The Costs of Buying and Financing a House

We’ve got our final cash-to-close number for the house – and even after we put the down payment, pre-pay 9 months(!!) of escrow, buy all the new appliances we need, and pay the movers to actually move us in, we’ll still have about 6.5k left over to do with as we please.  We already have a list of things we want to buy for the house to “improve” it – like blinds, a humidifier, and a deck – in that order most likely.

What does it take to buy a house?

We’re putting 20% down, we have a 3.875% rate (no points), and we’re borrowing just over 293k.  Some of these costs are based on the APR and the purchase price, so that’s why I give background :)  I’ve rounded off the numbers using the standard round down if less than 50 cents, round up if more than 50 cents.

Underwriting/Processing fees: $1297

Appraisal, credit report fee, etc: $844

Title Charges (mostly lender’s title insurance): $3119

Taxes/fees to the local governments: $3967

HOA origination fee: $200

Total closing costs (that we’ll never see again): $9427

Then there’s the pre-paid amounts – this includes the first year of homeowner’s insurance ($420/yr through USAA!) 1 day of interest, 3 months of homeowner’s insurance, and 9 months of property taxes (there are three: “Property taxes”, “city property taxes”, and “school taxes”).  If I didn’t escrow, the rate would have been > 4%, and there’s no way I can make that up in interest on what sits there waiting to pay taxes.

$7215 (most of which is school taxes of $4464 <- about a year’s worth of property taxes in NoVA)

For a grand total of: $16,642 in closing costs and fees, about $9500 of which is just “gone” to never be seen again (aka the “cost” of financing/purchasing).

Now, there are likely better rates available, and better closing cost prices, but we’re getting a 35k credit from the builder for going through their lender, which pretty much makes up for any extra costs (and lowers our property taxes over time since they’re based on the purchase price of the house, and the purchase price is where that 35k came off).  That’s hard to compete against.

Closing Date Set!

We now have a closing date set for April 30!  They’d have had to get special permission to do the 1st, so we said OK to the 30th.  We’ll do our final walkthrough on the 24th to give them the list of “little things” to fix prior to closing.  I’ve placed a call out to the moving company to hopefully get them up here on the 1st to move in (or even afternoon of the 30th since closing is at 9am).  I’m still waiting for them to call me back.

We’re ready to do this!

Last week’s pictures (Thursday evening):

The kitchen from the living room.  All of the hardwood is sitting on the left waiting to be installed.

  The tile in the master bath/shower is done.

  This is our “main” kitchen sink and looking into our sunroom, which will be Daughter Person’s playroom (tentatively).

  Some of the granite is already installed.  There’s some hardwood under that butcher paper.

 View from the front door (dining room and living room)

Detailed Financial Picture – April 2015

March’s Numbers

As of April 7, 2014, we are $12,000 in debt without a mortgage (yet).  We currently have $591,430.79 in assets.  Our investment accounts are at $461,854.73. Our Net Worth is $579,430.79, up from $566,247.28 last month (2.33% increase).

I hate seeing so much money sitting in the bank collecting a pittance and not paying off the car loan.  We’re still on track to pay it off before the end if the year, but after almost 2 years of aggressive debt paying, this slow just above minimum payment is annoying.  It’s all 0%, so we’re not paying for the privilege of borrowing money, but it’s still annoying, we’d like to get rid of that payment.

This month, we spent a significant chunk of change on odor neutralizers and air fresheners for Dad’s car.  A rodent crawled in and died, and we can’t find the carcass.  We took apart the entire trunk and backseat – luckily, it didn’t die in the air/heat system – we can open windows and run the air.  What’s worked best for us has been this charcoal bamboo sachet that we got from Amazon.  It takes the smell from gagging level to bearable.  I’ve been driving Dad’s car to and from work (45 minutes each way) so that Daughter Person doesn’t have to be in the car.  We even took her car seat out so it doesn’t absorb the funk.  Meanwhile, I’m getting great gas mileage since his car gets better mileage and I’m the one with the longer commute.  We’re seriously considering trading the 15 year old Accord (aka rat-mobile) for a newer Prius V for me to drive.  I have perfect driving conditions for it: stop and go in traffic.

