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America, March 17, 2007

Banking Home a Half-Million Dollar Mortgage

Help me, it's Home Buying Time!

is cute worth $500K?
Ain't that cute?!
old school & next to a school
A solid DC block
There is an interesting alternate reality to your every day financial life. In this separate dimension, strange voices on telephones promise to send you a blank check. Blank but for the amount, there it says $500,000.

Five hundred thousand dollars.

Have you ever seen that much money? Have you ever held a check for it? I have not, not yet anyway, of those voices on the telephone wait for me to find something to spend it on before they will send me the check.

And not just anything, but a house, a home, a domicile to call my very own. And those voices, whispering in my ears from many sides tell me I should do it. I should take that blank check and buy a home.

Maybe buy a dream home in the Petworth neighbourhood of Washington DC. And a dream it is, perfect for a settled life of domestic bliss. What $500,000 buys in my housing market.

So should I buy no matter that the housing market is gyrating, that employment is tenuous, that money does not grow on trees? Those voices repeat my mantra, "life is short" and say "jump in, the water is fine!"

But I wonder, is the swim right for me? Is it what I want right now? To give up my sunny, spacious, rent-controlled apartment for quadruple the monthly payment, hopefully spit with a clock-stopping hottie? It's a risk, and I don't like risk.

Or I don't like financial risk. My travel career shows I can take risks. My work career shows I love risks. Yet in finances, I do not risk. And yet, this would be a massive one. Actually a half-million dollar risk.

To mitigate that risk, I ask you, my friends, family, readership, for advice. If you buy homes, if you sell houses, if you are in the real estate business, drop a line, let me know, lets talk. I want to make sure that when I jump in, I know how to swim. The water is deep, moves fast, and sharks are about.

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Can you lend me $300, 000 CANADIAN unsecured?

Im serious.

I will pay 6% interest on your money on a revolving basis.

Im 55 and an honest guy.

We could meet in Saskatoon Canada in a month to close the deal.


Buy the home. I am in the market too, but am going to hold off for another 6 months or so. I am looking for one that requires some work to bring it into shape. It should be a good time to buy and I do not think that the market is going to fall apart like some are predicting.

Good luck with the purchase process.


p.s. I wouldn't loan anyone $500,000.

housing costs in DC choke me a bit, but real estate rarely, rarely is a loser. my understanding is that right now the bubble in the real estate market has burst, so it should be more of a buyer's market.

things to think about: 1) what do you know about the zoning and future plans for the area that might affect the value of your home? 2) home improvements can cost a lot more than you think they will, although if anyone can tell you how to cut those costs, i can! anyway, factor into your offer any improvements that you'll HAVE to make (you'll know after you get the place inspected). 3) find out why people are moving. 4) use a buyer's agent to help you. 5) the city might have some programs for first-time homeowners . they might also have incentives to buy in certain areas. 6) visit the neighborhood at different times of day/different days of the week to get an idea of noise and activity. 7) don't "settle" for something. it's going to be your home; you want to feel good in it.

will be curious as to how this goes. good luck and keep me posted! and if you want to talk about buying a piece of junk, gutting it, and putting it back together, i can help you. :)

Hi again,

Actually, make it $1,000,000 USD

I want to borrow $1,000, 000 USD unsecured. It can go in my registered Canadian Company name.


I have no credit left but Im an honest smart guy. Democracy and free enterprise is like texas holdem poker. Not everybody can win. But its still the best game to play.

Lets get it done and start conquering global warming and world hunger.

I got some great ideas and we should be able to win that $25,000,000 from Branson.


Forget about the $500,000 mortgage thing,,,its a dead end.

I think Deborah provided the best advice so far. Just two things that raised a red flag:

1) You talk about making a lot of changes to make the place more the way you want it. Have you factored in how much that will cost? How long it will take? How long you plan to live in DC?

2) If you were going in on the purchase with someone, hopefully you have it in writing, regardless of the relationship. Money changes people.

If the place feels right and you've done your homework to increase your comfort level on the purchase, go for it. Also, if your real estate agent is a good one, s/he will look out for your best interests. Good luck!

hey man,
i like your blog. you should add a subscribable button, so you can see who your readers are, and it's easier for them to follow it. check it out: the dc blog project. if you would like, i'll set up an account for you.

You should buy the house. I've been through it and I know it's a solid one. Plus, Petworth/Georgia Ave. will be seeing a lot of great changes in the near future. Why not jump in now instead of waiting until it's seller's market again.

