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Caustic posted:Did you miss the part of my earlier post where I said that my savings had been wiped out by medical bills? If you look back at LeperFlesh's earlier posts, he was in almost the same position as you. Except he got someone to loan him the down payment which he payed back with the tax credit I guess. He also had no savings and a large income. I guess it's working out for him and it's in the same market. I wonder how tight his budget is now though.
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Feb 9, 2010 18:45
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Strict 9 posted:Got my refund! About three months to the day. In a month or so, you'll get a reminder from the IRS basically saying: "Remember to claim the interest we gave you on this years taxes ^_^". Can't get a break. I was pretty surprised when my letter arrived. Regarding loans for down payments. As i've mentioned in previous posts, we took the "borrow 8k from family members and repay with the refund check" route.. We took out a conventional mortgage so needed 5% down, which we had, but then later in the process our bank was considering forcing 10% down for the conventional mortgages, so we used the money to bump our 5% to a 10% which was actually quite a nice decision. Regardless of how much you have, adding $8000 to your down payment never hurts and could even bump you into a better PMI bracket. But I wouldn't consider even looking for a house with under 5% down at hand, because don't forget about closing costs which are NOT part of the down payment and can be VERY expensive in some areas. For comparison, our closing had roughly these numbers. 10% down on house (230k new house) = $23,000 Closing, escrow, insurance, taxes, etc = $7000 Total check written at closing $30,000. After closing, we needed a refrigerator, washer and dryer since we were moving from an apartment, added cost.. And even with as much down as we have, we still have to pay PMI since we're under 20%. I would honestly suggest having as much up front as you can before considering a purchase. I was also lucky enough to get a NEW house, so there wasn't any out of pocket repair costs and my house came with a warranty. FidgetyRat fucked around with this message at 19:17 on Feb 9, 2010 |
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Feb 9, 2010 19:05
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SplitDestiny posted:If you look back at LeperFlesh's earlier posts, he was in almost the same position as you. Except he got someone to loan him the down payment which he payed back with the tax credit I guess. He also had no savings and a large income. My situation is different in that: -I have no children and won't have any -I had enough savings to cover the down payment; my folks gave me a gift to cover closing costs, which I am choosing to pay back with the tax credit -I bought a substantially cheaper house -I have a large savings that I didn't touch (my 401k) which is a safety net if something disastrous happens -I don't have kids -Did I mention I don't have kids? I also have excellent credit and qualified for a great rate, and, my wife and I are young and have no medical problems and I have fantastic medical insurance for both of us through work. There is really no medical crisis we could face that would eat our savings. But, you are right. My budget is tight: mostly from the unexpected expenses that I was expecting after we moved in, stuff like re-finishing the floors (which we did ourselves to save money) and needing to buy a new stove. That said, my budget is not so tight that I'm in any danger... I'll be low on cash for the next couple of months, but we budgeted everything and kept to our budget. Perhaps most importantly, though, I don't have kids. There's no monthly daycare in my budget. While we don't make quite as much as Caustic, our monthly expenses are far lower... and we bought less house than we were told we could "afford".
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Feb 9, 2010 20:27
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Leperflesh posted:My situation is different in that: It's not anymore different than you think. He saved $1k vs. your $5k but he has no credit card debt (I'm assuming). He has kids but he also makes 20k more. Both of you guys are very similar in finances. The only thing really different are the medical expenses that can happen to anyone. Caustic, you really should monitor your budget and try to save at least $1000/month for the next year. Set this aside and then consider purchasing. The combination of down payment + financial saving skills will help in your home for all of those (un)expected expenses. Living with that tight of a budget is seriously nerve racking, especially with medical conditions.
