Apartment Therapy, one of my favorite design and home blogs, recently asked readers what advice they’d give first time homebuyers. The responses are in the comments and reflect some real wisdom learned through trial and error.
Definitely worth reading for all homebuyers, novices and repeat buyers alike.
A vacation home on wheels? I may have found the perfect second home. Or heck, primary home if you swing (roll?) that way.
So basically, you buy this rail car and then tug it around the country depending where you want to vacation. Done and done–a home and a means of transit all in one.
And even better, if you have crazy friends who ALSO own rail cars, you can link them together and travel across the country caravan style. How amazing does that sound?
Ok, now let’s get down to business. What will this awesome acquisition cost you? The car was originally listed a couple years ago at $225,000 but now it’s down to $89,900–not bad! The cost of moving it is less than you’d think, too, at $1.50/mile.
Given that you avoid real estate taxes (a house on wheels isn’t considered real estate), the monthly “parking” cost is very reasonable at $150/month. The car itself is approximately 85 feet long and 9 1/2 feet wide with 10 foot doomed ceiling.
Over the past few months, talk of the US debt crisis has got me thinking: how does all this effect me? As it turns out, more than you might think.
Here’s how my little brain traveled from the hell-in-a-handbasket news from the US government to me trying my hand at refinancing my condo:
- Clearly, US government is in crazy debt, with few options for getting out
- In the past, governments have used inflation to get out of debt, and this may be our country’s best bet over the next few years
- Inflation is great for people who OWE money, but not so great for people who’ve SAVED money
- Therefore, given my particular financial situation (and yours may be different) it is not crazy to pull equity out of my Portland condo, which has about $60,000 in equity based on the sale price in 2008
Think about it: you know how your parents brag about paying $12 for their house back in the 1970s, and today it’s worth $500,000? That’s inflation at work (and sometimes, also appreciation). In an inflationary environment, everyone’s mortgage payments become much more manageable as overall prices and wages rise.
I wanted to explore my options. What if I pulled some equity out, and at the same time refinanced into a lower interest rate?
Seemed reasonable at first, but it wasn’t long before my bubble burst. After pulling some “comps” (sales from comparable properties nearby) my mortgage broker had some bad news: my condo was underwater. The balance on my mortgage was more than the condo appeared to be worth.
Despite my high and mighty sense of compassion, I never thought that I would be counted among the ranks of oxygen-deprived homeowners. I thought I’d bought my place in the trough of the market. I knew the place hadn’t appreciated, but to depreciate by so much?! Unthinkable!
I would never be able to refinance, and I certainly couldn’t pull equity out of the condo, since my $60,000 of hard-earned equity had vanished into thin air. People, I’m not lying when I tell you it was painful. Even though I’m in a relatively good position–I’m not planning to sell the place, and it pays for itself as a vacation rental–this was nauseating news.
But! Ericka, my determined mortgage broker, had a plan: let’s see if I qualify for a HARP Loan.
Negligent real estate blogger that I am, I wasn’t sure what a HARP loan was. But after some research, I’m now a big fan.
HARP (Home Affordable Refinance Program) is an Obama program aimed at homeowners who are current on their payments, but who’ve ended up underwater. The idea is that these responsible buyers shouldn’t be prevented from refinancing into a lower interest rate–and boy howdy, they sure are low these days!
So HARP lets you borrow up to 125% of the home’s value. There are tons of restrictions–for example, the home must be a primary residence (so I would’ve had to move into the condo for a while), the loan must be held with Frannie or Freddie, etc.
We ran through all the numbers, and ultimately I decided not to go through with the refinance. The payback term was a bit long at 3 years (that is, it would’ve taken 3 years for me to recoup the cost of refinancing), so the savings weren’t enormous given my already-low interest rate. My very responsible broker advised me to do the refi if I planned to hold the condo for at least 3 years, and not to do it if I thought I might sell within 3 years.
While I have no immediate plans to sell, I wanted to keep my options open. So while I appreciated HARP opening its arms to me, I ultimately declined.
But the moral of the story is this: If you’ve been a diligent homeowner making all your payments and feel snubbed that you aren’t getting a piece of the bailout action, HARP is here to help (at least until June 30, 2012, when the program expires).
I dislike when bloggers stop writing for a long time, then they come back with tons of excuses about why they’ve been gone. I don’t CARE what you’ve been doing – I read you for content so don’t preface it with a paragraph of blubbering about how you’re going to be better from now on. Just write your crap, dude. All I have to say is the following: “oh, hey.”
On to the post. There have been a few changes around here, which I’ll announce with this:
No, I don’t live here. My point is, this is a damn fine house. Gorgeous Victorian architecture, excellent condition, and in a central, upscale neighborhood (I’ll just vouch for that). 4 bedrooms, 3 bathrooms, 2,600 sq ft. So how much do you think it costs? $1 million? $1.4 million? $2 million?
This home just went into contract for a mere $585,000. And that, my friends, is because it is located in Portland, Oregon – land of reasonable prices.
Thus begins my reintroduction into Portland, where this crazy blog got its start. Yes, it’s true – I have left San Francisco. And far from the long, drawn-out saga of the move to SF, the move back to Portland was short and sweet. I (along with my S.O.) decided to move, signed a lease, and bam, here we are. We’re renting a lovely home not far from my furnished rental condo, which I’ll be managing full-time from now on. The best part is we’re paying the same rent we paid back in SF and are getting about 3 times the value in return.
Anyway, enough about me! On to the Portland real estate porn. This home was built in 1890 but appears to be fully updated. Interestingly, it sold for $489K in 2003, then for $720K in 2005 (nicely done, bubble!), and now it’s back down to $585K. Given the stellar location and large size, I’d say we’re back to a somewhat realistic price.
Check it out:
I love being back in an area where even fancy pants homes are vaguely, one day, attainable–I mean, if you squint really hard and it’s kinda dark. [View on Redfin]
You may remember the Real Savvy profile of Jessica Gormley a few months back. Jessica is a real estate maven, whose guiding principal is one of stewardship. She believes in honoring a home’s history, and this became perfectly clear to me when I visited her stunning Taos estate last month.
I gush more fully about it on my vacation rental blog, but here’s a little appetizer:
This home is a true ode to history. Everything from the architecture, furnishings, and art pieces lining the walls pays homage to the people (Georgia O’Keefe, Ansel Adams and D.H. Lawrence, by the by) who once claimed this space.
I loved the place as a vacation rental, as a piece of real estate, and as a historical looking glass all at once.
How could you not?