Thursday, October 18, 2012

2. Deciding to buy a house

It wasn't an easy conversation.

Megan and I have always had this "You and me Vs. the World" Mentality, that no matter what, we'd tackle everything together.

We had a conversation about Buying a house First vs. Getting married First.
In my mind, Buying a house made the PERFECT sense.

We were paying $1540 a month in rent at the Diplomat in Burlington. It was a nice building, but as all renters discover, had its drawbacks. (hot water shutoff, Fire alarms, Broken elevators, Nosey and noisy neighbours, etc. Anyone who has rented has experiences these annoyances. 

Also... did I mention we were paying $1540 a month!?

So, I started to do the math, and slowly started dropping hints to Megan that we would be better off financially for the rest of our lives if we got our foot in the property door and bought a house. I kept dropping these hints and nudges over a few months.

Then came the day finally approached Megan on it, all my ducks in a row, with an Open and shut case towards buying a house before getting married. it made perfect sense!


20 minutes later, I came out of the conversation on my ass, scratching my head wondering what just happened. How did she NOT see my logic? How was this turned against me? why do I feel like I just tried to kill a litter of adorable baby puppies?


Turns out, Logic had nothing to do with it, it was an emotional decision for Megan. (and buying a house IS emotional. I found it critical to manage both mine, and Megan's emotions, as you'll find out later)
So, I kept dropping hints, And then relating it to the wedding instead of "instead of the wedding"  Things like... If we buy a house, Then we'll know what to ask for on our registry etc...

She started to warm up to the idea.

All the while, I was scouring MLS for a house in our area that matched MY criteria 

And then I found it. On Darlington Cres. It was our "Dream house"

I showed Megan it, and she fell in love as well. it was amazing. Granite Counter-tops  Pot lights, hardwood floors, Beautiful living room, neat, unusual but practical floor plan. Side split with a good sized attached garage, and a good sized backyard, with a stairwell to the basement entrance so we could rent it out to "pay for our wedding"

We looked at it for a day, then Called our Friend/Realtor. he got back to us a day later -  SOLD.

We were Completely deflated. It was so awesome. I had showed it to my parents already, and they thought it was great too, and were willing to help however they could. It was the benchmark that we compared every house afterwards to.

It was, however, at this point, when we talked to the Realtor, we realized how completely unprepared we were.

We did get caught up in the action, and Megan finally started to imagine what we could do if we owned our own house. We were finally united against "the world" again, and she was on board the "buy a house" wagon. Not totally because of Logic, but Emotion. Seeing our "future" together in a house, forever. She realized that I was willing to buy a house with her, which meant I just as committed to "us" as getting married and living together forever.

United, we were both "team house" Albeit for slightly different reasons.

Now, back to being unprepared...  We called our Realtor out of the blue - I played on a pool league with him, and knew him pretty well. However, he wasn't from the area. He's a great guy, but I should stress - Unless your wife/parents/brother is a Realtor, Get someone from the area you are looking to buy in to be your Realtor!  (more on your Realtor later)

Our Realtor started us off very smartly. He came over, and explained WHY and why not we should buy a house, and gave us some time to think about what we actually wanted in a house, and if it was right for us. 

Personally in the back of my mind, I already knew why I wanted to buy a house, so I went through it for Megan's sake. 

Basically, Its a numbers game.

I was paying 1540 a month in Rent. 30 dollars a parking spot X2 , meant 1600 a month. WAYYY to much. We were on a beautiful 3 bedroom apartment, On lake ontario, with manicured gardens... We thought "we could live here until we get married and have children. it was also large enough so that we didn't have to throw away furniture when we merged our belongings. (it made sense at the time... again, the emotional game)

Back to the numbers.

Mortgage Rates are/were low, so Looking in Hamilton  I knew with our combined salary, I could be approved for a $350,000 house...

Wait, what?!? a BANK would trust us with 350,000.00 bucks!?!

More on that later.

The Bottom line was, Rent is money that is GONE. You cannot get it back. If you can afford to buy a house, You should. Eventually, you'll build up equity. There is added cost to owning a house, but the long term gain is there. The sooner you get in the door, the sooner you'll start building equity.

Granted your first payment is almost 99% "rent" money to the wind... but eventually, that 99% becomes 80%... becaomes 50%, becoomes 25... and then almost all of your mortgage payment goes to your own net worth instead of your banks pockets(or land lord if you rent)

Next post... The First Steps/Wall:  Money.

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