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Tuesday, June 23, 2015

Really Exciting News To Share!

You might have noticed lately that my blog hasn't been as... I dunno... engaging as it usually is? At least it felt that way to me. The biggest reason being that my mind was just elsewhere- there was so much that was on my mind, almost taking over my whole life, that I couldn't post yet on my blog, and since that topic was off limits on my blog, there was a limit to how much I could write about.

But today, finally, I can share the news!

No- I'm not pregnant.
I bet that's what you thought when you read the post title and the first paragraph.


And no, I didn't get this amazing book deal for my cookbooks- still planning on self publishing those.


My big news is probably totally unexpected to most of you readers. And to be honest, it came as a big shock to Mike and myself as well. A little over one month ago, this was something that Mike and I only dreamed about, but never thought it could become a reality. Just destined to become an unrequited dream.

And then, somehow, within the space of just over a month, everything fell into place, and what I thought never would be possible, today became a reality.

Mike and I bought a house!

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Mike and I signing the paperwork on the house, at the lawyer's office today (with Rose's "help").

For those who are in similar Facebook groups as me, this probably will come as a bit less of a shock to you than to others, since I have recently been asking questions about home buying, and some people said that they can't wait to see my post about how to buy a home with a really low salary in my country.



Well, I have no amazingly special post to write about that.

Because the reason that owning a home was just a dream for us is that in my country, housing is a fortune, and down payments need to be 25-40% of the extremely high price of the house, with my part of the country requiring at the very least a 30% down payment.
My husband and I aren't exactly rolling in it. He doesn't make much above minimum wage, and though I try to keep our expenses down, the cost of living keeps on going up and up and up, so saving a large portion of our income each month simply isn't doable.
But, once I calculated that if we even managed to save 1/6th of our income every month, in 22.5 years we'd be able to save up enough for a down payment for a cheap house... assuming the price of housing didn't go up in the meantime- which it inevitably will, because there are many factors making housing prices just go up and up and never come down in my area...
In other words, very much a pipe dream. We despaired of ever being able to own, and honestly, threw back and forth with each other the idea of moving to the US, because maybe we'd be able to buy a home there one day, even though there are many other reasons why moving to the US just isn't a good idea for us... And we knew that eventually we'd be priced out of our community that we love so much, because every year rental prices go up more and more, and eventually we won't be able to stay in our 484 square foot home with our family of 6, but there are barely any apartment available here bigger than ours, and the ones that are are pretty expensive, and getting more and more expensive each year...

Then my mother heard that they were building a housing project in my community, where you can buy a house that isn't finished being built yet, for cheaper prices than ready homes, and she told me to check it out.
I didn't really. Since there was no point. We couldn't afford to buy, so why bother? I'd just be getting my hopes up for nothing.
So she checked it out instead, and got floor plans and schematics and prices.
And told us to check out some more details.
Which I didn't.
Because that price was simply too high for us, there's no way we could buy it. She said she'd help us with a down payment. I said that that's nice, but the down payments are too high- she wouldn't have enough for it.
So then she checked it out.
And told us we're doing it.
I said there's no way- I'd love to buy, but the down payment is disgustingly high.
She said she got an inheritance when her mother died last year, and she wanted to use it to help us with a down payment, as an early inheritance, because there's no point saving up an inheritance for after you die if your kids can really use it now.

So that is "my trick".

I have no secret plans of how to save up enough for a down payment locally on a minimum wage or near minimum wage, no matter how super frugal you are.
The answer really seems to be- have a rich relative who dies. Or have a family member who'll help you out. In my case, it's both- a rich relative who died and therefore a family member has money to help us.

I've done a lot of asking around, asked everyone I know that bought, and even asked the lawyer when we signed the paperwork to buy the house today- if everyone's parents provided them with the down payment- she said nearly everyone who bought, bought that way. People who manage to save a down payment on their own are nearly never living on a low income, are not a single or even 1.5 income family, and do not have kids (or at least not many).

I wish I had something more to share about how to do it, but alas I do not.

