The recent record low mortgage interest rates have lured us into the All American Dream of becoming homeowners. Six-and-a-half years ago I bought a little (crazy little) duplex. It was in the midst of the greedy market and I remember getting approved for a huge amount of money… with a sizable amount of debt, no down-payment, and not much credit. My real-estate agent at the time told me, “A lot of people are buying the biggest house possible and are then getting a lot of roommates!” While I wasn’t super money savvy then (not at all) I do remember thinking, “Um, no! Bad idea brah!” And I am so happy that I listened to that voice in my head saying that that was such a bad idea. Because it was.
I did some basic calculations and figured out what I could afford per month and then I got hooked up with a place in town called Colorado Housing and Finance Authority (CHFA). They’re all about getting 1st time home-buyers into homes, and they loaned me the money for the down-payment on the place that was to then be paid back if I sold the house.
Long story short: I found a place, lived in it for a few years, got married, decided the place was nutty small for two people to live in (I always reasoned that if people in New York City could make super small places work we could do it too). We then decided I’d sell the house, and we would move to Spain (crazy kids!) with the profit from the sale of the house. In the meantime we decided to get a cheap month-to-month apartment while we got all the details sorted out.
Another long story short: ended up not moving to Spain (visited instead), and here we are in our temporary month-to-month apartment years later.
We decided recently that we’re going buy some real estate here in town. I’ve heard that Denver is “house-poor” where the houses are more expensive then what most people who live here can afford so they end up spending most of their income on their homes. I haven’t done research on it myself, just heard it on the streets. It also makes me think of another thing people in town say it’s, “You pay for pretty.” And Denver is very pretty.
With the decision to go from renting to buying it brings to mind the very controversial topic of: is it better to rent or own? There is no doubt that there are strong arguments for each side (I’ve known people that are adamant about each), and I have experience on both sides. While I had done the basic calculations to see what I could afford I was being super optimistic and hoping that I wouldn’t continue to spend excessively the way I had before the house purchase. Once I was in the duplex I was getting myself deeper and deeper into debt because I continued to spend the way I wanted to even though it was only a line of credit. Since the mortgage was the very 1st thing to get paid every month I felt good about that but there’s no doubt that it was an extremley bad cycle to be in.
When we started renting I didn’t have the upkeep of the house to pay for anymore and I didn’t have to pay for all of the other things that go into home-ownership. We pay our rent and call the landlord if something needs fixing. There’s definitely some relief and freedom in that. But… I also know that every month we’re paying for someone else’s mortgage and when we leave this place we have no equity, no chance of making any kind of profit, and no option of keeping it as an investment and getting renters of our own.
The properties in town are going quick and if you like something you’ve got to pounce on it (this is what I’m hearing on Facebook anyway, and we all know that is completely official and trust-worthy;). It’s so easy to scour the real-estate sites for houses and start dreaming of living in them.
There are some houses that are so cheap and it doesn’t make sense. I can’t help but think, “Yeah, someone definitely got killed there for them to list it at that price!” And then my frugal brain instantly thinks, “Nothing a little bleach won’t fix!”
So we’re looking for something that’s not too fancy or too expensive (can’t afford that anyway), and nothing that is too much of a fixer-upper. We need something that the little girl in Goldilocks would approve of: something just right.
Do you think the American dream of homeownership still exists? Do you believe in it yourself? Why or why not? Would love to hear what you think about this topic.
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