After the trials and tribulations I went through picking out a condo, I was eager to finalize the details and get the keys in my hand. (Side note: it’s amazing how, in the span of just a few weeks, I went from not even thinking about buying a house to buying a house being my #1, all-consuming priority. Life is funny, I guess.) Of course, though, a series of hurdles popped up in my path:
Hurdle #1: The price
The asking price on the condo was $205,000. I wanted to spend closer to $190,000, so that’s what my initial offer was. However, I really, really didn’t want to have to shell out the money for closing costs, so I also asked for the seller to pay for them. My $190,000 was rejected; at first, the seller wasn’t even going to counter, but my his realtor let on that a higher offer would get a response. So I asked for $195,000 with the seller playing closing costs. In his counter offer, the seller agreed to pay the closing costs, but came back at $200,000. I gave this a lot of thought, and eventually decided to accept the seller’s counter. With closing costs included, I’m essentially getting the place for $195,000, which is only slightly above my target. Plus, the market in this complex is really, really tight. It’s highly likely the seller could have found another buyer willing to pay the full asking price.
Hurdle #2: The inspection
At the point that we settled on the price of the condo, I knew not to get too excited because, as I found out with condo #1, everything can fall apart if the inspection doesn’t go well. So when the big day rolled around, I was nervous. It turns out my nervousness was warranted; the inspector found that the HVAC unit was contaminated with lead paint (the condo was built in 1950), and the cost to have it professionally cleaned would be around $2,000. Plus, there were some other minor electrical and plumbing issues to contend with. I made it clear to my realtor that if the seller refused to fix these problems, I’d walk. I wasn’t going to shell out an additional several thousand dollars when I was already over budget on my home purchase.
Luckily, the seller quickly agreed to fix all of the problems listed on the inspection report. What a relief!
Hurdle #3: The mortgage
Once I’d cleared the hurdles of negotiating the price of my condo and making sure that it would be safe and healthy to live in, I started to relax a bit. To my mind, all of the tough stuff had been settled.
Well, I got a little too comfortable. When I got my initial interest rate quote on my mortgage from my broker, it was 3.98%. Unfortunately, by the time I was able to lock-in the rate, it had jumped to 4.5%. This is an increase in about $50 per month on my monthly mortgage payment, which, obviously made my frugal side a little crazy. But let’s be real: 4.5% is still a pretty freaking great interest rate. Also, I was lucky to lock when I did. Mortgage interest rates have shot through the roof recently, so I think I probably got the best deal available for the near future.
A note about my mortgage interest rate: because I have a high credit score, my broker was able to find me a bank that would allow me to “buy out” the private mortgage insurance (PMI) by accepting a slightly higher interest rate. So, even though I’m not putting down 20%, I’m not going to be forking over an additional $150-$200 per month in PMI, which makes the 4.5% interest rate seem like a pretty fair compromise.
So that’s pretty much the story of how I bought my condo! The process isn’t completely over yet; I still need to have it appraised, sign the final documents, and get the keys. But barring any further complications (at the rate I’m going, I wouldn’t be surprised if some popped up) I’ll be a homeowner on June 20th!
Have a happy weekend