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Last year was very hectic for me. The reason for this is that in addition to working and running a few races, I was in the market for a home. There are a lot of moving pieces involved when buying a home, especially when you live in the San Francisco Bay Area, which is one of the hottest places to live (and the most expensive) in the country.
I thought I would break down my search into a few posts, starting with the beginning, which was financing. Oh the joys of getting a loan. Now, I have no idea what the right or wrong way to go about this is, but I will talk about the way that I did it, and what seemed to work for me.
First, I pulled my credit report. I have heard, and I am not sure if this is true, that it is better to pull it 6 times in one month than 6 times over the course of a year. So I pulled it, knowing that the lenders would also pull it. Luckily, it was in good shape.
The next thing I wanted was a pre-approval letter. I had no idea what I was getting myself in for, but I did know that a pre-approval letter was better than a pre-qualify. With a pre-approval, the lender gets mostly all of your paperwork and then they use that to figure out how much they will be willing to lend you. This is important for a couple of reasons. Firstly, it is hard to figure out how much you can afford. I spent a lot of time on the internet plugging in numbers, but until the lender actually used my actual hard data to get an amount, I was just guessing (with the help of Google).
The second reason that it's important is that it helps to submit the pre-approval letter with your offer. This can help convince the seller that you are serious about the offer, and it will make them more comfortable that your agreement is not going to fall through due to lack of financing. In the Bay Area, your offer will most likely not get accepted without a pre-approval letter.
To get a pre-approval letter, you have to figure out who you want to try to get a letter and/or a loan from. How do you figure this out? Good question! Once again, I turned to Google (and Zillow) to find out who could give me the best rate. In addition, I asked several people who they had used and how their experience had been. I got a lot of different answers. Zillow named two internet banks and Bank of America as having the best rates. Two of my friends used Quicken (internet bank) and Bank of America.
So, I contacted one internet bank, Bank of America (who happens to be where I have had my accounts since I was a teenager) and Citibank. What happened next was this:
The internet bank asked me to fill out a form with my financial info and send it back to them. The lady was very nice and the operation seemed legitimate. I filled out the form and sent it back and got a pre-approval letter the next day.
Bank of America connected me to Texas. I finally got routed to a local agent, who barely spoke English (sorry!) and tried to talk me into getting a 5/1 arm (adjustable rate) instead of the 30 year fixed that I asked her for. She then asked me to send in about 400 different kinds of paperwork, including all of my Bank of America bank statements. I sent them all to her and did not hear back from her for three weeks (when I called her, her message said she was on vacation).
Citibank sent me an unprofessional email with no signature or logo that looked like a 12 year old had sent it, asking for 400 different kinds of paperwork. I told them I would feel more comfortable seeing a real person and giving my documents to them and the guy blew me off.
Since the Citibank guy seemed unprofessional, I contacted a third option, a local broker, and I sent him all my 400 different kinds of paperwork. He was very helpful and even helped me run a few different scenarios, depending on my down payment and/or desired purchase price. The guy was easy to reach on the phone and answered any (dumb) questions I had throughout the entire process.
The verdict: The amount I could qualify for was less than I wanted, since they could not count bonuses or overtime unless you could show two full years and proof that it would be ongoing. Bummer. So that meant the amount I thought I could spend was not the actual amount... in addition, I found it very strange that they ask you how much you want to spend. Can't they just crunch all the numbers and then tell you what the absolute max is?
My advice: Try a bunch of different lenders. You have no commitment to them. Once you have all of your 400 documents in pdf form, you may as well send them to as many lenders as you can!
In addition, my realtor told me a few tips. (1) the big banks (BofA etc) take forever to get you an answer, sometimes meaning you lose the house because you can't get financing in time. I know this as well because I work for a big bank and I see some of the frustration over how long thing take. (2) The internet banks will give anybody a pre-approval letter and will often give you the number YOU want, rather than what you can really afford. This causes problems later when it comes to getting the actual loan. Due to this, often times sellers will not accept offers if the letter is from an internet bank.
So, there we have it, my new understanding of financing in a nutshell.
Have you gotten a home loan? What advice or tips do you have for others regarding the situation?
*Disclaimer: I am not a professional. Any opinions I give are my own and you should do your own research before making any rash decisions. :)
I thought I would break down my search into a few posts, starting with the beginning, which was financing. Oh the joys of getting a loan. Now, I have no idea what the right or wrong way to go about this is, but I will talk about the way that I did it, and what seemed to work for me.
