House vs Rent

[Dice144]

Using the calculator (which does not account for alot) IE the houses I am looking at are almost 500 square feet bigger then my current apartment. My current rent is $600. Which is a lot more then my last two apartments. This makes me want to get out of the renting market. Also a garage to store my motorcycle and car would be nice.

Goal is to stay between 75-115k (115k is my max budget). Lower the better. Min 1250 square ft (number I picked after looking at some smaller houses).

Just a random house in my area:
http://zillow.com/homedetails/4528-Oxford-Ter-Hamburg-NY-14075/30343228_zpid/

At my income level ~35k not counting seasonal/side jobs or GF income (which I do not want to count). Goal is to save 10k down plus some extra for closing costs. Just starting to really learn to budget. For the more frugal AT or just budget guru's what would YOU recommend for a down payment amount. And what would you set for your max mortgage? House will only be in my name.

For some reason the closer I get to my old down payment goal the more fearful of owning a house I get.

Note: NY taxes are pretty beefy. I have the option to use a VA loan to avoid the PMI.

 

[olds]

20% down is nice, no PMI.

 

[Golgatha]

Down payment of at least 20% would be advisable to avoid PMI, which will substantially lower your monthly payment and give you some cushion room in your budget.

 

[Dice144]

I should have stated that I have the option to use a VA loan to avoid the PMI.

 

[Uppsala9496]

Let's assume you get the VA loan with no PMI.
House is $95K.

$10k downpayment leaves you at $85k loan. How much is that a month?
How much is taking the full $95K loan?

Having $10K in savings in case of an emergency (loss of job, etc) may be a better choice than what you are going to save each month in your mortgage payment (couple hundred dollars maybe).

Personally I'd keep the $10k in savings. Use it in 6 month cd's or something at 1% so you have quick access to it if necessary.

I have no idea what I am talking about either.

 

[Balt]

I'm not sure what field you're in, but it may be better to remain mobile at your current salary. That would mean continuing to rent, rather than buying a house. I'm tempted to buy a house myself, but I don't want it hanging around my neck if I get a better job offer somewhere else.

Rent has become inflated in a lot of markets as people have moved away from home ownership (either voluntarily or not), but $600 still seems pretty cheap. I wish I only had to pay $600/mo in rent.

 

[boomhower]

If you can avoid PMI with the VA loan, I agree, keep the money in savings. If you spend it all in DP and closing costs mother murphy will come visit as soon as you move in. At that income level I wouldn't go much beyond 80k and be comfortable with it. Mine is very similar an I spend 58k but did a 15 year mortgage. Hows your credit look?

 

[MixMasterTang]

To do a full cost comparison you also need to think about Taxes, Insurance, Maintenance, Increased Utility Costs, etc. What does it cost to rent a house in the area instead of renting an apartment?

 

[Atomic Playboy]

Give me a curmudgeonly doctor who understands that most mysterious ailments aren't caused by lupus over a well-harmonized collection of AIDS patients obsessed with the temporal quandary of just how many ways there are to measure time any day of the week.

 

[Balt]

Give me a curmudgeonly doctor who understands that most mysterious ailments aren't caused by lupus over a well-harmonized collection of AIDS patients obsessed with the temporal quandary of just how many ways there are to measure time any day of the week.

:hmm:

 

[Dice144]

If you can avoid PMI with the VA loan, I agree, keep the money in savings. If you spend it all in DP and closing costs mother murphy will come visit as soon as you move in. At that income level I wouldn't go much beyond 80k and be comfortable with it. Mine is very similar an I spend 58k but did a 15 year mortgage. Hows your credit look?

Working on getting it above 700. Last time I checked was between 640-660. Depending what on agency rating according to my credit union. Had a default student loan that I just finished paying off last month.

 

[boomhower]

Working on getting it above 700. Last time I checked was between 640-660. Depending what on agency rating according to my credit union. Had a default student loan that I just finished paying off last month.

That's fine for FHA but VA needs either 660 or 680. Another thing to consider is anything negative within the last 12 months is going to make it very tough to get a mortgage. What's the deal with the student loan?

 

[Dice144]

Defaulted when I was out of work a few years ago. Uncle Sam took my 2010 tax refund. That woke me up quick! Paid 15k ish off in the last two years. Fighting with sallie mae to update credit report as promised when I started the rehabilitation loan program. Had a windfall during the past two years so I paid off 75% of my out standing debts. Got 2 more private student loans to pay off. Hoping to settle the one.

 

[SketchMaster]

Personally, I don't plan on buying a house until I can either pay for it in full (cash), know the job I'm doing is what I want to do until I retire, or get married and decide to have kids.

I'm house sitting (living rent free outside of utilities) for a friend while he's overseas until late summer, and I'm learning how much of a PITA it is to maintain a house. The home is about 30 years old and there are little things breaking, like a leaky shower, crack in the roof, small things that can snowball real quick if you don't get them taken care of asap. He paid for the repairs, but it's showing me that owning a home is more than just paying the bills.

