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dyne posted:I have to admit I haven't looked extensively, but we'd be looking to find a 3 bedroom house that allows dogs with a backyard, that's also in a decent neighborhood. It also needs to be within a reasonable driving distance of work. A brief online search puts something like that around $900-1600/mo. The $2k/mo total figure seems high compared to what I've estimated, I would be interested in how you're getting it. I'll start with  first, I live in Rochester and have been studying the housing market here while I save. As for the 2k figure, you stated that renting cost = mortgage cost, where as maybe in pure monthly $$$ output it would be, but in the long run unless the area you buy it has some great value increase over the next few years it is almost always renting cost < mortgage cost. So in order for someone who wants to only have a house for 4 years the difference would have to be vast to make it logical. Remember PMI/FHA insurance, Property tax, and interest is no less "throwing money away" than renting. 6,000/year property tax is $500 a month, PMI would be 75 a month, and interest on the loan ~$415 a month for the first 4 years, so to start you would be throwing away $990 a month, why not just add 10 bucks to that and rent? Also closing cost, and selling cost you have to factor that in the whole picture as well. So I inflated the rent price to show you where it would make sense to buy over renting. if we are looking at rent = $1,000 a month and owning = $1,000, renting is actually cheaper, because of the above reasons. Unless rent is like $2,000 a month and owning would be $1,000 then I can understand but other than I can't say it is a good decision. I know a bunch of renting places pay for basic cable, water, gas, and garbage (if the Rochester thing is right you have to pay for trash pick up unless you live in the city, and you don't want to do that). I know a few townhouses in the area that allow pets for around $1,000. Given the fact that I don't have a car loan and my student loan bill is way lower than yours my take home pay is close to yours and I know right now if something happened after I buy a house I would be screwed, example just had a tire get a hole in it and it cost 250 bucks to get a new pair that was a big hit. (That is why I am building a good emergency fund) For the the entitled thing that was a general quote, but it seems very relevant for this thread. tl;dr: check this link: http://www.mlcalc.com/#mortgage-130000-5-30-4.2-6000-0-0.72-2-2012-month Given the variables I have figured from your posts, owning doesn't beat out renting until Dec 2025 (that is where there is no PMI, taxes and interest fall below 800 bucks a month). 13 years, and that doesn't take account Maintenance, insurance, closing, and selling costs. I am sure you can add another 30-50 month for insurance and I've hear $125 a month is a good estimate for maintenance costs. This is why it is said often, DO NEVER BUY. Dbhjed fucked around with this message at 05:37 on Feb 21, 2012 |
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Feb 21, 2012 04:44
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How is a landlord able to rent out a town home for $1000 a month that he is paying $500 a month property taxes on? Does this landlord not have the same monthly expenses as an owner occupier? I think there is a logical disconnect somewhere in the assumption that a landlord is able to sustain losses forever and never has pressure to increase prices to cover these expenses or be foreclosed upon by creditors. If you are not planning on living in a house for 20 years then you should probably rent, but to think that renting over the long term is going to be magically half the price of owning is not a reasonable expectation.
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Feb 21, 2012 16:09
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Elephanthead posted:How is a landlord able to rent out a town home for $1000 a month that he is paying $500 a month property taxes on? Does this landlord not have the same monthly expenses as an owner occupier? I think there is a logical disconnect somewhere in the assumption that a landlord is able to sustain losses forever and never has pressure to increase prices to cover these expenses or be foreclosed upon by creditors. Logical disconnect or lovely landlord with a poorly-maintained property that gets "renovated" with the cheapest materials and labor humanly possible and only when each tenant moves out? Flip a coin. In this case, the coin has 10 faces and 9 of them are "lovely landlord".
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Feb 21, 2012 16:17
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Elephanthead posted:How is a landlord able to rent out a town home for $1000 a month that he is paying $500 a month property taxes on? Does this landlord not have the same monthly expenses as an owner occupier? I think there is a logical disconnect somewhere in the assumption that a landlord is able to sustain losses forever and never has pressure to increase prices to cover these expenses or be foreclosed upon by creditors. If you are not planning on living in a house for 20 years then you should probably rent, but to think that renting over the long term is going to be magically half the price of owning is not a reasonable expectation. Don't assume that landlords are expert business people. Most of the time people ignorantly assume that if their mortgage payment is less than they can rent it for, then it's making money. In other cases, someone has to move but is underwater, so they rent out their house for what the market will pay, and knowingly run a loss because they don't have much choice. Chances are a place that has 500$ a month in property taxes falls into this bucket.
