Should I buy a house?

[LuckyTaxi]

I make about $28k (pretty sad for a network admin working at a private school), and my gf makes about $20k. We moved into an apartment this past December, and it's been hell. The kid upstairs runs around like crazy, and the parking lot if filled with cars with no place to park. My gf (fiance) was thinking about buying a small house. No one upstairs to worry about, and no worries of doing something wrong to the place. We're paying $525/month plus utilities, so i figure with a mortgage of like $400 I should be fine.

BTw ... I dont plan on buying a huge home for like $100,000, something in the range of $45k - $60k would be fine for the two of us.

 

[iamwiz82]

will you be able to find a $45k-$60k house in a not so bad neighborhood? Impossible where I am at.

 

[vi edit]

Don't forget about things like $1200+ in closing costs, homeowners insurance($200+ a year), property taxes($1000+ a year), and then all the associated maintanence and upkeep you weren't responsible for when renting. Oh, depending on the loan, they may try and stick you with PMI as well adding in another $30-$90 a month if your loan to value is too high.

 

[LuckyTaxi]

yea ... there are some places that are in nice neighborhoods. however, they are row homes, but I can deal with that for the time being.
hopefully i'll make more money later in life (i'm only 22) and get something nicer.

i'm tired of the apt life already!

 

[LuckyTaxi]

Originally posted by: vi_edit
Don't forget about things like $1200+ in closing costs, homeowners insurance($200+ a year), property taxes($1000+ a year), and then all the associated maintanence and upkeep you weren't responsible for when renting. Oh, depending on the loan, they may try and stick you with PMI as well adding in another $30-$90 a month if your loan to value is too high.

yes - worried about that also. told the fiance they may have to wait until i get paid a little better. we can save up money for the closing cost and all that, and i doubt property taxes will be more than $1k/year. my parents live in a row home and they pay like $700/year.

 

[FoBoT]

if you stick with something affordable, don't have a lot of other debts (especially CC's) and have at least 5% to put as downpayment, then it is a no-brainer, interest rates are so low

otherwise, you have to think about the whole thing a bit more carefully

 

[BooneRebel]

General rule of thumb is that you can 'afford' a house that is 2-1/2 times your annual gross income, or about $120K for you and your girlfriend. Keep in mind that this is a maximum, and assumes that you're not overrun with consumer debt already. You should have no problem at all getting financing for a house in the $45-60K range, in fact, you could probably get financing just in your name if you wanted to. Interest on a 15-year note (a good idead if you plan on staying there a while) is running about 5% right now, so your payment on a $60K house would be about $475/mo (plus taxes, insurance, and PMI). Taking a 30-year note drops this down to ~$320/mo (plus taxes, insurance, and PMI).

It won't cost you anything to talk to a loan officer. Look in your local paper to see who's carrying the lowest interest loans (there's usually a chart in the business section) as well as looking online. Based on your income & debt, any of these places can give you an idea of what you could afford and give you an amount that you're preapproved for.

 

[SagaLore]

Originally posted by: lilcam
I make about $28k (pretty sad for a network admin working at a private school), and my gf makes about $20k. We moved into an apartment this past December, and it's been hell. The kid upstairs runs around like crazy, and the parking lot if filled with cars with no place to park. My gf (fiance) was thinking about buying a small house. No one upstairs to worry about, and no worries of doing something wrong to the place. We're paying $525/month plus utilities, so i figure with a mortgage of like $400 I should be fine.

BTw ... I dont plan on buying a huge home for like $100,000, something in the range of $45k - $60k would be fine for the two of us.

Sounds exactly like the apartment I was in before my wife and I got married.

Wait until you break the $30,000 mark before getting a house. And don't buy a house with your "girlfriend". It will lead to disaster. Get married if you're that committed to each other.

 

[TheGameIs21]

Why don't you just rent a house? No need to buy just to get out from under some noisy kids. Also.... I don't care what anyone says, buying a home does not make it an asset. Owning a home usually means that you are going to pay twice the value due to interest and then you are responsible for all repairs and so on and so on....

I would rent and buy later unless you all are really just wanting to buy.

[edit] and I agree with not buying with a girlfriend....[/edit]

 

[Pliablemoose]

Get married if you're that committed to each other.

Yep, or have a pre-nuptual/cohabitation agreement drawn up before signing on a 15-30 year long committment on a mortgage.

