I Think We Just Bought a House. OMFG.

It was bound to happen. After 2 years of on-and-off and very on and very off and very on again looking for a house to buy, we put an offer in and won. Or, at least I think we did. Our sellers supposedly picked us, and they’re signing their counter offer that we signed in the morning.

This is a huge deal. I’m so tired of the entire process that it just feels like a huge relief to be “done” with it (even though our home ownership journey is just beginning.) In order to not totally get in over our head in Bay Area real estate (which is so easy to do) I made some simple rules about buying…

  • NO crazy bidding wars or unethical negotiations
  • Keep mortgage to under ~$7000 / month with space for FIL (who also will contribute to mortgage for a few years)
  • Buy in a neighborhood I can see us living in for many years
  • Buy a big enough lot to be able to expand the house if we want to stay
  • Buy in an area that, if not super close to current job, is close to a strong job market with future options
  • Buy a house that isn’t a fixer upper (ie nothing clearly falling apart, everything generally livable for 5 years without changes)

I think we got most of the above. I feel like we have been dealing with HUMAN sellers, which is nice. They apparently picked our offer over a higher bid because they really liked the heartfelt letter I wrote. I had heard of people winning house buying bids with letters but I wasn’t sure that was a real thing. Apparently, they liked us, because we’re real people, who want a real house to raise our family in. I guess that struck a chord with them. Or maybe my realtor is lying to us. In any case, I feel like while we’re paying A FUDGE TON for this house — both buyer and seller are winners here.

The risk I’m taking is that I am placing a bet on being able to sustain my current job for 15 more months, which includes 5 months of maternity leave (I can get laid off during maternity leave but it’s less likely than if I were working and at risk due to any performance issues — which isn’t a problem right now anyway as I’m finally kicking ass and taking names at work.) So that’s basically 10 working months to vest all my stock. I’ll sell it on vest, which will help me hit my other goals for next year:

  • superfund 2 529 accounts $75k each ($140k total)
  • max out pre-tax 401k, husband’s solo 401k, AND my after-tax account (~94k towards retirement)
  • max out ESPP plan (~$21k)

By doing this, I also can move towards my continuous goal to fix my portfolio diversification — the retirement funds are getting a lot of bond funds and international funds to move away from being too heavy in large cap US stocks. It will take a few years to balance that out, but I’m getting there. Avoiding selling my large caps because they are like 75% cap gains right now and my cap gains rate at the moment is close to 35% with state and fed.

We’re trying to get to $450k cash in hand for down payment, close, and emergency fund. I think after I sell off my upcoming RSU vest this month we’ll be about there.

It’s crazy to think that this is possible… going from basically $0 in 2005 to where I am now. I really don’t know how I got here (well, I do, I tracked it all on this blog) but it still feels like a dream.

Buying this house is terrifying. We are going in no contingencies, as one must do around here to win a house — and giving the owners a 30 day “rent back” (ie live free for 30 days gift.) This would not be a huge deal except I’m due in mid January, and this puts our move in date around end of November. While my husband has promised to do all the hard parts of moving and I can just sit and point to things (and despite what my friends think we don’t have THAT much stuff since we live in a 1 bedroom) it still gets a bit scary thinking of moving in late Nov/ early Dec. It’s possibly at that point something could go wrong with my pregnancy, and that will make moving very difficult for my husband — having to manage moving, kid, and me potentially in the hospital. I’ll be 32 weeks or so at that point, so hopefully it won’t be an issue. But really it’s cutting it close.

Even though owning a home is NOT an investment and is NOT a financially wise decision in a HCOL area like the Bay Area, I feel really good about this purchase. I feel good that the home isn’t perfect and it’s under $1.7M. Anywhere else in the country this sounds like a lot but here it’s really… well… it’s a lot but it’s not much in terms of what you can buy in a house. I like that I’m compromising and getting a 3 bedroom and my FIL will live in the big room and we’ll be living in the smaller 2 rooms. I like that it has room for improvement and that I will enjoy going for walks in the cute neighborhood everyday and love how the neighbors say hi to each other and how in a big sprawling city it has a similar vibe to where I grew up on the east coast. Sort of. At least enough of one where I look forward to meeting my neighbors and maybe even, gasp, making some new friends.

I could have moved to the east bay and spent even less, but that didn’t make sense for many reasons. This price point makes sense to us. I opted out of the peninsula because bidding wars were insane and — when I saw a total fixer mess that we looked at a year ago (that sold for $1.5M) listed at $2.2M with a half-decent flip job, I knew it was time to give up on that city dream. At least for now. Probably forever (I’m really into this 2.65% 30 year fixed loan so it will be hard to find a reason to leave unless rates are this low again and I am super wealthy in a few years.) This is a good, solid house. It has its quirks. The chimney may be slowly detaching from it (ok, that is something I’m worried about and need to get looked at.) But overall, it’s solid. I will feel happy coming home to it everyday. I will feel happy looking out the window at the cute house across the street that reminds me a little bit of the house I grew up in.

I’m glad we didn’t settle on the things that matter the most.

I am so fucking terrified but also excited. I’m turning 37 and buying a house and having my second kid (of maybe 3 kids?) and I’ve kept this job for 3 years as of next month and overall–for me especially–things are going pretty darned well. Sure, the world is falling apart, we have a sociopath for a president and may end up in a civil war come election season, and COVID is still lurking in every corner of air where someone might cough or laugh or breathe, but I feel strangely hopeful. Like, maybe it’s going to be alright for a little while. Like I am not just working and surviving for mere survival.