No news on closing on the house, but we have electricity, and the sales guy estimated 3-5 weeks after that happened it would be “completed”, and 2-3 weeks after that for closing.  So, we’re looking at early/mid May for now.  Theoretically, I was supposed to hear from the closing coordinator last week, but I didn’t.  I was going to give them the benefit of the doubt around the holidays and call today instead :)

Debt (in the order we’re paying it down):

  • Car loan (0%): $12,000 (-500.00)

Total paid off in March:  $500

March 2015 Early Retirement Progress

We contributed $5,096.15 this month to our retirement accounts, and we lost $2,508.27 in investment value this month. 

This was a pretty “normal” month in terms of contributions – no one time contributions, no extras from my Fidelity cash back card (although next month that will really have a lot – and the following month once we buy appliances – on the cash back card of course!).  We’ll have to contribute more to our Roths later this year to make it to 70k for the year, but that’s OK, I plan on setting aside that monthly amount in July, and probably putting it all in Dad’s account next February – once we know we’re under the AGis for the full contribution.

The markets seem to be slowing down in anticipation of the Fed rate increase and not knowing when that is, but I suspect it’ll still be up for the year, just maybe not the 20+% it was last year.

We got a letter in the mail allowing us to change the terms of our HSA to “more accurately reflect our goals”.  We have Optumbank, and our previous option was a minimum of $2000 in the “cash” part of the HSA, and $3/mth investment fee plus a $3/mth account fee (completely covered by Dad’s employer).  We sent the paperwork back to be a “investment” HSA, which requires a minimum of only $500 in the “cash” part, and $2.50/mth investment fee plus a $3/mth account fee, $2 of which will be covered by Dad’s employer, so we pay an extra $0.50 in fees per month, but we have the opportunity to invest $1500 more than we currently do – which in VFINX, I think we’ll make up all of the fees during most months.  The online account information hasn’t changed yet, so I haven’t been able to see this in practice yet.  The account fee can be waived if there’s a minimum of 5k in the “cash” part of the account – which kind of defeats the purpose.  I’ll need to watch that account to see if the investment option continues to make sense (so far, it hasn’t, but it’s only been 3 months).

In house news, which really deserves its own post: we have an electric meter!  I should know by Thursday or Friday when closing will be, and I’ll call and lock in my rate then (as well as finish up any other paperwork the lender might need).  We cannot wait to move in!

One quarter into the year, how are your contributions coming?

2015 Totals

In 2015, so far, we’ve contributed $19,521.22 (27.89% of our goal of 70k), and we’ve gained $11,486.76 in investment value (56.69% of our planned total).

New House Delays

Theoretically, we should have been bale to move into the new house sometime in April – I’m thinking it may be May at this point.  We still don’t have an electric meter, and no clue on when that will be installed.  It has to be installed by the electric company, and my guess is that they’ve been busy doing other things this winter – like keeping the power on for everyone else.  Once the electric meter is installed, we’re looking at at least 3-4 weeks before the house is finished, then 2-3 weeks after that to close and move in. I’m going to put my money on sometime in May.  The worst part is that the builder has no clue when the install will happen, so therefore, we have no clue.

I’d really like to get in as soon as possible, for a few reasons:

  1. interest rates may rise in June, I’d like a rate < 4% thank you very much
  2. We’re all ready to move out of my mom’s house – desperately!

We can of course, walk away at any time and just be out our 8k escrow – and we’ve seriously considered it.  8k is a lot, but not that much in the big scheme of things, especially when we’d really like our own place.  Unfortunately, we’d have to buy a place and remodel the kitchen (at least), and that would take 1.5-2 months anyway, so we’re not really any better off if we go that route.

There’s no recourse available to us yet other than losing our 8k.  *But*, the builder can opt to raise the price 30 days after the estimated completion date, and we can simply choose to walk away at that point (with our 8k).  But that’s only if the builder decides to try to raise the price on us.  The next opportunity to walk away without losing the money is in early September – one year after the original contract.  For now, we’re just going to sit tight and wait.

We’ve put a lot of things “on hold” until we can move – like saving for a trip to Disney next fall using CC points, because we can’t be applying for new cards when we’re waiting to get our mortgage approved.  Dad is considering changing jobs, but we really can’t until the mortgage goes through. We spend a lot of time in the car driving to and from activities for Daughter Person, because we signed her up closer to the new house rather than my mom’s.  We’re also not as aggressively paying down our car loan until we get the final damage from closing costs.

