Good News!

Our contractor just informed us that the building next to us - a shell - is condemned and Habitat for Humanity will build a similar looking building in its place!! It has a beautiful facade and was probably an amazing house, but it fell on some serious hard times.

Our House circa 2008

This photo is from October 2008. Look how gorgeous our house was, and the street it's on, before the foreclosure! The house next door is not just a shell!

Two weekends ago, we cleaned up some garbage and the neighbors five houses down were generous enough to lend us their wheelbarrow and weed whacker (which we then broke...eek!). We cut the overgrown weeds out front and hauled 900 pounds of garbage to the dump.

There's still about a ton of garbage we have to dispose of that we stored in our carriage house. Maybe during the week when the dump is open past noon and we can make more than one trip.

Financial Update

We're back from Hawaii and ready to tackle the house! A few pieces of bad news.

First, we didn't get the Mount Saint Mary/St. Luke's Hospital Grant. After going through the trouble of taking the Pathstone first-time homebuyer's course and sending in the application last year, Pathstone dropped the ball and forgot about us. They were waiting for the grant to be available to non-employees of Mount Saint Mary and St. Luke's Hospital. When that happened at the end of the summer, they didn't tell us. I spoke with the community liason/grant administrator at Mount Saint Mary and she said she never received our application. Now that we've closed on the house, we're no longer eligible.

Second, it turns out that we have serious plumbing problems. The water main is cracked and we have to hire an excavator to repair it before we can run pipes into the house.

Third, the City of Newburgh cited us two violations which had existed for the two years that the house was on the market and owned by the bank, but they never cited the bank for it.

Fourth, in our first weekend back there was a pitbull chained to the house and a stolen ATV in our driveway. Oh, and a shrine to someone who died (was killed?) right next door.

A few good things have happened, too:

Our next door homeowner helped us when we had to build a fence between our two properties. He provided barrels of water for the cement.

A wonderful Newburghian and his partner donated solid Victorian doors to us from their collection.

Community members have been introducing themselves (many from NCAC) and offering help, services, and information.

We found the best BBQ place - Brothers BBQ in Greater Newburgh/ New Windsor. The chopped bbq and ribs were crazy good, as well as the collard greens.

Thanks everyone!

Restoration...Begin!

We (well, I spoke for Eddie) were interviewed by a great blog about our decision to move to Newburgh. It was great to talk about the city and our house, and to get excited about moving. There's a really cute photo of Tracer, too.

Things are coming along...we met with an electrician, a plumber, a...heating guy (HVAC guy?), and our realtor, on Saturday. They are all awesome and it was a non-stop hyuk-fest for two hours. We're getting the power turned on this week, and hopefully the plumber can check out the water main to see if any work needs to be done there. If not, we'll be moving forward pretty quickly with fixing up the electrical wiring, installing a tankless water heater and an old boiler on the third floor.

The tricky part is we're also applying for tax exemptions and incentives. Newburgh has two tax exemptions - the Real Property Tax Exemption for First-Time Homebuyers of Newly Constructed Homes, and the School TAx Relief Exemption (STAR). The Real Property Tax Exemption also applies to non-newly constructed homes if there is a renovation or remodeling of an existing home. The renovation or remodeling cost "must exceed $3,000 and the contract for the work must be contracted for within 90 days from the date of purchase."

We need to make sure the work is completed by March 7, in order to qualify, and the deadline to apply is the taxable status date, or March 1. The exemption lasts for five years, "beginning at fifty percent the first year and declining to ten percent in the fifth and final year." Eligibility also depends on the household income and the purchase price of the home. It follows the State of New York Mortgage Agency (SONYMA) guidelines.

To receive the STAR exemption, the owner must be at least 65 years old, and/or the income of all owners and owners' spouses be $73,000 or less. The deadline is also March 1, the taxable status date.

The tricky part is coordinating the tax exemption with the Historic Preservation Tax Incentives (HPTI) Program. To receive the HPTI, all work that we want to claim the benefit for must be approved by the Technical Preservation Services Department of the National Park Service. The paperwork is long and tedious, with lots of photo documentation. There's no way we'll get the work approved before the tax exemption deadline, so...we'll see?

Working on the house...

We're going up to Newburgh this weekend to meet with Chris (our realtor), Bill Timmons (plumbing/heating) and Kyle Chick (electric). It's the first time since closing that we're seeing the house...now we're the OWNERS. I wonder if it means we have to shovel 18 inches of snow off the walkway.

We're also going to try and fix the wood fence. Our first project!

Price Decrease

So...I'm still tracking the property on realtor.com and the price went down by $10,000! It all doesn't matter until Eddie finds a job, of course. On that front, he's had two interviews but no job offers.

