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Am I making a mistake in buying a house now, what are your opinions? The facts: - I am making $19/hr and am full time. - 27 year old, single with no kids. - Have no debts - Paid cash for a 2011 Hyundai 3 Door Accent Hatchback four weeks ago, it has two 5 year warranties and one 10 year warranty. Oil changes for free for life. - Have $87k in cash, but no retirement fund saved (which I will immediately start after buying a home) - Starting March I'll be paying $532 in rent a month on a month to month lease (was $452 a month if I did the minimum 7 month lease). Currently I'm in a 550 sq ft studio in the nicer part of town. - Plan on renting out two rooms when I do buy a house (which people I work with are already interested in). - Likely payment on a $175k house is about $1000/mo which includes insurance. - Likely to get a second overnight job whenever I can (c'mon, eventually I can get one within 5 years). - I'm a huge cheapass, so I'm really good at keeping living expenses down. - No medication bills. - I live in a desert, so yard work will be to a minimum. Regardless I have some interests in trying to do a little gardening work in my yard appropriate for the local weather. - Plan on buying a newer home built in 2000 or newer. Hopefully I won't be stuck with outrageous expensive repairs for a while. The outlook of my future will most likely be me continuing on with my retail job for another 40 years. I can afford a house with my annual income, but as mentioned above, I still want a roommate or two to save more money. Tucson is a pretty good size city, so finding people who would be interested in paying about $350-$400/mo in the nicer NW area shouldn't be too hard. EDIT: I should mention, houses are pretty much at an all-time low along with interest rates. Both of them are down since 3 years ago. How much longer can they stay this low before both go back up? I feel now is the best time to buy a house. I don't want to stay in a studio for another 40 years at $500 a month which rent will also probably go up soon. ijii fucked around with this message at 01:06 on Jan 17, 2011 |
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Jan 17, 2011 01:00
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Leperflesh posted:I think you should pursue 203k outside of BofA. I think most lenders that are willing to do an FHA loan (and that's pretty much all of them) would consider a 203k. But more importantly, you want to be free to select your own contractor. The contractor makes an estimate which is binding and then they get paid directly by the lender, so you won't have to deal with shady contractor bullshit regardless (in theory, anyway). But it seems like this is a good fit for you, since you're living rent-free and want to keep the house for a decade or more. That's good advice. I'm sure I can find someone to refer me to a good contractor. If we do go that route, my wife is more the decorator type, not the room design type (paint/wall decor/etc). So once we decide on a design, we'd stick with it. In any case, we'll be continuing to look. 203k will be an option if we find a foreclosure with potential. But we can continue to look while living rent free. Our realtor isn't the "lets make a bid now" type so we can continue exploring our options. Here's a question: what's the most important question that's usually not asked to a realtor/broker/banker but should be?
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Jan 17, 2011 01:21
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ijii posted:
I think it's an ok time to buy a house, but houses are nowhere near historical lows by any metric.
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Jan 17, 2011 02:21
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ijii posted:- Have $87k in cash, but no retirement fund saved (which I will immediately start after buying a home) OPEN AN IRA. There are hard limits on how much you can contribute each year, so it's foolish not to start as early as you can. I'm pretty sure you still have a little time to throw in your $5k for 2010. There's a thread for this.
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Jan 17, 2011 06:19
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ijii posted:Am I making a mistake in buying a house now, what are your opinions? You'll need to see which bank will give you the best rates on a mortgage, and plan on how much you want make for the down payment. You can avoid the mortgage insurance by putting down 20%, which you have enough funds for. You also need to make sure you can handle the property taxes per year, and ensure that tax cost and insurance is factored into any leasing fees you set for the roommates. However, careful betting that roommates will help defray the overall housing cost, unless you are ready for various issues that can come about with that arrangement, like deadbeat renters, carelessness (i.e. someone accidentally starting a fire), liability issues. I bought my first house last March, (2300 sq feet) priced at $215K. I paid down 20%, got a rate of 5.125% from a major bank with no points. If I waited a few more months I could have gotten under 5%, but I needed to buy the house at that time. I don't use two of the rooms (except for storage), but I would never rent out the rooms since I don't want to deal with any drama. If one can find trustworthy roommates then it's good to help bring in some renters. Just not my thing.