For this reason I will be eternally grateful to my mom. Because it means that we're not throwing away money each month on rental, because it means that we won't be forced to move repeatedly and to more and more undesirable places because of ever rising rental prices. And because it means that eventually, even if only in 25 years from now, we no longer will have monthly housing payments, and one day may actually be able to save up enough money to help our kids with a down payment... Even that isn't a given, but at least it's something we can try to aspire to do.

So, now the real question I'm sure you're wondering is- what exactly are we buying, and when are we moving there?

 photo IMG_0178 Medium_zpscjkytpty.jpg
Holding up the blueprints for our house.

It's a 2 floor duplex, with a total of approximately 1850 square feet- nearly 4 times as big as where we're living now! With approximately a 690 square foot yard (we currently have none).

However, we're not going to be living in 1850 square feet. We're going to be living in 925 square feet at first, because we're making it into two apartments- one for us to live in, and one for us to rent out, and to use that rental income to pay for a large part of the mortgage. There is a huge demand for rentals in our area, specifically the size we're making it, so we're not worried about finding tenants, and after the rental income, our mortgage payments will be not much more than we're paying now, and since the price of rentals is always going up, it'll eventually be a larger and larger percent of our monthly payments each month, allowing us to save more and more money each month, hopefully. If we would have just bought a single apartment, the monthly mortgage payments would be much higher than we'd be paying this way, so buying a larger place to split into two means a larger down payment, yes, but eventually will make the place more affordable for us. And if our family grows, and we decide that we do need more space than the 925 square feet, and our financial situation allows it, we will be able to do some simple construction and take one or two of the bedrooms from the rental for ourselves, and rent out a smaller place, and get a bigger living space. But that is just theoretical and for the future... (Yes, I know there are expenses involved in home ownership, and in being a landlord. I'll be discussing that in another post.)

So anyhow, today we signed the paperwork to buy.

The project is supposed to be finished in maximum 2 years from the date we signed, but it is very likely that they will be finished a few months earlier than that, since the building is already in pretty advanced stages...

This is one of the most exciting days of my life.

The only other more exciting and life altering days of my life were the day my husband and I got married, and when each of our children were born.


Inevitably, I will have many, many, many more posts on buying a house, designing a house, building a house, etc... and my future plans, to follow, now that I broke this news.

And I apologize that I don't have any revolutionary ideas about how to save enough for a down payment to be able to buy.
It sucks.
I know, because 2 months ago I was there, thinking I'd never be able to buy.
But a miracle happened. and in less than 2 months, we went from giving up all hopes of ever being able to buy to signing the paperwork today.
I hope you manage to have a similar miracle as well, if you're currently despairing of ever buying.
And I'll join you in really getting upset at the system here, for making it inevitable that either you need to be rich, have a generous rich relative, or have a relative with large assets die to allow you to buy a home... I wish there were a way to change that...

If you are local to me, and you don't mind sharing- did you buy? Or are you renting? If you bought, did you manage to save up for the down payment yourself, and if so, how, and over how long? Or did you get help from parents or other relatives, or get an inheritance? 
If you aren't local to me, and you managed to buy, what percentage of a down payment did you need? How long did it take you to save up for that, or did you get help from a relative or an inheritance to be able to buy?

31 comments:

  1. Wonderful news!!!!!

    Will you be staying in the same neighborhood?

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    1. Yes, thats a big thing for us. We're happy here. I dont know if we'd be happy elsewhere, since we need something very specific in a community. We are buying a 5-7 minute walk from where we currently live.

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  2. That's so amazing, congrats! We rent. Recently there was an amazing opportunity to buy in a building project in our community, low prices like I haven't seen in any other community in the area! It was for a one floor with a small yard, and an opportunity to build a second floor in the future (as a rental or an expansion). We crunched numbers and... just couldn't make it work. We talked to our parents, and they aren't able to help without sacrificing their own lifestyle. We were pretty devastated, especially because all of our neighborhood bought except for us :-/ I still hope for a miracle some day!
    Congrats again!

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  3. I'm so, so happy for you!!!

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  4. Penny this is really fantastic news! I am so excited for you and your family. You should have only good things in your new home! (Is your house in your community proper or the one right next to you where you first lived when you got married?)

