Ahhh, it's a good month. The sun is bright, it was my 21st birthday a few days ago, and on the first day of June... THOMAS AND I BOUGHT OUR HOME!!
And yes, I'm saying OUR home and not just a home for a reason: We already live here!
So here's how this happened...
How it started
Since September of 2018, I've been renting a townhome in Forest Lake, Minnesota. It started out with my friend, Jen, and I renting together, and then Thomas moved up from Florida and in with us. Then Jen's boyfriend, Braden, moved in after their relationship got more serious and Jen was pregnant.
By October of 2019, Jen and Braden bought a house and moved out, so it was just Thomas and me. And while it was SO nice to have the privacy and luxury of a 4-bedroom, 3-bathroom townhome all to ourselves, it didn't quite make sense for us to continue dishing out that much money in rent for a home larger than what we needed.
Our options moving forward
Our lease was ending in June, and we needed a plan. Being the list-maker that I am, I outlined all our potential options moving forward:
Move out and PURCHASE a home somewhere else.
Move out into a smaller apartment for 6-months to a year until we figure out our game plan.
Stay with my mom until we figure out our next move. (It would be VERY cramped).
Stay for another year renting here & have my mom move in.
Pay month-to-month (more expensive) and stay here until we figure out of next move.
There was LOTS to consider. We asked ourselves important questions like "What's more important to us, size or price?" "Which would we rather give on, living alone or purchasing now?" "If we rented for another year anywhere, could we still be happy?"
WOW. Just thinking about this all again makes my brain throb. (Let's just say, it was a crazy few months in my head).
What we wanted
What we WANTED and were determined to do was very apparent to us: We wanted to purchase a house. It was something we were excited about and that felt like the right step for us. I had been renting places for almost 4 years by this point, and I no longer wanted to spend money on rent that I could be spending on gaining equity.
One of the hardest aspects of this decision-making process was that Thomas and I were having a very difficult time qualifying for houses above $200-240k, due to a number of factors: he hadn't been working at his job in MN for more than two years, they were only considering one of my part-time jobs (so less than half my income), etc.
And please note that my intention is not to sound prissy, as though a $200k house is beneath us! We were simply evaluating what we were getting for what we would be spending, and how that compared to other regions.
For example, on one of my many Zillow quests, I saw houses between that price range in other states like Florida and Texas that I thought were gorgeous. But the ones I found near our area in Minnesota were almost all out-dated, oftentimes small, and in need of work. (There is a lot that goes into the "why?" behind MN properties being more expensive—MN has great healthcare, higher minimum wage, and so on). Not to mention it's a seller's market too.
This doesn't mean you CAN'T find a beautiful house for that price—and of course, beauty is in the eye of the beholder—but WE were having trouble finding a house that met our criteria.
We didn't want to settle on something we didn't love—or frankly at least like—but we didn't want to give up on our aspirations either. For months we went back and forth and allocated a lot of time and energy into figuring this out.
We came to a conclusion!
We realized that, while we couldn't find a HOUSE we liked for that price, we COULD find a townhome.
Totally different ball-game when you start talking about townhomes. Here, most townhomes DO fall in that price range, and in terms of modernness, community, and even size, they FAR surpass houses of equivalent price. Our new approach morphed into looking for townhomes, and if we just so happened to find a house we liked during that time, then lucky us!
Because it took so long to arrive at this conclusion, though—despite us starting our search MANY months prior—we got to the point where we were running out of time. We needed to give our landlord the proper 60- or 90-day notice (I forget which one) on whether we decided to stay or go.
We decided to let our landlord know we would be moving out at the end of the lease. My generous mother offered to let us stay with her for however long we needed to find a place, and in our minds, that was ideally only going to be a month or two (since we still had the period of the notice to search for places too).
Then there was a TWIST...
This is where the story got exciting (and RELIEVING) for us...
My landlord came to inspect the place one day to assess the home—and might I interject here before moving forward with the story that we have been blessed to have the most wonderful landlords while living here. They are a married couple who owns the unit and have always been so thoughtful, thorough, communicative, and fair.
We told her of our plans, and she understood but mentioned that she was disappointed because she was hoping we would stay for another year. In retrospect, I believe they were hoping we would rent for longer because it would give them more time to decide on which direction they'd like to go with the unit (sell vs. continue renting out), especially given that they had a few recent life changes occur and were hoping not to have to juggle any more.