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Jan 17, 2011 07:47
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Chainclaw posted:I've been getting pressure to look into buying a house from my parents because "it's a good time to buy." But I am constantly hearing contradictory reports, and can't really decipher the http://www.standardandpoors.com/home/en/us linked in the first post. Housing tracker seems to show that prices are the lowest now that they've been since 2006 (which is as far back as it goes) http://www.housingtracker.net/asking-prices/seattle-washington/ greasyhands posted:I think it's an ok time to buy a house, but houses are nowhere near historical lows by any metric.
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Jan 17, 2011 17:37
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Lyesh posted:Yes, but they are upfront costs that are included in rent. When people talk about "throwing away money" on rent, they typically just compare rent to mortgage payments and forget all of the other costs that skipdogg mentioned. Closing costs are also NOT something that are usually included in rent and they are substantial unless you actually stay in one place for 10 years or so.
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Jan 17, 2011 17:37
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ijii posted:Am I making a mistake in buying a house now, what are your opinions? You're in good financial shape. You're overly concerned about what the market is going to do/where it is now... it's a good thing to be aware of, but you absolutely should not think that this is your best chance in the next 10 years to buy. Take a look at what the payments are on your 175k loan at 5% and at 6%. You'll see it's not that much money - certainly not enough to price you out of the loan. The main thing in your list that concerns me is that you're young, unmarried, and have no kids. All of those things will change, and along with them, your life plans. Buying a house ties you down. The cost of buying and selling is enough that you'll lose money if you have to sell the house in anything less than around 5 years, and maybe longer if prices go down or stay flat. I'm also concerned with your plans to rent out rooms. Even if it's your friends, they will want to move on eventually. You need to be sure you can cover the entire cost, indefinitely, and without roommates. That way the income from roommates is a bonus, not something that'll screw you if situations change. e. Also, you absolutely should be maxxing out a Roth IRA. Put in your $5k for 2010 and your $5k for 2011 immediately (you have until April 15th to contribute for the 2010 year). That's tax advantaged retirement savings, you can stick it in a Vanguard account, and it will be extremely likely to do better as an investment than your "investment" in desert residential real estate.
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Jan 17, 2011 21:03
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With my tight budgeting I can afford a house with my current income. I will use rooms to rent out as bonus only, I will never rely on roommates. I want to get a second over night job since I'm not doing anything productive outside of my work. Hopefully one of these months I can do such a thing and bring even more money home. I'll look into the 401k immediately and see how much money my employer puts in for every dollar I put in.
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Jan 18, 2011 04:26
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It's hard not to come off as prying too much, or straying too far from the topic of this thread, but do you really want to continue working retail for the rest of your life? You have enough money that you could comfortably afford to go to school if you wanted, and do you really want to work 2 different menial jobs just to be comfortable? Not to mention how much job security do you have at your current job? You've obviously done somewhat well for yourself there if you are making 19/hour in retail, but why not use your time to find something you like that pays double or triple that? Once you own a house you are somewhat committed, since no matter what you owe the bank that big lump of money. Right now you really don't owe anybody poo poo, enjoy that.
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Jan 18, 2011 04:44
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I thought I'd throw up my current home buying situation here to see if you all think I'm crazy or not. Our Financials: -Living in Indianapolis for the conceivable future which is rating as one of the most affordable big cities in the nation -Wife and I bring in 56k a year pre-tax (not including overtime or bonuses which we both get semi-frequently, so this is conservative number) -Own one car, have $4500 left on other car that we are planning on paying off within 6 months to help with house payment -Only debt other than that is interest free $4000 student loan that my wife pays to her mother every month to the tune of $100 -Current total savings is at $9000 (and this is before tax returns) -Currently renting for $700 a month but that is very low for the area and I'd expect or rent to go up to about $800 a month What We're Buying -We found an investor owned house that was previously a foreclosure that is around 10 years old. 2000 sq/ft bi-level with garage and .5 acre lot in a subdivision. -It was on the market for $150,000 previously but was re-listed and we dropped the seller to $129,500. It last appraised a year ago for $153,000 and all the houses in the neighborhood are in the $130-$145 price range so I definitely think we are buying low here. -Interest rate we are grabbing from the bank is currently %4.67 with FHA and %3.5 down but I may try to work with a conventional loan where the lender pays PMI and we put down %5 percent. -Start up price will be low because seller is buying new appliances (minus washer/dryer), putting new layer of shingles on the roof, re-carpeted the entire house and painted. Inspection is coming this week so we'll see on anything else that might need fixing. -Biggest issue with this place is the fact that we won't be receiving the homestead exemption on our taxes, so they go from $1200/year projected to $3300/year projected which will stay in place till May 2012. The seller is crediting us the first year in taxes so we'll have extra in our savings remaining to cover the inflated monthly payment. With all that up and running we're looking about $1000 per month on our mortgage payment (including the higher taxes, which should go down about $130 a month after we readjust in a year). I really believe my Wife and I are ready for this, even with 300-400 extra a month in payments and higher utilities. We're both fresh into careers with paths trending upwards, have very low DTI and are career savers. Does anyone think we're getting in over our heads?
