A few months ago I decided to move in with Eric. I started looking for a new place for us to share and discovered that the rent is too damn high in Portland. So I stopped renting.
I’m privileged. My family could give me enough for a down payment. My modest but plenty-for-one-person wages and almost no debt (also from the privilege of my family being able to pay most of what I owed for college after financial aid) allowed me to qualify for a mortgage that was almost enough for a house. Adding the two boons, I bought a small-but-not-tiny house in great condition just west of 82nd Street in SE Portland. One by one, several of my unmarried lady friends have discovered that they can’t afford to rent what they can afford to buy and made the jump. (Oddly, none of my unmarried dude friends have become homeowners.)
I’ve avoided publicly revealing that I bought a house until this post because the majority of my friends (whether married or unmarried) cannot qualify for a decent mortgage—because they are underemployed, paid terribly, and/or have crushing student loans, and/or are not financially able to save for a down payment, and/or don’t have families who can/will help them. I don’t want to brag when my friends are struggling. I didn’t earn the ability to buy this house.
Most of my unmarried lady home-owning friends did find a way to buy their houses without family help. Two of my friends used FHA (Federal Housing Administration) loans. This allowed them to buy houses with only 3.5% of the price of the house for a down payment. Conventional loans require 20% as a down payment. The catch with the FHA loan is that you have to pay mortgage insurance which keeps the bank from getting screwed over if you default, but does nothing to help you out of trouble. The annual premium for FHA mortgage insurance was recently dropped to 0.85% but that still means a couple hundred dollars a month (for a home on the lower end Portland prices). Nevertheless, it’s cheaper than renting, my friends say. There are other alternatives that get you out of having to pay mortgage insurance, but I’m not very familiar with them.
If you like where you’re renting, stay. Dig your heels in and do everything you can to never move. If you must move, I recommend looking into your buying options. And if you’re willing to move just slightly east of 82nd or south of Woodstock, the housing prices drop dramatically.
The main advantage of buying a house is that you (hopefully) build up equity over time. Your “rent” money (in the form of mortgage payments) doesn’t disappear into the ether (your landlord’s mortgage) but will mostly return to you if you decide to sell. Of course, if we get The Big One and Portland is destroyed, our remaining real estate will be comparatively worthless and the surviving renters can feel very smug (when not crying over dead friends).
Here’s an extremely simplified outline of my buying process.
1. Got pre-approved for a mortgage through my credit union so I had an estimate of what I could afford. (quick online system)
2. Got a recommendation for a realtor through a friend. (Gavin Shettler at Living Room Realty)
3. Met with realtor to discuss my desires. He suggested I use a mortgage broker because they light fires under asses to move the deal along quickly.
4. Met with mortgage broker and discovered I could qualify for significantly larger mortgage if I paid off my remaining student loans. (Decided not to do it.)
5. Watched the Redfin app on my phone like a hangry hawk.
6. Spent two weeks looking at houses with realtor, mostly in two marathon Saturdays. Looked at about 20 houses, including a few open houses I attended on my own.
7. Quickly made an offer on a house at asking price.
8. Offer accepted!
9. Inspections went fine. ($)($)
10. Mild demands for modifications to house accepted by seller.
11. House appraised around asking price. ($)
12. Acquired homeowner’s insurance. ($)
13. Lots of paperwork to get the money to the right people. ($$$$$$$$$$$$$$$$$$$$$)
14. Piles of paperwork to read and sign to agree to the house sale.
15. Get the keys!
16. Have an anxiety attack/meltdown and move.
$ Buying a house costs more than just the price of the house. There are a lot of costly fees, the most insulting of which involve paying people money in order to owe them money. $