I Really Want a Dog

             

          In the past two months, we have experienced something totally weird. First, a strange looking guy knocked on our front door in the early evening hours asking if a certain person lived at our address. We said no and he left. The second time, a police knocked on our door asking is a person with the similar name lived at our address. We said no and the he left after asking several questions. We called the local police station asking for an explanation. We mainly wanted to know if we should be concerned about our safety. I was thinking if bad people would visit us because someone used our address and was involved with illegal activities. We were assured by the police that there was nothing to be concerned about. 

                Anyway, these kind of incidents made me think of home security. I really wanted to have a dog. A big dog like a German shepherd! Our cats are not very helpful on this matter. But we do not have enough space for a dog at the moment. We may get one later though.

Read More»

Don’t Trust Your Realtor Blindly

When it is time to purchase a house, many people would you to find a good realtor. I agree that a realtor is indeed very important. They know a lot that others do not know. Especially when it is time to look houses around. Realtors can get passcodes to open properties and bring their clients to view conveniently. Still, I want to remind you that you should not trust your realtor blindly.

If one is lucky, the realtor he/she finds may be really professional and responsible. The realtor will warn you about every potential pitfall of a property you are interested, and sometimes will even find related information to present to you. In such case, one does not need to worry about anything. The realtor definitely deserves the trust. Unfortunately, not all realtors are that way.

Photo by  Daryn Bartlett

When I purchased my condominium, I used a realtor recommended by a friend. I trusted my friend, so I extended my trust to the realtor he recommended. The realtor’s name was Nick. Nick was easy to talk to and seemed a nice person. But it was not easy to find a house that met my requirements due to the tight housing market at the time. We made offers to two or three houses and all rejected. By this time we have viewed about eight houses.  I began to think I might need to wait longer.

Then suddenly Nick told me that there was a house available, and it had not been listed on the market yet. That meant I could complete the transaction without competing with others if I wanted it. Coincidently my realtor was also the sellers’ realtor. From a realtor’s perspective, this much be a perfect thing. He wanted to sell someone’s house, and he had a buyer right there. To me, the house looked very close to what I was looking for. So I decided to get it.

The only problem was, my realtor never investigated the HOA account strength of the property. He never mentioned it. Since I was a total newbie, and I trusted Nick so much, this issue never come to my mind either. Then, six months after I moved into my house, I received a bill about the special assessment (see my post Buying a Condominium? Think Again!).

I will definitely not hire Nick as my realtor anymore. Maybe he did really well with my friend and even many others, I just do not think he gave me the advice I needed.

Should you still hire a realtor to buy or sell houses? Mostly you should. Mainly because they are (supposed to be) experts in that. My advice is, hire one but do not trust them blindly. Even if the realtor you hire is recommended by your family or friends. It is still up to you to find as much information as possible. To ask your friends and family before making the final decision.

Read More»

Buying a Condominium? Think Again!

Picture not related to content

In a previous post, I talked about how I purchased my first house with money saved from graduate school. That was one of the achievements I made after graduation. Buying a house is a big thing after all. The downside is, it was a condominium. That means there was HOA dues every month. What was more, the HOA association had the right to issue special assessment any time. These were the two things that I really disliked.

Because of these issues, I strongly urge people who want to have control of their personal finances to stay away from condominiums. This article is solely based on my personal experiences and preferences.

HOA dues is a monthly charge by the Homeowners Association of the property community you live in. The money is deposited into a bank account that belongs to the HOA and is managed by a separate property management company. The HOA then use money from this account to hire people to remove snow, to maintain the landscape, to trim trees and bushes, and etc. This is overall fine to me because I do not need to mow the lawn or remove snow by myself. The amount of HOA dues depends on what services are included. Some communities may have a swimming pool or a gym, in such cases it means they need more money to maintain the communal facility. The monthly HOA dues can easily range from $100 to $600.

My biggest frustration is about special assessment. It basically means if anywhere in the community (the communal part, not within the walls of your unit) needs any type of repair, the HOA can ask each home owner to pay extra money (besides the regular monthly HOA dues) if they think what they have in their account is not enough to cover the cost. They can ask for $1,000, or $10,000. They decide on the amount. Scary, isn’t it? Imagine, you are doing your normal business and taking care of your house, and suddenly a bill arrives at your mailbox asking $5,000 as a special assessment payment. Once you get the bill, you have to pay.

You may wonder how they decide to issue special assessment. Well, when any member of the HOA board notices any urgent (or not urgent) problem of the community, they will discuss in their board meetings about the necessity to issue special assessment. If the board votes to issue special assessment, they will then announce it to the home owners, and an HOA meeting will be held soon, giving home owners the chance to vote. Remember, at this point, the HOA board already reached their decision, and they will try everything to persuade home owners that it is necessary and urgent. If they do not repair now, it will cost more later. Many home owners will eventually be persuaded. A bill will be sent out soon after the successful vote.