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Jan 18, 2011 17:28
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MinorApplicator posted:Does anyone think we're getting in over our heads? My only real concern is retirement saving. Are you currently saving at least 10% of your income in some sort of retirement account? If not I'd be worrying about that first.
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Jan 18, 2011 18:20
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Chin Strap posted:My only real concern is retirement saving. Are you currently saving at least 10% of your income in some sort of retirement account? If not I'd be worrying about that first. My wife receives a state pension from her job, but other than that we have nothing going yet for retirement which will be rectified in the next year. We've only been living together for a year as well so we're still sorting out our finances.
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Jan 18, 2011 18:48
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MinorApplicator posted:My wife receives a state pension from her job, but other than that we have nothing going yet for retirement which will be rectified in the next year. We've only been living together for a year as well so we're still sorting out our finances. Okay, well you need to take a serious look at a budget that includes retirement savings (one person's pension is not enough), and see if you can still feel comfortable doing both that and a house. Be honest with how well you will be able to save. It concerns me that you haven't even saved up 10% of the cost of this place yet, especially when standard down payment should be closer to 20%.
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Jan 18, 2011 18:54
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It's also worth noting that if your new jobs are less than 2 years old, your lender is going to look at previous employment and previous income when figuring your loan. Your finances are actually no worse than mine when I bought... with the exception of the total absence of retirement savings. Mind you, my wife and I are 35, so if you're like 25, it's not as worrisome... but you don't want to be in a situation where your housing costs are high enough you can't afford to save for retirement. With your 3.5% FHA (the same thing I did when I bought), you're going to have essentially zero equity in the house for the next five years or so. Unless houses suddenly start appreciating again (don't count on it) you will be tied to that house for something like 8 to 10 years. Tied to it, meaning, unable to sell without taking a loss, due to the cost of selling and the lack of meaningful equity. 2000 square feet is a pretty big house, and so is a half-acre lot. Could you consider a smaller, 'starter home' for less money? You might find it more comfortable financially...
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Jan 18, 2011 20:01
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With the new FHA PMI rules, single premium PMI is the way to go if you can swing 5% down. FHA - 3.5% down: 1% origination fee .90% PMI for at least 5 years 5% down single payment PMI (SPMI): $800 origination fee 1% single PMI charge (expressed as a point on HUD-1) No monthly PMI No interest rate adder The actual point charge will vary based on your credit score and market conditions, but that is what I received with excellent credit. I also had a different lender quote me 1.25 points, which included the SPMI charge and origination fee. You can see that over the first five years the SPMI saves you about 4% of the home purchase price vs FHA. You also never have to deal with getting PMI removed. The tax deduction for PMI is not a guarantee. Although it has been extended through 2011 it may not be extended again. The PMI deduction also has income limits. The higher interest rate no PMI option (LPMI) is ok if you don't plan on staying in the home for a long time. If you assume a .375% rate adder for LPMI the SPMI starts to come out ahead after year 4. If you end up staying in the home for like 10 years you will take a bath with LPMI compared to SPMI.
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Jan 19, 2011 02:17
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Leperflesh posted:It's also worth noting that if your new jobs are less than 2 years old, your lender is going to look at previous employment and previous income when figuring your loan. We're both in our mid-twenties and pretty fresh into our careers so putting a year-end goal on getting our retirement savings going is a must. We have a combined contribution by both our employers into a health savings account of 6k a year, which we can roll into a 401k eventually if I'm informed correctly. We are probably buying a bit larger than we need to right now but I definitely think we can turn around and sell this house in 5-7 years for a decent amount more than we're buying it since the investor who owns it now dropped the price 4 times this year to get rid of it. We have negligible debt combined and are very ready to get out of the apartment scene so I think this is a good choice for us.
