House now or later?

[Veramocor]

Hi,

I'm debating with myself whether I should buy a house now or later.

The options:

1. Buy a house now with almost 100% financing.

2. Wait 3-4 years till I have a 20% downpayment


I would prefer to do option 2 but Atlanta is a booming market, so house prices are going to keep on rising. Also the longer I wait the further from work I will be. The thing I really worry about is rising interest rates. Interest rates are going to continue to rise . I am also afraid of inflation pushing up interest rates.

The houses I am looking at are in the 185-215,000 range. I currently make 52,000, 6% of my salary goes to a 401k. I pay approximately 600 in rent and also save 450 from every paycheck. So monthly I could afford $1500 mortgage. This is about what I'd pay with a 5 year ARM on 210,000 plus insurance, plus property taxes. If I was more frugal I believe I could get an extra 200 in savings from my paycheck.

By time I would close on the house I would have 10,000 in the bank. I figure 5k of it towards closing costs. I probally could borrow/get an additional 10k from my parents. With this money I could lower my monthly payments to 1400.

What factors do I need to consider before making this decision? What has everyone else done with buying a house?

 

[tm37]

With rates this low you do not want an ARM Get a fixed rate.

Als with Zero Percent you will pay PMI

 

[iamwiz82]

We make more than you and are getting a mortgage lower than yours and feel that things will be tight.

 

[FoBoT]

ARM?!? :Q no, get a fixed rate loan. interest rates are only going to go up, they aren't going to go down, don't get an ARM

how long would you expect to live in this house? if > 5 years, then go for it

if you think you might leave the area < 5 years, then wait

 

[Veramocor]

Well the loans I were looking at were 7 or 5 year ARM. The first 7 years are a fixed rate loan. After 7 years then the loan begins to float. I figured that 7 years from now I could just refinance.

 

[olds]

If you can afford to buy it now, do so. In 3 - 4 years you might not be able to as fast as RE is going up.

 

[astroview]

I don't see why you think prices are just going to go up. Ever heard of a bubble?

 

[Orsorum]

Can you get an 80/20?

 

[vi edit]

At that salary level with that range of house price you would REALLY be pushing it. Lots of little things here and there add up to make it much more expensive than you think it is.

Were you figuring in insurance and property taxes in the monthly payment? Depending on the area you live in, property taxes are almost a whole additional mortgage payment.