    I was wondering how long you would be able to squeeze into your tiny apt!!

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    1. It is in our current community, right on the border of our old community.

      Thank you!

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  5. We bought many years ago when prices were lower. We still had to get help from our parents. Now we are helping some of our kids and ultimately everything will be a tight squeeze. The government has to do something about housing, no question about it!

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  6. Congratulations! And yes, I thought the news was going to be that you were expecting. :)

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  7. What exciting news for you! I live in the U.S. and we own our home. We have lived in it since we got married (21 years in September). Over the years, as our family grew, we have thought about moving to something slightly larger, but never wanted to spend the extra money. Plus, we really love our house and our neighborhood. Now that our kids are getting older, the house seems to be getting bigger again! So I'm glad we stayed. My husband owned a smaller house in a different area when we got engaged, which he sold. We used that money for the downpayment on our current house. He bought his first house with some savings and some help from his parents, but he paid them back over time. I'm curious why it will take two years to build your house? That seems like a long time to me, since new homes in the U.S. go up in several months.

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    1. Red tape. And because its a whole project being built at one time. And because they need to carve away mountains here to do it, and build the roads. And because construction materials here are different than materials in the US. I dont know exactly, but I was told 1.5-2 years most likely...

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  8. Congratulations Penny! That's wonderful news! My husband and I are buying our first home too and went through a similar experience. While we both have incomes that would allow us to buy a house eventually, the saving process is slow and we really want to start a family which we know would eat up most of that monthly savings, especially because we'd need a bigger apartment. Every time we spoke to a lender about our options they'd ask if we had a family member who could help us out which was so frustrating because we were certain we didn't. We were ready to throw in the towel and just put off having a family when his mother told us she knew this day was coming and had been planning to help us with the downpayment. While I wish I could say we were so frugal and did it all on our own, I'm happy to have the opportunity and plan to simply express my gratitude and some day save up and pay it forward.

    I can't wait for future posts about how to renovate and maintain a home on a budget! Also it sounds like you're like us and moving into much more space- any ideas about frugal furnishing? When to DIY and when/where to buy? Penny I'm so excited for you guys and it sounds like this is going to be an awesome new chapter in your life and for us readers on the blog. Wishing you all the happiness and good fortune with next steps!

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  9. Now that you have taken your mortgage and signed on a house, I am going to let you in a little secret that I learned in Book-keeping I course by an amazing teacher. He told us that due to the interest rates, etc. it is smarter to take a shorter term mortgage. Your payments will be lower and the length of your mortgage will be shorter. We just redid our mortgage - and did this. In order to do this, your loan officer has to be willing to play around with the numbers & be patient.
    On a separate note, congratulations on buying a house & achieving your dream !

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    1. Whilst the total amount paid is lower with a shorter term mortgage, the monthly payments are higher (not lower!) but for a shorter number of years.

      This is because the capital is repaid over a shorter timeframe, but overall interest is less since you borrow for less time. It's great if you can afford the higher monthly payments, but sadly many cannot.

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  10. Congratulations. Very happy for you and your family. Your blog has helped me so much in running our household etc.

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  11. i'm so happy for you! What a great gift your mom gave you...and you can share with your own kids.

    (Yeah, I was expecting another Penniless too :) )

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  12. Congratulations!!! Smart move to rent out part of the home too.

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  13. Congrats!!! This post put a big smile on my face - I am so happy for you. I think that is really wonderful of your mother. Shows how much she loves you!!
    Hope you have an easy and smooth transition into the new place :)

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  14. I somehow guessed what are the news when I read the title! Maybe because I'm in the middle of moving from one rental place to another and housing is on my mind a lot these days. Congratulations, those are really wonderful news, and a very nice and loving gesture from your mother. I am looking forward to reading everything about the new place, the move, adapting to bigger space, furnishing, and to seeing what you do with the yard! :)

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  15. Congrats! When we bought our home, I was excited and scared to death at the same time! JUst out of curiosity...signing the paperwork now and not moving in for up to 2 years, when do your payments start? If that is too personal, I apologize. So different than it is here in the US. When we moved when I was 10, my parents bought a home that wasn't quite finished yet, but they didn't "close" on the house until it was complete, which meant payments didn't start until then.