You should buy the house. I've been through it and I know it's a solid one. Plus, Petworth/Georgia Ave. will be seeing a lot of great changes in the near future. Why not jump in now instead of waiting until it's seller's market again.

i ride my bike by that house everyday. buy it. i bought a few blocks away 4 years ago, for half the price. petworth only goes up

Hello my primo Wayan, always so good to hear of your escapades!!!

Great decision to buy. It's the right time indeed. If you buy new there are builder incentives out there and a lot to choose from. Wither you buy new or resale its a buyers market with many options and discounts.

Like everywhere location is always key. I pray that in major markets we don't see houses dumped back on the market due to high levels of foreclosures! The market will come back, some places faster than others. Good luck and take care.

Wayan, It's been a while since we last talked, but I'm happy to offer some advice about home buying.

1. There's a lot to be said for seeking out houses which have sat on the market for awhile. My current house had been on the market for nearly 18 months when I bought it, and it sold at a significant discount to the original asking price for this reason. I have a friend who is shopping for houses and tells me that houses are sitting on the market longer nationally (although this may not be the case in DC), and he is taking his time about buying a house for this very reason... to see if any of the houses on his short list fail to sell.

Of course, it is important to ask why a house has sat on the market for a long time. In my case, it was a combination of a semi-vertical lot (which adds privacy, but lots of stairs), and the house needing some work and most people in the market segment for my house being unwilling/unable to do that work.

2. If you purchase a fixer-upper, do not underestimate the amount of effort and cost that will be required. My dad has remodeled two houses from the studs outwards and spent years doing it. In contrast, I've spent around 1,000 hours doing "minor" repairs (laying down a few hundred feet of hardwood floors, installing drywall, painting, replacing lots of hardwood trim a piece at a time, and a dozen other things). I'm very happy that I didn't take on a bigger project.

Six years after buying the place, I've saved up the money to renovate the bathroom and am shocked at the prices you pay for simple things like fixtures. Even simple things like my bathtub faucet, which cost around $300 for a rather basic Delta fixture with a stainless steel finish. Or the Kohler glass shower door (6' tall by 4' wide) which swings on a pivot and costs over $500. Why should a glass shower door cost as much as the front door to a house? I try not to ask or answer these questions.

3. Look at a house as both an investment and a place to live, and balance between these two things. In the case of my bathroom renovation, I question whether I will ever get my investment in the shower back, but I'm really looking forward to having an oversized 4'x4' shower. 4. When you make an offer, make your offer contingent on a satisfactory home inspection (to be conducted in a short period of time, say 10-14 days).

This provides you with some cooling-down time as you can always declare the home inspection to be unsatisfactory, but it also provides you with an experienced second set of eyes to look at the place. A home inspection will cost several hundred dollars, but a good one will also be a guide to any future remodeling efforts you might choose to undertake. Of course, in paying for a housing inspection, you are demonstrating that you are pretty serious about the place.

4. Your offer will probably also be contingent upon financing, and you will want to allow yourself more than 10-14 days to obtain financing.

5. Every person who sells moves out, but most leave some stuff behind. Consider how this will be dealt with in your sale contract. I would suggest adding language that says the owner is responsible for removing any toxic substances, and that you reserve the right to dispose or assume ownership of anything that remains on the property past a specified date (probably the closing date).

6. When I moved in, my dad told me to live in the house for a year before making any changes. This is good advice, or at least it was for me. After you live in a place for awhile, you understand its quirks and come to better appreciate what certain things you dislike were trying to solve. While you may still dislike something, your solution to the problem will evolve over time and meet your needs better when you get around to fixing it, or you may think of a way to achieve the same improvement at a lower cost.

There's a lot to be said for seeing a problem every day for an extended period of time. It took me nearly a year before I had the eureka moment which allowed me to understand the changes that my 70's Tudor/barn-style fireplace room decor required in order to peacefully coexist with the decor of the rest of the house. An exception to this might be simple painting, since the house will be empty before you move into it and it's easy to paint an empty room.

I think it's great you're ready to buy a home, but make sure that you get your money's worth& do not settle on anything, get what YOU want, it's not just a house, it is a big step & a great investment.

I am only familiar with the mortgages & homes available here in Florida,as a mortgage processor, but a home would be much more (in several ways............) in Florida for $500,000

(the market here is slow right now, but I intend to get my real estate license one of theses days........... )Good luck to ya in everything

Hey Wayan,

Home owner, huh? There's a house in my neighborhood for sale. Nice yard, lots of windows, good area. I have never had a problem. Right on the D6 busline.

