Say What???

Now, it has been quite some time since I've been involved in the process of buying a home. My first experience was nearly 20 years ago. My first home purchase was a little condominium that I bought from HUD. I paid $33K for it (less than the car I'm currently driving) and even then, that seemed like a fortune. I only had to put $500 down and all closing costs and my first year's condo fees were paid by HUD. I actually walked away from closing with a check made out to ME. My second experience was with my ex. I couldn't be on the mortgage since I still owned my condo, but the plan was once I sold it, we'd refinance. We bought a house in a historic district from the VA for only $40K. It was in desperate need of renovation and I put my entire inheritance from my mother into transforming it from a run down eyesore into a beautiful home that ended up being featured in the annual holiday homes tour. It was such an accomplishment, but in true fresh off the turnip truck form, I didn't have a thing that documented my contributions and when things went south with that relationship and I opted to leave in order to reclaim my peace of mind and happiness, I walked away from everything I put into it.

Fast forward 10 years. The average price of a home in our area is now over $200K. Yes, $200K!!! Nearly a quarter of a million dollars!! I break out in hives every time I think about it. Add to that, all of the great first time buyer, 100% financing options are a thing of the past since the housing bubble burst and so many mortgages went into default and foreclosure. So as we were thinking about starting this process and reading up on today's conventional loans, imagine how thrilled we were to find out that 20% down is now the norm. At first it didn't seem like a lot, I mean it's only 20%. Yeah, 20% of $200,000.00! That's only what, 40 grand? Now, I can see where someone who is selling a home to buy up to something larger or to another area can swing this with the proceeds from their previous home. But someone starting out, unless they have been gifted the down payment or they've spent the last 10 years eating ramen noodles, faces quite an uphill climb to come up with that kind of cash.

This pretty much dashed our hopes. Don't get me wrong, we both have been fortunate enough to enjoy success in our respective careers, but we've also enjoyed life at the same time. We haven't really been socking the money away. Don't worry, we've been told. There are still options out there. I didn't hold out much hope until I started researching FHA mortgages. The government will guarantee the loan, which presents a much more attractive opportunity for a lower down payment, usually 3.5%. There are definitely downsides to this option, like having to secure PMI insurance, but lets face it, this is potentially the only way that millions of us can make that first purchase. And this is our chosen way. After sitting down and doing some figuring, we'd be looking at a down payment of between seven and eight thousand dollars based on most of the prices we've seen. So we struck a deal. We'll start saving immediately. We set a goal of February 22nd, 2013. At that point, we should have enough saved to start the process of applying to get preapproved and that's really how I want to approach it. I really want to get that part over with before we begin looking at actual properties. I just don't think I could find a house, fall in love with it, and then start the loan process only to find that something goes wrong and we can't have it.

So, what does this mean? It means cutting back. I have to admit, I'm not used to this. I'm not fond of the idea of staying home in order to put the money we would have normally spent on an entire afternoon of Sunday Funday brunch into savings. I highly dislike the thought of saying a new home will be our Christmas present to one another and not spend like we normally do.  We won't enter the new year with the latest tech toys. While none of those thoughts is appealing, I know it will be worth it. It also puts things into perspective the more I think about it. I feel nearly ashamed that I'm stressing over not spending extravagantly when so many people would give anything to trade places with us in order to get to live on what we've limited ourselves to while saving the rest. And the truth is, it will be worth it. Even though we are 90 days out from starting the process, I find that I'm already having to reel myself back from getting excited. I look at the listings online and I can already picture living in this home or that home.

So here we go. This is going to be one hell of a ride....