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Feb 21, 2012 16:28
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Elephanthead posted:How is a landlord able to rent out a town home for $1000 a month that he is paying $500 a month property taxes on? Does this landlord not have the same monthly expenses as an owner occupier? I think there is a logical disconnect somewhere in the assumption that a landlord is able to sustain losses forever and never has pressure to increase prices to cover these expenses or be foreclosed upon by creditors. If you are not planning on living in a house for 20 years then you should probably rent, but to think that renting over the long term is going to be magically half the price of owning is not a reasonable expectation. I rent a 950 sq ft 2 bedroom apartment in a decent area of town for 780 a month and the only utility I HAVE to pay is electric. I pay more to have digital cable and Internet access. Don't forget the needs of a person is different than the needs of a company, your not going to find many decent privative owned apartments where I am, being in New York alone makes that a hard task since most of the laws are written in the tenants favor. The company that owns my apartment complex, also owns my doctors and dentist buildings. I am also sure they get tax breaks people don't get. ALSO Dyne is only looking to buy a house to live in for ~4 years, that is what we are talking about. I think anyone understands if your going to be in a place for 30+ years, buy it Dbhjed fucked around with this message at 16:38 on Feb 21, 2012 |
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Feb 21, 2012 16:32
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Don't forget that some (many?) places have tax caps. You, buying a house right now, could end up with much higher taxes than your neighbor. OTOH, your neighbor could have bought in late 2007. But that's their problem - lose the money slowly via renting or quickly via sale. Many people probably take the slow option hoping things will get better.
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Feb 21, 2012 17:29
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Elephanthead posted:How is a landlord able to rent out a town home for $1000 a month that he is paying $500 a month property taxes on? Does this landlord not have the same monthly expenses as an owner occupier? I think there is a logical disconnect somewhere in the assumption that a landlord is able to sustain losses forever and never has pressure to increase prices to cover these expenses or be foreclosed upon by creditors. If you are not planning on living in a house for 20 years then you should probably rent, but to think that renting over the long term is going to be magically half the price of owning is not a reasonable expectation. Also, people have lost literally trillions of dollars in real estate over the last few years alone; it's not like it's out of the question to be taking advantage of somebody else's poor business decisionl.
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Feb 21, 2012 17:32
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Elephanthead posted:How is a landlord able to rent out a town home for $1000 a month that he is paying $500 a month property taxes on? Does this landlord not have the same monthly expenses as an owner occupier? I think there is a logical disconnect somewhere in the assumption that a landlord is able to sustain losses forever and never has pressure to increase prices to cover these expenses or be foreclosed upon by creditors. If you are not planning on living in a house for 20 years then you should probably rent, but to think that renting over the long term is going to be magically half the price of owning is not a reasonable expectation. * If they bought the property outright, which is the only smart way to do personal rental property, then they are not losing money to the loan-based money sinks (PMI, interest, etc). * If they lived in the property for several years before moving and put down a reasonable down payment, they are likely not paying PMI, and a larger portion of their mortgage payment is going toward principal and thus building equity. * If they bought the house with the intent to return to it at a later date, they are basically "keeping the house warm" for a small loss. * If they bought the house with the intent to rent it and took out a huge mortgage to do so, then they have made a poor financial decision and will likely incur heavy losses.
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Feb 21, 2012 18:03
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My husband and I are looking into building a house in a nearby community and we have some questions about the process. Is this the right thread for that? I don't see a "home building" thread.
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Feb 21, 2012 21:12
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yawnie posted:My husband and I are looking into building a house in a nearby community and we have some questions about the process. Is this the right thread for that? I don't see a "home building" thread. This thread should be OK I'm sure. I'm familiar with custom home building and buying a home from a big name builder. My current home was built by Centex. What do you want to know?
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Feb 21, 2012 21:15
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yawnie posted:My husband and I are looking into building a house in a nearby community and we have some questions about the process. Is this the right thread for that? I don't see a "home building" thread. therunningman is building his own home (caveat: in British Columbia) and has a DIY thread that he updates every now and then. If you don't get any help here, maybe you can ask him? Come watch as we (try to) build a house (hopefully to code).
