Appraisal Update

Here's what might be our next house!

The appraisal is in and it came back better then expected considering our experience with this appraiser on the last house.  Our accepted offer on the house is $279,000 and the value came in at $280,000!!  Woohoo!

Offer Accepted!

Well, here goes nothing.

We just put an offer in on a house in our new little town that was accepted after much back and forth.  

We now have three weeks to sort out conditions, cross your fingers for us. 

Updated: The Big Backyard Project

The first deposit has been paid ($750 for the fence, and the work has begun!  Jordan and I are both working  so we can't see the work being done, but our lovely neighbor is taking photo's for us and sharing them.

Where the Money's At: House & Wedding

I had a great visit with my mom and grandma on Sunday/Monday we got a lot of errands run for them and I got to decompress and talk wedding talk.  A few conversations in with my mom had me admitting that I've been ignoring the money a bit because I know it's really tight - which of course, is not going to make anything easier.

Let's look at what we need for the house first:

The total cash we need for the house includes our 5% down payment and 1.5% for closing costs for a total just over $22K.  In my spreadsheet, amounts in red have already been processed by the home builder.

We have submitted the request yet, but we'll be used our RRSP's for the majority of the 1.5% we need.

Now that I see the big picture, It won't be so hard to come up with another $1,500 for the rest of the 1.5%.  This money won't necessarily be spent, but it is a requirement of the lender that we have it available for closing costs.  They need to see the money in our accounts three months before we close, so we should have it there by August.

Next, the wedding:

We've currently spent just over $4,500 on the wedding and have about $11,500 left worth of project expenses (breakdown to the left).

The current wedding fund has dwindled due to the aforementioned  expenses, but my projected monthly budgeting has has in good shape.  It looks like we'll need about another $1,000 in addition to what we are projecting to save/spend over the next few months.

We have to keep in mind that this does not include money for our honey moon, but I do have money set aside in August's budget for that.

So, all told we need to come up with another $2,500.

That's actually not so scary.

I should also probably admit that our current credit card bill is really high, but I'm going to pretend for the next five minutes that it's not.  I'll do a credit card post tomorrow to own up to that.

House Fund Goal

Now that we have a number, Jordan and I can solidify our house fund goal.

• At least 5% downpayment
• At least $5,000 closing costs
• we won't need to pay a realator, but we will have legal fees and I'm sure other things that we don't know about.

So, while we won't be pushing to reach our new goal until after Christmas - we know what it is.

Before anyone comments and says that we ought to have 20% to avoid mortgage insurance, we know that technically we would be better off if we saved $52,500 - but it is simply not realistic.  If we save more than the initial $20,000 - that will be fantastic, but we know that once we have that amount saved, we'll be technically ready to take the next step - that's when we'll talk to my aunt about firming up a timeline.  There is no point doing it any time sooner.

Jordan and I also talked about saving an additional $10,000 cash for things above and beyond the renovations that we will need to do.  These things would include new appliances and any new furniture that we would need.  We will push for this once we hit $20,000.

Market Assessment Complete

Most readers know by know that Jordan and I are saving to buy our first home.  Only readers who have been around for some time know that we're looking to buy my aunts home when she decides to move.

Her timeline is vague (anywhere from 3 to 18 months), but it's in both our best interests to start to hammer out the eventual price.  It's important so that we know if Jordan and I can actually afford to buy her home; because if not, we'll start looking at new builds (townhouses/condos).

it's a bit dark - but here is a picture:

So, our first step was to have a market assessment done.  It's actually best if we get two done (us and her) to make sure that it's fair.  The real estate agent we found came up with a recommended listing price range of $375,000 to $391,000.

Jordan immediately thought that the number was wayyyy to high.  To give you a picture, the house has been lived in for 30 years by two chain smokers (now only one) and hasn't had a single reno/update done.  My aunt, when she moves - wants to leave the place as is.  Not only is she a smoker, but a bit of a collector (not quite hoarder-style, but she does have a lot of stuff). We anticipate required renovation costs to be between $65-80,000.