Not more than 15 minutes after they left, I got a call from her in the car. She said that they were just talking and mutually decided to ask if WE would be interested in buying the townhome!
Immediately, my interest was piqued. I never before considered that they might want to sell the unit, so it was a complete shock to me. Instantly, though, I foresaw this working out and was relieved. She said we could do the sale as a contract-for-deed and that she would put together a package proposal outlining the cost and interest rate.
What is a contract-for-deed?
For those of you who don't know what a contract-for-deed is, just like Thomas and I didn't, it is a scenario where the seller finances the sale of their property, as opposed to going through a third property, like a bank or mortgage lender. Because of this, there is SO much more wiggle room on both the seller's and the buyer's sides.
I imagine the terms vary depending on the seller's conditions, but our specific contract entailed that we would have up to 5 years to secure a mortgage with a third party to pay off whatever remaining balance we have on the home—called the "balloon payment." Until then, we pay the seller each month.
In a sense, it is like renting, except the home is actually in our names and we can remodel/make changes to it. (Win-win!)
How this helped us
The best part about it for us is that we didn't have to jump through ten million hoops to secure this deal. Because we already had a solid, trustworthy relationship with our landlords, we didn't need to go through all the qualification steps: proving income, history of working, credit score, etc. etc. etc. We didn't even have to involve realtors.
Essentially, we got to bypass all the roadblocks we were having difficulty getting around in the first place, which took a huge weight off our shoulders. Let me tell you, it gets awfully tedious having to prove you can financially afford something when the system is not in your favor. The funny thing is, we were spending equal or more in rent anyway!
The rest was easy
We got the package proposal from our landlord—everything seemed very fair—and we emailed back and forth about any questions that arose or negotiations we wanted them to consideration. We discussed matters like escrow, homeowner's insurance, and title insurance, and by June 1st, we did the deed (pun intended)!!!
This was a giant step for us, and we are so thankful that God allowed this opportunity to fall into our laps. Though it took a few months of headache and struggle, I'm actually grateful I had to go through that because it taught me priceless knowledge about the real estate world, and specifically real estate in Minnesota, that I'm sure will become of use in the future.
Takeaway value for everyone
I'm also grateful to have this outlet to share our life event with you guys. If nothing else, I think there may be a few takeaways from our story...
Good things are rare to come by... or more aptly, are harder to secure. However, it is critical that you don't let these challenges keep you from pursuing what you want. With us, we almost got to the mindset of accepting that though we could afford a house, we didn't properly qualify for one—or at least one we liked, I should say. It would've been all-too-easy to drop out of the game or concede on a house we couldn't honestly say we LOVED.
This doesn't mean you should be inflexible about achieving your goal, though. We decided not to give up our pursuit of a house, but we knew it meant we might have to move in with my mom for a couple months until we found a place we liked. We also had to accept that it might be a townhome and not a house. Plus, if we had been entirely rigid about our plan, we may not have been able to accept this amazing contract-for-deed proposal from our landlords.
If you're looking for a home, START EARLY. Which we actually did, but in our case there was only so much we could do to meet all standards. I can only imagine how much harder it would've been though, had we not started when we did—maybe impossible. Start at least 6 months early by reaching out to mortgage lenders to see where you stand, what you can do in the following months to polish your financial situation, and to learn about the process. (Bear in mind it will probably involve your credit being run. And once you pre-qualify, it expires within a few months, so you'll probably have to have it run again closer to the time of closing).
If you're looking for a home, consider this...
Every situation is different, so I recommend sitting down with those involved in the decision-making process to determine which courses of action you could potentially follow. Outline which factors you can budge on and which you can't without sacrificing your happiness.
In our scenario, I didn't feel I could rent another year while still being happy. But I did feel I could delay it a few months if necessary. I also didn't feel like I could be happy in a house I didn't love, but I did decide a townhome wouldn't be so bad. It's give & take.
Large decisions like these involve honest discussion and an ability to weigh logic vs. emotion. Again, life is a balancing act.
Alrighty! That's about as far as I go on this topic!
If you are in a similar boat and want to ask more specific questions, or discuss the steps Thomas and I went through in more detail, please email me at firstname.lastname@example.org.
I cannot provide any legal advice. However, I can share the knowledge I've gained from my experience in hopes that it will help you too.
Happy Monday! Have a nice week.
Until next time...