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  16. I'm so happy for you! Knowing your story, this made me so excited for you and happy for you that you are so blessed to have such a supportive mother. I'm so happy for you and your family. This will be great for you and the kids! And you are being so smart about the building project with the apartment to cover your mortgage! I'm so happy for you, it has brought tears to my eyes! <3

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  17. I live in your area and don't have a rich relative (in fact we end up helping our parents). For six years we worked our tails off, lived modestly, and then finally bought in the boondocks. We lived in less than 30 m for four years and my kids had to go to babysitters while mommy was working in the city. It's not an easy or quick solution, but it's one without inheritance or parents.

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  18. Wow Congrates I pray for you to have a nice home and now hopefully you will Just look after it and hope it will be something you can make money from as well good luck from Mom

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  19. we are so happy for your family( I told my husband and kids,) that you were able to buy.

    you should have only happiness and good times! rochel.

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  20. Congratulations! You are a very nice looking and happy couple plus a cute daughter. I'm sure this will prove to be a wonderful blessing for you all.

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  21. We also couldn't afford to buy here, but we are considering a different plan. There is a possibility to buy privately owned agricultural land for super cheap, and since it's privately owned as opposed to government land, it is possible to build on it (ok, not a house from cement, but a simple structure yes). I know someone who bought agri land up north (near the big lake) very close to a really nice community and built a yurt on it and lives there with wife and 4 kids! Another option is of course to "claim" no man's land which exists in certain parts of the country, but this is not for faint hearted. Although the advantage is that if it works you'll never have to pay rent or morgage, and may end up starting a little "village" for other people to live in. I actually recently checked out one such "village" who're looking for more people to join.

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  22. This is so fantastic! Congrats! I love your hair in this pic! You are so pretty!

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  23. Yay! What a great opportunity!! I love the idea of renting out the other side to help pay the mortgage. We bought our first house this year as well. My husband took over the family business a couple years ago, and it has done very well. We kept our expenses super low, living in a corner of the shop and only driving one vehicle (I quit my job when we married). The property has the shop/office plus five acres, so that is plenty of room to keep animals and a garden. With the vast difference between income and expenses, we were able to do a 50% down payment, and hoping to pay off the rest in the next couple years.

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  24. Dear Penny,Mike and the bubs,
    Many congratulations on your happy news! I know that since you make the best of every situation that this new chapter in your lives will allow your creativity to flourish and that you will all be very happy.
    Thank you so much for sharing and what a gorgeous photo! Recently I have been trying to explain to a family member that if you have a million dollars and you spend a million dollars you can claim to be penniless but if you have a few dollars and save as much as you can you are ahead. It is not so much how much you earn but how much you save that ultimately will count. Your family are great examples. Even now you are "saving" half the space and using it to generate income when you rent it out. I wish you so much happiness because you and your lovely family certainly deserve it. What a wonderful Mother too( mine died when I was 13) I hope she enjoys seeing the marvellous home you will create!

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  25. Congratulations! That is so exciting! We live in the same country as you and recently bought our first house without any real help from parents (my parents gave us a small gift to help with some renovations that we needed to do after purchasing). But we have been married for 15 years and saving all that time. We also make more than minimum wage. And we have always invested the money we saved, instead of just keeping it in a savings account. It is more risky, but is the only way for the money to grow fast enough! My husband has a friend who is a stock broker in the U.S. who was willing to "manage" our money for a small fee as a favor and over the years we have invested in stocks and have averaged about 20% returns each year. That enabled us to have enough money saved for the crazy high down payments in this country (and we also live in a bigger city than you -- one that is famous for its large Anglo community -- and prices here are even crazier than in many other places in the country!)

    Renting out part of the home is a great idea. We do that currently as well, and it makes a lot of sense financially.

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  26. jWhere did you buy? ya the down payment is the critical obstacle for us. I like the idea of the rental apartement - but the bank doesnt consider that when they approve you for a mortgage. - or did they>

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