Upon going through the report, I've found that the majority of the homes in it have had lots of renovations including: finished basements, hardwood floor, new counter tops, new bathrooms, new kitchens etc.  My Aunts doesn't have those things - it needs those things. I've summarize the report he gave us and found 3/29 listings to be close compartitives.

you'll notice right away there's two duplicates.  I believe this is because they were listed and failed to see and then listed again at a later date.

So - if you look at the actual comparative homes, there's an average price of about $305K - which is much more reasonable (and actually my first gut response when thinking about how much I would pay was $300K). When we described the report to my grandfather (who has been a general contractor for nearly 40 years, if not longer) he thought about $290,000 sounded good.

Jordan feels that starting at $250,000 (because my aunt loooves to negotiate) would be good and then we can go through the report and suggest she still get her own done.  

It gives us a great place to start and we are feeling pretty good about it.

Our next steps include:

• talking to my aunt
• talk about money
• talk about a timeline
• suggesting she get a second market analysis done
• get a bank assessment done
• to find out how much of a mortgage we could actually get for the property
• ramp up our savings

A Home of Our Own

One of the big topics while I was in town over the weekend, was an idea Jordan had about a transitional option to sell my great aunt's house to us. This isn't something I've talked a lot about before, but I've written about it a few times.

Jordan's idea was that we renovate and move into the basement and do a rent-to-own scenario.  We would want to do a proper legal suite and would have to ensure that her smok(ing) wouldn't get down into the basement.  Pluses in the space is that it's already plumbed for one bathroom and has a bedroom.

This would work for both parties in a number of different ways.  We would be able to get a head start on renovating, we wouldn't have to rent anymore (in the rent-to-own scnario, the 'rent' would be going straight to principal).  We would be there to provide support to my aunt.  This is something we do anyways, it would actually be easier because we wouldn't have to drive accross town. 

This is something I'm likely to start writing more about as time goes on, investigating the different ways this could play out and the steps we would need to take.

Has anyone ever renovated a secondary suite?

Updated Status Bars

My Canada Student Loan is down to $1,639 for a total student loan debt of $6,843 – wahoo! Finally under the $7,000 mark.

Our house fund is coming along really nicely. We’re at 41.72% of our first goal which is 5% of $250,000. Isabelle actually gave us $200 last night to add to this account. She really appreciates all the energy and time we put into helping her out around the house and doing shopping. We’ve never asked or expected anything – and when we try to say no, it seems as if it’s insulting her. So, we’ve given up saying no – and just taken to being very appreciative with lots of hugs (they are her favorite).

My emergency fund and RRSPs have been pretty stagnant the last couple of months – but that should change once I’m back from Palm Springs.

I managed to put $25 into my Christmas fund – I’m not too worried about that one, but I’d like to have closer to $1,000 by December vs the $500 I had last year.

I’ve deleted my clothing fund as I’m taking that $475 to Palm Springs with me – for whatever extra expenses come up. They’re will be some clothes I’m sure, some food and beer. I’m not sure how much to chip in for accommodation as I’ll be there for four full days (and two sort of quarter days) – but Best Friend is looking into that. I’m planning on buying some American money today/tomorrow once the transfer goes through from ING to my main bank.

That’s it for updates – have a wonderful weekend!

The house fund... is back!

Back in October, Jordan and I put our house fund on hold.  We had just gotten notice that all of our roommates would be moving out - and weren't sure if we'd be able to handle the rent on our own (It was $1,500 back then).  Since then, we successfully negotiated a rent decrease to $1,350 and went from having three roommates to just one.  Our rent effectively went from $300/month to $425/month.

Even with an increase to our monthly expenses, I'm pleased to report that both Jordan and I have set up our bi-weekly automatic transfers into the house fund.  We will each contribute $150/bi-weekly on opposite weeks.  So each month, the fund will get $600/month, except for four months out of the year where it will get $750 (thanks to our 'extra' pay days).  It's pretty powerful, saving for a joint goal this way, the savings increase very quickly - and thus we are encouraged to continue to save.  