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Jan 19, 2011 22:51
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MinorApplicator posted:We are probably buying a bit larger than we need to right now but I definitely think we can turn around and sell this house in 5-7 years for a decent amount more than we're buying it since the investor who owns it now dropped the price 4 times this year to get rid of it. That is a nice thing to hope for, but a dangerous thing to plan for. Again: residential real estate is, historically, lovely as an investment. Consider that selling your house costs a ton of money. Right off the bat, you owe 6% of the final sales price just as commissions to the buyers' and sellers' agents. You might have to do very costly repairs if the inspection turns anything up (replace a roof, fix a cracked foundation, something like that can cost many thousands of dollars). You'll pay fees to list the house, fees to show the house, and probably substantial taxes and fees to your city, county, and/or state. All told, even if your house appreciates at 1.5% a year, you could see the entire appreciation over 7 years eaten up by the combination of your out-of-pocket costs from buying it and from selling it at the end. And that appreciation is certainly not assured. Five years ago, lots of people were absolutely sure that real estate "only ever goes up", and that's why we had a big bubble. It was a falsehood then and it's still a falsehood now. The fact that your seller had to drop the price repeatedly in order to sell it is not an indication that it is now undervalued. In fact it is only an indication that your local market is soft. In other words, it shows that prices in your area have dropped. That's not news and not special to your area. If the house was really underpriced, it would be attracting multiple bids from prospective buyers! If you are the only bidder, then, by definition, you are paying more for it than anyone else is willing to. E.g., if you immediately turned around and tried to sell it, in theory you would have to sell it for less than you paid, because you are the only one willing to pay that much. In practice, of course, the market is not perfectly efficient, so it might be there's someone who'd be willing to pay as much or more, but they didn't know about the sale or something. Still, the point is that you cannot judge the house's future value based on what the current seller had to do to sell it, or by how much it's declined in price recently. I'd look instead at your area's prospects for economic recovery, how likely it is that a recovery will be accompanied by more development, whether there is a pent-up supply of houses that will go up for sale the instant the owners think the market is finally going back up, and so on. Even then, there's just no way to know what the situation will be in the future, and anyone who acts like they're certain about it is an idiot. I might sound like a bit of a negative nancy, of course... and you should keep in mind that I did actually decide to buy a house, despite all of these factors. But unlike you, I'm 35, have a substantial amount of money already saved for retirement (which I didn't touch), my combined costs for mortgage, taxes, and mortgage insurance are still lower than what I was paying for rent before I bought, and - maybe most importantly - I have no illusions about making money on this deal. We plan to stay put for at least 8 to 10 years and are willing to stay much longer if the house doesn't go up in value. Also I've never heard of being able to roll health savings accounts into a 401(k) so you should double-check on that.
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Jan 20, 2011 02:38
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MinorApplicator posted:I definitely think we can turn around and sell this house in 5-7 years for a decent amount more than we're buying it
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Jan 20, 2011 02:58
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Do never buy.
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Jan 20, 2011 03:17
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MinorApplicator posted:I thought I'd throw up my current home buying situation here to see if you all think I'm crazy or not. Sup fellow Indy goon. Where abouts in Indy you looking at? From what you are saying I would work on getting more savings and the 10% of your income into retirement like Chin Strap said. My wife and I are in pretty much the same position and we are still waiting to buy a house unless some crazy deal pops up.
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Jan 20, 2011 03:20
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gvibes posted:Do never buy.
