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I don't want to start a new thread just for my specific situation, so I'm going to post it here. If you all think I should make my own thread, let me know - I don't want to break any thread rules. I'm trying to decide if buying a condo makes sense for my situation or not; I'm not sold on the idea one way or another, but with the markets how they are I'm exploring it. However, every single mortgage person tells me something completely different and I'm starting to get tired of trying to sort out what actually makes sense. I've made countless spreadsheets and believe I could make the payments, but I'm not very familiar with the process of getting credit nor if this would actually be smart in the long run. So, my financial situation. I have no debt (no student loans, no car payment, no rolling credit card balances), and these are my monthly important places where I have monthly payment money: Net Income (after taxes, 401k contribution, deductions, etc): ~$3,900 Rent: $1,350 Parking: $240 Savings: $700 With everything else (utilities, gas, insurance, groceries, vacations, etc) I come out about even over the rest of the year (i.e. I don't put any extra into savings but I don't take anything out either.) If I needed to come up with extra money for monthly payments I could definitely tighten my belt, and also drop my 401k contribution from 10% to 5% (the company match). That would probably give me an extra $200 / month. I currently have $42,000 in savings. My credit history is good (somewhere around 780 I think), and I'm in little danger of losing my job as far as I know. My lease is up May 1 but I can get out of it with no penalty if I keep until November 1. The type of place I would like to buy (I live in Chicago) would probably run for $350-$375K. Taxes would be around $4,500 / year and assesments would be <$300 (by my own requirements). My dream is to put down 20% but I recognize that might not be possible; 10% would be as low as I'd be comfortable going. I'd want a 30 year fixed mortgage. I don't really understand points and all of that stuff so I don't know what I'd do there. My parents have set aside $40,000 to loan to me for the downpayment, but would probably want to give me $26,000 this year and the rest next year for tax reasons. However, my dad is somewhat uncomfortable with listing something as a gift when I would actually be repaying it to them by private agreement. My mom would be okay giving it to me and never having me pay it back, but I don't want to ask them to do something that they wouldn't both be comfortable with so I'm not counting on that money. Another potential source of income that I can't fully count on would be my sister, who will likely move here and live with me beginning in November whether I've moved or not. If she does live with me she will pay rent (probably ~$600 / month if I buy a place, $450 / month if I don't). So my question is, given all of that, should I push to buy, or wait until my lease is up / I've saved a bit more myself and then go for it? I've heard that potentially the tax credit will be extended or house prices might go down more once it's not available. I've also heard that Chicago's housing "collapse" is behind other cities and we may not have hit bottom yet. I'd like to have my own place, I'd like to have a nicer kitchen than I currently have, and I'd like to have a bedroom for my sister to come to, but it's not worth making a poor decision. Any advice? Edit: I forgot to mention that if my car crapped out or something I wouldn't need to replace it. I only bought it because it was the car my parents let my sister and me use in college and they were going to just store it in a barn so they gave me blue book value and free dad maintenance for the life of the vehicle as long as I came to visit. I only use it to drive out of town and go to the grocery, and I could go back to Amtrak / Zipcars if the car died. I also forgot to mention that as part of my exploration I was pre-approved through my bank for $325K. They didn't try anything higher than that because I had no idea what types of prices I was looking at. Sophia fucked around with this message at 04:20 on Sep 2, 2009 |
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Sep 2, 2009 04:10
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^^ I don't see why that would be way too much - the payment he talked about is something I could easily make with a few lifestyle modifications (get rid of the gym membership, take domestic vacations instead of international ones, cut down the cable package, buy generics and plan meals more carefully) and still save ~$300 / month, plus I would gain about 1,000 square feet and two bedrooms. Maybe I just live less expensively than other people, I don't know. Okay, thanks for the advice. If my sister comes back then I'm definitely getting a place when my lease runs out, so it looks like it would be better just to wait to see if that materializes. I wouldn't be too worried about a monthly total (mortgage + taxes + HOA) of $2300 or less even on my own so if I save up for another 6 months and have a renter it sounds like it's within grasp. Sophia fucked around with this message at 15:54 on Sep 2, 2009 |
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Sep 2, 2009 15:44
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Well, like I said, if she comes back, my sister will be living with me whether I stay in my one bedroom or move to a different place. I don't want to live in my one-bedroom with a roommate for another year, but if I move I want to move somewhere for the long term since I hate moving, and I don't think I'll move out of Chicago for a long time, possibly until I retire. Buying seemed like the natural fit for the situation, and most of my single coworkers that make the same amount as me own places in the $300 to $400K range. I guess I'm a little taken aback at the responses here because of that but I'll certainly think about what you're saying. Thanks again! Edit: And that is to say, I'll reevaluate whether or not renting something between the two of us makes more sense than trying to buy something. Sophia fucked around with this message at 17:15 on Sep 2, 2009 |
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Sep 2, 2009 16:56
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I'm 26. I've been living in the same apartment and working for the same company in Chicago for a little over 3 years. Definitely won't be getting married or having kids anytime soon.