 

[iamwiz82]

Originally posted by: lilcam

Originally posted by: vi_edit
Don't forget about things like $1200+ in closing costs, homeowners insurance($200+ a year), property taxes($1000+ a year), and then all the associated maintanence and upkeep you weren't responsible for when renting. Oh, depending on the loan, they may try and stick you with PMI as well adding in another $30-$90 a month if your loan to value is too high.

yes - worried about that also. told the fiance they may have to wait until i get paid a little better. we can save up money for the closing cost and all that, and i doubt property taxes will be more than $1k/year. my parents live in a row home and they pay like $700/year.

in the town i live in, the average tax rate is well over $2000. A buddy of mine pays $3500/year.

 

[heartsurgeon]

to get a home at a reasonable price - you really need to save up so you can pay 10-20% of the price as a downpayment

if you can't put 20% down - you have additional costs like mortgage insurance.. closing costs increase, less favorable loan..

remember property taxes, utilities, closing costs, home owners insurance, and all the "new" things you'll end up buying (lawn mower, garden equipment, furniture, drapes..)

geting a home is curcial to your financial future, however, you do not want to live beyond your means..

if you have saved up some money - go for it.

if your in debt, or don't have any significant savings...

save first.

 

[vi edit]

Owning a home usually means that you are going to pay twice the value due to interest and then you are responsible for all repairs and so on and so on....

That is debateable. Two years ago I was renting a 2br 700 square foot condo for $625 a month. I just refinanced my home and my TOTAL monthly payments are $850 a month. That includes principal & interest, insurance, and poperty taxes. Now, also consider that just this last year I paid out over $11,000 interest and taxes on the home offsetting my taxes by that much and getting me back over $2,000 on my federal return. That $2000 back takes my payments down to $685 a month, just $60 more than what I was renting for. For my $60 I get an extra bath, an extra bedroom, 900 more square feet, a two stall attached garage, a back yard, a place to call my own, and an appreciating asset.

Well worth the $$ if you ask me.

 

[vi edit]

if you can't put 20% down - you have additional costs like mortgage insurance.. closing costs increase, less favorable loan..

Yes and no. My latest refiance split my payments up into two loans at 80% & 12% so that I could get around PMI.

 

[FeathersMcGraw]

Originally posted by: vi_edit
Don't forget about things like $1200+ in closing costs, homeowners insurance($200+ a year), property taxes($1000+ a year), and then all the associated maintanence and upkeep you weren't responsible for when renting. Oh, depending on the loan, they may try and stick you with PMI as well adding in another $30-$90 a month if your loan to value is too high.

Some lenders offer no-closing costs mortgages, but this is essentially paying "anti-points" since they'll usually then give you the loan at a slightly higher rate. However, given the ridiculously low interest rates right now, this isn't a necessarily bad deal if you can't bring a lot of cash to closing. The increase in monthly mortgage payment may be an extra $20-$30.

Property tax rates vary pretty widely by geography. In addition, for the price range being considered by the original poster, I doubt they'd be at that level.

I think PMI is standard if you don't have 20% down at purchase.

 

[RossMAN]

Yes.

 

[TheGameIs21]

Originally posted by: vi_edit

Owning a home usually means that you are going to pay twice the value due to interest and then you are responsible for all repairs and so on and so on....

That is debateable. Two years ago I was renting a 2br 700 square foot condo for $625 a month. I just refinanced my home and my TOTAL monthly payments are $850 a month. That includes principal & interest, insurance, and poperty taxes. Now, also consider that just this last year I paid out over $11,000 interest and taxes on the home offsetting my taxes by that much and getting me back over $2,000 on my federal return. That $2000 back takes my payments down to $685 a month, just $60 more than what I was renting for. For my $60 I get an extra bath, an extra bedroom, 900 more square feet, a two stall attached garage, a back yard, a place to call my own, and an appreciating asset.

Well worth the $$ if you ask me.

Point taken. Things have changed though... societies views on owning homes and moving every 5 years is changing though. More and more people are trying to stay in one location and not move so much. This is due to the low rate and lack of a job market to be moving around. People are finding something and staying there.

 

[HomeBrewerDude]

you don't have to make this decision all at once...


go talk your bank, get pre-qualified and then get pre-approved.


start looking at a few open houses to see if what you can afford will be any better than where you are now.


go to a first time home buyers seminar.


get a buyers agent (they split the commission with the seller's agent...


all the while you are doing this, keep re-evaluating whether or not you want to do this.


financially, its probably a good decision.

