another "should I buy a house in MA" thread

[CassnBeth]

The current thread about home buying in MA has made me realise just how many real estate savvy mamas there are on here -- would you guys be willing to give me an opinion too? Because I am worried I am about to anxious myself out of a good opportunity (that would be VERY like me).

My wife and I moved up here to MA July of '08 and rented a two bedroom apartment with the intention of shortly having our first child. We were planning to keep saving up for a downpayment on a home and trying to buy a house in four or five years so we specifically picked an apartment where the second bedroom was big enough for two little ones to share. However, as soon as we moved here, the economy tanked and housing prices plummeted so I am rethinking our intention to wait so long to buy a house. Houses in MA are very expensive and all the foreclosures make it possible for my wife and I to consider houses in some wonderful school districts we wouldn't normally be able to afford.

My quandary is that we don't have anywhere near as much money saved up as I would like. We would need to finance the entire house with no downpayment (we qualify for a state program where that is possible) and would barely be able to cover closing costs. Our rent right now is no problem but what if, despite all my research, we got into a house we couldn't afford? How much of a problem is it that we have so little cash saved? It isn't for lack of frugality; I drive my wife insane with the constant couponing and I have paid off every scrap of our debt except some student loans consolidated at 1.8% -- it's just that my wife makes about 54,000 a year and I am staying home at least until our last baby starts school so, for this area, we are on the lower income end to be considering home ownership and I am terrified that I am nuts to even consider this. I certainly don't know anyone else in this position; almost all of our friends are broke PhD students who already think we're insane for having a baby, let alone considering home ownership.

SO -- how do you know when you're ready to buy a home? Do you think our family might be ready to buy a home? And, do you think, even if we aren't ready, that we should move on account of the market? Or should I just throw in the towel on this whole thing and go up my prozac dose instead because I am way over-thinking this?

[SleeplessMommy]

Looks like houses start at $300K.

http://www.zillow.com/homes/map/framingham,-ma_rb/

You would would end up with a monthly payment well over $2000.

What is your current rent?
What is your family take home income?

In general, buying with barely enough to cover closing costs is a bad idea - houses have a tendancy to cost money, things break.

Have you checked the income guidelines for Habitat?

[SuzyLee]

At your income, what do you think you can afford?

Honestly, yes I think it is a terrible idea to buy wth no downpayment and no savings. You need one or the other- either 3-6 months living expenses saved, or a 10+% downpayment, in my opinion.

The only exception might be fi you can buy a house in time to get the homebuyers credit- would that amount of money equal the amount of savings you would need?

[SleeplessMommy]

The deposit should be $30-60K on a $300K house. Plus closing costs and an emergency fund. A 2br condo might be OK if you could find one for around $100,000. This would be very hard to resell, though.

I have a feeling the tax credit may be extended, to help keep the real estate market moving towards recovery.

[mich]

Yes, dh was just reading something about the possibility of extending and expanding the gov housing tax credit. Personally I think you have time to wait and save and still get a great deal on a house next year, or the year after. There are still many more foreclosures to come. You don't have to jump in now out of fear of missing something. That is what got so many people in the trouble they are in now. Never make decisions out of fear.

You really do need a good savings in place before you buy a home. Maybe spend the next 6-12 months working on that. Winter in MA is a good time to get a house, less buyers. Try living like you have a mortgage, save all you can, and then when the market slows down next November (2010),you can find a great house.

In our current house, we moved in and with in the first few months had to repair the roof, re-line the chimney, replace the hot water heater and the heating system. We are used to buying and repairing homes, but even I was shocked how much went wrong so quickly. Having savings is very important.

[gurumama]

I see you live in Framingham--so do I.

The median incomein Framingham is nearly $90K, and the median house price is around $290K.

You generally shouldn't buy a home that costs more than 3 times your annual salary--if your entire family income is $54,000, then that means $162K should be your limit. As you know around here, $162K will get you a decent 2 BR condo right now, or maybe a run-down home in a higher-crime area (if you're lucky--even those homes are $200K+).

If you have a HUGE (like 50%) down payment, or if you plan to have a higher income (and know how to make that a solid plan, and not just a hope), then buying might be right.

What towns are you considering? Because the good school districts around here are in towns with MUCH higher median incomes and median home prices. Framingham's schools are supposed to be pretty decent through 8th grade (I don't know much about them, though, because we private school).