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Sep 2, 2009 18:34
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I don't use "it's what my friends do", but I do use "I'm in a different market" as a barometer for how much housing costs. Housing in Chicago is a larger part of your budget; it's just a fact. Obviously the people I know who don't live here and can get a 3 bedroom house in a nice neighborhood for 200K don't go out and get a 350K one just because they can. But here, a 3 bedroom will run you 375K in the city and a 2 bedroom is probably 300K, especially if you're a single girl who knows nothing about home repair and safety / condition is a concern. And those prices are a lot lower than when I first started looking. I mean, if I can't buy because it will be smarter in 7 months when I have a bigger down payment, prices might be lower and know for sure I have a roommate, that's what I wanted to think through, but when I moved here I knew I'd be getting into that housing boat. When I first got here my rent was 45% of my take-home and that's what I planned for to get the type of place I wanted. I still managed to save 25% of my pay (plus do a 10% 401k contribution) by dint of being frugal in other areas. This isn't to say that I don't appreciate the advice, because I had no idea how people in the rest of the country saw this type of monthly payment %. It's convinced me that I definitely need to hold out until next year to build up more money and to see if I have a roommate or not, since that will make the difference (and I don't have a great desire to move or buy if I don't have one). But I think it's a little ill-defined to say someone is living outside of their means when they're fully aware of the cutbacks they can / must make to get something that they want. It's the people who want something expensive without giving up anything else that they have that are "outside of their means" in my book.
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Sep 3, 2009 02:09
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Thanks Leperflesh, you gave me some good ideas about building some adverse scenarios / increases into my projections to see what I could handle if something unexpected happens. And sorry to anyone who thinks I may have been snippy or stubborn at them in the thread, but I feel like some people think I'm fiscally irresponsible or something for considering my options / recognizing the realities of my housing market when they don't even know me or my history - it made me a bit defensive. I do know how to manage my spending, I swear, and I'm just exploring. Half of the reason I came here was because half of the mortgage brokers I talked to told me I could afford $360K with a 15% downpayment easily and I didn't know if I could believe them or they just liked my credit score. Turns out that it's the latter. 
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Sep 3, 2009 03:22
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Schnozzberry posted:Is it a bad idea to sell my home to my brother? Basically my entire family just went through a round of "musical houses" wherein we ended up with all of the same houses as before just with different people in them, plus a couple of extras. In every case there was a bit of a "family discount" but they didn't use realtors or agents and it saved them a lot of money and hassle. There's also a lot to be said for knowing who was in the house before you were. However, my family is also really close and trusts one another, so there was no worry about a contentious "hey, this was supposed to be fixed you rear end in a top hat" conversation at the next family gathering. Bear that in mind when doing family transactions...
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Apr 28, 2011 22:28
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Boxbot posted:Well, not necessarily right? I mean, You may be losing some cash but you are gaining equity. Your break-even point will be a looooooong way away if you're paying someone else to live there until you're not making mortgage payments anymore. It's better than buying a house to have it sit empty until you pay it off (probably, unless you get destructive tenants), but it's still a very poor use of capital.
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Apr 28, 2011 23:24
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I think he's saying that a house is worth whatever price it can be sold at and that it has no true intrinsic value. The confusion appears to be springing from his assertion that if they see something they don't like they're asking for a "discount" rather than just lowering their perceived value of the house. The seller isn't discounting it as much as the buyer is saying "this house is now worth $X less to me in its current condition". If the seller agrees to that lower price, congratulations, that is what the house is worth. I disagree that a property has any true baseline value, but I do agree that you can reach a price in which a large percentage of buyers would be willing to pay to purchase it, which basically means the same thing in practice.