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Jan 20, 2011 03:53
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As a counter-point to all the negativity of recent posts: If you don't look at a house as an investment but as a place you'll make your home, then you can understand the notions that "There is something permanent, and something extremely profound, in owning a home" and "No man but feels more of a man in the world if he have a bit of ground that he can call his own. However small it is on the surface, it is four thousand miles deep; and that is a very handsome property." But seriously, don't view a house as an investment. It can be an emotional and personal investment. One that can someday provide the possibility of rent free living, independence, freedom, and immense pride. But all markets are fickle so make no assumptions about how your house may serve you as a financial investment in anything but the long run. Edit: An aside, my wife and I got our first pre-approval letter from a lender. I know these mean squat nowadays with all the underwriting going on during the actual loan application process, but still, it's something to know they didn't reject our asses outright. Thwomp fucked around with this message at 04:23 on Jan 20, 2011 |
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Jan 20, 2011 04:16
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moana posted:Don't count on it, assume you'll be stuck in the house for twenty years. Still want to buy it? If not, then don't buy it. There are no guarantees in life, and you could potentially be ruining yourself with an optimistic assumption. I can't echo Leperflesh enough here. If you're sick of apartments, rent a house instead. I said the same thing about my house. Will only be there 5-7 years, what could go wrong? Only my value dropped 80k, losing my whole down payment, 5.5 years of payments, improvements, and the such. Now my best recourse is a short sale (not interested in dealing with renting, explored that option) and I'll only be out several dozen thousands of dollars for the whole thing. Seriously treat a house as a domicile that you will reside in for at LEAST 10 years, and aggressively pay down the principal. Investment? Pfft...
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Jan 20, 2011 04:31
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I live in a really cheap part of the country. Real estate is really, really cheap. Like stupid cheap. We found a house on 2.2 acres for $32,000 that was built in the 70s with cheesy wood paneling and green porcelain toilet and all that awesome stuff. Anyway, if we put 30% down (lol like 9k), 10 year mortgage and just ballpark 8% interest which is probably high, then our monthly payments will be about $275 a month. Ridiculous I know. My rent is $350 a month. Worst case scenario? We have a terrible house that needs a ton of work and we spend a lot of time and money fixing it up. Which we can do and are willing to do. Or double worst-case scenario, it turns out that it's practically unlivable and we just paid 32k for a house that needs bulldozed and 2.2 acres of land. And we just throw away 250 bucks a month until we can dump it or pay it off. Even this wouldn't put much strain on us financially as the monthly payments would be like 6% of our net pay. We spend more than that on food each month. Awesome idea, or SUPER awesome idea? Neither of us give a drat about the house we just want a couple of acres out in the middle of nowhere.
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Jan 20, 2011 05:04
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Backno posted:Sup fellow Indy goon. We are looking on the eastern side of Washington Township, subdivision near 56th and Allisonville. I do ultimately think we are in this for more of the "my house my rules" aspect of it more than the investment part. We are fully ready to live here for 10 years since we'll have plenty of room to grow into the house and we both have steady and reliable work (my wife works for the state and I work in banking) and I only see our career and money tract going up in the future. We are debt-adverse and career savers so we'll have plenty of emergency funds if need be as well as start investing into our future soon. All and all I believe we are ready for the task and I'm rather excited.
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Jan 20, 2011 05:07
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razz posted:That looks like a house people get murdered in...but go to town!
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Jan 20, 2011 05:11
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MinorApplicator posted:That looks like a house people get murdered in...but go to town! This is exactly what I am going for. I'm about as redneck as they come and I love a good sketchy looking house. Heck if we buy it I might even keep the wood paneling.  Actually boyfriend wants to throw up new drywall if we buy it. He worked in construction for years and I sense a drunken hillbilly drywall party in the future if we get that house. EDIT: Look at that freakin' chandelier. Awesome. That thing is staying. razz fucked around with this message at 05:21 on Jan 20, 2011 |
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Jan 20, 2011 05:18
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razz posted:Awesome idea, or SUPER awesome idea? Neither of us give a drat about the house we just want a couple of acres out in the middle of nowhere. edit: oh, to party. That actually sounds pretty fun 
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Jan 20, 2011 05:22
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MinorApplicator posted:We are debt-adverse and career savers This does not seem to line up with "haven't started saving for retirement yet" and "want to take on a greater than decade long debt without even being able to put 20% down". If you are really sure you want to buy, I still wouldn't be in a rush to buy this place. Something this big shouldn't be rushed just because you think you are getting a deal. Like others said, this isn't a good investment and you shouldn't be viewing it that way, so there should be no need to rush. Plenty of people will be willing to sell in a few months. Start setting aside A) 10-15% of your income in retirement savings and B) the difference between your current rent and how much more it would cost for a mortgage + property taxes. If you can do that for a few months and still feel comfortable with what's left over, then start considering places. Keep in mind you will also need to start worrying about the inevitable things that come with moving into a house: lots of new/extra furniture, new paint, etc etc etc.