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Feb 10, 2010 23:04
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SplitDestiny posted:It's not anymore different than you think. He saved $1k vs. your $5k but he has no credit card debt (I'm assuming). He has kids but he also makes 20k more. Both of you guys are very similar in finances. The only thing really different are the medical expenses that can happen to anyone. You're right that our incomes are not that different, and we're in similar markets. I was trying to highlight issues that my wife and I considered before deciding to buy, but which Caustic had made no reference to. He's going to do whatever he's going to do, but advice is useful no matter who it comes from. In my case the advice I got was useful, which is why I'm still hanging around in this thread. I'm not going to pretend I was in ideal financial condition to be buying, but I have gone into this with my eyes wide open and fully knowing the risks. One of the things that is critically different between us, though, is that I have no children to be responsible for. If my wife and I see our financial risks blow up in our faces, well, we could move into a tiny apartment and sell all of our poo poo and basically be financially ruined and the only ones who would suffer would be ourselves. Caustic has children and he has a moral responsibility to be much more conservative with his decisions as a result. It is not only his own welfare at stake any more. Also, as I mentioned, I have a 401k. It's supposed to be for retirement but it is a safety net as well. Caustic did not mention a retirement account. If he has one, we don't know about it, but I'm not going to assume he does unless he says so. quote:Caustic, you really should monitor your budget and try to save at least $1000/month for the next year. Set this aside and then consider purchasing. The combination of down payment + financial saving skills will help in your home for all of those (un)expected expenses. Living with that tight of a budget is seriously nerve racking, especially with medical conditions. If he saves $12,000 in 2010, but passes up $8000 in tax credits by not buying right away, that's kinda stupid. Obviously he needs more cash to be able to buy, but I can understand why someone would want to get in on this deal now instead of waiting just one year and losing out on it. Honestly Caustic hasn't given us enough details of his monthly budget and what expenses he's accounted for to know if waiting one year makes sense or not. Were I him, though, I'd consider waiting two or three years, and saving enough to get a full down payment and conventional loan. Low down means more vulnerable to a drop in prices, which means more risk. I'm at a place in my life where I can handle that kind of risk, but I don't think Caustic really is. Leperflesh fucked around with this message at 01:02 on Feb 11, 2010 |
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Feb 11, 2010 00:57
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Does anyone here have any experience with the Freddie Mac Closing Costs Assistance / SmartBuy program through their Homepath division? I got an offer put in before the deadline, had to struggle with the seller's agent to get the coupon written into the offer but now my bank (USAA) is 'researching' whether they can handle my mortage if I take the coupon. I've seen nothing in the literature on the program regarding who the lender is, and want to move on and not have to struggle with it again. This appears to be the only information on it. http://homesteps.com/smart_buy.htm Is there a bridezilla equivalent to a homebuyer, because this is turning me into one.
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Feb 11, 2010 04:19
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What is that, some sort of commission kickback program? I'd be worried it would conflict with USAA's, if you're using it ("Mover's Advantage"). Or maybe not since it's on the seller's end.
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Feb 11, 2010 06:34
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slap me silly posted:What is that, some sort of commission kickback program? I'd be worried it would conflict with USAA's, if you're using it ("Mover's Advantage"). Or maybe not since it's on the seller's end. I'm not using USAA's program. It's some sort of Freddie Mac incentive to buy their foreclosed homes as best as I can tell.
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Feb 11, 2010 10:39
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I am purchasing a forclosed home with a 203k loan (loan that is given for the intention of purchasing the home and then renovating). My issue is that the home was renovated about 7 years ago and they put stucco (the real kind, thankfully) on the exterior of the house. I am going to remove the stucco and put up Hardy Plank. I was wondering if anyone knows of a way for an inspector to see behind the stucco before I own the house and am stuck with what is back there. Even though the stucco has only been on the house 7 years and it seems to be well done, they didn't put the usual dividers in that prevent moisture from rising from the ground.
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Feb 11, 2010 20:49
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My 1958 house has original stucco. Our inspector was able to see the condition of the exterior walls, somewhat, from the crawlspace under the house and from the unfinished attic and garage. That said, there were places where he said "I can't see behind here" and that was that. What is the construction type of your house? Wood frame with crawlspace and no basement is typical here in California but I know other areas have different styles predominating.
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Feb 11, 2010 21:49
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tadashi posted:I was wondering if anyone knows of a way for an inspector to see behind the stucco before I own the house and am stuck with what is back there. Even though the stucco has only been on the house 7 years and it seems to be well done, they didn't put the usual dividers in that prevent moisture from rising from the ground. That being said there are inspection cameras made for looking through small holes and tight spots, there is nothing stopping an inspector from using one.
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Feb 12, 2010 11:32
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Good news. Apparently the seller has decided to sign off on replacing the roof if their insurance company won't pay for it. This means that, barring any catastrophes, we should be buying this house. Now to try and do everything I can to make sure I have as much say as possible in the roof replacement.
