We have a closing date!
NOVEMBER 12, 2020
I uploaded the last round of requested documents last night at 8pm, and I woke up to an email confirmation of a closing date appointment (and a missed call, but hey, my schedule is jacked right now). I had a few very-specific-but-unanswerable questions that I've been wanting to ask, but couldn't until I had a firm closing date.
One of my questions was to check back in on the amount due at closing. We had a rough estimate back when we paid our Earnest Money & Construction Deposit, so being my normal OCD self, I wanted to see if we had a better idea about this prospective amount. I hate surprises, and even if things are actually in my favor, if I don't get at least a hint, I will 1000x lose sleep over it and my anxiety will skyrocket. Well... Not only did we get a ballpark figure, it was significantly lower than what was originally quoted -- with the potential to turn out even lower. (The assistant that was returning the call said this was largely due to Covid.... it had a big enough effect on the supply and demand that it became cheaper for the Buyer).
So, that means the extra cash we've been physically withdrawing for the last few months (literally putting in our "House Fund" jar) has catapulted us into some major extra cushion. We adopted this method on purpose because if the money is just sitting in the bank account, we'd find something to waste it on - having food delivered, getting out of the house and shopping a bit, that sort of thing - and I wanted to make sure that we specifically had extra funds in case of an emergency at the finishing line.
Another factor that played into this mindset was to help off-set the difference in available money from my 401k. The original estimate for Closing Costs were justttttt shy of using the Non-Penalty portion of my 401k (in the form of a personal loan to myself for whatever I wanted), whereas the other option would mean there was a Tax Penalty (considered an "early withdrawl" of my 401k and required documents/proof of home purchase. I was trying to avoid the Tax Penalty at all cost, so we aimed for setting aside extra money to cover the difference. If this is confusing, I'll break it down:
OPTION A - Personal Loan (can use up to 50% of 401k amount)
No documentation required because you will pay yourself back.
Can use for a Vacation, a Wedding, A House Project... no restrictions.
Tax penalty avoided due to a small interest rate applied to repayments.OPTION B - Home Loan (entire 401k amount)
Documentation of Home Loan or Mortgage is required = cannot freely use the funds.
Transaction is itemized and you don't get to pocket the change, any leftovers go back to the 401k.
Tax Penalty comes during tax season as "Early Withdrawl" on your 401k
With the new Closing Cost amount being lower, it is completely covered by my Option A (with extra left over), so after closing, all the cash will be redirected to X-Y-Z... whether that's paint, garage shelving, an accent wall, a couple new rugs, the water softener...... or even for moving men, the Uhaul, cleaning supplies.... or maybe the down payment/deposit for new services at the new house. We will be sitting on the money until it needs to be used.
[2]
The second question was concerning what all the Closing Costs would cover. Essentially, I was wanting to know when we would be required to make our first payment on anything house-related. Closing this close to the end of the year, means that our first home payment wouldn't be due until January.
H E L L O P E R F E C T I O N
I was trying to dodge a Rent & Mortgage Payment Combo since day one of this whole adventure. My slaving away at timelines and calculations have served me well and we are spot on. So accurate, in fact, that I don't even have to change my featured counter!!!
The beauty of this now, is that I can calmly give the 60 Day notice to our Apartment Complex knowing the Closing Date has a legit time & a place. I was struggling with "what if" for the last 6 weeks (or so) about when we'd be notified and if it would be in a timely manner or if I'd be left in the unknowing abyss.