Is a house a possibility for us? - Page 2

[Alare]

Originally Posted by UUMom

Ack--stop yelling.

*Often* a good investment. Esp when one does the sort of work in the sort of town we're talking about.

There ya go. I realized I used the verboten SAT 'always* word. lol

I wasn't yelling, only wanted to emphasize the point.

But do you really think that people who only gross around 60,000 a year should be trying to buy a 275,000+ house? Yes, he has an academic job in a good city, but still, a house would be about 5 times their annual income . . .

OP: I completely understand your craving for a house . . . I share the same craving!

[SleeplessMommy]

Have you checked Habitat for Humanity or other low income/first time buyer programs? Do you meet the income levels for those?

[UUMom]

Originally Posted by Alare

I wasn't yelling, only wanted to emphasize the point.

But do you really think that people who only gross around 60,000 a year should be trying to buy a 275,000+ house? Yes, he has an academic job in a good city, but still, a house would be about 5 times their annual income . . .

OP: I completely understand your craving for a house . . . I share the same craving!

I don't expect people who don't live here to understand. That's simply the situation in many parts of the country. It's not whether we 'should' or not, it's just the reality. Frankly, 275 is pretty much rock bottom, not too mention pretty non -existent, even as far as condos go in the Boston area. I know it's very hard for people in other parts of the country to understand what those of us on the coasts face.

I hope the OP can find something that she can afford and is comfortable with.

[FireWithin]

Originally Posted by Alare

I wasn't yelling, only wanted to emphasize the point.

But do you really think that people who only gross around 60,000 a year should be trying to buy a 275,000+ house? Yes, he has an academic job in a good city, but still, a house would be about 5 times their annual income . . .

OP: I completely understand your craving for a house . . . I share the same craving!

I actually don't think I can afford a 275,000 house. It is beyond us, but I am trying to figure out what I can afford. It must be above $200,000, which hits us at the 28% mark. This thread has helped. All of the different opinions have helped me think. Velochic's numbers have helped a lot. DH has an academic job, in a really good city, which will pay for our boys' college.

What UUmom said was true. We would not be able to buy an apartment style condo in Cambridge got 275. I am hoping with the first time buyers program we will be able to buy a 1000-1100 sqf house with the actual price tag of 375,000+, for much less. The market is crazy here, and commuting is insane. I just see this as our only opportunity to get something. But, we do need to wait a while, so hopefully we can get our downpayment to 25,000. I am confident we can get it to 20,000.

We are not trying to get anything luxurious here. just a tiny house, a row house, that sells for over $400,000. omg. how do all of the people in Cambridge survive on that?

I am hoping by getting a row house that will reduce the maintenance, very tiny, tiny yard, energy costs - shared walls means less paint, less, heat. low square footage is less energy. We are currently living relatively happily in a 690 sqf apartment (plus storage)with two young boys.

We haven't looked into forclosures yet. We still need to learn, and we also have time.

Jimmymom - we will check it out. thanks

[karne]

This won't be a popular opinion because it seems counter-intuitive, but there is nothing in the Boston area that is going to be a bad deal. Prices and demand will always be there, and you will make your money back, in time. And many, many people are above the 30% mark because housing prices are insane, and housing costs are just not in line with most of the rest of the country. If you have a chance to buy in Cambridge, at a good deal, I say go for it, provided you're not totally overextended. I think I'm with UUMom when I agree that real estate, esp. in an area like Boston, is a good investment.

[kijip]

If I were you, I'd be getting on the waiting lists for the first time buyers programs in your city that kick in money either through a land trust agreement or deferred, low interest downpayment assistance. Take our situation.