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Feb 12, 2010 11:33
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slap me silly posted:What is that, some sort of commission kickback program? I'd be worried it would conflict with USAA's, if you're using it ("Mover's Advantage"). Or maybe not since it's on the seller's end. Nurbs posted:I'm not using USAA's program. It's some sort of Freddie Mac incentive to buy their foreclosed homes as best as I can tell. USAA Mover's Advantage is awesome. They provide you with a dedicated person you can call at any time in the process if you have questions, etc on what you need to do next. The real estate agent they referred us to has been fantastic and very easy to work with. Plus the $1k cashback (based on purchase price) direct deposited once closing is done doesn't hurt either. We close on March 5th and the entire process has been painless and worry free, especially for my wife and I being first-time homebuyers. A+ would buy a house using their services again.
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Feb 12, 2010 15:33
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I had a good experience with them too. But next time I will go straight to the agent and just negotiate a lower commission - that cashback prize comes straight out of the agent's commission, and USAA gets a chunk. You could both come out ahead by splitting the difference.
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Feb 12, 2010 16:12
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I've been seeing a lot of foreclosures in my area and most of them say "No Seller's disclosure, sold as-is." This really doesn't matter much if I get my own home inspector right? edit: I mean I wouldn't have to rely on the disclosure in the first place assuming my home inspector isn't terrible.
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Feb 12, 2010 23:48
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One of the benefits to a disclosure is that if you later can determine that the seller knew about an issue but didn't disclose it they are held responsible for the problem. But not having that safety net (and other such mechanisms particular to real estate transactions) is part of the excitement of as-is.
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Feb 13, 2010 00:13
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TheWevel posted:I've been seeing a lot of foreclosures in my area and most of them say "No Seller's disclosure, sold as-is." This really doesn't matter much if I get my own home inspector right?
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Feb 13, 2010 01:51
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And be aware that you can get more than just the general inspector. In particular, there are specialists for things like termites & dry rot (very important anywhere in California, for sure), roofing guys, etc. Suspicious crack in the chimney? Get a chimney expert. Wondering about the gas appliances? Have the utility company bring someone in (you may have to ask the seller to arrange that, but don't be afraid to do so). It is your responsibility to get whatever series of experts in to look at things as you desire, and don't let anyone's agent discourage you. Of course this all costs money and takes time, which are the limiting factors. My agent recommended having the general inspector first, and then getting specialists to look into anything that the general guy noticed or specifically said they couldn't look at. (By the way it is my opinion that all buyers should do this, even if the seller has a disclosure. It's only $400 or so for a general inspector... and even though the seller is legally obliged to disclose everything they know about, there are a lot of desperate sellers who think they can pull poo poo. What's $400 or $500, compared to the cost of the house?)
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Feb 13, 2010 19:14
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I'm soon to be in contract on a 280k 1920 SFR in Oakland, CA My agent is wanting me to use his general inspector but it makes more sense to me to bring in specialists (ie plumber for plumbing, electrician for electrical, etc). General is $600. I looked over a sample report from the general inspector and it was a bunch of small nit picky things that as a person who is not afraid to do my own work, I'm completely uninterested in. I just want to know about the big issues (roof, foundation, dry rot, electrical, plumbing). Thoughts?
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Feb 15, 2010 06:31
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The general tells you which specialists to bring in; that's how it's normally done. The nitpicky stuff is all what he's required to report; there is a standardization in play here. My inspection in Concord on a $240k house was $495. I'll PM you the contact info for my guy, if you like; I assume he'd do Oakland. I was very happy with how thorough he was, and he was friendly and didn't mind sticking around and answering all my annoying questions. Also, beware termites. Those 1920s era houses in Oakland very, very commonly have subterranean termites. You will want to get that pest inspection regardless. Leperflesh fucked around with this message at 09:51 on Feb 15, 2010 |
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Feb 15, 2010 09:48
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Thanks for the recommendation Leperflesh Today I inspected the house in some good detail except for the attic and roof. A dual pane window has a hole in it, door draming inside and out is poo poo, one bedrooms wood floor is visibly warped from water damage, a new foundation was built on top of the old (the old appeared to have sunk and is now at soil level). I'm having a pest inspection done tomorrow and looking to get a contractor in to give me a bid for repairs.
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Feb 17, 2010 03:50
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dwoloz posted:Thanks for the recommendation Leperflesh You're welcome. It looks like there's several points of interest worthy of further inspection, in particular those floors. Foundation settling could affect the floor level radically, all over the house, as well as stressing wall members and stuff. That's worrisome. Then again, maybe you'll get a bargain because of all the work that needs doing...