Seeing my son light up about the “green grass” in the home’s yard — “need to run! need to run in the grass!” he exclaimed — I knew this was the one. I want him to not be stuck inside a tiny one bedroom apartment all day. I want him to be able to run around the yard safely fenced in. To have a little swing set in the backyard and to one day, post COVID, have friends over. To have a house of our own. Life is so fucking short. I’m ready to start living it. For $7k a month. Or, you know, whatever it costs.

 

 

 

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9 thoughts on “I Think We Just Bought a House. OMFG.”

  1. Congratulations! You must be so thrilled. It sounds like this house is checking off virtually all of the boxes you had, and at a good price! Were you able to get it for exactly asking price? May I ask where you are getting a 2.65% 30 year fixed loan? What are the closing costs going to be for that?

    I think you guys will be really happy in this house for a long time (maybe the rest of your lives) and in the Bay Area, it will likely appreciate at 7+% a year.

    1. I don’t know if it will appreciate 7% a year. If it does, that will certainly help with the wealth building goals (though we will have to be extra careful to not have too much of our networth concentrated in our home!)

      The home isn’t perfect, but it works. I hate that I had to spend $1.6M for a home that isn’t perfect, but that’s how it goes here. Location matters most. This isn’t the best location but it’s good. I’d give it a B in terms of location in the general area if you’re looking to buy in that area.

      Was able to lock in 2.65% 30 year fixed with 20% down with Wells, with their relationship discount (have $1m in assets at the bank.) We’re actually borderline right now as we had about $1M then stock market went down and we had to put down $50k for escrow so we’re trying to move around a few more funds to get them over! If we don’t get that money over in time I think we’re at 2.8%. We can also buy points to bring the rate down to 2.25% (!!) but I’m thinking that doesn’t make sense. Even though – man, 2.25%.

      Oh, closing costs seem very low. We need like $20k to close including our taxes and interest prepay. They gave us a $1500 credit for their fees. I just paid $500 for an appraisal. It’s not bad.

      I feel like if I was a bigger risk taker I should have bought more house. But I think a lot of people are thinking that because houses are getting bid up and I also didn’t want to deal with a bidding war. We supposedly went up against one buyer for this house and they offered more but we won with a letter. So that was a positive process and I feel really good about that. We actually bought for under the zillion/redfin estimate, so I also feel good about that.

      I don’t feel good about how much I’m about to put in this house up front to make it livable for us.

      1. 2.65% for 30 years fixed is killer. Even 2.8% is incredible. In 5 or 10 years, that loan will essentially be free money when interest rates eventually rise. Even still, I would not buy down to 2.25% as I imagine those points would be pretty expensive. And although a larger house could potentially have paid off in the long run and been worth it, I think you set your criteria well. With your large taxable account, you could potentially weather a long period of unemployment without losing the house so I think it was a smart move. I used to live in the Bay Area and realize that perfect just isn’t going to happen. Locking in a “B” is a huge success, in my mind. And the fact that you got it under Zillow/Redfin estimates and by not offering the highest price also sounds like you got a good deal.

        1. Thanks for this comment. I keep telling myself all of these things. We’ve been looking 2 years, and at the end of the day while this house isn’t perfect, it’s the right house. I think between COVID and the wildfires for better or worse we purchased a home from an older couple who probably preferred to sell quickly vs having people in and out of their house for weeks. Our offer was fair, they asked for a little more than we offered (my realtor encouraged us to go higher on our offer and I constantly pushed back on that, so I feel good with going in at list, knowing it was a fair price.) There were larger houses we looked at around the corner that went 1.6 and 1.7, but their lots were much smaller. This one block has oversized lots (for the area.) It just felt like a good deal where we could either expand (prob not with high construction costs but who knows) or move in a few years. My biggest concern is how it will never make sense to move with a 2.65% rate! Oh well, a good problem to have.

  2. WOW!!! I’m so happy for you. It will be so nice setting down roots, expanding, and having a yard for the kiddos. You’ve patiently waited, sacrificed, and earned a huge amount of financial stability. You have plenty of years of freedom saved if it were needed. So no need to worry. If all the jobs somehow didn’t work out over many years, you can always sell, and likely sell at a gain. But, you said you were kicking ass right now, great job! The fed has said that will allow high inflation of about 4% annually while keeping interest rates low. This should boost the housing asset prices further. Your interest rate is amazing. The max debt to income max is about 45% where I live 🙂 I’m glad to see you and your family live your life where you will be happy. I’m excited to read more about your new adventure!

  3. Wonderful! Congratulations! I’m a big you’re going to regret it based on how well you’re doing financially and because you have a second kid on the way. A house becomes much much much more valuable once you have kids. In fact, you might actually wonder why you didn’t buy a house earlier.

    Lifestyle first. As we all know, life is not certain. Might as well spend money on living a better life now.

    Good luck with your father-in-law living arrangement.

    Sam

    1. Thanks! I feel good about the purchase. The $7k a month is scary — my FIL paying $2k a month makes it less scary but then… I’m living with my FIL for the foreseeable future. He’s a pretty cool guy an we get along, but I still value my privacy and it’s still going to be an adjustment. But I think it’s worth it… $2k a month for a few years plus free part time childcare isn’t a bad deal, even if we live in a tiny room for a while. I just hope I don’t regret the new commute!

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