2.06.2009
Dorm life?
Stressed!!
We're getting conflicting views from all angles - YES! Perfect time to buy! What a novel idea!!
OH MY GOD! DO NOT BUY NOW! THIS IS A HORRIBLE TIME TO BUY! The market is still dropping and in 2 years when it bottoms out you will suddenly be completely upside down in your home! NO! BEWARE the Ides of March! AHhhhh!!!
So there was this brief time where we were sort of joy-riding on occasion (like twice) to drive by homes for sale and explore neighborhoods and pin a "maybe" here or there and then I decided to ask my family for advice and now I'm just completely, 100% discouraged. My uncle is a total financial market fanatic (somewhat radical) and told me absolutely do not buy right now. My mom had been DRIVING the Buy Now bandwagon when suddenly she tumbled off and landed in the mud with the DO NOT BUY NOW crowd.
When the discussion turns pessimistic they just tell us repeatedly to "do research." An aunt of mine has absolutely no grip on financial matters and encourages me to buy now and also to pray to God about it. We checked out some books at the library that are about buying a home but unless they were written within the last, oh..month or two, I feel like they're applicable BUT..
My uncle has directed me to reading Bloomberg News, which I know nothing about. He's talking about foreclosure auctions but still insists we should wait at least 2 years.
My mom has asked us for some time now to move in with her - temporarily - to save money, blah blah blah. I'm about 99% against this but then when I think about not paying rent for a few months, putting some of that back to be used for a home purchase the idea seems reasonable, err, generous for sure but.. BUT...but..
I told our landlord we won't be renewing our lease in May. I'm not sure what we will be doing in May.
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Don't listen to anyone, it's a personal decision. The rules are-don't overextend i.e. you should not juggle bills to pay mortgage. If you are buying a fixer-upper make sure you are up to it - I am not so I bought new. Shop mortgages and agents, they are hungry and you dictate the rules and prices. Don't go for weird mortgages. There is talk about 15K tax credit for new home buyers. see how it pans out. lastly-do not think that it's an investment, or owning is better than renting, it depends. you would have to realistically review the chances of you having a job for the next few years, if there is any doubt you should stay away.
ReplyDeleteIf you can afford to buy a house then you should. I don't think house prices around here have gotten so crazy that they could see that much depreciation. If we were in Phoenix that would be another story, but my house has not decreased in value at this point. That said, there's not a whole lot of time before May to find and buy a house, as well as get a mortgage lined up, so you'd have to start kinda fast.
ReplyDeleteif you wait on the market, you'll be waiting forever; once the bottom hits, bumps along for a while, then suddenly everything will be far too expensive...
ReplyDeleteor somethinf.
it's always something.
buy when you're ready.
how do you know you're ready?
here's an artcle that might help...
I agree with mv. I've bought & sold a lot of property over the years and I think this is a great time to buy as long as you make a rational decision (don't every buy anything solely because you LOVE it) and don't overextend. If you haven't already, sit down and make an honest budget of your debt & income. Bloomberg & similar resources are great - use their calculators to determine what you can afford based on your budget and see where you're at. If you can find a nifty house that you like and can afford with savings / fun money left over, I say go for it!
ReplyDeleteStop listening to your uncle, and listen to us who read your blog! Seriously, you can't "time the market", and paying attention like a fanatic will only make you edgy. Things may be bad for another two years...they may be bad for 10 years...they may be great after one...the bottom line is this: DO NOT spend more than you can afford on a house, EVER. There's a reason people say to buy a house that's 1.5x your salary - because you can usually afford the mortgage along with all your other bills and the costs of home ownership, like leaky faucets, broken furnaces, replacing windows. Check your credit reports. Look at bank statements. Talk to the bank where you have your accounts and see what they say. A book I read, called "All Your Worth", says to keep your must-haves (those bills you are required to pay, like rent, phone, water, student loans, credit cards) at 50% of your income; that way, if you have problems later, you won't be at the breaking point (and you won't have to stay at a job you don't like purely for the money). If your other bills are small, then you might be able to afford a larger mortgage. One book I liked was The 106 Common Mistakes Homebuyers Make by Gary Eldred...even though times are a bit more dire now, they still apply when you actually decide to look for homes.