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Feb 17, 2010 17:49
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dwoloz posted:Thanks for the recommendation Leperflesh
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Feb 17, 2010 20:54
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We're signing papers and transferring our down payment this evening. Holy crap, this is nerve wracking. In ironic news, I managed to schedule our signing at a Starbucks near my house, thinking the parking would be less of an issue on a Wednesday afternoon then some of the other places we'd thought of. Well the Starbucks happens to be next do Greenlake, which is home to Seattle's most popular pedestrian path and the weather today is absolutely gorgeous.  Parking is going to be horrible.
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Feb 17, 2010 23:29
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PC LOAD LETTER posted:Dude, unless you work out a deal that gets you that home sold for next to nothing (I mean that literally BTW, 280K is a lot for a home with that sort of damage and its almost a sure thing there will much more hidden damage, especially if there has been enough water in the home to warp the foor) run don't walk away from that thing. You're probably going to end up spending a shitload on repairs, and there are plenty of homes out there to choose from right now. I take it that you are not familiar with the Bay Area housing market because there is in fact not a lot out there right now and $185/sqft is considered a deal around here. I was back in today with the pest inspector. He found rot where the addition meets the original structure. The roof slope sends water right to this point and there was likely inadequate flashing on the roof. The roof is new and now has the proper flashing but the damage was already done. I also pulled permits today at the city office. The addition took them SIX YEARS to complete (wtf) so who knows how long the building stood exposed to the elements. The report also showed a termite inspection in 92 and a subsequent foundation capping to correct the problem of termite damaged sills. Good news that its likely not a sinking foundation.
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Feb 18, 2010 03:59
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dwoloz posted:I was back in today with the pest inspector. He found rot where the addition meets the original structure. The roof slope sends water right to this point and there was likely inadequate flashing on the roof. Haha, this is exactly what happened with my house, only nobody caught it. At least it only cost me $2k to fix. Seemed like a lot at the time. Good luck if you decide to go for it.
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Feb 18, 2010 04:02
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dwoloz posted:I take it that you are not familiar with the Bay Area housing market because there is in fact not a lot out there right now and $185/sqft is considered a deal around here.
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Feb 18, 2010 05:00
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Realtor posted:The closing date has been set for 4:00 p.m. on the 5th at the title company office in xxxxxxxxx, I have pasted the information below. Everything is in place other than getting final instructions from the lender. I will touch base with them on Monday to see where they are at in the process. Loan Processor posted:I am waiting on title to come in. Please send me your most recent paystub when you get them. Once I get title we will proceed to closing. Have a good evening! Hurry up and get here, March 5th! 
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Feb 18, 2010 15:10
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Well, awesome. I've managed to get everything that I wanted. The seller replaced the roof, used my roofer, and allowed me to choose the shingle and color. To top it off, the roofer's receptionist goofed on the estimate, saying that they would install four turbines. Four is too many for that house, but they said they would honor it, and install two turbines, as well as three low profile vents above the garage. This is good because the garage attic didn't have any ventilation except for the stack above the water heater. We are supposed to close on the 26th, and despite an issue with my 4506-T form (forgot that my 2008 tax return was filed with a different address), we should be ready to roll. I'm wondering, though, how should I transfer utilities? They have TXU for electric, and I know that they aren't the cheapest rate in town. Can I call them and ask to transfer it without a contract, or should I just have my provider lined up to turn it on the day the sellers are cutting theirs off? Getting the house about $10k below valuation (factoring in $5k for the roof) is pretty bad rear end, so thank you for the advice regarding the roof. Edit: Has anyone had experience with thermal imaging inspections? I asked this before, but am really curious. They sound really cool and useful in theory, but you know how that goes...
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Feb 20, 2010 23:39
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Hi guys, trying to search for a few ideas on the best way to accomplish buying a house between my 2 friends and I. Basically, there is a house owned equally between Friend A's father and 2 uncles. My 2 friends and I want to buy the house to move into. All of our salaries are higher than 35k and we'll have around 10k~ saved up between the 3 of us. The house is valued at 100k. What would be the best way to go about buying it? We were considering forming a LLC and buying the house as such, considering the possible tax benefits, but not sure of the logistics and all. Right now we're not sure if the house is even going to be put up, so this is still in the idea phase. If it looks like its going to market, we will obviously consult a CPA and real estate lawyer to get the full legal picture, but I just wanted to see what you guys thought.