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Feb 21, 2012 21:16
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Well we won't be doing any of the actual building, and I guess that's what I'm most concerned about - We're very new to all of this and want to make sure we ask all the right questions and cover our asses so as not to have any surprises while having our home built by someone else, if that makes sense. The builder we're looking at offers a home warranty (though I understand those to be largely crap and just a selling point), and an "independent 3rd party inspection". I don't know if that means an inspector of their choosing, or if we get to bring in our own inspector, but I don't really feel comfortable unless we can bring in our own, and maybe even several times during the building phases - Get an inspection after they pour the foundation, again during framing, plumbing & electrical, etc. I'm not sure what is the standard procedure or if we'll get the side-eye for asking if we can have our own private inspector. I'm also not sure how the payment process works - Is the money held in escrow during the entire build process or does the house get built before any money is exchanged, just loan approval? If we get an inspection and something isn't right, do we have the freedom to walk, or are we sort of locked in once they start building? Obviously we would read all the fine print very carefully for this stuff but I didn't know if there was a standard that I should expect, or if it really is different everywhere you go. We're meeting with a local builder today at 5pm. We checked out the community last weekend and they seemed very eager to sell us a house. I'm more of the take it slow type but my husband is really amped up about it and I just don't want to jump into anything. We looked online at reviews and found one or two negatives for this builder, but they've been around since the 80's and have a BBB rating of A. One of the negative reviews was about a cracked foundation that wasn't covered under the warranty, which is why I'm so set on wanting our own inspection to catch something like that immediately. The most unsettling of all, though, was a lawsuit against the builder AND the city about four years ago for conspiring and providing false inspections. I intend to bring it up at the meeting today and see what they have to say about it. But I almost wonder if, after something like that being brought to the public eye, they're on their best behavior in an attempt to repair the damage from that. They do seem to otherwise have a good reputation and are one of the top builders in the US. Should we run away? What they have to offer is really perfect for us in every way, so we're sad to walk away, but we will if it's just too dangerous. But if there are ways to proceed with these guys while covering our asses to ensure we're getting a quality build, then I'm all ears.
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Feb 21, 2012 21:41
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I would be leery of buying new construction unless you are handy and can inspect before the drywall goes in.
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Feb 21, 2012 21:56
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Well, we're not very handy. That's why I was thinking having a good inspector on our side would come in handy 
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Feb 21, 2012 21:58
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yawnie posted:I'm not sure what is the standard procedure or if we'll get the side-eye for asking if we can have our own private inspector. Don't have this attitude, you're buying from them and should be allowed to inspect anything you drat well please. What some home company salesperson thinks is irrelevant. There are home inspectors that have done a community college course and there are home inspectors who are proper engineers. One thing I really wish we'd done when buying was hire the latter, they're more expensive but it would have been worth it. http://criterium-engineers.com/ I'm positive a company like that will be able to go onsite for you multiple times during the process and provide good insight into the quality of work. sanchez fucked around with this message at 23:30 on Feb 21, 2012 |
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Feb 21, 2012 23:28
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We had saleswoman (?) come in for a mortgage company talk in our hospital today. The focus of the talk was aimed at first time homebuyers/young doctors. Thinks I learned: 1) ARM mortgages are great 2) Real estate is a great investment 3) Renting is throwing money away. 4) On a 200k mortage, the break-even point for buy versus rent is right around 2 years. It's like she was out of a mid-00's time machine.  Thanks for educating me House thread!
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Feb 21, 2012 23:31
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Residency Evil posted:
Did she show the math on this? I'd love to see the assumptions that were made to come to that conclusion.
