Thursday, July 16, 2009

The final word on the horse property

You all have been so supportive while I blogged about our attempt to buy horse property. Unfortunately, it turns out we won't be able to do it.

It's not about Michael not liking the neighborhood, or his commute to work being too long. (We test-drove it Monday morning and it was actually better than both of us were expecting.)

It's because of money, of course.

Technically, we can afford it. Our plan was to rent out our current house. I know there would have been some tight months when we were between renters, but we could have done it.

The first thing we found out was that there are no longer any zero down mortgages. We got an 80/20 loan when we bought our house three years ago, which is where the purchase amount for the house is divided into two loans — 80 percent in one, and 20 percent in the other. This keeps (or kept, I should say) you from having to pay a down payment or mortgage insurance. We couldn't have bought this house without a loan like that, so learning tthat the rules have changed so drastically makes me grateful we became homeowners when we did.

Having to come up with a 3.5 percent downpayment might not have been a dealbreaker, but it certainly would have made it difficult. The real dealbreaker is the new rules regarding rental properties.

Basically, we can't get a mortgage for a second house, even if we are going to rent the first house, unless

1) we can qualify with both mortgages on our current income, not counting rental income, or

2) we have 30 percent equity in the home and 6 months' worth of payments in the bank.

Pretty stiff rules, if you ask me. I know they want to make really sure that the only people buying houses now are the ones who can really afford to, but honestly I think we can afford to — we just don't have 30 percent equity in our current home, or that much in savings. But realistically, I'm already paying a whopping amount per month for horse boarding — so as long as we had our first house rented out most of the time, our finances would be pretty much the same as they are now.

Of course, I have some thoughts about how these restrictions are affecting the already-troubled housing market, but I won't go there in this post.

So for the time being, our horse property search is stalled — but we're not giving up. We have a plan for putting some money aside, so that next time we find horse property we want, we will have some more resources available to us!



At July 17, 2009 at 9:13 AM, Blogger Nuzzling Muzzles said...

I'm so sorry it didn't work out. My husband and I spent years trying to buy a house and never could scrounge up the money even with both of us working, so we are living under my mother's roof. Fortunately, she owns two houses, so she live in one and we live in the other.

I think back to all the houses we considered buying back in the day, and am now relieved that never happened. In one case, the house was washed away in a flood. It was sitting on the bank of the Truckee River. Nice location... unless the river rises. In another case, the house we were going to buy ended up being right next to a motocross track. I would have LOVED that. *sarcasm* Of course, I didn't have horses at the time, but I really dislike noise. In several other cases, a neighbor bought the lot next door to the house we were going to buy, and they built their house right up against what would have been ours, with all their main windows looking directly into our main windows. In another case, the street we planned to buy a house on got overtaken by gangs. It could have been worse than where we are now.

At July 17, 2009 at 10:13 AM, Anonymous Jackie said...

Sorry to hear it didn't work out this time around! If you get to looking around in the future, there is one 100% financing mortgage still available. It's a USDA rural development mortgage. If you find a house in a town of 10,000 people or less, the house qualifies. You also have to be under a certain income to qualify. Not sure where you live, how this is affected by the double mortgage thing you mentioned, or if you would qualify, but I figured it would be worth mentioning just in case.

At July 17, 2009 at 11:16 AM, Blogger Katharine Swan said...


Holy crap, and I thought it couldn't get much worse than what you've already got to deal with. Well, seems like you have a guardian angel looking out for you after all. Crazy neighbors pale in comparison to gang activity, drag racing, or washing away in a flood!


There's no way Michael would go for THAT rural of a neighborhood. In the Denver area, you'd have to go out to Elizabeth in order to get under that population, and that's an hour or more commute for him each way. It wouldn't bother me much, since I work from home, but Michael would never even consider such a thing.

Plus, I'm sure already owning a home would be a dealbreaker in that scenario, too...

At July 20, 2009 at 3:12 PM, Blogger Irreverent Freelancer said...

Well, that's a big bummer! Hopefully, this darn economy will improve and eventually financing will get back to where it used to be. I can understand the caution, but it shouldn't impact individuals who have been responsible about repaying their debt.


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