The Writers Coin

In case you’ve been frozen for the past 36 years, you probably know about the first-time home buyer credit. The government started it to give home buying (and the economy in general) a boost by offering a credit to certain buyers in exchange for buying a home. Since home buying had stagnated after the mortgage crisis collapsed, it seemed like a good idea to boost the sales of homes by giving people some money in exchange for doing it. While it looks like it might be helping boost the numbers, a lot of people aren’t so sure that it’s a good idea.

I’ve written about the buying a home a lot and one thing I’ve noticed in the comments is a very specific kind of resentment towards this program. Usually, people are mad for one of three reason:

It’s Not Fair

They either just bought a home or don’t qualify for the credit or they qualified for the credit when you had to repay it. Which—to be totally honest—sucks a lot. If I had just bought a home and gotten a $7,500 credit that I had to pay back and then a few months later the “you don’t have to pay it back” version came out, I would be pissed off too.

It’s Not Smart

They think it’s bad strategy to put people into homes (and mortgages) who are so close to not being able to afford it that they need an $8,000 “loan” to make it happen. This makes sense—$8,000 is nothing compared to the commitment you’re making when you sign up for a 30-year loan. What happens when these people run through that money and hit a speed bump?

Politics

Some people just don’t like the government getting in the way. The idea that they are paying their taxes and that some of that money is going to go to someone who can “barely” afford a new home just doesn’t sit well with them. These people aren’t fans of government intervention and this programs gets all up in their nerves.

One More POV

Regardless of your opinion, the credit is having the intended effect: more people are buying thanks to the incentive. Now all that’s left is to hold on and see what kind of long-term impact this has on the economy and the real-estate market in general. What will happen once the credit ends? Will prices stabilize? Will the economy be affected?

For those answers, we’ll all have to wait.

Yesterday I wrote out my first check to make my first payment on the mortgage to our new place. It’s a big check—bigger than any rent check I’ve ever had to write. And I started to think about whether or not it was a little too much higher than my rent used to be.

Doesn’t everyone always say that you should try to pay less than your rent when you buy?

But this place we’re in now is nicer, bigger, and has amenities we didn’t have before—so we moved up in the world by moving here. Which means we should expect to pay more. I did a little digging around and found that I’d probably be paying around the same amount if I rented a place just like this one. So that made me feel better.

Then I read an interesting piece in the NY Times about this very debate: is it better to rent or buy? Usually articles like these try to go against the grain to show people that renting offers more flexibility for less money. This article does the opposite, making the point that in most markets buying is probably the way to go.

And they have a fancy calculator to prove it.

As analytics as I like to think of myself, this is a decision that considers so many other life factors that a cool calculator can’t really do the math on why you’d want to buy.

• By buying we are putting our money towards something for the future
• Renting gives us flexibility to move whenever we want, but I hate moving
• Buying got us a bigger, nicer place
• Renting usually means you’re not living in as nice a place, unless you’re paying a premium
• Buying gives me that unmeasurable feeling of ownership that is hard to describe
• Renting made me feel like I was still in college

These feel things are hard to quantify, especially with so many money ratios out there that we’re “supposed” to follow. And that’s probably whey there’s so much debate about buying vs. renting—you just can’t properly weigh all the pros and cons when you don’t know that feeling of walking in the door, looking around, and going “this is my place.”

I know it’s cheesy and probably very unhelpful, but it’s true.

Image by helloturkeytoe

This is part IV of a series on buying our first home. Part I was about us getting started, Part II was about the beginning of our search, and Part III dealt with a couple of close calls and the fallout with our realtor. Today I’ll talk about how we knew we found the right place and the process of putting in an offer.

After the fallout with our broker, we decided to take a break from looking. Deep down it felt like we weren’t ever going to buy a place. In two years we had seen over 80 places, been kind of interested in two of them but we still hadn’t put it any offers. Not we were all on our own and it looked like there was no hope. The Obama tax credit came, went, and then was extended and I didn’t care. The rates were still low and I didn’t care.

It was obvious: we were not going to be buying a home anytime soon.

But Redfin is very addicting. Every other week or so, M would email me some places she found and I would do the same. The reactions were typically some version of “Eh…” Nothing out there was very impressive. Then one day M sent along three or four links that looked very promising. They had most of the amenities we wanted and the pictures looked above average. Nothing exciting, but better than what we had seen in a LONG time.

And that got us excited.