In my case, I never ignored the problem they reported in such meetings. And I tend to agree that if they did not fix it sooner, it would only be more difficult and costly to fix later. What I disliked was how little financial control one has when living in a condominium community. You never know when the next repair project will come up and how much it will need.

Honestly, if I knew about special assessment, I would have not purchased a condominium. Unfortunately, my realtor did not warn me about this. Talking about realtor, that deserves another article.

I still own the unit because of two reasons. Firstly, the house value is increasing rapidly. Deducting the special assessment, it still brings good profit. Secondly, after the first special assessment, it seems things have been normal and healthy. If they do not issue special assessment within the next five years it will give me more confidence to keep it. But if they do, I may put this unit on the market immediately.

So you are interested at buying a condominium? Think again!

Read More»

How I Purchased My First House Upon Graduation

Today I am going to tell you my story of purchasing my first house upon finishing graduate school. To be precisely, I purchased my first house about four months after graduating and starting my first job. But the money I used for the down payment was not from my new earnings. Every penny of it was saved during graduate school, from my stipend as a teaching/research assistant.

In graduate school, there are always opportunities to be a teaching or research assistant. When one gets such position, they were also offered discounted or completely free tuition. I finished my entire graduate school without paying a penny by myself. However, the amount of the money that actually comes to one’s back account as monthly stipend was actually small, barely enough depending on your lifestyle. My stipend fluctuated around $1500 per month. And yes, this was my total monthly income while in graduate school.

You may wonder how I managed to save for a housing down payment with such tiny income. Below is an itemized expenses when I was in graduate school:

Rent: $500

Utility: $50

Grocery: $300

Transportation: $60

Miscellaneous: $100

Total: $1010

         

To clarify, all the above numbers were average cost. My rent was rarely higher than 500 because I always shared an apartment with others. Most of the time I lived in two bedroom or three bedroom apartments, so it was not overly crowded. I might be able to save even more if I chose to live at somebody’s basement, or share with four or five roommates, but that would make my living environment less comfortable. As a tiny female, I preferred to live with others as compared to living alone. I felt safer and livelier. Our utility bill was always low because most of us spent most of our time on campus. For transportation, I took buses and the cost to get a monthly bus pass was about 60. I have a big appetite, but my monthly grocery cost was not that much. A lot of time I had to throw away vegetables because they went bad in the refrigerator. You may ask what about books. Well, I used university library all the time. I can get books through interlibrary loan even if my school library did not have certain books I wanted. As a graduate students, our departments often allow us to print and scan for free in the department, so that saved some money too.

          As you can see from the numbers above, I tried to save about $500 each month. The problem was, we only had stipend for nine months during the semester. That meant there was stable income during summer breaks. I was lucky to get some grants to cover my most summer expenses so I did not have to tap my savings. That meant I could save $4,500 a year. For five years that was a total of $22,500. This was the money that helped me to pay the down payment for a house.

          If you ever checked on house prices, you may know that in order to get a mortgage, one needs to pay a 20% down payment, with my saving of $22, 500, that meant I could only get a house priced at $112, 500 or so. In many parts of US, one can get a decent single family home with $112, 500. However, in the place where I worked, it was very difficult to get an ok house with this price, so I was forced to get a more expense one. That meant my saving was not enough to meet the 20% rule. That was why I ended up taking a more expensive house, but had to pay Private Mortgage Insurance (PMI) until the loan to value ratio reaches 80%. My strategy was to pay extra mortgage principle each month during the first two years or so, since now I had much higher income. The goal was to remove the PMI as soon as possible.

          With the gradual recovery of the housing market and the increasing prices of houses at where I worked, the value of the house I purchased was increasing steadily. Even though I had to pay PMI, it was still a good idea to buy it.

          I hope my story is helpful to those who are not making much money currently, but want to buy a house or a car in the near future. I want you to know that this is really about what you want and the choices you make in your life. You do not have to follow others’ steps. You should get a plan that works for YOU. In my case, I was comfortable living with roommate so I did not see it as a torture to myself. So I was saving happily. If taking certain measure in order to save money will make you unhappy, then it does not worth it. I do not want to act like a motivation speaker and ask you to do whatever possible to save. I like modesty. After all, life is short, you never know what will happen tomorrow. What is the point of sacrificing your living standard in order to save money, and the next day, there is a car accident… So find what works best for you, and gradually achieve your financial goals.

   

Read More»