I'm sure a few folks remember that we also took a loan from ourselves to the tune of $750/each (so $1,500 total) to purchase some much needed household items.  We are still planning on depositing any tax returns we get to the fund to top it back up.

That said - would you folks out there suggest we stay that course, or take any tax refund we get and pay down debt (Jordan the truck loan and me a student loan)?

Buying a Home of Our Own

As some of you know, Jordan and I are planning on buying my great aunts home in a few years when she is ready to move into an assisted living home.  We brought up buying her home about a year ago when she mentioned she was thinking she might move, that's when we started the house fund.  She was more then happy with the suggestion and we often talk about different things that we would like to do or that she would like to see done.  We haven't talked about details, just vague timelines  The last time we talked she said it would be 2-3 years before she was ready.

This past weekend, she spent a good few hours with my grandmother (her sister) - and later my grandma mentioned that Isabelle thinks she might be ready this time, next year.

NEXT YEAR... whew! We could be home-owners in a year!

The home is 100% paid for (has been for several years) and as Isabelle is looking at moving into an assisted living home, she likely won't need a large sum of money up front to purchase her next home - she'll be renting.

So, with that noted it's possible that she maybe be able to hold a mortgage for us (rather then us getting  a mortgage from a bank), we could also pursue a traditionally mortgage as well. 

Jordan and I need to get ourselves in the best financial position we can within the next year.  Although we were already thinking about some of these things, we're going to have to make sure that:

• Jordan's truck loan is paid off
• My student loans are paid off
• Jordan's credit score is higher
• We have money in the bank!

It would be good to have at least $10,000 I think - but we'll look at specifics in the coming weeks.  If not for a down payment (depending on how things work out), it will have to be for renovations (of which there will be plenty)!

I'm so excited for this new journey, I hope you are too!

House Fund Update

A while back, Jordan and I went on a bit of a spending spree and aquired some household things that we would need given the changes to the household.

We bought a couch, a chair, a tv stand, a souround sound system, new pots and pans, some home decor, and a few kitchen odds and ends (popcorn popper, gravey boat, cups, mugs)...i think that about coveres it.

Right before we did this, we had broken the $5,000 threshold.  Given the total balance in our account new, we owe ourselves $1,549.67, or $774.84 each.

We had put all of our old, used, couches up for sale as well as one of our fishtankes when we downsized from three to two.

I'm please to say that we have now sold one couch and a coffee table for $50.  I've deposited that money into our house fund.  So we now owe ourselves $1,499.67, or about $750 each.

It seems like a lot, but between now and the time we receive our tax returns, we'll get it all paid back. Aside from selling the things above that I mentioned (which will probably net us around $300-$500), we'll focus on this once we get through Christmas.

We've been spending, spending, spending....

With all of the roommate changes and going from a 5 person household to a 2 person household there will be a few household items that we will be missing in short order.

I talked a little bit about this yesterday with some of the smaller purchases we've made at Ikea.

This past weekend we also made a couple of larger purchases and have plans for another.

• A new home theater/speaker system

You're probably thinking...really?! That's so not important.  Well no, but it was either that or a new TV (yes I know a TV isn't a need - we're okay with buying these items that we want).

I'll explain.  My TV is recently out of warranty, and we have a blown speaker.  The TV doesn't work properly unless hooked up to external speakers.  We found a great deal on an LG home entertainment system at Costco.
It was $250.00 (plus GST).

• A new set of cutlery (price is wrong on the costco.ca link)

Two of the people who are leaving have been living with me for over a year, one has been there closer to two years.  It can often be hard to remember exactly who's fork is who's after that much time.  To avoid any sort of potential conflict over this, and as Jordan and I wanted a newer set anyways we thought we'd go ahead and buy a new one (just about everything I have is hand me down of some sort).