Hello Wayan,

I've enjoyed following your adventures since you were married to Jing-Mei.

About buying a home, it might be a good idea to check the following website before buying:

If I understand him, there have been a high number of home foreclosures, and he believes the worst is yet to come, especially for people with adjustable-rate mortgages, and the price of homes will drop in the future.

About taking advice from bankers, Realtors, always ask yourself if they have a vested interest in the advice they give you (as you hinted).

Best wishes, whatever you decide.

So, saw your video... did you bite on it?

I have a friend up there, I think on Second Str. (which I think you were on First Str. or something.

Looks like a nice place...

There are a lot of mortgage companies out there that will charge way too much for the mortgage closing. Shop around to get the best mortgage and closing fees. Ask each company for a Good Faith Estimate. They are required by Federal law to give you one within three days of your application. Tell them you don't want to pay points and you want a low interest rate. Compare attorney closing fees and look for the lowest bottom line.

Get a number of good faith estimates so you can compare them. Get your credit scores and give them to the companies without having them all look you credit up and charging you for the report. Also having a lot of times companies have looked at your scores can hurt your scores. Tell them when you decide on a company, you will then give them your social and not before so they can't look it up early.

Feel free to fax your good faith estimates to me at 205-520-5083 so I can give you my opinions about them.
Beware that some companies will advertise one rate and give you a different one or advertise certain closing costs and then charge different ones. There seems to be a lot of bait and switch in the mortgage business. Before you go to your closing, tell someone at the closing office you want to be faxed the exact closing costs and terms. That way you won't have to show up at the closing and find out they have tried to pull a bait and switch. A difference of a few hundred dollars is probably not bait and switch and frequently occurs for taxes, recording fees or a lot of other possible variables they may not know until the last minute so that is usually okay.

My Dad, my Mom before she became a University professor, and my Grandfather were all in real estate. One tip I got from my parents is to not buy the most expensive house in a neighborhood. The other houses will percentage wise go up more in value. Some study said houses gain the highest percentage in value the first seven years after they are built. So if you buy a new house, you may want to sell it when it is getting close to seven years old. If you plan to get married again and have children, get a house in a good school district unless you want to pay for private schools.

Hey! Got your text message last night~!! YIPPY! I'm so hapy for you! I was going to give you some advice, but it looks like my window of opportunity has just closed.

Congratulations, friend.

Well there are some nice houses on 5th St NW in Petworth you should really stop by some of them esp in the 5100 near Gallatin St NW

This is a solid and free advice for people with bad credit. If you need to fix your bad credit or if you are looking for a loan you may be interested in paying off your credit cards and being financially prudent.

It has been sometime since I saw this post, so I am assuming you either bought the house, are still hunting for a house, or still debating the options.
Hmm, I think this is going with lots of situations in your life. You are in love, your job is going well, and things are looking good for you in DC. Plus, I think if you're going to have a site dedicated to your future offspring, you better have some babies soon! Haha I suppose DC is going to see many more years of Wayan time.

I always thought you'd end up in SF, they were selling a house in a semi-nice area for 450,000 (okay so it was more like a 1 bedroom cottage), and you guys could add maybe just the right amount of spice that is much needed to SF.

Me? I plan on going to Africa this summer and save myself from getting old too fast behind a desk. I started to forget who I was, or at least doubt that I was meant to do something else.

-- By the way- I love reading your blogs. They make me realize I want to do a lot of traveling now and that there is hope! Oh yeah- I met the African correspondent for The Economist, he emailed me, so I thought I'd send him a link to your site; then he too can be a fan.

Hey there...I am about to wed Nicole Jago. She sent me a link to one of your blogs and I continued to peruse other ones...anyway, I digress.

The house pictured above...any particular reason that you did not buy that one? I ask because Nick and I are looking to buy in the district and as fate would have it, that is one of the properties we will be seeing!

Cheers and congrats on the home you did purchase!

*Home Buying Update*

I'm now the proud owner of a home in Petworth and with a (almost) half-million dollar mortgage, I know what the Seven Dwarfs were really singing to Snow White: I owe, I owe, its off to work I go, my woe!


Buy the house. It shouldn't tie you down or otherwise restrict you (assuming you keep your job/income so you can pay the mortgage). You can even move later and rent the place out. So that's the only risk/restriction - keeping your income to pay monthly mortgage.

But that's like paying the rent (althought maybe more), which you already do, right?

