So, I woke up this morning and decided to go crunch some more numbers. If I am going to make an offer on this house, I need to be sure it will not suffocate me financially on a monthly basis. I found a way to make the down payment and closing costs. So, now I have to make sure it will work within my budget.
In case anyone was wondering, numbers are sort of my thing. I was an ‘A’ student in math, and I love working with numbers. They just appeal to my logical mind and they seem so definitive unlike me sometimes. I sometimes wish I could be so accurate, so definitive in my decisions. But decisions are usually a combination of emotions and logic, at least they are for me, though mine tend to be more logical, there is still a portion of them which is emotional.
For instance, this house, in size it is perfect for us, in location too. It also has room for growth. All so very good for making this a home which would suit us for a long time to come. This is the emotional part. I can see us in it without there being anything that might aggravate us and I can provide my daughter the space she needs for her and her friends. And it would provide a quiet area for me to write and read, and a beautiful kitchen to cook in and room for friends and family to visit.
Well, that was until I crunched the numbers today. I had done it before but had not done a thorough job of it. I had to go back and make sure I didn’t miss anything. I knew it would be tight but today I discovered how tight. We would have to tighten our belts quite a bit, like completely cut out the extra spending we are able to do without having to evaluate every dollar. We could cut back on expenses by discontinuing cable which we don’t watch very often. Even so, it would be so tight I told my daughter if there was something she wanted then we would have to look at it, decide how important it was to her and save up until we had the money to do it, that what I’ve been able to sock away into savings every month would have to be cut in half or even more. This includes clothing, and so many other things. She said she didn’t want to live like she was in poverty. I told her I understood. She said she would think about it. I told her I would too.
And I have done a lot of thinking about it. I can tell when something is getting to the point that it is just too much. If I’m constantly thinking about it and worrying about it, and trying to find a way to make it happen, then I know most likely it isn’t right for me or for us. The townhouse would have worked nice financially but would have been aggravating to deal with the strata. This house would have been nice to manage on our own for whatever we wanted to do with it but it is turning out to be a headache financially. There has to be a happy medium somewhere. I’m sure there is something better.
Tonight while talking with my friend L about how buying the home would affect my budget, she suggested we have our realtor do a comparison on homes which have sold to see if it is overpriced. I sent my realtor an email and she said she would check. In the meantime, I did some other checking. I looked at the asking price of homes in the neighborhood. I looked at their pictures, read their descriptions and selected some homes that looked comparable in condition and upgrades and such or in even better condition or upgrades like a soaker tub in the master suite . I took the asking prices and their square footage and calculated their price per square foot. I did the same with the home we were looking at.
The results were interesting, I did 4 homes including the one we were looking at. Two of the homes calculated to be $145-149 per square foot. One calculated to be $125 per square foot. The one we were looking at? Well, it calculated to be $210 per square foot. This is a HUGE difference. I know the home we are looking at has some unfinished square footage in the basement that is not included in the square footage listed and there will be some consideration for that since it is not included in the livable square footage which is what I used for the calculation. Even so I feel this definitely indicates the house is way overpriced. I sent the information to my realtor to see what she thought.
I will wait before making a definite decision because there was a house not far away which sold and I want to see if she can find out how much the purchase price was and see if it supports my calculations. If so, then we will not be buying this house and in fact, it would have to drop quite a lot before anyone (if they are smart) would make any offer on it.
I am both disappointed and relieved. This has eased my mind. I was not feeling comfortable with such a large mortgage payment. I told my daughter I thought it best we not buy because I didn’t think either one of us would enjoy not having the freedom we have been accustomed to in regards to being able to do things we enjoy doing. Currently we have the cash flow to do the things we enjoy doing and if we are careful we can also take a trip once in a while. If we bought the house at this price, many if not all of that freedom would be squashed or we would have to find a way to bring in extra money.
If however my calculations are correct and a good way to evaluate a fair price for the house, and the owners are willing to drop their price, then it would indeed be an option for us, but as it stands now, I don’t see a way for us to do it and not feel constant stress over our finances every month, which I feel is unnecessary if we don’t have to live that way.
So… we move forward. Again, I am reminded about the importance of signs and not making assumptions in what they mean. Even when we acknowledge them we cannot always know what they signify. A pair of handcuffs on the lawn can mean so many different things or nothing at all. However, it was fun to think about all the different ways they could have gotten there… lol