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Feb 21, 2012 23:41
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yawnie posted:new home stuff Sounds like you're buying a home in a builder community. Correct? Like you go to the model home, pick from one of several floorplans, stuff like that? To answer your items in order: 1. Home Warranty: Find out the specifics. Centex provided us with a 2 year fit and finish warranty. I've had them come out and patch a crack in the sidewalk, and fill a drywall screw hole that popped out I didn't want to deal with. 2. Inspector. You should have the right to bring in your own home inspector. They should charge 500 to 800 dollars and perform 4 inspections for you. Pre foundation, foundation, before drywall, and final inspection. I live in a small suburb of San Antonio known for very strict city inspections, and the guy in charge of building our house was a perfectionist so we felt safe not hiring our own inspector. I would recommend it though. This will be coming out of your own pocket, and the inspector has to be available when the contractor (home builder) is ready for them, as they will NOT slow production of your house because your inspector isn't available that day. Hiring your own inspector for the largest purchase of your life is normal, and if they balk at you wanting to do so I would walk away. 3. Financing. This depends on how the building operates. We left a 500 dollar deposit with Centex while they built our house. We could walk away at any time and the most we would have to forfeit was the 500 dollar deposit. There were lots of contractual ways to get it back, but 500 bucks was very reasonable. You don't have to worry about anything else until closing. You're buying from a tract home style builder it seems so you won't have to worry about financing issues like someone building a custom home would. 4: Meeting the builder. Of course they are eager to build you a house! They make money that way. Ask lots of questions. What are there plans for the community, how large is it going to get? What about the space around you if it's empty? How is that land zoned? You don't want a Wal-Mart in your backyard in 2 years. Tour the community around 7 PM. Most folks are home by then. Are there a lot of cars parked on the street? Are folks out with the kids walking and jogging and playing? What's the noise situation like? There is tons of poo poo to consider when buying a house. After buying new construction I would worry about how long they're going to build there (because you'll never sell your house while they are still building new ones in your community), future growth in unimproved areas, what houses in neighboring developments are going for, stuff like that. Ask lots of questions about building materials. Energy Efficiency. Foundation and soil conditions. HOA rules and regulations and fees. Don't jump into it, and you might be better off waiting for a sale. Lots of builders will have extra incentives, or pay your closing costs. I know we waited for a sale and got our closing costs paid for and about 20K in free (heavily marked up) upgrades.
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Feb 22, 2012 00:38
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ObsidianBeast posted:Did she show the math on this? I'd love to see the assumptions that were made to come to that conclusion. Well 7% appreciation of home value, rent goes up like 20% a year no doubt, roll all your costs into the mortgage and pay interest only for the first five years. Duh.
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Feb 22, 2012 00:39
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We put an offer down on a house yesterday! We should find out by the end of the week if it's approved. If all goes as planned, this will be our very first home. This thread has been a great resource. We were renegades and did everything independently and will (hopefully) get a wonderful home out of it all. Boring house details for anyone who cares: 4 bedroom 1.5 bath, brick home with half-gambrel half-A frame roof, built in 1908. All hardwood flooring, original fireplace, original woodwork, original stained glass windows, front porch, full basement. Structurally very sound, new roof in 2009, fuel oil tank in basement, washer/dryer/fridge/stove included. Cute back yard. Decent neighborhood (better than where we live now). Listed for $75k, on the market for a long time, dropped to $50k. Very roomy, adorable house, but not a whole lot of interest due to lots of wood paneling and drop ceilings in the bedrooms, and also not built on the hill, so no view of the lake. We would love to give it some TLC and do some aesthetic updates. No more paneling, no drop ceilings, new bathroom. We offered $48k, seller to pay $3k for closing costs (so $45k for the house). Realtor who is representing both the seller and ourselves, thinks that this will be accepted. We'd do 15 year mortgage but plan to pay it off sooner than that. Very exciting times. Wish us luck.
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Feb 22, 2012 01:06
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I have three questions I'm hoping someone can answer: 1) How good/bad really is the VA loan? Are most lenders willing to accept it? 2) Related to #1, is there any benefit to having no down payment other than the ability to buy right now? Doesn't that mean you have what would have been 20% less remaining on your principal you now have to pay interest for? 3) Is there typically a penalty or disadvantage to paying more than your minimum payment on your principal every month? I'm thinking, if I don't quite have enough for a full 20% down payment right now, can I buy with the VA loan and pay nothing down, then in a few years when I do have enough, pay off 20% (or a similarly huge chunk) of my principal? Thanks.