We looked at Ikea and found some cheapy sets that weren't super nice - and then back at Costco we found a great set for jus tunder $45.00 (plus GST).
It's weighted fairly heavy and is a set for 8 people, plus it came with some serving spoons/forks.

• A new TV stand

The stand I had before was an Ikea special that was a hand me down from my mom.  It was great while it lasted, but it didn't really fit in the living room where we are currently living. It also took up a lot of space because it was quite long and low to the ground.

We picked up a new stand at Walmart for $110 (plus GST) as well as a few other odds and ends (Jordan wanted optical wire for the new home theater system) there for a grand total of $167.  The new stand is tall, and matches the fish tank stand in the same room.

Everything looks fantastic!

We have borrowed the money from ourselves (our house fund) and have made a commitment to pay it back with any tax returns we get in a few months.  If we don't get enough of a tax return to pay it back, we'll live like paupers for that month until it is paid back.  We can of course, pay it back early (which is what I will try to do).

The other item's that we're looking at purchasing include:

• A new couch to replace the gross, stained ones that we have (budget $500)
• A set of new pots and pans (budget $250). 
• The ones we have are starting to fall apart.  This is another case of a hodgepodge of pots/pans (much like the cutlery).  We'll have a few pieces left over, but not enough to cook like we do.
• Sears if having some AMAZING sales right now... if anyone has any suggestions for this, it would be greatly appreciated (see link).
• We MAY need another chair (budget $100 - Ikea Style).

Go house fund go!

Today is Jordan's payday, another $150 goes into the house fund!

Furniture

Jordan and I fell in love with a couch on Wednesday night.  It's comfortable, priced perfectly, and has a great warranty!

For the couch, loveseat and chair - the price was $1299!  That includes set up and delivery in home as well as a lifetime warranty on the frame and springs.  The foam in the cusion's are 7 inches thick and the material is 5 inches think so as the foam shrinks a bit naturally, the fabric is still taught over them!  How cool is that!

Yeah! Couches!

We have this rediculously old and ugly used blue couches.... they are rejects.  But they were free!
Do you see... that second char, it looks like it's chewing on something....

It's hard to decide if it's worth it to buy new furniture when we are renting a place with 3 other people....plus $1300 (okay more like $1500 after taxes and this special cleaner protection stuff they sell you) would be a big chunk of change ripped out of our house fund....

Down Payments and Gifts of Equity

I've read on the forums at get rich slowly about 'gifts of equity' which is a term I've only found used in the states.

My understanding is that a gift of equity is a unique way of coming up with a down payment for a home. Basically there is a sale between family members where the current value of the home is listed as well as the price they are selling it for in the sales agreement. The difference between those two numbers is considered a 'gift of equity'. That 'gift of equity' can be used (in the sates) as their down payment on the home.



I have posted this questions on the aforementioned Get Rich Slowly Forums, and also shot it off to Gail Vaz-Oxlade.  I will let you know if I get any good information from either of those sources.  I did call my bank, they had no clue what I was talking about.  I also shot off this question to a couple of mortgage brokers, and got a few responses. 

Response One:

Unfortunately, Canadian law requires all mortgages to have a down payment. There is no recognition of an 'equity down payment' by way of a gift or otherwise. I completely understand where you are going - however our current lending laws don't provide us any options.

Response Two:

Yes, you can use a gift of equity as a down payment in Canada. Please let me know if you require further information

I find it absolutely flabbargasting that I would have two answers that are completely opposite.

Is anyone out there familiar with it?

I will be credit card debt free in 4 days!

House Fund - Update

Hurrah!

So for the last 3 weeks Jordan and I have been at my aunts every Saturday and most Sundays doing yard work. There's some things that we help out each week (like mowing the lawn) but we've been working on a fairly large project. We cut back her out of control hedges which were a little horror film (about 7 feet tall) to about 3 feet tall.

