Tag Blog: Big Life Change Approaching

A Simple Plan

The plan was simple.

In 2009, as I started what would be my last year teaching at South Mountain High School in Phoenix, Arizona, we decided to move back to Florida.

Sofia would be starting high school in 2010, and changing schools during high school is no fun. If we were going to transfer our lives back to the east coast, summer of 2010 was the sweet spot. The perfect window.

The options still remained to move to North Carolina or even Costa Rica, to live closer to family and get out of the desert. But the job market was lousy and my best chance was to be rehired at Gainesville High School, where the principal knew me from my time there before. We would sell our house in Phoenix, rent something in Gainesville until we found a house to buy, and then we'd be homeowners again.

How naive.

The Great Recession of 2008 threw a wrench in the cogs of our simple plan. Selling a house in Phoenix in 2010 was like selling a diamond-encrusted comb to an impoverished bald man. The housing bubble had offered easy loans and plentiful home options. The bubble enabled us to buy our first house.

When the bubble popped, we were faced with two choices: remain in the desert, 2000 miles from family, essentially chained to a house while our kids could easily be grown and in college before our house sold, or we could commit credit suicide by walking away from our house.

We took the family option.

Walking Away

To my friends in Phoenix who love living in the desert, I mean no disrespect, but we're Florida people to our core. The thought of greenery--and rivers and lakes and beaches--not being a part of our children's daily lives... it bummed us out. And kids grow fast.

With our oldest about to start high school, we felt a sense of urgency.

March 2010: Our house went on the market.
June 2010: GHS rehired me. We packed up and moved.
July 2010: We rented a house in Gainesville.

As we knew might happen, our house in Phoenix didn't sell. Being "underwater," we expected a short sale from the get-go. Not even a nibble. Soon we explored a "deed in lieu of foreclosure." Wells Fargo said they'd try to help us out, but it was lip service, and six months after making our last payment, our house foreclosed.

On one level, I feel ashamed. After a lifetime of financial responsibility (although it could be argued that taking on so many student loans was not financially responsible) our credit scores were excellent. And now we had reneged on a big time promise. We said we would pay, and we did not. And that's embarrassing.

But on another level, I see it as a business decision, not unlike the tough decisions that businesses make all the time. We knew the costs of walking away, and we decided that the benefits outweighed the costs.

A Fresh Start

My pay was lower in Florida. Much lower. Like $20,000 lower. It quickly became very clear that our credit card debt which had been manageable in Phoenix was not so in Florida. With a foreclosure already wrecking our credit and potentially looming as a crippling debt, we decided to file for bankruptcy and start fresh.

The bankruptcy process took a while. We spent many months not answering the phone to avoid debt collectors, while chipping away at the paperwork required. We finally filed in November 2012. Our discharge date was a few months later: March 6, 2013.

By this point we had been in our rental house for nearly three years. And we knew we'd be there a while longer. Bankrupt couples don't just go out and buy a house. Rent is high in Gainesville. Because of the huge university, Gainesville has a large rental market. Our four bedroom house was costing us $1100 a month in rent. It was aggravating to know that if we were homeowners, we could be paying considerably less each month for a mortgage payment. We'd also have the incentive to put money into fixing up the house if we owned it. It's bad enough to pay rent to someone else, but I'm not going to upgrade the appliances, roof insulation, and HVAC for the landlord. So we suffered on with high rent and crazy utility bills from the inefficient HVAC and poor insulation.

But that's the price we pay for our mistakes. I can only blame myself.

In the Fall of 2014, after signing our fifth 12-month lease for our rental house, I was determined that this would be our last year paying rent. There were no thoughts that we might move to another city or state any time soon. Certainly not before all the kids were done with high school. It was finally time to think about buying a house in Gainesville. When we filed for bankruptcy, I had heard that even after a bankruptcy, it was possible to get a home loan within a few years. I started checking realtor.com in my spare moments.