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Apr 29, 2011 19:03
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Well, I learned while my parents were selling their house recently that the new big thing (at least in Illinois and Indiana) is to not change or fix anything at all (particularly colors, carpet, or anything cosmetic), but provide a monetary allowance for the new buyers to do it. Buyers love that because then they feel like they're getting free money, and sellers don't have to worry about losing out on cash that's ultimately not worth it. My parents ended up doing that and it was a big help in selling. Edit: I think you might be right when it comes to things that people in general don't have strong opinions about (water heaters / furnaces being a good example), but when it comes to something that people will mostly really care about, like carpet vs. hardwood vs. tile, or the color of the walls, it's better to just leave it as is. Your overall cost will likely be much lower if you don't try to fix it than if you do. Sophia fucked around with this message at 19:26 on Apr 29, 2011 |
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Apr 29, 2011 19:23
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sanchez posted:Did this really happen or is it just someones idea? It seems insane to me. This is going to be a great urban legend.
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May 18, 2011 16:59
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senor punk posted:I'm effectively "throwing away" $1570 a month towards interest, property tax, and the cost of insurance, maintenance, and some of the utilities for my place. Not that I disagree with you - Seed, it doesn't sound like the financial incentives are really strong enough for you to saddle yourself with a house at your age as opposed to renting, even if renting gives you a "crappier" place, since buying and owning a house is a LOT more than just your mortgage payment. However, senor punk, you pay for property tax, the owners' insurance, maintenance, and possibly some utilities in your rent check as well. They just don't come itemized on your invoice nor are they specific to you. The big difference, of course, is that you lower your risk exposure to those costs being higher than expected or rising without warning, which is a huge deal from a financial perspective. But you can also end up massively overpaying for them depending on the market. In either case, you pay for it, though. To say that you're only throwing it away on those things in the case of owning is misrepresenting the situation. Interest is indeed a completely avoidable expense by renting, though.
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May 18, 2011 19:13
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Seed posted:It feels like my options are: If it makes you feel better I make about $50 / month more than you, rent a one-bedroom for $1400 / month with no roommate, and still save $700 / month in cash and do my 401(k) contribution and my Roth contributions. And I don't live on Ramen and beans to do it - I have a car (and parking it is freaking expensive), an expensive gym membership, a fancy phone, nice food, plenty of gaming systems and games, full cable, take plenty of cabs, go on nice vacations, etc. If I wanted to cut back (or needed to because of student loans or other debt) I easily could and still save what I'm saving now. So buck up - it is possible! Unless you have massive cost outflows that I don't know about, of course, in which case I'm sorry. 
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May 18, 2011 19:39
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I'd say there's nothing wrong with considering an ARM unless you follow the idea with "because if I get one, I can afford the house!" Sadly, that's what everyone did for a good long while and much like comets they are now seen as bad omens by most of America.
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Jun 6, 2011 17:43
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slowfoot posted:We may just walk away from the deal and keep looking, but it sucks already having around $1000 invested already. You can't look at it this way - the $1,000 wasn't an "investment" in this house, it was part of the cost of looking for a house in general. And what you've received from that $1K is the intelligence to not buy this house under any circumstances. And really, that amount is nothing compared to the amount of money you have the potential to lose. Bad wiring and termites? That really just means that there are even more problems that you haven't already found. Looking at the $1,000 as an investment you need to get back is like saying "well, I already lost a thousand bucks at blackjack, time to put another thousand down and earn it back!" Just walk away.
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Jun 28, 2011 14:59
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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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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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Kalli posted:Yeah, you sound like you're in a pretty good situation for that Sophia. Also, geez, only $80 a month for snow removal / yardwork? They must get a solid deal by contracting the whole complex, because let me just say that it is nowhere near that cheap out here. Yeah, I'm guessing so, but it's also that the guy that does it really likes to mow so he does it at a cheaper price than others might. Plus Indiana is nice and flat so you can just set it on forward and go for a long time before stopping or turning around.
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Feb 24, 2012 00:57
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Realjones posted:$50K in cash needed for a $110K home purchase? Seriously? I wonder what percentage of first time buyers have 50% cash before their first purchase. Not enough which is why the housing crisis happened. Also if he's looking at $130K houses, that's not even close to 50% of cash. $21K in savings is not enough to buy a house that costs more than $80K.
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Apr 1, 2012 18:04
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Does it feel like we are the Ghosts of Housing Markets Future?
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Apr 1, 2012 23:16
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Residency Evil posted:The way I see it, if it goes up in value over 4/5 years I'll have the the option of selling it and making money. If it stays the same/goes down, I can always hold on to it and rent it out in the future. Renting one house to strangers (or even to people you know) is a great way to lose a bunch of money unexpectedly. Might as well go to Vegas and put it all on black if you're going to flip a coin - at least there you have a maximum amount you can lose.