You and Amy are so cute. I can't believe your about to buy a home in the suburbs and live that life...or phase. You've grown so much in this last year. Congratulations

I hope you love your new home...I'm thinking about seeing a financial advisor, so that I can get ride of my student loans and buy property as well, or maybe a sail boat.

I"m an accountant, outsourced CFO, business consultant and Technology Integrator. I've developed a network of trusted advisors who are exceptionally capable people. In the case of our investment consultant we have a young retired Wall Street Mutual fund manager (20th Century Funds) who worked directly for George Soros.

His opinion (and subsequently mine) is that there will be a deep and dramatic market adjustment on the scale many times that of the 2002 downturn. This will cause all of the real property nationwide to be worth considerably less than what it was when you purchased it. Think of the Depression. Additionally, your mindset should be to save, save, invest and save some more and live considerably UNDER your ability to earn.

You should be saving 15-30% of your net wages each year in addition to your 401K or pension plan. If you look at the market variables which are precursors to general market conditions, you will see that the construction supply houses inventories have gone up, their income has gone down, current nationawide and global inventory of houses has grown while on the market homes stay on the market much longer in MOST markets. These are all indicators of a continued growth slow down.

I would recommend that you buy a small condo or townhome as a starter in the general range of 200,000 to 275,000. This may not be much but it is a CONSERVATIVE approach. I respect your general playful risk tolerance for other factors in your life but some or one aspect of your life should in fact be somewhat stable and conservative. Try to put 20% down on the house so you don't have to pay mortgage insurance which will add to your costs. Don't get a variable rate loan under any curcumstances and try to get a 15 year loan pay off if you can afford it AND/OR get a bi-weekly payment plan on the mortgage and pay an extra 1 or 2 payments a year.

Pay off your house as soon as you can. Rent a room out to offset your mortgage cost. Buying a 500,000 house, even if you make enough income to make the mortgage payment is rather imprudent given the entire US and Global market conditions (leveraged) and the bleek outlook, the increasingly leveraged lifestyle of Americans consumeristic attitude. Living on less seems to have gone out of style but it remains a smart thing to do. Buying low and selling high is also not in style any longer. Try to buy a fixer upper, buy a foreclosure buy from a distressed seller who can't make the payments any longer or take advantage of someone who needs to unload a house quickly.

If you have cash you can swiftly in a matter of a day, grab the house and take the equity. If you have cash you are generally in a position of power over any purchase. Wait, wait, wait until just that deal comes along then swiftly move on it with cash. I live in a 1.5 million dollar penthouse in Waikiki and I bought it for $120,000 just 3 years ago. I also purchased several homes, ALWAYS at foreclosure and made 30-50% on the purchase price and many times that on my actual cash outlay/downpayment.

I have further dialogue direct from my contact who manages my clients funds. Anyway, don't mean to bore you with all this but I am fearful when a young person is embarking on leveraging their entire life on a single purchase which won't be worth that same amount of moeny in 3-5 years. Many will disagree. Take it for what you get out of it. Perhaps buy a duplex for that same amount and rent half out.

Buy a little out of town but on a bus route or public transportation route for convenient access to work and home.

You know its true, you should listen to what makes sense. I'm a Realtor and yes their can be bias when asking us for our opinion. If your going to buy its because you can. Period.

There's always a time and a place but I know plenty of my own buyers who bought when the market was going down because

A) They could afford it.

B) Their want for a home exceeded market fluctuations

C) They felt comfortable.

When the market was going up, up, up...what did the media say? "Oh it will NEVER go down...the sky is the limit!"

And what do they say now?

"Oh there's no end in sight, prices will keep going down for the long term"

Besides being a realtor I'm also human and my profession aside you have to crunch your own numbers to see if a buy makes financial sense to you.

Everyone knows that a if KB Homes, Country Wide and Bear Sterns got it wrong with all their economists and scientist men on their payroll...what makes you think you can time the market as well?

Those who say "I'll wait 6 months" are really saying "I really didn't do much research except think of a nice round number"

The future is impossible to predict but trends are good indicators. Many of the best investors, which include savvy homebuyers, take initiative and ask the question

"IF in a declining market I find a home that is worth what my projected values of homes will be in 6 months right now, will I jump at the opportunity?"

A heck of a lot better then spitting out a nice round number and saying your going to wait.

Find something you enjoy paying off, real estate like all else has its pros and cons. What outweighs the other more for you?

Also macro economic views of real estate are nice but even those who are not in the real estate business can tell you that real estate is local so saying that some respected author or analyst says that prices are going to fall or rise nationally X percent is like saying that the national
temperature is 95 degrees.



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