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Feb 22, 2010 01:07
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In California, you can do this with a "tenancy in common" type of deed. I don't know if it is different in other states (probably). That said: I personally think it is a terrible idea. Any one of you can cause untold grief to the others by a)damaging something, b)failing to keep up with payments, or c)selling their share to someone awful. It is one thing to be roomies with your buds; if you have a falling out you can easily move out and get a new place, and if you damage things, well, the landlord will deal with who pays and how much; its not your own property value being hurt. As co-owners you'll be mutually responsible for every expense and will have to negotiate and come to a mutual agreement on everything. 10k between the three of you on a 100k house does not mean you'll have 10% down, because you'll be paying many thousand dollars for closing costs. It is probably more like 5% down. Which means you'll be paying higher PMI, and you'll have that much less principle when you close. Not to mention that any two of you could lose if the third fails to get their loan... Finally, the house you're considering, it would appear, is not going to be on the market, which means you are not really testing what the market valuation is. This could mean you're getting a fantastic bargain (and presumably since one of you is a relative, he'll be getting a full picture of the house's condition) but it could also mean you're actually going to overpay. Leperflesh fucked around with this message at 04:49 on Feb 22, 2010 |
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Feb 22, 2010 04:46
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Welp, there's a slight chance my wife and I will be putting in a bid on a house. Will go down to the bank this Saturday for a pre-approval. Probably also going to talk to our realtor about seeing the house again this Sunday. The house is the best we've seen so far (which isn't saying much), but still needs a real inspection to see if there are any problems. On our first go-round, there were a few strange things about the house. I have never owned a home but I like to think I'm smart so I'm going to ramble on about things that just don't make sense. First, it has a Romeo & Juliet staircase which the stairs on the kitchen side looked 'new' and I couldn't tell from the structure around the staircase if a wall was taken out to accommodate it. As it is, the kitchen isn't small, but the staircase takes away a corner that could be used for a fridge. The cabinets are metal (painted white), and do not stick and roll easily. There isn't a lot of countertop area available. Second, the doorway to the basement and the basement stairs are really strange. I am convinced that the doorway to the staircase was moved to a different wall. First- when you open the door, there is a landing right in front of you. I actually thought it was a pantry at first until I saw the realtor disappear inside of it. The staircase goes straight until about 2 feet away from the basement wall, and then it has a tiny landing which turns you to a side. Looking at the staircase, it looks like the 'turn' is newer than the staircase. It's as if the stairs were moved two feet closer to the wall in order to accommodate the kitchen entrance with the landing. For what reason? I have no loving clue. I can't see the structure of the doorway, but it would make a lot more sense if the doorway was off the dining room and the stairs go STRAIGHT down and end on the FLOOR with about two feet from the basement wall. (If I'm right, it wouldn't be the strangest thing I've seen people do to a house) Third, this place has corner built-ins for the dining room. Which rocks. It's stained an older dark color that matches the trim throughout the first floor. Awesome. But some dickwad put down laminate wood flooring. The wood color is, uh, completely lighter than the trim. Fourth, the house's property line backs up to the parking lot of an apartment. Would have to put up a tall fence to block the view. So, assuming our pre-approval is enough, I'm thinking of offering 80,000 on a house that's being sold for 99,000. After we check the local sex-offender map.