It was a large time commitment, but we really didn't mind the work. I enjoyed being outside and spending some time with her - and it's not as though we had other plans. It sure has kept me from spending as much money on the weekends.

Yesterday we stopped by with some new bins to keep her bird seed in (the squirrels were getting into her old ones) - and she had a cheque for us for $250!!! What?! yeah!

She said she'd have to pay someone to do the work if we didn't and she thought it was fair. She said she'd continue to pay us for mowing the lawn and for any other big jobs that we help her out with. The deal with this is, that the money has to go into our house fund. Jordan and I are both fine with that.

I made the transfer this morning, and our house fund is now sitting at $4,412.54 which is 35.3% of our Tier one goal!

Home Ownership - A Timeline

So we went for supper with Isabelle tonight (and then took her shopping which took like 4 hours because she's a little old lady and walks slow).... highlights at the dinner conversation included:

1. She has some really funny stories about cats
2. Gingerale is a good fix for a stomache ache
3. When asked if her timeline for moving was 1-2 years or more like 4-5 years she gasped and said 'oh, I don't want to be there that long'

Conclusion:

Must buy Aunty Isabelle a cat soon, and we *think* she'll be ready to move in 18-24 months.....

Home Ownership - A possibility?

I few months ago I wrote about buying/renovating my Aunts place, this is still something we talk about every day. We spend a lot of time at her place taking care of the yard and doing other miscellanious things that she can no longer do for herself, and we also spend a lot of time at home depot and open houses trying to get ideas about what we would want to do with the place and how much it would cost.

Her place would need a total renovation if not restructure. In the 30 years that she has lived there the ONLY maintance was a new roof a few years ago. She and her recently passed husband also chain smoke(d).

We're thinking of approaching some design students to see if we can get some ideas on what to do with the place. At this point we're not sure the best plan of attack, or if we should just figure it out ourselves (or try to?).

In my head I know that we should not get too excited about it because it could be a long way off, but it may also not be.... let me explain.

She has told us that she want's to have AT LEAST one more Christmas in the house... well, Christmas is 4.5 months away. We don't know really what her plans are (I doubt she knows)... I've read about a lot of different ways you can mortgage a place or buy property off family, but again I don't know how she would want to do all of this.

Part of me hopes that she takes the next 3-5 years before she moves, but the part of me that really really really really wants to own a home and have a back yard.... wants her to decide sooner.

It can be pretty overwhelming even to think about, let alone write about, so I'll stop here. I will show you some pictures though!

The front of the house is on the left the back of the house and a view of the garden is on the right. There is a garage further to the rigt that you can't see. There is also a large deck that you can just see the corner of on the left hand side of the right picture.

Back of house and garden... there is a garage to the right that you can't see...

House Fund - Update

Jordan got paid today (woohoo!!) This means two things:

1. I'll get utililty $ plus $100 for my visa today and

2. WE JUST BROKE THROUGH $4,000 ON OUR HOUSE FUND! YEAH!

Revision - House Fund Goal

On the drive back to Alberta yesterday, Jordan and I were talking about our house fund goal.

I had orginally put $35,000 as our goal for a down payment - I just sort of decided, with out putting to much energy into it. Just to get us started. We have our eye on my aunts home, which she stated she would want about $250,000.

With that in mind, we have decied to set up 4 tiered goals. The first goal would be reaching 5% of 250,000 - then 10%, then 15%, and finally 20%. Having a down payment of 20% is the ultimate goal, so we can avoid Mortage Loan Insurance

From what I can gather from the CMHC, we would pay insuance equivilant to 2.75% of our mortagage loan ($250,000 less the down payment) for insurance - approximately $6,875 if we had less then 20% down.

So, our tiered goals are shown in the following little picture. Teir one, has our current monthly contributiones ($150, every week). In this graph, I'm assuming that about once every year we will increase our contributons by $25/each a month. This may or may not happened - depending on circumsatances, but I'm going to role with it for now.

(I have updated our house fund goal tracking bar to reflect our Tier One Goal)