 

[BoberFett]

They're really not comparable. If you prefer medical dramas got for House, if you prefer musicals I'd recommend Rent.

 

[blackangst1]

They're really not comparable. If you prefer medical dramas got for House, if you prefer musicals I'd recommend Rent.

:biggrin:

 

[Jeff7]

I found this calculator awhile back. Pretty nifty.

Makes me wish I would have bought a house awhile ago. :\
According to that, it would have made financial sense after only about 4 years of renting, though that's assuming $0 change in the value of a house.

 

[amdhunter]

Using the calculator (which does not account for alot) IE the houses I am looking at are almost 500 square feet bigger then my current apartment. My current rent is $600. Which is a lot more then my last two apartments. This makes me want to get out of the renting market. Also a garage to store my motorcycle and car would be nice.

Goal is to stay between 75-115k (115k is my max budget). Lower the better. Min 1250 square ft (number I picked after looking at some smaller houses).

Just a random house in my area:
http://zillow.com/homedetails/4528-Oxford-Ter-Hamburg-NY-14075/30343228_zpid/

At my income level ~35k not counting seasonal/side jobs or GF income (which I do not want to count). Goal is to save 10k down plus some extra for closing costs. Just starting to really learn to budget. For the more frugal AT or just budget guru's what would YOU recommend for a down payment amount. And what would you set for your max mortgage? House will only be in my name.

For some reason the closer I get to my old down payment goal the more fearful of owning a house I get.

Note: NY taxes are pretty beefy. I have the option to use a VA loan to avoid the PMI.

Wow. Something like that would cost 1 million here in the Bronx. I saw an 850 sq ft home for 240k and I am considering it...

 

[Net]

I agree with 20% and no PMI

Question, how much are the taxes on the house per year? Or if you take your current rent per and subtract off the cost of what you will pay in taxes on the house per year what is left? Then take closing cost, loan percent and expected repairs per year and subtract that off too.

 

[unokitty]

Dice144,

While I am not familiar with real estate in your area, most of the US is a buyers market now.

And it sounds like you have a good plan to increase your credit rating.

My perception is that time is on your side.

For example, if it takes a year to find the right house, thats not too long. And by that time you will have fewer debts, more savings, and a better credit rating.

While it would be nice to have a garage for your motorcycle now, it would also be nice to have the garage a bit later with a bit more money in the bank.

Its your decision...

Best of luck,
Uno

 

[xanis]

I'll be watching this thread -- I'm struggling with this myself (I do have better credit than the OP though).

I'm currently living at home with my parents to save money; it's working out really well in that sense, but not in the sense that I need to get out on my own as soon as I can. Really having a tough time deciding whether I should leave now and get an apartment, or if I should suck it up and just buy a house a less than a year from now.

 

[SirStev0]

it is pretty much cheaper for me to buy than rent. I have awesome credit and rates are pathetic.

 

[mmntech]

I'll be watching this thread -- I'm struggling with this myself (I do have better credit than the OP though).

I'm currently living at home with my parents to save money; it's working out really well in that sense, but not in the sense that I need to get out on my own as soon as I can. Really having a tough time deciding whether I should leave now and get an apartment, or if I should suck it up and just buy a house a less than a year from now.

Same here. I've been eyeing this condo that's going for $200,000 in a new building, but it's only 673sq ft. I'm having trouble picturing how big it is. Bedroom is 9x12, which is the same size I have now, and it's pretty small.
Condo fees are super cheap but that's awfully small. Before anyone scolds me for looking at something so pricey, $200,000 is the cheapest you can get in Greater Toronto without living in a trailer. The two bedroom model is a jaw dropping $300,000 for just 1066 sq ft.

I can purchase a detached house for $200k in Hamilton, Ontario. Problem is the city is a little bit on the ghetto side. Houses are cheap ever since the Stelco steel mill scaled back operations.

There's just no affordable housing here for single, first time buyers. Rent starts at $800 but that doesn't guarantee a safe, well maintained building. Getting tired of living with my parents. I keep hearing rumours though that the housing market is due for a "correction" sometime in the next year. So if the property bubble bursts, I might get something at a decent price.

 

[JS80]

They're really not comparable. If you prefer medical dramas got for House, if you prefer musicals I'd recommend Rent.

10/10

 

[Red Squirrel]

If you have no plans to move somewhere else definitely buy. It may seem expensive at first but the benefits outweigh the costs and at least your mortgage payments are not going in thin air. You'll eventually own it.

I got lucky enough to move straight into a house from my parents' so I kinda had that advantage of having more money saved up. I think I only had to put 15% down to get to a bracket where the payments are much lower.

If you are not a DIYer you'll become one fast. It's crazy how expensive even the smaller jobs can cost.

Looking at the example house it seems the houses are super cheap in your area too. It makes even more sense to buy. First step is getting a mortgage preapproval that way you know what price range to look at. If the bank says 200k, then shop at 150k, but at least you have buffer to settle with something that's like 180k if you find a perfect house.