So we decided to check them out. It was January and winter was in full effect, but we decided these places were all deserving. We weren’t very optimistic—how could we be after 80+ viewings—but finally agreed to check these out. And that’s when we had to make a decision: do we arrange the viewings ourselves or do we call our estranged broker? M had saved me from sending him a scathing email after our fallout, so it wasn’t like I’d have to come back groveling to him. We were on the fence: he knew his business and was clearly a good broker despite our differences.

So we emailed him the places and told ourselves this would be the last time. We thought these places were better than anything we had seen online for a long time so this was our “last attempt” with this broker. If anything weird/uncomfortable happened from here on out, it would officially be the end.

The first place was great. It was a little small but the unit was well taken care of and had a lot of stuff we liked. The next two were not good—too small and weird layouts. Then we walked into a place and as soon as the door opened we both went “Wow.” As we walked into the master bedroom and our broker chatted up the broker showing the place, M came up to me and whispered (a little too loudly), “I want this place!”

I knew we were in trouble right then—falling in love with a place can be very dangerous as it can cloud your judgement and make you take rash decisions. Which is exactly what we did—when we got home we called our broker with the message he thought we’d never send him: let’s put in an offer. I did a bunch of research to come up with what I thought was a little bit lower than a “fair” price to get the negotiations started and after two days and some back and forth with the sellers, we had finally bought a place.

The search was over. M and I were finally going to be homeowners. We have moved into our new place and let me tell you—it’s a very special feeling knowing that you own the walls around you, the appliances you cook with, and the closets you put all your crap in.

I love it.

Stay tuned for another post on everything I learned from this process…there is a lot to cover!

This post was included in the Carnival of Money Stories and the Money Hackers Carnival. Make sure to check out the other posts included.

My arms have lash marks on them, my feet are swollen and sensitive to the touch, my legs are sore, and running hot water over my hands makes them burn like Tabasco. No, I did not get tortured over the weekend, I moved.

And it sucked. It rained the whole time and going up four flights of stairs with heavy boxes and boxy pieces of furniture is not how I like to spend my time. You would think that now that it’s over (for the most part), I would look back and say “it wasn’t that bad.” But I’m not going to do that. It was the worst move I’ve ever had. Who knew you could accumulate so much crap over three years? Sure, buying a new place is great, but moving is and has always been a painful thing.

Anyway, enough whining. I’m curious to start a conversation on whether it’s worth it to pay for movers and how much it’s worth to all of you out there. I paid $250 for two people that M knows through work to help us out. I rented (and drove) the U-Haul truck ($36) and I was right there with them carrying stuff back and forth. But from what I hear moving can cost anywhere from $500 up to $1,000. Four years ago, paying any money seemed ludicrous to me, but I”ve come around. Let me share why.

The first time M and I moved, I figured I’d do it all myself. And I did, until I realized there wasn’t any more room in the U-Haul and I was sore, tired, and hungry. This was around three and a half years ago and that’s when M’s helpers first arrived and saved the day. They move stuff for a living so they knew how to properly pack up a truck—it’s like playing Tetris at a bigger scale (but not as fun). So when we paid them for their help I thought it was totally worth it—they saved the day.

This past weekend I was even more thankful. There was twice as much stuff, four flights of stairs (last move had an elevator), rain, and some heavy furniture. I think $250 for two guys for five hours is a steal.

So I paid around $300 total to move, which is pretty damn good. But was saving all that money worth it? Our sleeper sofa got damaged and we’ll have to replace it eventually (which to be fair we were considering anyway) so there are other indirect costs associated to it.

Did I mention how horrible it was and how banged up I am right now? That got me thinking about paying a little more. I guess there are movers out there that you don’t even lift a finger and they do it all. And then there are movers that even pack your stuff up for you—you don’t even have to pack a box yourself! That’s probably a bit much—unless you’re really lazy. But I would definitely consider paying upwards of $750 to have all the heavy lifting done for me—it was painful and I’m going to be feeling the effects all week.

What do you think? Is moving not as bad as I’m making it out to be? Would you spend more money to not have to feel like you went 12 rounds with Manny Pacquiao?

UPDATE: I started up a conversation on the GetRichSlowly forums on the topic of moving and thought you all would be interested. People have some great moving tips over there…especially on being busy the day an unorganized friend is moving!

Oh look! I hate moving so much I bitched about it again a week later!

Image by Wetsun