The Search

Sofia was spending her gap year in Panama volunteering for the Baha'i Faith. I was insanely busy teaching a 6th period (you don't realize how precious that planning period is until you no longer have it). Cristina turned her full powers to managing the household, taming our overgrown yard and helping Alex and Bella navigate through 8th and 5th grade respectively. Boy Scouts and Girl Scouts. Band. Making breakfast and lunches. Carpool. It's a full time job.

And every day, I'd take a quick pass through realtor.com. Sometimes Zillow.

Here's what made our search even trickier: we didn't think we'd qualify for too big of a loan, based on our credit. And despite Sofia mostly being out of the house, we wanted a four bedroom so that she'd have a room of her own when she was home on breaks and summers. The rest of the time the room could be a guest room. We like to couchsurf, and it's nice to have a room to offer our visiting family/friends, as well as couchsurfers.

An additional desire was to find a house that had room for Cristina's Jin Shin Jyutsu practice; a space where she could leave her table up full-time, bring clients without having to rent a space, etc.

So four bedrooms, a practice space, and cheap. Tall order? Yep.

After looking for a few months, I found a couple of houses that could work. One of which (we called the blue house) was five bedrooms. No garage, but lots of upstairs storage. We started dreaming. It was east of Main Street (the less desirable part of town), but within our desired radius of GHS. It needed some work. A lot of work. But it was only $95,000. We toured it with a realtor and we talked to a lender.

It turns out there's a type of loan called FHA which we would be eligible for two years after our bankruptcy discharge date. March 6, 2015. Once we talked to an actual loan officer, it began to really feel like this was going to happen. Our renting days could come to an end and we could be homeowners again.

We heard rumors that the blue house wasn't eligible for an FHA loan. Perhaps because it needed a new roof. Not sure.

Another house I found that fit our needs was surprisingly close to our current rental house. We live on a short cul-de-sac street that has about nine other similar streets running parallel.

Our rental house

The house I found for $123,900 was six streets down from us, in nearly the same position on the street our rental house is. Four bedrooms, check. Bonus room for JSJ practice, check. I told Cristina about it, but she was too busy to give it much thought. I stopped by on my way home from work one day and peeked in the windows. It really looked like a good possibility. I encouraged Cristina to look at it.

The possible house, which we refer to as "3300"

She finally stopped and looked, and she liked it. Soon after that, I noticed on realtor.com that the price dropped 5K. $117,900. Interesting.

Things Move Fast

January 15: I emailed the loan officer that had pre-approved us for the blue house. I told her about 3300 and asked if she could run our numbers through to see if we'd qualify for $117,900. We did.

January 16: We met our friend Nancy Turbyfill, a realtor, at the house and got our first walkthrough. The pics on realtor.com had looked pretty good, but until you actually walk through a house, it's hard to get the full lay of the land. It was big. The bedrooms aren't big, but the living space is plentiful. The kitchen, while outdated, has newer appliances than what we currently have in the rental, and the kitchen itself is slightly bigger. At first glance, the bathrooms looked like a real problem, but on closer inspection, it was mostly cosmetic. I even told Nancy the bathrooms didn't bother me, because that was how we could afford a house like this. Many buyers would be scared off. We told Nancy we were seriously interested.

Our concern was that with the price drop, the house wasn't going to last long. Nancy agreed. In fact, she knew that there already was another offer, but it was contingent on the buyer's own house selling. 3300 had recently become bank-owned, and obviously the bank wanted it sold sooner rather than later. However, we were facing a date problem of our own. We couldn't get a loan until after the two year anniversary of our bankruptcy, March 6. And it was currently mid-January.

Then we got some good news from the loan officer (whom I will henceforth refer to as Sue). Sue found out that as long as the closing was after March 6, we could proceed with the offer and buying process. It typically takes about 45 to 60 days from submitting an offer to closing escrow. This just might work!

We mulled it over all weekend and on Sunday, we met Nancy at the house again for one more walkthrough before deciding to put in an offer. We wrote up the offer in the kitchen of 3300. We included $5000 for closing costs, so our offer was for $123,000 with the seller paying $5000 in closing costs.

