How I Almost Committed Financial Suicide
See that house? About 6 months ago I had myself convinced we needed to buy something like this to validate our lives and prove to the world that we were successful. What a difference 6 months can make! My fiance and I had decided, on a whim, to start looking at houses. We knew that sometime in the distant future we wanted to upgrade to more living space. We thought this would be tons of fun! We still have no idea how that whim quickly turned into a serious house search. I suppose it’s our fault for reaching out to a realtor to show us a property. Before we knew it, we were signing agreements to work only with that realtor and looking at a few properties each week. After a few months, we found a home that we loved. The home was quite similar to the home in the picture. We were pre-approved for a ridiculously high mortgage and went back and forth with the sellers to agree on a price. Interestingly, our price point of no more than $300,000, during our search, turned into an agreement price of $412,000 in the final contract. How we went from no more than $300,000 to over $400,000 is still beyond me. Not only was the purchase price high, but the taxes were approaching 5 digits/year!
The Next Few Months
The next few months were exciting! We began finalizing our mortgage documents, had our home inspection, and even started planning the improvements we wanted to make. Yes, we agreed to pay top dollar for a house that needed a ton of updates. I estimate that we would’ve ended up spending a total of $500,000 to purchase and modernize the home. We would’ve been upside down on the home almost immediately after possession. Can you say stupid?
Mold – Eek
The home, despite not being updated, was in great condition and the owners were meticulous in caring for it. They built the home and lived in it for 25 years. Unbeknownst to us or the sellers, there was mold in the attic. Our inspector found the attic dripping with condensation during the home inspection. There was so much snow the day of our inspection, we couldn’t even make it. We had to rely on the inspector to do the job on his own. I was so bummed. I was counting on having that day to take a ton of pictures of every nook and cranny. Did I mention we didn’t go back to see the house a second time before making our offer? Because of this, I was extremely excited to see the house (we already bought) again so I could take more pictures. See how irrational this decision was? Who buys an expensive house before going back to see it for a second time? Apparently, me. Okay, back to the dripping attic part…our inspector couldn’t believe his eyes. He was so impressed with this home and how solid it was he couldn’t believe it was, essentially, raining in the attic. As it turns out, the owners replaced the roof a few years ago and the new ridge vent was too small for the home. So, weather permitting, the attic turned into a rainforest. Fortunately, we had the “perfect” weather conditions the day of our inspection, or it could’ve gone undetected, and I could be working a second job right now to cover the mortgage and expenses.
The owners were notified and vowed to address every item on the inspection list. Short of having the entire roof replaced, they added a humidity sensor and fan to the attic and replaced copious amounts of wood and drywall. They really did love their home.
As we inched closer and closer to settlement I started to realize how much money we were going to be shelling out each month for basic living expenses. Oh my God. Why didn’t we go over everything with a fine tooth comb before now? We are sitting fine financially, but my fiance has a career with variable income. In addition, because his career is project-based, his income is not only fluid in amount, but also fluid in terms of pay schedule. Bottom line, he gets paid in chunks that don’t follow a set, predictable pattern. *SCREAM* He certainly doesn’t get the standard bi-weekly paycheck that my company adheres to. What if we needed to go longer than expected before he gets another chunk? We can dip into our savings, right? Right. No sweat. We can cut back on luxuries, utilities, and necessities, right? Right. No sweat. Except, I was sweating! I was soaking the sheets every night. I was having heart palpitations. This is no joke. I was so anxious over this house that we thought we wanted and definitely couldn’t afford, comfortably, that my mind was waging war on my body. I was suffering physically and emotionally over this soon-to-be dumb decision. What had we done?
One day (not at band camp – haha!), the skies opened up and the birds started singing. Despite having installed the humidity fan and replacing a ton of drywall, the air quality in the kitchen was still not showing acceptable levels. We jumped on this and ran. There were still mold spores being recovered in the kitchen! There were still mold spores being recovered in the kitchen! Sorry, I was so excited I needed to say it twice. Who would agree to still purchase a home under those conditions? No one. We can’t be blamed. They can’t be blamed. It was the perfect out for us.
See that house? That is my actual house. It’s small and isn’t flashy, but it’s affordable and I can crank the heat up and the AC down and not worry about not being able to afford the bill. It’s on a great piece of property and I can easily make upgrades and make it “more flashy” if I choose to do so. It makes much more financial sense than paying for my financial coffin each month. I wake up everyday feeling relieved that we never had to pull the trigger on that other home.
I thank those glorious microscopic, filamentous creatures for saving my financial ass on this one! …and my heart health has dramatically improved, too!
Do you have a financial disaster story that made you smarter?