 

If you plan to stay put in it for at least three years, then yes your better off buying than renting. I would not worry about your income level. 40+ a year combined income is plenty to get approved up to a 100,000 morgage with just 1% down plus closing. I would not also worry about being married. Dual partner ownership is very common these days and does not encounter any more problems when its time to sell than a married couple.

 

[TheGameIs21]

Originally posted by: Midnightmovies
If you plan to stay put in it for at least three years, then yes your better off buying than renting. I would not worry about your income level. 40+ a year combined income is plenty to get approved up to a 100,000 morgage with just 1% down plus closing. I would not also worry about being married. Dual partner ownership is very common these days and does not encounter any more problems when its time to sell than a married couple.

It's not a problem to sell at all. The proble lies in which partner claims they paid more into the mortgage and therefore should get more of the $$ from the sell etc..... This happens all the times in divorce cases but in divorce you have a solidly structured course of action to take. In cases of live in partners, you are treading on (legal speaking) new ground.

 

[HomeBrewerDude]

Originally posted by: TheGameIs21

Originally posted by: Midnightmovies
If you plan to stay put in it for at least three years, then yes your better off buying than renting. I would not worry about your income level. 40+ a year combined income is plenty to get approved up to a 100,000 morgage with just 1% down plus closing. I would not also worry about being married. Dual partner ownership is very common these days and does not encounter any more problems when its time to sell than a married couple.

It's not a problem to sell at all. The proble lies in which partner claims they paid more into the mortgage and therefore should get more of the $$ from the sell etc..... This happens all the times in divorce cases but in divorce you have a solidly structured course of action to take. In cases of live in partners, you are treading on (legal speaking) new ground.

easy enough to plan around though. Each person should contribute 1/2 the mortage payment PLUS 20% into a joint account. Money for monthly payment, maintenance and repair come out of that account. If house is sold, money in acount gets split 50/50.

Anyways, he could probably get his gf to agree to just paying a fixed 'rent'. He would then assume responsibility for repairs and maintenance.

 

[slickcat]

I make 44k a year and I have a 120k home. My monthly payment is $985 including all of the insurance property tax etc etc... and I'm still doing just fine with me being the only person paying the bills. I was nervous about going out on my own and buying a house. My house has appreciated about $6,000 since I've bought the place (2 years ago) at the last inspection before refinancing. I've put in new carpet and tile in the basement. I look at a house as a place to live and a solid investment.

 

[teddymines]

Consider a house around the 60-80k range in good working condition so you can go 2-3 years without a new roof, furnace, water heater, etc. If you could find one with appliances, then at least you're off to an even better start.

Then consider paying extra on the principal every month. Even an extra 100/month can result in a shorter term, bigger savings, and even more equity when you go to sell.

 

[mithrandir2001]

I wouldn't buy a low-priced rowhome in Philly right now. I know the kind of neighborhoods that have houses in that price range (you can't even buy into Mayfair or other mid-northeast communities) and those houses don't appreciate in value because people are tired of the blight and the crappy schools and the taxes...and many of those houses are in poor condition. In Philly, you either live in Center City, Chestnut Hill or the great Northeast....or you live in the suburbs.

Your apartment is hell because you are only paying $525/month for two people. A low rent like that attracts a certain kind of renter. A sad fact of reality is that you need to find places that price them out. With a combined income of $48K, you can afford more than $525/month. $800/month should be doable and you can manage to move into the lower-taxed suburbs.

Wait until you are married to buy a house.

 

[LuckyTaxi]

Originally posted by: mithrandir2001
I wouldn't buy a low-priced rowhome in Philly right now. I know the kind of neighborhoods that have houses in that price range (you can't even buy into Mayfair or other mid-northeast communities) and those houses don't appreciate in value because people are tired of the blight and the crappy schools and the taxes...and many of those houses are in poor condition. In Philly, you either live in Center City, Chestnut Hill or the great Northeast....or you live in the suburbs.

Your apartment is hell because you are only paying $525/month for two people. A low rent like that attracts a certain kind of renter. A sad fact of reality is that you need to find places that price them out. With a combined income of $48K, you can afford more than $525/month. $800/month should be doable and you can manage to move into the lower-taxed suburbs.

Wait until you are married to buy a house.

EXACTLY my thoughts! I hate to live in some of the worse neighborhoods. I currently reside in the FAR NE around Bustleton and Philmont Ave and there are nice houses over there. Chestnut Hill is out of the question, and I hate to commit to a house over $100k making this much money.

I told my fiance (forgot to mention she's my fiance - i have to get used to it) that I would only get a house if I made it to $40k. But, apt living is nuts and I need out!