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Jan 20, 2011 05:22
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razz posted:This is exactly what I am going for. I'm about as redneck as they come and I love a good sketchy looking house. Heck if we buy it I might even keep the wood paneling. Well, keep in mind that your neighbors will also be the kinds of folks that can only afford a $32k house. E.g., it's likely a rural area with no work nearby and a horribly depressed economic situation. The kind of place where everyone joins the military at age 18 because it's the only way to escape. Then again, if you're comfortable with that, it's certainly cheap! At $32k it costs the same as a BMW. And a BMW will gradually get old and run down until it's worthless, whereas your land will probably always be worth something. And if it loses half its value and you still want to sell it, well, you're only out $18k. Nothing to sneeze at, but not life-destroying either. I'd say go check it out in person first, visit the area and drive around and see what it's like. Find out how far the nearest hospital is, stuff like that. But if you're still comfortable, go for it. Also 8% is unlikely unless you've got atrocious credit. With decent credit you should be able to get under 5%.
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Jan 20, 2011 05:28
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Leperflesh posted:Well, keep in mind that your neighbors will also be the kinds of folks that can only afford a $32k house. E.g., it's likely a rural area with no work nearby and a horribly depressed economic situation. The kind of place where everyone joins the military at age 18 because it's the only way to escape. Boyfriend works for the government. He's secure. I'm gettiny my master's degree in biology and can get a job where he has one. I am secure. We already live in the nearest town, 14 miles away. A college town, I attend Kansas State University and he works on Fort Riley military base. I'm a native, and so is he. And the neighbors should be the ones fearing US. moana posted:Why? To farm, to camp out at? Haha! We aren't even big partiers. Actually we are both wildlife biologists and just want to live out in the hills, away from town. And he needs a place for his hunting dogs to run and I'd like to build an aviary for my parrots and also raise chickens and have a garden. Hippie folks, ya know. We aren't like most people. But goon party if we get it and y'all are invited! And we can have a bonfire as big as we freaking want. Also we have lots of places to hide bodies. 
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Jan 20, 2011 05:30
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Ahah. You're in Kansas! Beware of tornadoes. Make sure that place has a basement you can cower in.' Also you're pretty close to a military base. Expect lots of soldiers on leave at the local bars and such. Leperflesh fucked around with this message at 05:35 on Jan 20, 2011 |
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Jan 20, 2011 05:32
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Leperflesh posted:Ahah. You're in Kansas! Beware of tornadoes. Make sure that place has a basement you can cower in. Unfinished basement! The house only has "one bedroom" lol. We are gonna see it as soon as the foot of snow is gone. ^^^ you ninja edited. I worked on the fort for a couple years. I'm a native Kansas, not this area but have lived here since 2006. I'm used to the weird combination of military base + major university. One of the reasons to get a few miles out of town is to avoid some of that nonsense! However as a non-fat girl anytime I go to the bar I can get as many free drinks as I want from soldiers and frat boys. Another reason to stay semi-close to town. I fricking love Kansas. razz fucked around with this message at 05:41 on Jan 20, 2011 |
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Jan 20, 2011 05:34
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I once spent a weekend in Hays, Kansas. I had to work two 14+ hour days in a row, helping a customer do a software upgrade (well, I was writing a manual and observing the upgrade to help refine the doc, but I wound up doing a lot of the actual work too). It sucked. There was nothing to eat that wasn't fried and covered in cheese.
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Jan 20, 2011 05:42
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Leperflesh posted:I once spent a weekend in Hays, Kansas. I had to work two 14+ hour days in a row, helping a customer do a software upgrade (well, I was writing a manual and observing the upgrade to help refine the doc, but I wound up doing a lot of the actual work too). Hays is...yeah. Hays is Hays. I almost went to grad school there. It's definitely in the middle of nowhere, like most things in western Kansas. At least they have a sweet museum. Also it might sound like I'm kinda joking or just being silly, but I really want to live in a cheap house in the middle of nowhere. It's one of my goals in life - to have a little land and a little house and a place where all our pets can be happy. I would truly be happy in this lovely pink house in the hills. EDIT: omg this house cracks me up! Every time I look at the pictures I laugh and want it more and more.  Alright, done hijacking this thread with poor people nonsense. razz fucked around with this message at 05:57 on Jan 20, 2011 |
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Jan 20, 2011 05:47
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Chin Strap posted:
Our current plan is to pay off my car which will free up $250 per month which will break us even on our monthly spending. Without getting into too much extra detail we've crunched our monthly spending and between our incomes we still have 900-1000 extra per month that we can save/invest. Now I'm not saying that buying a house at this current moment is the most financially sound thing to do but I definitely don't think it's a abrupt mistake either. We'll be debt free besides one interest free student loan for 4k once my car is paid off so we have the flexibility in our budget to afford this. Thanks for all the feedback though it's made me think things through again.