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Feb 22, 2012 01:53
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FooGoo posted:I have three questions I'm hoping someone can answer: I've heard the VA loan is good (for buyers). If you use a broker, they will be able to find many lenders who will do a VA loan. quote:2) Related to #1, is there any benefit to having no down payment other than the ability to buy right now? Doesn't that mean you have what would have been 20% less remaining on your principal you now have to pay interest for? The less you pay as a down payment, the larger the size of the loan - and therefore, the more you will pay in interest. Additionally, you must pay mortgage insurance until you've hit 20% (or 22% for FHA... dunno what the exact number is for VA) equity. If you put no money down, that probably means you'll be paying PMI (that's the insurance) premiums for longer. The up-front premium is probably a bit bigger too. And of course, the amortization table will be uglier for the first few years (meaning, you will gain equity very slowly for the first five+ years). The main benefit to minimum or no money down is that it lowers your up-front cost of buying. There is one other way in which this could supposedly benefit you: if the house rapidly loses value and you wind up defaulting on the loan, you will have lost less money when it forcloses (e.g., by not actually buying any equity in the house, you have less to lose by losing the house). Unless you actually think you'll be doing this (in which case you definitely should not buy a house), that's not really a consideration. The best advice is to put as much down as you can, up to at least 20%, unless you really cannot afford it but are still in a situation where you are sure you can afford the house. Everyone's finances are different and so it's impossible to advise you on this point without knowing a bunch of details about your particular situation. quote:3) Is there typically a penalty or disadvantage to paying more than your minimum payment on your principal every month? I'm thinking, if I don't quite have enough for a full 20% down payment right now, can I buy with the VA loan and pay nothing down, then in a few years when I do have enough, pay off 20% (or a similarly huge chunk) of my principal? Most buyers prefer to sign loans that allow prepayment without penalty. If you want this, be sure to specifically ask for it, but it is a very common stipulation and there should be plenty of loans available. It might be a requirement for VA loans anyway (I believe it's a requirement for FHA loans). You should not, however, plan to save up cash and then pay off a big chunk of principal later. You pay interest on the full outstanding amount of your loan every year; the interest you might earn on a stack of cash is probably significantly less than the interest you are paying on that portion of your loan. Everyone should have an emergency fund (and it needs to be larger if you buy a house, because there are potentially large emergency costs built in to home ownership)... but if you can't afford to pay a down payment and have no emergency fund, I feel confident in saying you can't afford to buy a house yet. The best strategy is to at least make your required payments, and if you can afford to pay more, do so regularly. Some folks make bi-weekly payments (so, 26 half-payments per year) or make a 13th payment every year (like, with the christmas bonus). Some simply write larger checks than are due. Since you pay your accrued interest every month, whenever you pay extra that extra amount goes 100% to the principle on the loan. This is a good way to significantly reduce the amount of interest you pay in the long run. The attraction of low payments up front, with payment deferred until later, is what led millions of people into balloon mortgages, ARMs, subprime loans, etc. Many of them believed (because it was widely accepted and constantly proselytized) that the rapid increase in value of their home would more than make up for things like large PMI payments, negative amortization loans, etc.. The line was always "if when the adjustment comes/the balloon hits/etc., you can't afford the payments, you can always sell at a profit! You can't lose!" We now all know (or should know) that houses not only don't always go up up up, they can lose value. The less equity you have in your house, the less buffer you have to absorb a modest loss in value and still not be underwater. Once you are underwater on your loan, your options become much more narrow: you can become house-poor, be locked into a terrible financial situation, or (of course) be financially bankrupted. The best advice, then, is to save up enough money in cash that you can A) make a good down payment, B) have an emergency fund left over, and C) get a fixed-rate loan with payments you can afford. Unless your circumstances are quite unusual, this is always going to be the best advice, even if you have access to a low- or no-down mortgage option. Leperflesh fucked around with this message at 02:48 on Feb 22, 2012 |
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Feb 22, 2012 02:44
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Basically VA loans are great because you do not pay PMI. Unlike FHA loans and conventional loans PMI is not part of a VA loan. The caveat to this is that you do pay an upfront funding fee with VA loans that can differ depending on if you have ever had a VA loan and the amount of entitlement that you have left. The super amazing reason to get a VA loan is because you are currently collecting VA disability. If you are collecting any service related disability you should be able to have your funding fee waived, which means you are going to be able to finance the entire payment without any PMI, and that all subsequent refinances (which can be streamlined) will not have the funding fee as well. I originate for a lender that does a lot of VA loans, and I almost never do it unless the individual is collecting disability because the funding fees are so high.
