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Saturday, April 26, 2014

A Rant - Housing Woes

My hubby has a friend who has a sister that flips houses. She told hubby's friend to look for a house around him (us) that she would buy for him to work on (with my hubby as a partner) so that it can be flipped and the profit split. She gave us a budget of under 70,000 and is willing to buy SOME of the supplies.

Okay, so, with this in mind, I went online to do some research and fairly quickly found this home for sale: http://www.edinarealty.com/kelley-holmes-realtor/homes-for-sale/MN/St-Cloud/56303/319-38th-Avenue-N-109214743

I don't know how long this link will be active. I assume that after the house sells, it'll probably be taken down at some point, so I will list the strong points of this house:
Price: 49,900
3 bedrooms
1 bathroom
1,133 square feet (approximately)
Detached garage
Double sized lot. NOTE this is double a city lot, so to me - growing up in the suburbs, this is a standard size lot, maybe a little smaller. Actual dimensions are 84 feet X 109 feet. That's big enough to have a decent garden :-D

There are other good selling points, especially if you like hardwood floors and some paneling, plus it apparently comes with appliances. From all the pictures, it is definitely cute and totally worth the asking price. Because it's a bit low, I am assuming that there ARE some things that need fixing. For example, the kitchen looks like it was remodeled in the 50s (the house was built in 1920), and the carpet in the upstairs bedroom looks just hideous - but these are all easy enough to fix with a little time and money.

On another subject - back in... OH... I think 2010, we lived in an apartment building which we paid 590 dollars a month plus our electric bill. James was working full time at Erberts and Gerberts - a sandwich shop much like subway - for minimum wage. Actually, he MIGHT have been working for 8 dollars an hour at that time. HOWEVER, he had 500 dollars a month (plus some) taken out of his paychecks for child support, so his take home pay was only about 250-275 or so each check. He was paid twice a month, and it worked out to BARELY enough to pay our rent. We took cash assistance from time to time to pay the rest of our bills, although we qualified for energy assistance.

Okay, here's the rant:

We had shit credit back then and it's even worse now. There wouldn't have been a bank in the world that would have agreed to let us buy a house - not even with first time home buyers down payment assistance. NOT EVEN considering that James had had that job for over a year and -so far as we knew at the time - would continue to have it until he finished school and found a better job.

But do the math: 49,900 plus an unknown amount of closing costs and other fees, so we'll call it 55,000 for ease of math. Plus .05 for the more or less standard home mortgage interest rate =57750 divided into a 30 year mortgage = 1925 divided into monthly payments of: 160.42

Notice, I WAY over estimated the initial amount to be financed because I know that there are a lot of fees, and things like insurance that are needed. I figured that if I add several thousand dollars onto the initial price, I MIGHT have an accurate monthly payment estimate. But even if I am off by a LOT, I cannot see how that payment would be more than 200.00

Now rewind to when I said that my husband was making 8.00 an hour and we were paying 590.00 a month in rent. We were JUST BARELY squeaking by. We needed cash assistance every three months or so in order to pay our bills and buy the kids clothes and birthday presents. Not to mention toilet paper and shampoo. He earned about 11,500 dollars that year (Gross income), and after child support and taxes were taken out, his take home pay was about 5,000

It was very demoralizing to him. He very often said that he was basically working for free, because even after working a full 40 hour week, we still needed to get cash assistance from time to time just to stop from going even further into debt. Our saving grace was that we finally came up for Section 8 (after a 3 year wait) and once it kicked in, we only had to pay about 140.00 a month for rent. That was a load off and we were finally able to pay our bills and buy toilet paper without having to get cash assistance from the state. (This was a HUGE win for us!)

BUT JUST IMAGINE... Let's say that instead of getting on Section 8 housing assistance - in which the government pays the portion of rent it deems that we cannot pay - INSTEAD we had gotten a bank to agree to let us buy THIS house. (The one I listed above, which was not for sale at the time, but according to research done at the time, there was something similar.)

Using the estimate I calculated above, our mortgage payment would have been about 160.00 a month. He could have worked part or full time at E and G's for 8 dollars an hour, and I could have worked around his schedule (provided I could have gotten a job somewhere, considering that none of the places I have applied to have hired me, I doubt it, but this is a what if situation, so we'll say that I got really lucky and found a part time job, lol) at a minimum wage which is currently 7.00 an hour (I think, not sure).

Even on just HIS pay, we could have made our house payment AND paid our bills and bought TP! If I also had a job, I could have tried to pay off some of our debt, or maybe made extra payments on our house to pay it off sooner, OR maybe even saved up for a rainy day - or Gods willing - an actual, honest to Gods, REAL vacation!!!

The point is, we COULD have done it, and that's why I'm ranting. Why oh WHY do the MFin' banks ONLY give loans to people who have money??? And I'm not talking millionaires, I'm talking people who are blessed enough to have steady jobs paying like 15 dollars an hour or more. People who haven't truly had to wonder how they were going to feed their kids. People who can afford to have both a cable AND a monthly family cellphone plan costing more than 150.00...?

I do get it. The banks actually did shoot themselves in the foot by loaning out money to millions of people who couldn't truly afford their mortgage and then had to foreclose. The average foreclosed home in MN had between 150,000-200,000 unpaid principle left on it, and the monthly payments were between 1,500 and 2,000 dollars a month. The irony??? ...

My hubby and I probably wouldn't have gotten foreclosed on. We had no money. James got fired in 2011, and we've been living off of student loans. (Plus section 8 and food support, I do admit that.) That said, when push comes to shove, it is a LOT easier to come up with 160 dollars a month to ensure that our house payment is made than it is to come up with more than 1000. (Even the 650 a month that we would have to pay if we didn't get Section 8 would be impossible for us to even hope to come up with.)

Heck! We could have paid our entire year's house payments off with his student loans and had money left over!!! (I know, it's actually illegal to make a mortgage payment with a student loan... I think. But still it's meant for us to live off of, so we could have done it.) If we had really wanted to go crazy, we could have ALMOST paid off the entire house with student loans in just the time it took him to earn his Auto Body degree and his Welding degree. And then we would have had a dependable place to live while he looked for a welding or auto body job to pay back his student loans.

With this house in this scenario, our lives would be so much easier. We'd have a good place to live and could plant a garden, AND it's right off the bus line, so even if we had no car, we could bus like we do now. Even better, it's practically right in the middle of everything, so we could easily walk to any store we needed to, even in the middle of winter.

I'm not trying to say our life would be perfect. We'd still have our many problems. The ONLY thing we'd have going in our favor is an affordable place to live, but you know what? THAT would make everything else easier too!

I'm telling you right now - and Zeus strike me down if I don't actually do it - but if I EVER win the lottery and have millions of dollars to invest, I have already said that I would buy up at least 10 houses around town so that if my money vanished one day, at least I'd have places to live and a way to make money (via selling them or renting them out). Well, I'll go one step further: If I ever have enough money that I can buy even one extra house, I will do so and then find a family that is in my current situation. A family with no credit and little money that could really use a nice and affordable place to live. I'll be the "bank" in a rent to own type contract in which they pay me directly a payment that they can afford. I won't be a cold hearted bitch who just wants money. I'll be sympathetic.

So long as they don't damage the house and cause problems with the neighborhood, I'll be the best bank for them in the world. And then, if I can do it again, I will. Given the funding, I would do my best to help every family in my situation.

Good night all and sweet dreams! :-)

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