First, I pulled my credit report. I have heard, and I am not sure if this is true, that it is better to pull it 6 times in one month than 6 times over the course of a year. So I pulled it, knowing that the lenders would also pull it. Luckily, it was in good shape.
The next thing I wanted was a pre-approval letter. I had no idea what I was getting myself in for, but I did know that a pre-approval letter was better than a pre-qualify. With a pre-approval, the lender gets mostly all of your paperwork and then they use that to figure out how much they will be willing to lend you. This is important for a couple of reasons. Firstly, it is hard to figure out how much you can afford. I spent a lot of time on the internet plugging in numbers, but until the lender actually used my actual hard data to get an amount, I was just guessing (with the help of Google).
The second reason that it's important is that it helps to submit the pre-approval letter with your offer. This can help convince the seller that you are serious about the offer, and it will make them more comfortable that your agreement is not going to fall through due to lack of financing. In the Bay Area, your offer will most likely not get accepted without a pre-approval letter.
To get a pre-approval letter, you have to figure out who you want to try to get a letter and/or a loan from. How do you figure this out? Good question! Once again, I turned to Google (and Zillow) to find out who could give me the best rate. In addition, I asked several people who they had used and how their experience had been. I got a lot of different answers. Zillow named two internet banks and Bank of America as having the best rates. Two of my friends used Quicken (internet bank) and Bank of America.
So, I contacted one internet bank, Bank of America (who happens to be where I have had my accounts since I was a teenager) and Citibank. What happened next was this:
The internet bank asked me to fill out a form with my financial info and send it back to them. The lady was very nice and the operation seemed legitimate. I filled out the form and sent it back and got a pre-approval letter the next day.
Bank of America connected me to Texas. I finally got routed to a local agent, who barely spoke English (sorry!) and tried to talk me into getting a 5/1 arm (adjustable rate) instead of the 30 year fixed that I asked her for. She then asked me to send in about 400 different kinds of paperwork, including all of my Bank of America bank statements. I sent them all to her and did not hear back from her for three weeks (when I called her, her message said she was on vacation).
Citibank sent me an unprofessional email with no signature or logo that looked like a 12 year old had sent it, asking for 400 different kinds of paperwork. I told them I would feel more comfortable seeing a real person and giving my documents to them and the guy blew me off.
Since the Citibank guy seemed unprofessional, I contacted a third option, a local broker, and I sent him all my 400 different kinds of paperwork. He was very helpful and even helped me run a few different scenarios, depending on my down payment and/or desired purchase price. The guy was easy to reach on the phone and answered any (dumb) questions I had throughout the entire process.
The verdict: The amount I could qualify for was less than I wanted, since they could not count bonuses or overtime unless you could show two full years and proof that it would be ongoing. Bummer. So that meant the amount I thought I could spend was not the actual amount... in addition, I found it very strange that they ask you how much you want to spend. Can't they just crunch all the numbers and then tell you what the absolute max is?
My advice: Try a bunch of different lenders. You have no commitment to them. Once you have all of your 400 documents in pdf form, you may as well send them to as many lenders as you can!
In addition, my realtor told me a few tips. (1) the big banks (BofA etc) take forever to get you an answer, sometimes meaning you lose the house because you can't get financing in time. I know this as well because I work for a big bank and I see some of the frustration over how long thing take. (2) The internet banks will give anybody a pre-approval letter and will often give you the number YOU want, rather than what you can really afford. This causes problems later when it comes to getting the actual loan. Due to this, often times sellers will not accept offers if the letter is from an internet bank.
So, there we have it, my new understanding of financing in a nutshell.
Have you gotten a home loan? What advice or tips do you have for others regarding the situation?
*Disclaimer: I am not a professional. Any opinions I give are my own and you should do your own research before making any rash decisions. :)
It's that time of year again! Money pie time! This year was fun because a coworker loved that I did this last year and decided to join in the fun. We have been presenting each other with our "pie" each quarter to see where things have gone over time.
Here's the breakdown! But first, a couple of notes. First, I did not include any savings in this chart. I do put aside money for retirement as well as an emergency fund and a fun money fund. However, as this money is not technically an expense, it is not included. Also, I excluded my down payment, as it would have inflated the "home" category to over 90 percent.
Home: Like last year, this includes rent and utilities but this year, as well as taxes and insurance, this category was also furnishings heavy. As I said, I did not include my down payment. However, there were still a lot of things, such as blinds, appliances and other misc items, that I will not have to buy every year, but that were a big expense this year. I was a bit aghast at the high percentage, but if I just had rent/utilities only, it would be closer to 33%, which is about right, according to articles like this.