If they accepted our offer, another problem loomed: our rental lease was through the end of July. If we closed on this house mid-March, our first mortgage payment would probably be due May 1. That means we'd have three months of paying rent and mortgage. Maybe our landlord would let us out of our lease early. It was a long shot, but we'd have to try if it came to that.

Nancy called us four days later to tell us the bank had accepted our offer. There was another week of paperwork, contract counter-offers, and counters to the counters, but on January 29, the bank signed the contract, setting into motion the buying process. We had five business days to get all the inspections done. We had already scheduled a home inspection and septic inspection on the 29th, and the bank signed the contract about an hour before the inspection appointment. Just in the nick of time! The following Monday we got the WDO inspection done (wood-destroying organisms...termites, mold, etc.). Apart from a little wood rot in a few places, the house was in average shape.

So now we're in the underwriting process. Our assignment is to do whatever Sue asks us to do. Everything is on track for a March 12 closing. In the meantime, we're plugging along in our normal busy lives, with an eye towards decluttering, packing stuff up, and planning our list of things to do on the new house after we close. Even if our landlord lets us out of our lease two months early, we'll have several months of overlap, so we can live in the rental while working on the new house. So many things we'd like to do, but so limited by lack of money! But it will be ours, and we can work on things gradually. For now, here are the photos!

May as well start with the most unattractive room. This is part of the converted garage, which is a utility room with washer/dryer hookup. Electric water heater is relatively new. It's piped for gas, so when we upgrade to a tankless gas water heater, it's easy.

The bonus room. The other part of the converted garage. They didn't pull a permit for it, so it can't legally be claimed as a 5th bedroom, even though it has a closet and HVAC ducts. This will be Cristina's practice room, but it needs a lot of work: new floor and flooring, new door, and we want to add a half bath. We'll pull a permit though, which will increase the square footage of the house, and make it a 5/2.5 instead of a 4/2.

The family room, at the back of the house. The fireplace is large and original (1968). The french doors are relatively new. This is where we'll put the sofa and TV. The primary living space, since it's attached to the kitchen, where life really revolves.

The hallway to the bedrooms.

Some of the bedrooms have two closets.

Bedrooms are small but adequate.

Guest bath. Note the crappy patch job in the shower. We will retile this bathroom eventually. That wallpaper is coming down too.

The master bath. The terrible looking tile in the shower is where the previous owner painted the tiles and the paint is now coming off. Stripping all that paint off will be the first step in making this shower a little more attractive, but we'll eventually retile this one too.

The HVAC is only three years old! YES!!!

The living room, at the front of the house. Big space. This will be a multipurpose room: study/office space, craft room, music studio, etc.

Front door is beautiful and fairly new.

Back porch is delapidated and will be torn down. One of the first things we'll do. Alex would like to repurpose the lumber into a chicken coop. We'll see!

All the houses in this neighborhood were built in the 60's, and terrazzo floors were a very popular flooring choice then. We like it and want to pull up all the old carpet and linoleum and restore the terrazzo. It's coming back into fashion, but that's not why we're doing it. Less allergens, cooler house in the summer, and we like the look of it. Yes, we know it's cold in the winter. That's why slippers and rugs were invented!

This will be our second fireplace. My parents house (that we rented) in Northwood Oaks had one.

We'd like to find a place for these somewhere on the front. Pretty.

Another view of the french doors, with a partial view of back yard. You can see the edge of the kitchen in the right side of frame.

The kitchen. Needs a major overhaul, but at least the oven/stove and fridge are fairly new. Eventually we'd like to take out the soffit and update the cabinets and counters. And what's up with that wallpaper trim? Ugg.

This photo shows pretty much the entire garage that remains after the utility room and bonus room were created. Not deep enough for cars, but fine for bikes and storage. I'll probably keep that cabinet thing as a workbench area.