Right now, our life is full of “when we (finally move)” wishes.

Detailed Financial Picture – March 2015

February’s Numbers

As of March 5, 2014, we are $12,500 in debt without a mortgage to speak of (yet).  We currently have $578,747.28 in assets.  Our investment accounts are at $454,222.97. Our Net Worth is $566,247.28, up from $551,947.34 last month (2.59% increase).

Not as much of an increase, but we didn’t have the same contribution assistance from Dad’s company this month.  Just a lot of improvement in the markets.

The outside of our House

The outside of our House

We have siding on the house (mostly), the kitchen cabinets are mostly installed, and most of the outlets, built-in lights, and faceplates were installed as of earlier this week.  Not sure we’ll be moving in by March 26, but they might be finished and we might be on the path to closing by then.  We’re still waiting for the electric company to install the electric meter before we can schedule inspection and closing.

The kitchen cabinets

The kitchen cabinets

We’re all ready to finally move out of my mom’s house! We’ve been able to put $3400 (at least) aside every month towards closing, moving costs and new appliances while living with my mom, but we’re done and ready to be on our own again – with a garage, and our own kitchen!

Debt (in the order we’re paying it down):

  • Car loan (0%): $12,500 (-500.00)

Total paid off in February:  $500

February 2015 Early Retirement Progress

We contributed $5,902.70 this month to our retirement accounts  We gained $16,648.42 in investment value this month. 

February made up for January’s market slides, we “made” almost 70% of our annual total in the first two months of the year.  If we keep “making” this much money, we could retire on it now – too bad it’s not consistent!

This month, we dropped an additional $750 into our Roth accounts for 2014. I’m counting them this month since they were a bit spur of the moment. I added $500 to mine to get it above a $10k balance, and I added $250 to Dad’s because we needed to open a Roth for him anyway and that was a nice round number we could afford.  Most of his is invested in ITOT at the moment since we don’t have $2500 to get to FSTMX.  We likely won’t be contributing any more to Dad’s Roth until we see what our taxes are like in 2016, so it might as well gain us some money in ITOT.

Once closing happens (oh please $DEITY soon!), we’ll know our cash flow better, and I’m hoping to start setting aside money to put in Roths next year after 2015 taxes are done.

2015 Totals

In 2015, so far, we’ve contributed $14,425.07 (20.61% of our goal of 70k), and we’ve gained $13,995.03 in investment value (69.07% of our planned total).

Teaching Little Ones About Money

This weekend, we had our first money lesson with Daughter Person.  I think it went pretty well.

Daughter Person got some money for her birthday, and has been keeping it in a “wallet” with her toys.  She’ll play “pretend store” with me where she dumps a bunch of toy jewelry in my lap and ask me how much something is.  I’ve always been pretty simple and say most things are $1, with a few being $2.  She’s using the real US dollars to “pay” me, then I give them back to her to put back in her wallet.  I had a pretty good idea of how much was in her wallet: $7.

We went to the zoo for a class, and we’re allowed to remain in the zoo afterwards, so we went to the aquarium (she wanted to see the fish, and we were happy to be out of the cold!).  In the aquarium is a store with all kinds of stuffed animals, and Daughter Person wandered in there and started looking at things.  She asked if she could buy something, and I got this bright idea to remind her that she had $7 at home, and that Mommy would give her $7 now, but she had to give Mommy $7 when we got home.  She “got” it, and started looking around. Dad and I started looking around also, and realized that there was absolutely nothing that she could get for $7, so I offered to give her $3, so she could buy something that was $10.  (I completely left taxes and our membership discount out of the discussion).

She spent her time looking around to find things that were less than $10 – there was a small pile of little stuffed animals for $9.99.  She’d ask how much they were, and we’d look and answer with “you can afford that, or no you can’t afford that”.

She settled on a red-eyed tree frog (for some reason, she remembers that episode of Diego really well…).  She picked it up and continued to look, but that’s what she wanted.  So, I gave her $11 to give to the cashier, and told her to pay. I asked over her shoulder about our membership discount of 10%, and handed over our membership card as well.  She handed over her money, and handed back to me whatever the cashier gave her (there were coins involved).