Travel: I hope I never have to make this category smaller. I have mentioned this before, but I will skimp on most everything before I give this one up! As you can see I forwent shopping for travel this year. I have a great trip to Europe, as well as several other trips around the US to visit with friends, and several road trips to do active things around California.
Transportation: This category is mostly commuting, but I also rent a car approximately one weekend per month in order to visit family or friends or to go to a running event. I did not try to separate the costs for running related things into the entertainment category, as they are often all intertwined.
Groceries/Eating Out: Funny that these are almost the same! I probably only eat out about once a month, so this shows that when I do eat out, it is a major event! Eating out also includes coffee shops and beer, which is probably the majority of my expense in that category! I also put all Costco trips in the grocery category, even though there were some other odds and ends in the basket usually.
Misc: This includes haircuts, gifts and donations, credit card fees.. things like that. The bulk of it is gifts and donations. I think I got my hair cut twice last year!
Health: This includes pre-tax deductions and any copay or charge for contact lenses etc.
Entertainment: This includes movies, baseball games, and running related (or other hobbies) expenses. Truly this year I did not spend a lot on running gear, only race fees. Also, like I said before, my transportation to running events was either carpooling or it went into the transportation or travel category. It may be better to try to separate those out this year to get a more accurate idea of where the money is going.
Shopping: If it's not food, I don't buy it! This category included clothing, toiletries and items from Target that were not home or running related. I literally bought maybe 4 (Banana Republic) shirts for myself this year from a thrift store, and that was about it! k
So, what did I learn from this? I am pretty happy about where I spent my money in 2015. If needed, I could definitely spend less on travel. Currently it is not necessary, but it would have to be the first thing to get a haircut if I needed some extra money. As you can see, I don't really spend a lot on unnecessary things, except for travel. I am also happy about how much I am putting aside and am trying to increase my savings amounts if I get a raise this year, instead of just spending more.
What is the biggest piece of your spending pie? Do you keep track of where your money goes? What are your financial goals this year?
December was packed full of fun and family and food! I am sad to see it go, while at the same time am looking forward to starting a new year full of fresh new things! I am going to keep this one short, as I mostly already talked about a lot of these same things in my Best Of posts.
Running: I picked things up at the end of the month and managed to run 142 miles in December. In addition, I had 4 strength training sessions, 15 miles of biking and 6 miles of hiking. All in all, I would call it a success, as my total "activities" equaled 40. My goal for the month was 30, but the fact that I ride to AND from work, equaling 2 activities per day, really upped the numbers more than I thought it would.
Reading: In December I read 5 books; my favorites were:
The Beekeeper's Apprentice: A fun play on Sherlock Holmes with a new assistant, teenager Mary Russel. Its fun to see them solve mysteries and to see the inner workings of Holmes' mind through Mary's eyes.
The Architect's Apprentice: Set in late 1500s in Istanbul, this is an interesting glance at life in those times. We get to meet a white elephant, the sultan, his architect and the 4 apprentices and to learn their stories.
Inside the O'Briens: Another good book by Lisa Genova (Still Alice) which goes into the heartache that comes to families along with Huntington Disease. Like Still Alice, I couldn't put it down.
Travel: December was mostly filled with holiday travel, and I got to see many old friends and family and to meet many new family members as well!
What was December like for you? What are you reading right now?
Running: I picked things up at the end of the month and managed to run 142 miles in December. In addition, I had 4 strength training sessions, 15 miles of biking and 6 miles of hiking. All in all, I would call it a success, as my total "activities" equaled 40. My goal for the month was 30, but the fact that I ride to AND from work, equaling 2 activities per day, really upped the numbers more than I thought it would.
Reading: In December I read 5 books; my favorites were:
The Beekeeper's Apprentice: A fun play on Sherlock Holmes with a new assistant, teenager Mary Russel. Its fun to see them solve mysteries and to see the inner workings of Holmes' mind through Mary's eyes.
The Architect's Apprentice: Set in late 1500s in Istanbul, this is an interesting glance at life in those times. We get to meet a white elephant, the sultan, his architect and the 4 apprentices and to learn their stories.
Inside the O'Briens: Another good book by Lisa Genova (Still Alice) which goes into the heartache that comes to families along with Huntington Disease. Like Still Alice, I couldn't put it down.
Travel: December was mostly filled with holiday travel, and I got to see many old friends and family and to meet many new family members as well!
What was December like for you? What are you reading right now?