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Feb 24, 2010 17:59
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I know this is the buying thread and all, but I just wanted to chime in with an update on my current (short) sale because it's something I feel buyers should know since it affects them as well. After less than three years of ownership and a year of nearly a $1000 / mo shortfall, I got an offer w/ the earnest money in last night - $175k. I paid $320k in mid-2007 (the height of the Seattle area housing boom). The lender pays my PMI (very unusual loan - that should have been a warning sign alone) and they'll be paying for another 10 years at this rate, so they want out on the loan just as much as me. Even though I now make 50% more than when I bought the place, I can't afford a $110k promissory note, so this shouldn't be too hard to justify to the bank. Why the sudden price drop (the property rents for $1300 / mo)? Seems that everyone else in the complex had the same idea as me to get rid of their condos once the HOA's lawsuit was over and prices have collapsed in the condo market with our complex leading the charge. The Seattle area market was thought to have been bottoming out in the past year. Just last week some people bought equivalent units for $192k, so we're seeing price drops at a pace faster than what happened in Vegas and Arizona in 2006. My brother in law's place just outside Phoenix didn't even drop this much. Imagine being one of the people that bought last week - you've just lost $20k in a week! Good deals became retarded deals over the course of a week. There goes the "Seattle wasn't as affected by the bubble as other places" idea popular among even the bubble cynics... Moral of the story: like all "investments," houses can drop in value whether it be due to macroeconomic conditions, buyers' perceptions, and how desperate (and able) others are to sell their properties. The original owners of these properties paid $220k in 2004 and put in about $12k in upgrades, so they're willing to pay $32k+ to get rid of it. Because a lot of these owners are well off, they can afford to say "screw it, sunk cost" to their properties and aggressively price downward. But people like me that put in a good chunk of net worth don't have that kind of leverage. On the other hand, even rich folks would hate to lose $150k on a place like me unless they had to.
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Feb 24, 2010 19:07
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El Mariachi posted:Fourth, the house's property line backs up to the parking lot of an apartment. Would have to put up a tall fence to block the view. None of that sounds too bad except for this item. First, I think you'd have to make sure your city's regulations allow you to do such a thing. And second, I'd just make sure you are comfortable with buying a house that borders an apartment complex. There are a lot of issues that come with that type of thing, including issues with privacy (which you're already aware of) but also noise and crime.
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Feb 24, 2010 20:46
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necrobobsledder posted:I know this is the buying thread and all, but I just wanted to chime in with an update on my current (short) sale because it's something I feel buyers should know since it affects them as well. Out of curiosity, what neighborhood was this in? I was pretty astounded until I saw this was apparently for a Condo. Having closed on a home on Friday, I now have a vested interest in the Seattle housing market not collapse, but I honestly wouldn't be surprised if it does, especially in the hotter areas and especially with condos (since people who were scrambling to afford condos 4 years ago can now spend the same amount and get a decent house).
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Feb 25, 2010 01:08
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BeastOfExmoor posted:Out of curiosity, what neighborhood was this in? Frankly, if I was still in the area I wouldn't be buying anything. Seattle's unemployment kinda sucks still and prices have only corrected so far for the credit boom, not the recession. We're starting to head into the housing market boom for the year, but I wouldn't be surprised if prices barely move up as a bunch of owners in shadow inventory (like mine was) try to unload at the same time and drive prices down. My parents are probably going to get screwed here because they bought a $450k McMansion near Kent way out from everything in 2004 and about 15% of the houses in the subdivision are on sale or for rent with a couple foreclosures. You betcha there's a lot of people wanting out of those properties. Read http://seattlebubble.com for about the most cynical view of the Seattle housing market out there.
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Feb 25, 2010 02:20
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Read the OP and wanted to do a run-down of my set of circumstances to make sure that I understand what I should be looking for. -Moving to McAllen, TX to be a professor at UT-Pan American. It's a town of about 150,000 with a low cost of living. -The salary will be $50k to start, with yearly increases. Wife will be looking for a job as well, but can probably make another $10k in part-time work in the first year. -By the time we move, we'll have at least $25k saved. -I'd like to keep the house between $125k and 140k (at most). -No debt aside from a student loan and a car payment which together total $500/month. CCs are paid off, no store cards, etc. The big problem is that I won't get my first paycheck from UTPA until October 1st, so I don't want to blow ALL of our savings on the house costs and then have nothing to get us to the first check. My dad said that if our credit score is good enough, the bank will take 10% down. Any truth to this? We feel like we're in a good spot financially but don't want to be totally wiped out with buying the place. If we can survive with $5-6k of money to get us through the first few months, that would be ideal.
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Feb 25, 2010 05:35
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A bank will want to see that you've been at the same job for two years. My wife's income from two of her three part-time jobs was discounted entirely because she hadn't been there a full two years. That's not to say you absolutely cannot get a loan, only that getting a brand new job is going to severely hurt your chances. It might help if you've been a professor previously and can show that your new position is very secure, but I dunno. In any case, moving to a brand new town and getting a brand new job is not really the ideal circumstance for buying a house. What if you hate it there? What if the new job sucks? You'll be in a position where the sunk costs of buying and then selling would eat most or all of your down payment, leaving you, at best, out tens of thousands of dollars, and at worst, underwater and unable to sell at all. So you'd have to rent out the place instead (are rents in the area high enough to pay the mortgage + maintenance on a house?). My recommendation is to rent for at least a year, get to know the place, save up your money, and be certain it's where you want to live for the next 7+ years. If you're dead set on buying, I recommend talking to an independent loan consultant. This is free (these guys get paid by the banks who they find loans with), and a consultant should have the experience to advise you as to which banks (if any) would be willing to write a loan for you on a new job and take that income into account.