We made a fair bit less than you when we first got our mortgage. The house cost just about $300,000 (for a small townhouse in a FUNKY, low cost part of town). We had inheritance $$, decent but not great credit, no other debt. We put in our down payment and the city here put in $60,000 at very low interest (2 or 3%) for 30 years with deferred payments for nine years. Our initial payment was around 35% of income (but we had NO other debt and paid cash for all our move in needs like appliances). A short time after we closed, my husband started working PT which put our income up above yours (and also above the income limit for closing on the loan). Now our payment is about 25% of income (payment has gone down because they WAY overestimated taxes, plus income went up). We can very comfortably afford it. In 8 years (9 years after we closed), we will pay an additional $300 or so a month on our mortgage payment to pay off the down payment assistance we received. But in a few years, my husband will be a PharmD and an extra $300 will be nothing. Also, even if one of us was not in professional school, over 9 years, 3% interest does not even keep up with inflation and we would naturally be making more money with just the normal COL adjustments we get in our fields. The main part of the mortgage is at 5.5% fixed. The only limitation is that we share appreciation with the city if we sell within the first 9 years of the mortgage (after that, any gains are all ours). Some programs combine this city $$ with $40-50K that you don't pay back but the land is held in trust (making it a permanently affordable house). For moderate income folks like you and me in high cost of living areas, these programs exist for a reason. Most are government/non-profit partnerships and they really evaluate the borrower to ensure you are not getting in over your head. The rate of default on these program mortgages is generally VERY low.

I get the emotional side of buying. I felt the same way. I grew up poor and we moved all the time. It was important to me to give my son a yard and his own, consistent space for most of his childhood. If we move from here it will be when he is in junior high or thereabouts. I do think you need to get help to make it work in your area with your income level. Saving money each month like you were paying the higher mortgage amt is a great idea. Good luck!

Rather than seeing a mortgage broker (who will often try to sell you on whatever they are selling) I would see if these homebuyer's programs have an orientation class that is a prereq for getting on the waiting list. Ours was taught by a Realtor and a broker, but the followed the state curriculum and were experienced with these assistance program and special rate mortgages.

[karne]

I second the above idea to take a homebuyers program. When we were buying our home we took one through the bank. Not only did it cover the financial end of things, but there were also presentations from home inspector, etc. covering the essentials of the real costs of home ownership. It was an eyeopener. We were suprised more people weren't taking the class actually. It was free.

[Garden~Lover]

Living in Mass. I know what its like to own a home here, and try to buy one. We purchased our home 2 years ago. We rented for many many(many) years. When I was doing all those mortg. calculators they estimate far lower than what a bank will actually give you. NOT that I am saying go for the max. Total opposite.
When we where looking the bank said $300K (+our deposite) when we went to look we told the RA NO more than $250. (thats including our deposit) it was hard 2 years ago , houses where alot more money.
I think our income I think 2 years ago was $60K. We had abosolutly no debt though. Our mortg. payment is $1500 a month, which was do-able for us. Dh got a promotion this year, now our income is $75K which helps.
I think a realistic way to approach it is , all of your maintence/utilities you pay now , well just double them. we dont pay anyone to do our lawn, or anything like that, but our bills generally doubled.

have you thought of looking North of Boston on any of the "train" towns, Salem, Beverly, Swampscot, ....From Beverly it is only 25 minutes to Boston on the train. and the subway is right out in front of North staion.
House prices have gone way down this year.Now the average house price is $225-$250K. I actually saw a home in Swampscot listed at $199K , 3 + bedrooms.

Just remember something always happens. Even though you dont want to think it will LOL it always does.

Good luck

Oh and we did get a first time home buyers program here through our city (North of Boston) , we got $6K towards our down payment.

[Jilian]

I didn't read all of the replies but I suggest waiting. Save up more of a down payment and a sizeable emergency fund. I'd suggest an emergency fund of at least $5,000 when you own a house so an unexpected repair doesn't put you into debt. I believe the market is only going to keep going down, so waiting will probably be beneficial. While you are waiting you can likely pay off the rest of your student loan debt and free up an extra few hundred per month.

Have you read any of the Dave Ramsey books? If not check out the total money makeover (most librarys have it) and work on the debt snowball to get as much out of debt as you can before buying. Then you'll avoid having your house own you.

We did things the wrong way and bought a house while still in major debt. Then a major financial emergency came up and we ended up having to ask for a deed in lieu. We didn't have a large enough emergency fund, and the small fund we had depleted when our AC broke. So now we're working on paying off all debt so we can buy again in 2-3 more years. I think it is really smart that you are doing the research and asking all of the right questions before buying!