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Apr 2, 2012 15:40
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Put an offer in on that house. I'm trying to keep myself in the proper mindset and treat it like the business transaction it is, but it's a lot harder than I thought it would be. I suppose I'm lucky in the sense that I'm in no hurry but it's still really hard to divorce from the emotion.
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Apr 9, 2012 19:59
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Why wouldn't you just buy it from them when they are actually ready to move? Edit: Or are you planning to live there while they are living there as well for the next couple of years? If so, then it makes more sense, but if you're not actually planning to live there yet, I don't know why you wouldn't just wait. A lot of things can happen in a couple of years.
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Apr 10, 2012 21:24
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So they accepted my offer on the house with barely a word of protest and now things are moving very quickly. I thought this was supposed to take longer, now I'm kind of freaked out.
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Apr 14, 2012 02:16
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Yeah, that's true. I won't be going through appraisal process but there's still inspections and the like, so I know there's many a slip twixt the tongue and the lips. But the process still jumped forward a lot more quickly than I was expecting.Soothing Vapors posted:There's a joke about rolls being slowed here somewhere but I'm honestly too tired to find it My roll is rolling away too fast.
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Apr 14, 2012 20:35
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My thought would be that if your parents really want this to happen, and really want to keep doing it after you're done with school, and have that much money to front it, they should just buy the house themselves and you should be one of the renters. That way everyone wins (they get the rental house that they want and at least one renter that they can depend on and treat the house well, you get a place to live with landlords you know and you don't have to put your name on a mortgage for a house you will only be in temporarily and take on the massive responsibilities and risks of being a landlord while being incredibly busy with your medical poo poo). I think it would be a terrible idea for you to try to be a landlord while you're in school, and I think being a landlord is kind of a sucker's bet in general, but if your parents have the money and the time then there's nothing stopping them from trying it out. If you guarantee that you'll rent from them for awhile, it would help them have a little stability in the first going as well.
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Apr 19, 2012 14:19
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Kalli posted:Quick, DVR like 20 episodes of Holmes on Homes and Holmes Inspection and marathon them~ My inspection went super good, with only minor issues like a loose outlet cover and some slightly short insulation on the AC lines, so these shows just ratcheted up my fear for no reason apparently. And even though I intellectually knew this, it's only now hitting me that I'm going to have to like, buy a washer and dryer and furniture and stuff. I have money budgeted for it but the reality of the bank balance going down even farther is now staring me in the face. 
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Apr 22, 2012 03:40
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You could also ask him if there are any social media sites or other places where you could post a positive review of him and his services and make sure you fill them out.
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Apr 22, 2012 17:44
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Buying a place that shares walls with other people is for the birds, because, while your quality of life is always affected by your neighbors, sharing walls with them is about as intrusive as you can get.
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Apr 30, 2012 17:18
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squidtarts posted:Are townhouses generally considered better than condos, or do they have the same "not a real house" problems? I am buying basically a townhouse (closing tomorrow) and the things listed above were essentially my pro and con list. I don't want to remodel or add things, I hate being outside so I don't want to do my own landscaping, etc, so what might be cons for some weren't for me. It was all pros. I do have the advantage of having relatives who have lived in the association for a few years (my uncle is the HOA president) and thus knowing that it's not a bunch of crazy people, though.
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May 1, 2012 01:58
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Commander Hen posted:I always wonder where the hell do these people come from? It's incredibly popular for pure cash buyers to buy up homes but I personally think homes have a ways to go especially out here. Well, in my personal experience I got my mortgage from my parents, and they paid cash for the house. It lowered fees and costs, was a decent investment for them, and saved shopping around for rates for me. I don't know if that kind of situation is incredibly common but you have to think at least some people are out there doing that.
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May 11, 2012 02:52
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That is totally awesome, Kalli. I'm about to unpack my final box today and be done with the moving part. Feels good.
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May 14, 2012 20:40
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FlyWhiteBoy posted:Even with these low interest rates it seems outrage how much is paid on interest for a house. It seems most people could buy a whole other house with all that interest. Is there any reason I shouldn't live in an apartment for a year and try to save up to buy an older house in cash? Maybe even a 10 year loan max if they are available. Interest is not inherently a bad thing; it's a financial instrument to leverage future earnings effectively. The problem is when people don't value their future money appropriately and spend more of it than they can afford to have things now. People who do that also are not using their current money in more profitable investments - they are just spending it all. I currently have a mortgage, reasonable for my future expected earnings, that allows me to own a place to live and also allows me to put more of my current money into retirement savings (which will likely yield more than the 3.5% that is the interest on my mortgage). For me this was a good use of capital. But I would never tell someone that they shouldn't continue to save to put more cash into their house purchase if that's what they feel comfortable with. That's a conservative, but viable, decision and much better than going the other way around.
