I realized the other day we really got lucky in our housing. We have a really exceptionally cheap mortgage, and with 20% DP we bought way more house than we could have afforded without a DP. The downpayment is really important I realize because it gives you the choice of selling if you need be and taking a loss if you must.
Many people are being forced to refinance or short sell but are unable to come up the cash to do so. By having equity present we can do either without too much worries. Why am I bringing this up?
Well our two neighbors had a complete meltdown Wednesday night, where a screaming match ensued betwween them. Fortunately we were not present although we received irate phone calls late at night from them about the other one. But they are no longer talking with each other. They are only communicating through us and they are becoming very nitpicky.
So DH says to me, let's move. Eat the loss and leave. We're losing control of our situation fast. Our neighbors are just making our lives misery, but our house is nice. When you buy a condo you never know who your neighbors will be. In a house at least you can avoid them and threaten to shoot if they step into your yard. In condo well there's no escape.
I don't think we can afford to move however. We will have a terrible time renting with two dogs and buying another place would again have to be a condo. So my vote is no we're not moving, we're sticking it out no matter how miserable they make us. I may have to grouse about it for the next two years. This is my only outlet for venting because I can't yell at my neighbors about how stupid they are.
Plus we have a phenomenal deal on our condo. We pay $2263/month mortgage with $650 going to principal. So $1600 is interest, with 25% being tax deductible because of our bracket. So in essence we're renting for $1200. Then add in our property taxes, HOA, and insurance and we're paying $425 property taxes, $25 insurance, $200 HOA. So every month were renting our place for $2250, with $500/month tax break for PITI. That means we're renting it for $1750 for a 3 bedroom townhouse. This does not include repair and maintenance of course.
However DH best friend has looked recently at renting 2 bd apartments for $1600-2000/month so I think we're ahead of the deal. Our rent for a 3 bd that we can have two dogs in is $1750. It's not apples to apples because we have to upkeep the condo. But a lot of places he's looked at are older and their furnances are inefficient so the heating bills cost more than ours for a smaller 2 bd apartment instead of a 3 bedroom townhouse Also their windows are older, and in general the appliances are older. Also most places don't have an in apartment washer/dryer/dishwasher. So we have a lot of bonus comforts.
I don't count principal paydown because hypothetically we should be saving that money even if we were renting, not using it to eat out and stuff. But $1750/month to "rent" our place is too good to pass up. Hence I feel super fortunate in housing. DH is just going to have to play mediator and we're going to try to hide from our neighbors. One day we're going to be kings of our kingdom and no one will ever bother us again.
Also as a sidenote, DH's friend might be living with us indefinitely. But I feel it's okay and good karma. He's helped us out in the past and now we're returning the favor. Plus it's good karma to return the favor. He's paying rent and helping out around the house, and very clean. He does the dishes, does his bathroom, vaccums, and will help reseal the deck, finish the backyard, and work on the painting. In exchange he was thrown over by the girl he was moving in with so now he's considering buying a condo. But the catch is it's a wait-list till next year and by living with us he's not trapped in a lease. And we feel we're going to help him get ahead so he can buy a place.
When we first bought a condo in 2002, he loaned us money because we needed more than we expected, $2k actually because our earnest money check cleared but the mortgage company lost it, and the money was already gone from our checking account to cyberspace. Good karma and now I hope he can buy a place too. I feel better because he's paying rent and at the same time potentially going to be able to buy with our help and has a plan! Plus we don't require a deposit or lease and the money he gives us is just a bonus. It's below market value but whatever. He's a good person and if he buys this place it will be an awesome way for him to get a foothold in the housing market.