Then, when we got home, she willingly gave me her $7 once I reminded her.

I think it’s time to institute an allowance and let her buy her own toys for the most part. I didn’t think we’d have to worry about the allowance until she was older (like 5 or 6)!  If you have kids, how do you handle the allowance?  Do you tie it to chores?  Do you just give them a certain amount of money?

2014 Roth Contribution – $500

For the first time since I’ve been married (2008), I’ve contributed to a Roth account. I didn’t have much set aside, so I limited myself to $500 into my Roth for 2014. We just barely scooted in under the contribution income limits for 2014, and I wouldn’t have been able to put in the full amount anyway. $500 was enough that I could scrounge up from “extra” money laying around, and we’ll be getting about that much back from our taxes, so I can “float” the $500 in our budget until we get the money from the state of VA.

$500 is also just over the magic number I need to add to the account to qualify for Fidelity’s Advantage class (vs Investor class), which saves me 0.03% in fees (0.10% for investor vs 0.07% for advantage). This is why I really did it :)  I have $200 leeway for the markets to decline and still remain above the 10k minimum needed. I now only have investor class funds in my taxable account, where I just managed to get the $2500 minimum to buy into FSTMX; so it’ll be a while before I qualify for the advantage class fund there.

We should qualify for contributing 2015 funds as well (hopefully the full amount) since I’m finally maxing out my 401(k) contributions and lowering our MAGI. I’m budgeting to put about 75% of the maximum 11k in for 2015. I’m hoping to start a specific budget line item for our Roths in June/July with $950 each month – then doing the actual contributions the following February (once we can confirm that our MAGI is under the contribution limits). The exact timing depends on how closing goes down, how much we have left from what we’ve saved, and what our monthly cash flow looks like.

Did you max out your Roth contributions for 2014?

Detailed Financial Picture – February 2015

January’s Numbers

As of February 6, 2014, we are $13,000 in debt without a mortgage to speak of (yet).  We currently have $564,947.34 in assets.  Our investment accounts are at $442,758.19. Our Net Worth is $551,947.34, up from $532,971.98 last month (3.56% increase).

The markets are going back up (at least for today), and so are our investment accounts.  It didn’t hurt that we added about 8k to our accounts in January.

Our house still didn’t have any siding on it as of this past weekend, but we can’t see inside the house any longer (the garage door has been installed – and we were able to see into the kitchen through the garage).  I sent an e-mail off to the sales guy to ask “permission” to go inside when we drive by this weekend, or if he’d tell us what the progress is :)  It’s recommended that we lock our rate with the mortgage company when the cabinets get installed.

I have a feeling that we’ll be refinancing very shortly after getting the mortgage.  The mortgage company asked me to write a letter explaining why my income dropped between 2012 and 2013 (uh, I got a salary plus bonuses and the bonuses were lower?), and why $1500/mth was being taken out of my paycheck and sent to Vanguard.  Seriously?!?!  Dad didn’t have to write any such letter, despite him also contributing the max to his 403(b) *and* having part of his W2 as bonuses based on how well the company did.    A lot will depend on their rates as to how quickly I refinance.  I may give them a month or two of trial if their rates are sufficiently low.  The estimates they’ve given me so far have been 4.75% – which is outrageously high (and the loan officer admitted that, but it was “safe”) – I’d be on the phone to refinance immediately after closing if that’s the rate.  Unfortunately, the builder is giving credit against our options only if we go with this lender (FBC Mortgage), and because we’re planning on paying off the loan early, the rate would have to be criminal before it made sense for us to finance elsewhere.  Doesn’t stop me from refinancing immediately though!

Since it’s 2015 and we started the year with no debt other than our car loan, I’m going to just drop off the other debts below, and will add the mortgage back in once we have one.  It’s actually driving me nuts seeing the ability to pay off the car sitting in my bank account, but earmarked for something else.  I’m hoping that I’ve really saved way too much for the down payment and I’ll be able to put some of what’s left to paying off the car faster.

Debt (in the order we’re paying it down):

  • Car loan (0%): $13,000 (-500.00)

Total paid off in January:  $500