A day in the life of James Cavanaugh - or a few

House Update

Alright, so the first house didn’t work out.  I don’t remember if I went into the details, but because of powerlines in the back I couldn’t get an FHA.  This is probably for the better since the house was really a little too small, and there was a lot of work to do.  It might have all worked out, but since the loan was harder to get, I didn’t want to fight for it.  Since then I made an offer for 230k on a nice house in Orangevale, that I was out bid on…I should have upped it since it was a nice house, but oh well.  Then katie came to visit, and we looked at a lot of houses together, I think a total around 35 in the week she was here.  Out of those we liked about 6 or so that looked like good deals and would work. Of the top two, one was a short sale by the lake, 5 bedrooms, nice pool, nice kitchen, 2200 sq ft, great location, quiet, everything was good, for 275.  The other was originally posted as active, but turned out to be a short sale, it also had a pool, 1900 sq ft, vaulted ceilings, nice master bed, nice work area, but was next to hazel, which was a down side, but the yard was bigger, and well layed out.  I could get used to the road noise for that house, and it was 289.  Who knows how long these will take to go through, it has already been 2 weeks, and will probably be another 6-8 weeks.  So we kept looking, and I was putting an offer in on our third choice, which was on kenneth, a 1900 sq ft house for 200k…needed some work, but it was big and had a lot of potential.  As the process of putting that offer in proceeded, I found out the entire foundation of the house was infested with termites…not something I want to deal with.  So I am back to square one again.  There is a nice Blue house that I think would work, the rooms are a little smaller, but the over all house size is good, back yard isn’t the greatest, but it would work.  It is 250, not a bad price, the neighborhood is pretty good, but a little further from work.  I think it would be good for one roommate, but the other two rooms were so small it would be hard to put someone in them unless it was a kid.  Then I liked this house off Big Oak way, for 260, it was also pretty big house, in a nice neighborhood.  Backed up to Madison, which sucked from the noise, but had a big front yard, and the living room/kitchen was decent.  Needed some updating, and the room sizes were a little small again, but not a bad deal for that house.  I thought I would keep looking before settling, due to the noise, and distance etc.  When I was out today, I saw some houses that I liked a lot.  This one house was 3 stories high, had a great layout, master bed and bath was huge, had a great view of the hills, not to far from a little airport which is a big draw to some people.  The neighbor hood was great, lot was pretty big, no pool, but that could be a good thing, as far as utilities go.  There were two bedrooms downstairs, separate from the living area, kitchen was pretty big.  All in all, I liked this house, but it was 313k.  Which brings me to my next point of how my housing views have changed a little.  Originally I was thinking I wanted something kinda run down, to fix, that I could sell in a couple years and get something nicer.  Now I am leaning toward buying something nicer now, and living in it longer.  The reason is because the housing market is a percentage game.  If the market goes up 20%, then having a 300k house would yield 60k in profit, if you have 150k house, that is 30k in profit.  Now if I put 30k into the 150k house, and it brings the value up 50k, i’d still be down 10k from the nicer house.  Then I was thinking if I got a big fixer, like I saw with katie, that was 3000 sq ft, but needed a ton of work, then when it was done, it would be worth a real lot, and if the market went up, it would be even bigger…but then there is the question of how much work is too much.  And would I get everything back that I would put in?  All these variables make this decision one of the hardest I have had to make.  But so far me not making a decision right away has helped me in a lot of ways.  For one, the housing market is still going down, which it isn’t going super fast or anything, but it is going down still.  Also, interest rates are getting better, when I first was looking they were around 6.5, now we are looking at potentially getting down to 4.5…way better, and only a couple months later.  The difference in interest rates that much means my payment could be as much as $300 less on a $300k house.  Another thing that is playing in my favor is the Christmas season, many buyers don’t want to buy around this time, cause they are busy with the holidays and what not.  Just means I don’t have as much competition.  At the same time, there are less people listing their homes, so there isn’t as much to pick from too.  I guess that one goes both ways, but for the houses already out there, good for me.  Anyways, I am going to talk to my broker tomorrow, and see what he has to say about rates, and about me buying a 313k house.  That’s all I got for the house update for now. -James

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