Today I sent bouquets out to my realtor and my lender. They were so very good to us. We aren’t big spenders, we are actually in the peasant category, however, they treated us like we had millions to throw about.
Bali and I spent years saving like crazy, living frugally, going without, building our credit, and hoping, dreaming, praying, and doing all the little steps in between to prepare for that big time when we were finally ready to join the tribes of home buyers.
Only one big problem. By the time we were ready to play in the little leagues, we were completely priced out of the market with the soaring housing prices. We live in Sacramento and this area used to be one of the last affordable areas and now average homes are starting at $300K to $500K. The homes that were cheaper are being scooped up at incredible speeds by investors with cash and private lenders backing them. I watched the horror last summer as homes around $200K and under disappeared faster than I could get the computer turned on.
Still, that day came that I woke up and I knew it was time. God calls us to go forward at times that don’t seem very logical or smart. But when He nudges you on, you go without question. He knows when He’s about to perform a miracle.
We had $30K saved and we qualified for $130K loan. I choked on that figure and began to immediately look at double wide trailers. I actually found some adorable trailers but they had no yard. With two growing boys and two dogs, a yard is imperative.
I searched far and wide, I traveled to other towns that were small, dusty, and sad. I traveled to neighborhoods that looked like I might need a police escort. It was depressing, to put it mildly. What we could afford was a home that would need so much work that it would make more sense to just burn it down. We were looking at neighborhoods we would not have been safe to walk in.
I finally found one home that was in our price range if we spent every cent and borrowed some. I felt hope. Someone offered more and we couldn’t compete. I cried all night. I just felt so hopeless.
I was just about to tell my husband that we needed to put the dream on hold for a couple more years and see what happened to the market. Sadly, all we can hope for is a crash in the housing market but that isn’t very Christian now is it? We could also start up the hardcore saving and frugal lifestyle again. Not that we every left it but I was starting to relax with the money lately.
And so we went back to the frugal ways. I decided to make a game of it because if you don’t you get tired of it real fast. You have to make it a challenge and keep your eye on the prize. If you are working toward a goal you can get inspired.
I got so cheap my pennies were crying for mercy. I talk about this in other blogs. But in short, we cut the groceries in half, didn’t buy or spend outside the household bills, conserved on utilities, made everything stretch.
Then one day I started looking up foreclosures. Now, these can be tricky. Some are very damaged and therefore a bank won’t give out a loan on it, however, HUD homes have been kept up to state standards. You can get all kinds of loans. It was a message I was supposed to get because days after that I came across a HUD home, put a bid on it and won! We won because no one else bid that night. What a gift!
Ok, so how does one win in this market? There are some modular homes that are adorable, even trailers that are built well and very nice. You can get these for under $50K. If you need a yard for pets and kids than your other option is to get a fixer-upper in a good neighborhood or start looking in smaller towns were homes might still be cheap.
The other things to look at to prepare to buy a home:
- Build those savings. You may not be able to do a 20% down but, if you are first time buyer, you can get an FHA loan or even conservative loan and put only 3% down.
- FHA loan is for first time buyers with not the most stellar credit. Conventional is pickier.
- Clean up your credit. Get a secured card through the bank. Just get a small limit such as $200 or $300. Every month buy gas and groceries with the card, spend it all and then completely fill it up. This will raise your credit score fast and not get you into trouble.
- If you have debt seek help from a local Credit Counseling Agency that is nonprofit. They have solutions. If you want to do it yourself look up Daveramsey.com. He teaches tricks like the Snowball Method to getting out of debt fast.
- Learn a frugal and thrifty lifestyle. It will serve you and your family always. Read my blogs, I have tons of advice and I have books on amazon for the one income and fixed income lifestyle.
- Make a challenging game out of the whole thing. It can be fun. Especially when you start reaching your goals and winning prizes like a house!
We did get the house with the yard. We couldn’t afford the town we live in now, we had to move South about 35 miles and into a much smaller town. I’m actually happy about this now. Our house has good bones but needs a lot of patching, painting, and filling. Because we have the savings and chose to only put down 3% we will have enough to do all the work and buy all the materials.
Be open minded. Very, very open minded and flexible. Look in other towns, try short sales, pre-foreclosures, HUD or former section 8 homes (these do qualify for FHA loans). Think about buying land and putting a modular home or trailer on it. Buy a tiny house. Get creative.
This market is crazy right now. I read an article that said prices were at 2008 prebubble highs again and the average earnings of all us worker bees had only gone up something silly like less than 5%. The point is that we aren’t making much more but the housing prices are up at that all-time high that no one could afford 9 years ago. Something has got to give at some point. Don’t get caught up in the madness.
You can still meet this challenge. Get your money in order and have faith. Prepare, prepare, and prepare. Your day will come.