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Jan 20, 2011 06:28
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Keep in mind that someday - perhaps within the next ten years - you may have to buy another car.
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Jan 20, 2011 06:34
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Leperflesh posted:Keep in mind that someday - perhaps within the next ten years - you may have to buy another car. I know. Luckily we both drive Toyotas so I'm hoping for at least 2-3 years before one shits out on us.
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Jan 20, 2011 07:23
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Thwomp posted:Okay so my wife and I are starting to think seriously about buying a house. We spoke to a lender yesterday who mentioned the FHA 203k program. Anyone have any kind of experience with this? I did this. Sometime last March I bought a fourplex from the bank and got the $40k 203k loan to fix the place up, which needed a lot of work. If you go this route, make sure you get a reliable contractor and to be absolutely sure what they are and what they are not going to do. Your lender will likely have a draw sheet where they list every single thing the contractor is going to do with a dollar amount and know that you will be doing the rest. This may not sound like a lot until you spend every single weekend of your life working on your property. A big problem I had with my contractor is that they would just not show up for days, sometimes weeks at a time and the bank makes it extremely difficult to fire or replace them. My contractors took almost 8 months to finish work on my property and during that time I was paying over $2000/mo in the mortgage, HOA dues, electric, water, etc. out of my regular salary on top of the almost $30k I sunk into a down payment. This was a huge burden for me and I lived basically paycheck to paycheck until the work was done because I foolishly assumed it wouldn't take more than a few months. With all that said, I bought in a very good location. I am directly across the street from the biggest university in my state and once the work was done, I had no problem finding tenants and waiting for quality tenants to come along. Within a week or two of putting my units up on the market, I had 3/4 units rented out. I have to live in the 4th unit because I qualified for the first time homebuyer's tax credit and that is part of the deal. A nice part about owning it outright is that I was able to really do whatever I wanted with everything. All 4 units have tile installed downstairs (they are 2/2.5) and I ripped out all the carpet upstairs in all the units and installed a hardwood laminate. All of the appliances had to be replaced in all the units, which gets expensive when you think of a washer/dryer, stove, dishwasher and microwave for 4 units. The rehab loan covered all of it and I bought from a scratch and dent kinda place and installed them all myself (this takes so much longer than you would think it would). I had to replace the bathroom vanities in pretty much every bathroom and I didn't discover until I had already bought that I would need to replace the major plumbing in the entire building which rank $9k, also covered by the rehab loan. I also didn't know when I bought it that the house was on a septic tank that hadn't been emptied since the building was built in the 80's, but luckily it was only a few hundred dollars to empty it out and it was in pretty good condition. Although, if it ever shits out, it will cost me $12k to get on the city sewer system. Make sure you get a really thorough inspection. In my own personal unit, I had all the floors ripped up everywhere and installed travertine tile downstairs and had both bathrooms gutted and had the contractors build tiled showers with the leftover travertine which I really like. The one I am living in was in by far the worst condition, so I had to get rid of pretty much everything and buy new cabinets and have the AC replaced, which came out of pocket. I guess what my point is that my purchase wouldn't have been possible without the 203k loan, although if you are buying a single family house you probably won't have as much work as I did. I am pretty young (23), and I know a lot of people discourage young buyers from buying homes but I think I made a really good choice. With my current rental income from 3 units, I am able to cover all of the mortgage and HOA dues and end up with a small leftover profit as well as "free" rent/utilities. Once I move out and rent out my place (I should be able to get more for it since it is much nicer than the others), I should have a little salary coming out of the property, assuming a hurricane doesn't blow it over. This has been the most stressful period of my life, but now that it is all almost over I would definitely do it again, and might try to do it again in the future if I can find another good property.
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Jan 20, 2011 16:51
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