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Feb 22, 2012 04:09
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Thanks for the great responses! I'm definitely going to rent for a while more. Living in Los Angeles sucks if you want to buy a house (and is not a millionaire)...
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Feb 22, 2012 07:14
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Leperflesh posted:Additionally, you must pay mortgage insurance until you've hit 20% (or 22% for FHA... dunno what the exact number is for VA) equity. If you put no money down, that probably means you'll be paying PMI (that's the insurance) premiums for longer. The up-front premium is probably a bit bigger too. And of course, the amortization table will be uglier for the first few years (meaning, you will gain equity very slowly for the first five+ years). You don't need PMI at all because uncle Sam is on the hook to make sure the lender is made whole with a VA guaranteed loan. Hence, you also get the best rates, because it's safe (risk v reward). At 3.75% (the current rate for VA funded loans on USAA with no points) it would be silly to spend 10's of thousands of dollars on a down payment you don't need to make and that wont affect your rate. Money that, if you actually have it, can be held on to and made to work for you. Especially over the long term of owning a home. quote:Most buyers prefer to sign loans that allow prepayment without penalty. If you want this, be sure to specifically ask for it, but it is a very common stipulation and there should be plenty of loans available. It might be a requirement for VA loans anyway (I believe it's a requirement for FHA loans). It is a requirement of VA loans.
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Feb 22, 2012 15:02
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Is 3.5% overkill for earnest money on new construction? My wife and I are speaking with a builder. We have paid a $500 refundable hold for the lot and are reviewing the purchase agreement. Here is the process they have outlined: * Get Pre approved for a loan * Sign Purchase Agreement * Pay Earnest Money to begin construction (3.5%, around $9k) * Apply for Full Approval * Select Flooring * Select Intricate Options * Personalize * Actual construction with updates and inspection appointments (we are hiring a private inspector/engineer as well) * Closing I'm very new to the whole building process and don't want to get screwed. Any advice would be great. Thanks!
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Feb 22, 2012 21:54
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ObsidianBeast posted:Did she show the math on this? I'd love to see the assumptions that were made to come to that conclusion. No, it was her answer to the question I asked. I was curious because when I've run some numbers for my area through the NYT calculator, it always comes out to approximately 5-6 years or so on rent vs buy. She made it sound like a no-brainer.
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Feb 22, 2012 23:13
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I liquidated my IRA to fund a down payment on my house. I know that I do not pay a tax penalty on the withdrawal, but do I still have to claim the IRA withdrawal as taxable income? (oh god please say no, it's the difference between a huge refund and cutting a huge check to the government).
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Feb 22, 2012 23:16
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Residency Evil posted:No, it was her answer to the question I asked. I was curious because when I've run some numbers for my area through the NYT calculator, it always comes out to approximately 5-6 years or so on rent vs buy. She made it sound like a no-brainer. I think you answered the question sufficiently with the 'no-brainer' line.
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Feb 22, 2012 23:26
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Cmdr. Shepard posted:I liquidated my IRA to fund a down payment on my house. I know that I do not pay a tax penalty on the withdrawal, but do I still have to claim the IRA withdrawal as taxable income? (oh god please say no, it's the difference between a huge refund and cutting a huge check to the government). Was it a Roth or Traditional? If it was traditional, yes. You can only take 10k though, so the tax bill should not be that huge?
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Feb 22, 2012 23:38
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sanchez posted:Was it a Roth or Traditional? If it was traditional, yes. You can only take 10k though, so the tax bill should not be that huge? Traditional... But still, at no time during the home buying process was I made aware that I had to pay tax on the withdrawal. What the gently caress is the point then? Who in their right mind would liquidate a retirement account to fund a home purchase if they had to pay tax on it? I thought the transfer was no different than a conversion to any other retirement account... I'm just really sore about the whole thing because now I have to cut $980 to the government. I guess we have different definitions of huge. That's one entire paycheck to me.
