Buying a house - drowning in numbers! Need advice

[ldawngirl]

Hey gals! I need some help/advice. We're in the midst of the home buying process and I'm feeling a bit overwhelmed money-wise.

Here's the situation.... (Note: Our possession date is July 1st.)

I just met with the bank where my RRSPs are and I won't be able to withdraw as much as I thought for our down payment as the markets dipped a bit and they're charging me a fee to withdraw.

(Normally you can withdraw for first-time home buyers with no penalties, but the funds that my RRSPs were in were for long-term and there's a penalty for that - really that's the investor's fault b/c she shouldn't have locked us in for 20-30 years, but can't do anything about that now). So I'll likely walk away with about $10,000 in RRSPs that can be used for the down payment. I had thought it would be a little bit more - maybe $11,000 or $12,000.

The home purchase price is $272,600. 5% of that is $13,630. We had talked about adding about $10,000 to the mortgage so we can put in a new furnace and upgrade one of the windows (the only one not done by the previous owners, which is the big front window). That would bring the price up to $282,600, and increase down payment required to $14,130 ($500 more).

Lawyer fees are estimated to be about $4,200, but could go as high as $5000 or $5500.

I figure by the middle of next month, when we have to pay everything, we should have just over $17,000 available to us in cash. That leaves us $1,000-$1,500 short. We won't have to pay our rent for the first of July, so there's the extra money to cover us, but my mom loaned us $2,000 for our cash deposit and we told her we'd pay her back once we were in the house and I thought the rent money would go to her. Plus that won't be in our hands until the end of June and we could need it before then.

PLUS, we have a balance on the credit card (about $2,500) that I was going to pay off when we got back from Ottawa, but then, bam! We bought a house. So I've been hoarding all the money in the chequing account. But that balance keeps going up as I'd rather be using credit than the precious cash right now.

So on top of all this, we'll have to pay my mom back $2,000, plus, say, $3,000 or so to the credit cards. The only extra money I can see coming in is our damage deposit from the apartment, which will be about $425 if we don't get dinged for anything (and I doubt we will) and that's not until mid-July after we're in the house.

I feel like we were doing so well! But now that we have the house, everything is going nuts! There is so much we need to pay for that I never expected.

So here are my thoughts... get the mortgage for $282,600 and have the extra $10,000. We can spend that money to update the furnace (about $5,000) and put the rest of the money on the credit card and to pay back my mom. But that means we need an extra $500 up front for the down payment. Because we're only asking for $10,000, the banks don't require receipts of upgrades, but this could come back to bite us in the butt. But, we could also pay off the card and then in 6-8 months, upgrade the window out of pocket and the bank won't care.

The other option is to take the lower mortgage amount (just the amount for the house) and start to slowly chip away at the credit cards like we were doing before. But, that leaves us with an older furnace that should really be updated and we still have the debt...

Sorry if I'm rambling, but I'm just trying to get this all down on "paper".

Breakdown:

Money that has to go out:
Down payment - $14,130
Lawyer fees - $4,500 (semi-conservative number)
Pay back mom - $2,000
Credit cards - $3,000

Money coming in:
RRSPs - $10,000
Currently in chequing - $6,238
Extra money in June - $1,250 (what I can easily pull together while still paying all the necessary bills and eating! This could be a , but I'd rather underestimate)
Rent - $1,122 (not available until July 1st, but we will have to pay the lawyer and down payment before then)
Damage deposit - $425 (not available until mid-July)

The other thing is that we will still need to buy a few things for the house - a lawn mower, racks, shovels, etc. Some we can definitely get for cheap or free or hold off on for now. But we also wanted to get a new dresser - the one we have is falling apart (literally) and it would be easier to throw it out and not have to move it. But then we'd have to buy a new one once we have the house. So that's an extra bit of money...

Part of me just wants to pay off the credit card and then just see what happens - whatever will be, will be. But I don't want to lose the house over it...

Thoughts, comments.... any advice is appreciated! I'm too close to this and so wrapped up my head is spinning!

[mourningcloak]

First - Breathe! I hated the whole home buying process. Stressful, stressful, stressful.
You probably want to hold onto the cash - mortgage companies will question any large amounts of money flowing in and out. It's only a couple more weeks the way it sounds. Or ask your loan officer about whether or not that would be an issue if you really want to pay off the credit card.
Next, have you made sure you can take out more on the mortgage for repairs and updates? This isn't possible for all mortgages even if you were preapproved for a larger amount than you are getting. I have no idea what the rules are on this one, but again the loan officer probably would know.
Good luck! You'll get through this!