Our apartment in Ditmas Park is pretty awesome, so maybe it's all a sign we need to stay in Brooklyn.

Movin' on up

We are in the process of buying our first home. It is located in Newburgh, New York, along the Hudson River and about 60 miles north of New York City.

The Process:

First, we had an awesome realtor. He went into great detail about the new developments in Newburgh and which neighborhoods would benefit when.

Secondly, we got an informative mortgage broker who was experienced in a special government loan, the FHA 203K, that would allow us to buy the property and rehabilitate it all in one mortgage.

Thirdly, we found wonderful contractors - general, electric and plumbing/heating - who were invested in the community and wanted to help us renovate this house to bring more own-occupied homes to Newburgh.

And fourthly, we had help from Eddie's sister-in-law, since she is a real estate lawyer and gives great advice. Our real estate lawyer proper was also very communicative and got things done quickly.

The hard part was getting everything together to get the loan. If you're interested in the 203K loan, here is what you need to know:

• BEFORE you start the whole process for any mortgage, make sure that you have your financials in good shape. Outside of good credit, you also need to make sure your bank statements reflect an adequate amount of money to cover the closing costs and all the other fees. Since most banks look at the past two months' bank statements, it's good to have all the money in the bank before those two months. It's also a good idea to locate your W2's for the last two years and the last two months' worth of pay stubs. You'll have to account for any deposits over $200 in your bank statements. Make sure you have a good income-to-debt ratio and that you're saving a lot of your paycheck during those two months of bank statements.

• Not all banks offer the 203K loan, but on the FHA website, you can look up which banks offer it.

• The closing costs for FHA is higher than other loans and you must pay insurance on the mortgage (MIP), but the downpayment amount is only 3.5% and the interest rate on the renovation portion is the same as the mortgage making it more reasonable than other renovation loans. Also, you can finance the closing costs in a 203K, if you qualify.

• If, like us, you are buying a foreclosure that needs a lot of rehab, it is wise to get a jump start since the selling bank is usually less understanding than real-people sellers.

• Get pre-qualified, find a house you like, win the bid. Within a week or two of winning the bid, your real estate lawyer will meet with you to sign the final contract and you must put down a deposit.

• Find a home inspector (who is also a 203K consultant, if possible) and get an inspection (usually around $500).

• Have a 203K consultant inspect the home for a work write-up. This work write-up outlines what needs to be done to bring the house up to code and the cost. If you're not buying a foreclosure that has been badly vandalised (like ours), and your house is perfectly livable, then the renovation portion of the loan may be used for cosmetic, repair or improvement work, such as installing new lights, fixing the tread on the stairs, or adding a new bathroom. The renovation must be at least $5,000 to qualify for the 203K.

• Next, you must find contractors willing to do the work outlined in the work write-up for the cost the 203K inspector indicated. They will have to write up their own estimate that matches the scope of work and price of the consultant's work write-up. They will also have to sign an agreement that the mortgage broker sends to them.

• In the meantime, your real estate lawyer will have sent the fully executed contract and title seach to your mortgage broker, and he will have a municipal search listing any code violations that need to be addressed. Those should not be a surprise if you have a good home inspector and 203K consultant.

• At this point, you should have everything needed for your mortgaging bank to go into underwriting: 203K work write-up, contractor's estimate and signed documents, fully executed contract of sale, as well as, a photo ID, most recent pay stubs, two months' bank statements, last two w2s, and finally, a check or credit card for the bank to pay for an appraisal of the property, a credit check and a deposit for the lock-in rate ($500, $25 and $500, respectively).

• Underwriting takes anywhere from 2 to 4 weeks. During this time, the bank is conducting its due diligence and determining the risk involved in the loan.

• The closing cost breakdown for a 203K loan:

1. Interest rate: 6.5% with .375 discount. We eventially bought it down to 5.5% for around $3,000.
2. Appraisal fee: $500
3. Commitment fee: $700
4. Flood Life of Loan fee: $24
5. Suppl. Orig. (Reno): $500
6. FHA Upfront Mortgage Insurance Premium: $3,526
7. 203K Consultant fee: $1,000 (this is based on the size of the renovation loan and the fee is set by FHA)
8. Abstract or title search: $1,947
9. Attorney's fee: $700
10. Municipal lien search: $500
11. Recording fee - deed: $150
12. Recording fee - mrtg/DOT: $150
13. State tax stamps: $1,640
14. Fire and Hazard insurance premium for 1 year: $960
15. Hazard Insurance escrow (9 months): $720
16. City property taxes (7 months): $933.31
17. School taxes (10 months): $2,500
18. Downpayment: 3.5% of combined mortgage and renovation loan

The cost for items with months in parentheses change depending on the time of year you close.