assert ownership of part of it later. You said “I don’t think principal should matter because you are the one who put up 20% of the value of the house, so principal should have nothing to do with how much you charge them.” But the principal you put down is what made the mortgage payment and the monthly interest amount what it is. The extra principal payments that *you* are making are lowering the interest cost too. So that seems super confusing on how to set an amount to me…

          I guess it’s worth a shot to rent if you want to be a landlord, but I have no interest in that so I think I would probably just sell. I think I’ll still have gotten some psychological and financial value out of it even if I only stay for a couple years.

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