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Feb 22, 2012 23:41
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Cmdr. Shepard posted:Traditional... But still, at no time during the home buying process was I made aware that I had to pay tax on the withdrawal. What the gently caress is the point then? Who in their right mind would liquidate a retirement account to fund a home purchase if they had to pay tax on it? I thought the transfer was no different than a conversion to any other retirement account... No offense, but its pretty ignorant of you to expect to withdraw from a traditional IRA and not expect to have to come out of pocket for anything. All contributions to traditional IRAs are pretax and you really should have known that you're not going to be able to use pretax money on anything (rare cases like health care). I don't know how you even had money in an IRA and didn't know what the consequences of spending it were... Conversions from Traditional to Roth IRAs are taxable, by the way. Otherwise you'd be funneling pretax money into a posttax account without the tax man getting his. That's just not going to happen. http://www.smartmoney.com/calculator/retirement/should-i-convert-my-ira-to-a-roth-ira-1304481621417/ Dead Pressed fucked around with this message at 23:57 on Feb 22, 2012 |
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Feb 22, 2012 23:55
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Cmdr. Shepard posted:Traditional... But still, at no time during the home buying process was I made aware that I had to pay tax on the withdrawal. What the gently caress is the point then? Who in their right mind would liquidate a retirement account to fund a home purchase if they had to pay tax on it? I thought the transfer was no different than a conversion to any other retirement account... If it's any consolation, in the years you contributed to the IRA you would have received a tax deduction to make up for the $980 you must pay now. The IRA provider should have told you about tax implications, Vanguard had multiple warnings during the process when I did the same thing. I had to send a paycheck or close to it to the feds too, I was expecting it though. sanchez fucked around with this message at 00:07 on Feb 23, 2012 |
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Feb 23, 2012 00:03
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I have to ask - why would you liquidate an IRA to fund a down payment? Heck, we're delaying house buying by a year specifically to put more into our (Roth) IRAs. Now we'll be forward-funded to give a bit of an extra cushion if something happens (aka, won't *need* to make a payment for up to 2 years without falling behind). Putting $30k into IRAs in 13 months murders down payment savings  It just seems like if you're planning to live long enough to be able to justify buying a house, you should be planning to afford living.
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Feb 23, 2012 01:14
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Advent Horizon posted:I have to ask - why would you liquidate an IRA to fund a down payment? I contributed to mine knowing there was a chance I'd use some for a downpayment. If the withdrawal option wasn't there I would have dropped the contributions back and kept the money in a regular savings account. 10k (the limit?) is not game changing as far as retirement goes.
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Feb 23, 2012 03:05
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Dead Pressed posted:No offense, but its pretty ignorant of you to expect to withdraw from a traditional IRA and not expect to have to come out of pocket for anything. All contributions to traditional IRAs are pretax and you really should have known that you're not going to be able to use pretax money on anything (rare cases like health care). I don't know how you even had money in an IRA and didn't know what the consequences of spending it were... I had a company managed 401k program. When I left the company, it rolled over into an IRA and sat there doing nothing and it was at that time I learned that I could withdraw from the IRA and use it toward a down payment "penalty free". However, no one ever explained to me that penalty free does not mean tax free. You're right, it is my fault for not figuring that out when I was buying the home. Doesn't make having to write a $980 check to the IRS any easier. sanchez posted:If it's any consolation, in the years you contributed to the IRA you would have received a tax deduction to make up for the $980 you must pay now. I don't think so, because it was a 401k that rolled into an IRA. By having to pay tax on it, it's as good as if I never paid into my 401k at all. The fact that I'm 28 years old with no retirement account right now (except for a government pension) is a story for another day I guess. I'm just hoping that when I retire my pension will still be there. Advent Horizon posted:I have to ask - why would you liquidate an IRA to fund a down payment? In answer to your first question, because I wouldn't have had enough money for a 20% down payment if I didn't, and I refused to go FHA. I do make ends meet and usually net a small amount of money each month. Certainly not enough to cover a $980 IRS bill though, that's gonna hurt a lot considering I've got less than $3k to my name. Do never buy, I guess. Can we still say that? The Shep fucked around with this message at 04:24 on Feb 23, 2012 |
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Feb 23, 2012 04:19
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For those of you building, where the hell are you that doesn't already have a glut of shoddily built homes that corporate builders can't unload?