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Feb 25, 2010 08:15
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So my dad and a family friend who does my taxes have been telling me how much I need to buy the condo (due to tax incentives / deductions and the current market) I'm currently living in. I personally don't think I'm financially ready for it but I'd like to hear other opinions. I have no experience at all with this sort of thing. I generally hate debt so I've never had any sort big loan in my life (college, school, home, etc). I've made a few large purchases on credit cards which I've either immediately paid off, or paid down at 0% interest through special offers, so while my credit is good there is not an extensive credit history. I'm sure I would be able to talk my dad into co-signing for me. I graduated college about 3 years ago, and I've been at my current job for about a year making $75k. I've rented this condo in Annapolis, MD for a year now. It's in great shape in a nice, growing area, so I'm assuming the value will not drop significantly even in a not-so-great market. It's a top-floor unit with 20ft+ ceilings and a loft, so it does offer some unique features, but it's also in a very large cookie-cutter condo development with hundreds of very similar units. Long story short, I've been notified that the owner of the condo can no longer afford the mortgage payments and is short-selling the house. My rent is currently $1500, and the unit is a 2BR/2BA plus the additional loft. I estimate that I can get a mortgage payment between $1300-1400. The asking price as quoted to me by the real estate agent was Pros: - Lived in unit for a year, so I know what I'm getting. - No lawn or exterior maintenance. - Great area that will maintain property value. - Short-sale could result in a very good purchase price. - Mortgage interest is tax deductible, $8k first-time homebuyer credit. - If I move to another area I can pay my family to maintain / rent out the place. Cons: - Savings are not quite what I'd like them to be. - Condo association, both in restrictions and in fees. (I know there will be condo association costs, but I don't know what they will be - will find out soon) - Property tax. So, my main questions are 1) How should I handle the short-sale situation? and 2) What are your general thoughts about this situation? mega dy fucked around with this message at 21:02 on Feb 25, 2010 |
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Feb 25, 2010 18:58
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Your monthly cost on buying a home is more than the raw mortgage. With less than 20% down, you'll be paying PMI (mortgage insurance); you will also have to pay your local and state property taxes. Together, these will substantially increase that estimate you've got for the monthly cost. Also, does your condo come with HOA (or whatever) fees for owners? If so, are you including that as part of your "rent"? Because you'll have to tack it on to the monthly mortgage payment. With less than 2 years at your current job, you will struggle to get a good loan. Having less than 20% down makes it even harder. You say you can save up money pretty easily which is good, and you also have no debts which is good, but if you wait a few months, you will miss the first-time buyer's credit (it is expiring in a few months and is not likely to be extended again), so keep that in mind. Actually short sales can take many, many months, so even if you decided to pull the trigger today, being in contract in time to get the credit might be questionable. Finally, even though you're living there and know the place and that's a plus, you would be well-advised to comparison shop. What are other similar places going for in other condo developments? What can you get a house for? Condo prices tend to be more volatile than houses, and in many areas (especially Flordia) there was a huge buildout of condos just before the market crashed, leading to massive levels of vacancy and plummeting prices. If condos are fairly rare in your area, that might not be so bad. Your dad and the tax guy are putting too much emphasis on "tax incentives". You can deduct your interest, but that's a deduction, not a credit; so, all you save is a percentage of the interest corresponding to your highest tax bracket. That's a "savings" that means you effectively pay less interest, but you are still paying interest. In fact, unless you have additional deductions to make, it's possible the interest deduction will not be much more (and might be less) than the standard deduction, meaning you save nothing on your taxes. All that said; you've got a good income, and if you like where you're living and know you'll be staying there for 7+ years, buying a home is not an unreasonable thing to want to do. Just be very careful, do all the math, and if you possibly can, save up 20% to get a good loan. And think very seriously about the risk involved in buying, especially buying a condo where the only thing you own is a depreciating asset (because you don't own the land its on).
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Feb 25, 2010 20:28
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