After we bought the house, our first step was to get it insured. Fortunately that was pretty easy, and not too terribly expensive. (The replacement value is rather low at the moment, for various reasons; once we get some work done and other things figured out, we'll see about raising it.) The entire bill for a year was $459, plus a $25 membership fee. For budgeting we'll just figure $500 a year for now, and probably $750 in the future. Next step was to get an alarm system installed -- even though Walnut Grove is a pretty safe area, and several people are watching the house (the neighbor across the street is the grandson of the original owner/builder of the house, and the neighbor on the side is kin of some sort), we've moved some of our things down there and would rather be safe than sorry. Fortunately the house was already wired for ADT, so installation (they had to upgrade the unit and add some sensors) was only $49.99. Monthly service is around $46 -- higher than I expected, but every other place was as much or more. *sigh* So, another $500 a year for that expense. Of course, before they could install the alarm system, we had to get the electrical service started. Fortunately that will be fairly low cost, since we aren't there all that often, but it is $22.55 per month just to have electricity, even if we don't use any. (It's a co-op, and of course the only game in town. The rates seem extremely low, however, once we do start using it.) Estimate for a normal year (until we establish a true normal) is $350/year.
The biggest expense, of course, is the purchase. I honestly did not know that if you pay cash for a house, you can't refinance it for six months. Not a huge issue, since we had the cash, but it's a bit frustrating because we had planned to take cash out of a refinance to pay for the things that needed to be done. (We also purchased $4500 of furniture, at a going out of business sale; I'm still shaking my head over that one, but we did get quite a lot of bargains, and it's quality furniture that, since we're not using it every day (and thus having it abused by the critters), should last quite some time. Net savings were about 65% off of retail.) So right now we're having to do some creative financing to cover things until the refinance can go through. (We did try for one loan through BofA, however their comp-only appraisal (not considering the updates) came in at only $70K, and for some reason they would only offer a loan for $28K at 5.2% interest. We told them thanks but no thanks -- regardless of where the appraisal comes back, we should be able to get 80% in a loan. (S has the primary mortgage on our home in his name, but that's about the only debt he's carrying, so his debt-to-income ratio is pretty low.) Plus I suspect that if we can get the major needs taken care of now -- the most expensive being the floors -- the appraisal will come back higher. Fortunately, S has some 0% checks on his one credit card and was approved for a new 0% card, until August 2015, so we should be able to cover the bulk of the work at 0% and get it paid off when we do refinance, well before the 0% expires. (The upside is that even at $70K, that's double what we've paid for it so we're already ahead!) Estimate for the mortgage, assuming it appraises at the $95K, is around $400 a month.
With the recurring expenses, the mortgage, and various incidentals (water, lawn/yard care, etc.) I'm guessing the house will cost us about $700 a month. Fortunately the mortgage amount includes paying off some of the credit card debt and personal loans, which frees up about $900 a month in payments. So we're covered on the mortgage and have a little extra to use for setting up a 'slush fund' savings account (I'm working on an emergency savings account via other means) and for paying off the few remaining non-RE debts (which are at 6% interest or less). While I know conventional wisdom says you shouldn't use your house to pay off your credit card debt, I just can't justify paying 11-25% interest when we'd have available credit at 5% or less. We'd still have at least 20% equity in the Walnut Grove home, with enough from the mortgage to cover the purchase price, the debts/loans, the 0% loans, and several thousand for other improvements to the home and yard, and we'd end up paying off non-RE debt about a year sooner than anticipated.
So that's the situation. I have to keep reminding myself that this will work out in the long run, and that even if we can only get a mortgage of, say, $50K, it will cover the purchase price, the money we've already spent, and the major projects, with payments of only about $250 a month. In the long run, we will be much better off with the mortgage rather than the credit card debt, and it will allow us to pay down the real estate debt that much sooner, as well. It's also good to know that we could fairly easily sell it if necessary, and at least get back what we've put into it, if not a small profit. Not that I want to sell, but it's an option. The long term plan is to fix it up and use it as a vacation home until we retire. Then we'll move in and live there for a couple of years, while we find our 'perfect' piece of land in Walnut Grove and build our dream home. Depending on where things are at that point, we'll either sell it or keep it for family, friends, etc. when they come to Walnut Grove to visit.
Next up, all the stuff that needs to be done (that we've figured out so far!)....
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