ReplyDeleteOn the other hand, there's a lot going for renters, too, namely, if something goes wrong, you're not on the hook for fixing or replacing it, and a lot of property managers are giving good deals to keep people in their apartments/homes. Whatever you decide, you need to do your homework. And you'll decide for yourself what's right for you and your family.
Thanks, guys.
ReplyDeleteI just read the article you linked, doc and I'm going to look for the books you mentioned, Melinda, at the library.
I had asked fam about ok, the bottom hits and...then what? Could a person potentially be upside down temporarily and...then prices go up and they're in a great position?
My dad told me before he died if he'd had it to do over he'd never, ever own a home.
Is it like when you're planning for a baby? Ok, when everything is in order, then we'll have a baby and..somehow things are never all perfectly in order. I admit there are times that are better than others, certainly...
Well...if it makes you feel any better I'm thinking about buying a house right now in KC for when we "might" "eventually" move back just because there are homes there that are at a really good price and once things turn around...they will have been a steal.
ReplyDeleteThere is no way in even a frozen hell that we could afford Portland prices even if the bad economy suddenly really hit Portland...so I would rather keep my bills low here in PDX and get into a steal of a house in KC that I would want to keep around for several years and possibly sell later (or not) and prior to moving - I'll rent it out....I wonder what your family would think of me?
Do what you think is best. We owned and sold our house prior to moving out here. We rent now and to me it is a waste of money. Buying a house is an investment where sometimes you just have to ride it out if times are bad and you want to sell.
Just make sure that you have a good stack of bills in your savings for not only a down payment but also for those move-in things you'll want and enough to cover expenses for at least 3 months if you lose your job.
Everyone else pretty much has it covered. The markets in KC are not like the markets in much larger markets where most of these stories come from and are directed to the population of. Don't buy a house beyond your means. Don't buy a house if you think you could lose your job if the economy stays down.
ReplyDeleteWe played the game of how much money we could save if we live with my parents for a while. Jen really wanted the full 20% down payment. For us, it wasn't worth it. We paid 10% down, and had an 80% 30-year mortgage and 10% 20-year second mortgage so we could avoid paying PMI. We didn't want to drain our savings on a full down payment, but also were up on our lease soon and didn't want to rent again. The additional 10% loan was a good solution for us because it let us get in a house, and we knew we had enough income to make it go away fairly quickly.
If all of it is too much to think about, you should just do your best to find a good realtor. If you are buying a house, you shouldn't have to pay anything for their services...it's on the seller. They should be able to tell you about tax breaks and any government programs that can assist you. I'm pretty sure if your income is below a certain amount, there is a program that would allow you to take a 30-year mortgage at 100% with no PMI.
suddenly feeling incredibly poor.
ReplyDeleteMy mom thinks it will be a strike against us since Roommate stays home right now. I'm like, err, ok, is it a strike against all those families in which the woman is a stay-at-home mom??
I'm not an expert, but I think the only way it would hurt is in the income - two incomes are definitely better than one in the banking world, or perhaps one income that is so high it's just like having two. But single people buy houses all the time. It shouldn't, in my opinion, matter that he stays home - there's no cost of daycare to consider.
ReplyDeleteyeah - no matter when you decide to purchase a home you will have reservations...but only you two can decide when and what you can afford. there are some good deals on decent homes out there right now. we bought a 1960s house in old opks 3 yrs. ago....yeah - needs updated...but nothing we can't live with and can't do as we have money to do it....and i don't regret the decision to buy at all...even in this lovely economy.
ReplyDeleteI love old OPKS!!!
ReplyDelete