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Feb 23, 2012 04:55
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I'm looking for some advice about what to do in a situation where I'm looking for an apartment but found a house with roughly the same specs. Info: 28, single, no debts, have $60K in non-retirement accounts, good credit, net about $60K / year, looking in rural Indiana. The rents for the type of places I'm looking at have been about $1000-1200 / month, the house is $160K with $80 / month HOA fees that take care of all of the yardwork and snow removal. I'm pretty sure I could get them down to $150K, if not lower, based on prior sales in the same association - if I couldn't I would likely walk away. The house is about 5 years old and has had one owner (an elderly lady who died). I'm sure I could afford it financially, but I am wondering if I'm overlooking anything really critical to make it a bad idea. I'd take my dad along on inspection (he's an engineer and very handy) to see if there were any major issues, and I would be living only a couple of blocks away from them as well as my aunt and uncle who live in the same HOA division and haven't had any complaints in the last 2 years. It feels like I would be kind of crazy not to at least consider it, but if it's a bad idea please tell me your horror stories or anything else to make me see the downside I'm not currently seeing. Sophia fucked around with this message at 05:46 on Feb 23, 2012 |
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Feb 23, 2012 05:43
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Sophia posted:I'm looking for some advice about what to do in a situation where I'm looking for an apartment but found a house with roughly the same specs. Info: 28, single, no debts, have $60K in non-retirement accounts, good credit, net about $60K / year, looking in rural Indiana. The rents for the type of places I'm looking at have been about $1000-1200 / month, the house is $160K with $80 / month HOA fees that take care of all of the yardwork and snow removal. I'm pretty sure I could get them down to $150K, if not lower, based on prior sales in the same association - if I couldn't I would likely walk away. The house is about 5 years old and has had one owner (an elderly lady who died). How secure is your job? What if you find a partner and want to move How well is the company your working for doing? How long do you plan on living there? HOAs blow. How much of a downpayment do you have? Keep in mind you will have to live in the house for a least 5-9 years to cover the basic cost of getting the house (Closing, and sellers fees for when you sell) and hope the house values stay stable. And your going to also have to factor in the HOA fee, which to me is a bigger waste of money then PMI and Interest combined. Somethings I see: Owning Pros: Pride of Ownership You can change the house within reason (well, not so much in a HOA) You do build some equity over time Don't have other people attached, unless it is a townhouse or Condo Could make money when you sell, but that is very unlikely. Cons: Closing cost Interest PMI If something breaks, you have to pay to fix it Property tax House Insurance Can't just walk way if something better comes up after you close Cost more to heat What if bad neighbors move in and are loud Renting Pros: If something breaks, it isn't your problem If something better comes up, you can leave when your lease is up Besides moving cost, the only other cost to start is security deposit, that you could get back Cheaper to heat They do all the yard work Sometimes they pay for some utilities Cons: Some neighbors could be loud, but if it is a big enough problem you can move Connected walls Rent money isn't working to pay anything down People telling you "Renting is throwing money way" Dbhjed fucked around with this message at 06:07 on Feb 23, 2012 |
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Feb 23, 2012 05:55
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Dbhjed posted:How secure is your job? - Secure (actuarial, hard to find people to do it who want to live in rural Indiana) - This is the million dollar question, of course, but currently that's not on the horizon and it is a two-bedroom so it wouldn't be inconceivable to live there with a partner for awhile. My current plan would be to live there for at least the next 10 years. In addition, I have a lot of family in the area and we tend to buy each other's houses from each other - my parents have already talked about the fact that if I decide to go that route, they'd like to buy it from me eventually when they downsize in older age. This would be a worst case scenario, but it is out there. - The company is doing well, established and international. - See above, ~10 years is the current idea, but if I don't get married it would probably be until I hit a retirement home or if my parents really wanted to swap houses with me before that. - Ironically the HOA arrangement is one of my favorite parts of the whole thing because I've never pushed a lawn mower or a snow blower in my entire life and would not be excited to start. I know people in this thread are really wary of them, though, something I'm keeping in mind and would talk to my aunt and uncle about extensively.- I'd go with 25% probably ($38K if I can get them down to $150K). That would leave me cash for closing, movers, and an emergency fund. Edit: And don't let this post make you think I've already decided; I'm just answering devil's advocate-style to your questions. You raised a good point about the length I plan to live there. Edit2: Part of the reason that my rent options are so high comparatively is that I refuse to rent something with any shared walls (I am absolutely done with that), so those cons don't really apply to my situation. Sophia fucked around with this message at 06:18 on Feb 23, 2012 |
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Feb 23, 2012 06:12
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