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Jun 3, 2012 22:15
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Baronjutter posted:I'd rather spend 1-2 years saving up to buy then 20 years saving up on what would be left after renting. Also renting loving sucks unless you get super lucky with the building/neighbours/management company. And since I believe you were thinking about getting a condo, multiply your headaches by a factor of two. The best part of renting beyond not being financially exposed to a large amount of risk, is the ability to just leave if your surroundings are not to your taste. A house ties you down in more ways than one.
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Jun 19, 2012 17:43
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I Might Be Adam posted:We lost a bid on a house a few months back (outbid). Now I notice the house is back on the market. I don't even know if I want to deal with that realtor again due to her cuntiness. Anyone have experience with that? You could also try to contact the seller's company and say "I'm interested in this house but won't deal with X" and depending on the size of the company you may or may not get results.
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Jun 20, 2012 19:05
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uwaeve posted:How much stronger is an offer without the "must sell our current house" contingency? Is not having that contingency generally seen as a "nice to have" on top of the offer, or is having that contingency in place seen as unattractive? I assume that it depends on the seller's situation, competition for the house, etc. I can't tell you anything about the other stuff you were saying, but I can give you my experience on the offer with contingency. Basically I'm not sure if it makes it more unattractive but it means you might not get the house (I am in Indiana for reference). I put an offer on a house that already had an accepted contingent upon selling house offer on it. They had to notify the seller and the other offerers of my offer within 24 hours, and they had 72 hours (I think, my memory of the time lengths are not exact) to decide whether or not to exercise the contingency. Basically they could have said "Screw selling our house, we will buy this one now regardless" and I would have been poo poo out of luck even if I'd offered more. The sellers wouldn't have been able to do anything. However, the offerers were unable or unwilling to exercise it and thus my offer was now on the table, and was quickly accepted. About 4 days after this happened, the original offerers sold their house, and I found out that they were offering more money than I was as well. However, there was nothing they could do, as my offer had already been accepted and was moving forward even though we hadn't closed.
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Jul 2, 2012 16:12
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Because you know you have a buyer? For a hot property that's going to have a lot of offers and sell quickly, it doesn't make sense, but if you've had a house on the market for a year or so, especially if no one's living in it, why not accept it? If you get another offer then they have to put up or shut up immediately, and if you don't then you'll still eventually sell it when the buyer's house gets sold. I mean obviously you can get screwed by the buyers backing out in some way, but you don't have to take the house off of the market on a contingent offer so you can still be seeking other buyers while they have their offer on it.
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Jul 2, 2012 16:58
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I Might Be Adam posted:This is something we've noticed in our search for a house/townhouse. Especially in townhouses, the builders give you these sprawling master bedroom/baths and closets and some decently sized secondary bedrooms and then they completely screw over your living/kitchen/dining by trying to cram it all in a tight space. We've seen countless listings where you're just blown away by all the space in the rooms you sleep or poo poo and shower in and just insulted in the spaces where you're supposed to spend all of your time. This might not apply to me as much because my kitchen is big too, but my bathroom and huge closet are my (and all of my visitors') favorite part of the house. I don't care about the bedroom proper's size as long as the bed fits, but I want that closet space and that huge tub.
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Jul 10, 2012 21:00
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gtkor posted:If you are planning on paying the home down in less than 7 years, you are going to be better off in an ARM than a fixed interest rate. The key is planning versus will, and for someone with that much other debt load (and not student debt) I would have concerns about it. There's just less wiggle room in general if something unexpected happens. With rates so low right now, with a fixed mortgage you're taking on a very little extra payment for a lot less risk if your time horizon gets bumped out. If you really do pay it off in 3 years it's not like you paid that much extra interest anyway but you kept yourself hedged against negative events. It's not necessarily just about a straight interest rate comparison, it's also about the variance you're expecting on your outcomes and your overall risk exposure. Which is why you need actuaries and capital markets guys for long-term decision making.
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Jul 19, 2012 11:28
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Save up until you have a 20% down payment and make a little more money, and rent a house until then.
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Jul 24, 2012 18:02
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