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Can we afford a house? - Page 2

post #21 of 37
Quote:
Originally Posted by Porcelain Interior View Post
That really doesn't matter. Owning a house cannot be compared by saying "Well my rent is pretty much the same amount as my mortgage".

Owning a house will rip you a new one in the pocket book. Houses in many respects are money pits, even nicer ones.

Things break, you have to fix them. When you buy a home (if it isn't brand new) there are bound to be several things about to go on the fritz. How will you pay for that?

It's expensive to own and take care of a house.

It is nothing like renting. Nothing.

We own a house and boy has it been a huge financial eye opener. The mortgage payment is the least of your worries.

If your living is tight now do not buy a house.
I agree with this like 2000% . We bought 4 years ago, got the full 20% downpayment from family as a gift and in theory I thought owning would be equal or cheaper than renting.

Ha, ha, ha..... Joke was on me, house is expensive I won't even tell you how much we have sunk into but lets just say its a nice chuck and the place still looks like crap. We bought a 120 yo Victorian, turns out all the simple jobs like doing the walls are not simple tasks, we have neither the time or money now so we live in a house we just can afford that we are unable to do anything more to.


Home ownership was more than I bargained for and looking back we should have either rented or started with something more managable like a condo.

Shay
post #22 of 37
Quote:
Originally Posted by pixiewytch View Post
However, we have crap credit, and from what DH says after tacking on insurance and taxes here in Florida, any house similar to what we rent now would cost us nearly 2K a month. But then my parents say that if the insurance and taxes are that much, why wouldn't the owner be passing that on to us in rent?
They aren't passing that onto you because that may not be their cost. Maybe they have good credit, have already paid the home off, bought it at a much lower price than you would have to, etc... Just like the fact that we couldn't afford to purchase our current home doesn't mean we can't afford to live here--- we bought it when it was worth a lot less and *our* costs are based on that, not on buying it right now.


Quote:
Originally Posted by pixiewytch View Post
So with crap credit, little to no money down, and a maximum of $1200 a month that we can pay for rent, does it seem likely that we would be able to buy a home?
Well, if it would really be $2K a month to get a house and you have nothing down then not only would you not be able to, but you shouldn't!


Quote:
Originally Posted by pixiewytch View Post
LionTigerBear, I think you hit the nail on the head. I guess that I'm just not sure that buying a home is really my dream. In fact my real dream is living off grid in something unconventional like a dome or yurt. Due to finances that one isn't any more feasible right now. I guess I was just thinking that buying a home while we wait ten years or so to pursue the real dream might be a better investment than renting...and might not make me feel like such a loser.
I don't think you should feel like a loser at all. I think it's great that you actually have a REAL dream. How I would look at it? Is what you are doing now putting you in a better or worse situation to persue your real dream? If it is better the you are doing exactly what *you* should do.
post #23 of 37
the process from start to finish on when we bought our house was 2.5 yrs. It started with me, cleaning up our credit reports, getting things removed that did not belong, then I got dh and I, 2 secured cc, b.c we couldnt even get a cc b.c our credit was so bad. I took those 2 cards , we used them every month for various things, paid them each month on time. Then I started looking into first time home buying programs. called each town we where looking into purchasing at. then I started comparing loan options. finally we went into our bank filled out a loan application.
I seriously thought they would laugh at us, our credit was so bad before , mine I think was barely 500, and dhs was 550.

the bank approved us for $350K I thought I was going to die. I knew we could not afford that much.

Our credit had gone up in that 2 yrs to both being over 700.

I also paid off all our debt and we had saved up over $10k + $6K that we got for being first time home buyers.

You want to know what ccs we still have, we still have those same 2 secured cc. LOL I dont think I will ever get rid of them.
post #24 of 37
Thread Starter 
Quote:
Originally Posted by jennlindsey View Post
i feel you on this one, OP. we live in one of the most over-valued housing markets in the country (median salary is 60k, median home price is $300k), and we've pretty much just let the ol' homeownership dream go. i would honestly rather live in a spacious rented apartment or house than scrape for ten years to afford a whopping 700 square foot condo in a crap part of town that needs massive updating (would be the best case scenario around here for us). it just doesn't make sense to me -- i mean, sure, cutting back to achieve your goals is a fantastic idea, but if you're living in cramped quarters for ages, just to squeeze yourself into something you may not be able to afford in the long run, how is that improving your quality of living? the "american dream" ownership can be way over-hyped.

granted, i've owned before -- lovely older homes -- and there are some benefits (the ability to make changes to suit your taste, a fixed monthly payment that won't rise like rent), but the constant headaches and hassles are something i don't miss. my DH has also experienced a foreclosure due to financial trouble in the past and has no desire to take that risk again.

i agree with previous posters that it can be very dangerous to compare yourself to other folks on the homeownership front. they may be living in a totally different housing market, or have better credit, or the gift of a downpayment -- it's really easy for other people to make glib statements like, "oh, you should be able to get a nice starter house for $115k" (I almost peed my pants when I read that in Dave Ramsey's column -- $115k will get you a garage around here if you're lucky) or "you should be able to do just fine on X income with a mortgage" (my mom, for instance, is shocked at how tight we are on my husband's salary -- but she lives in rural PA and I live in an urban area on the West Coast, huge difference!). I feel the stigma of renting as a family too, but sometimes it really can be the smarter decision. Had I stayed in the last house I owned, I would have been facing a giant ARM reset this coming year, and it would have been ugly.
Yes, this is pretty much how I feel. My parents constantly remind me of how stupid we are for not owning a home. Nevermind that they grew up in a time when one could buy into the american dream on one income, that wages equaled cost of living, that insurance premiums weren't out the roof...nevermind that my younger brother was able to buy their older home off of them because they sold it to him way below value, etc. and he had crap credit too.

And yes, 115K here would buy a trailer or a really undesirable house. In fact, I don't even mind a small house. I've lived in plenty of them...but it has to have some sort of character and anything with "character" in our parts tends to be 200K and up.
post #25 of 37
Quote:
Originally Posted by pixiewytch View Post
Yes, this is pretty much how I feel. My parents constantly remind me of how stupid we are for not owning a home. Nevermind that they grew up in a time when one could buy into the american dream on one income, that wages equaled cost of living, that insurance premiums weren't out the roof...nevermind that my younger brother was able to buy their older home off of them because they sold it to him way below value, etc. and he had crap credit too.
Sounds like your parents are being really unreasonable and annoying. :

Quote:
Originally Posted by pixiewytch View Post
And yes, 115K here would buy a trailer or a really undesirable house. In fact, I don't even mind a small house. I've lived in plenty of them...but it has to have some sort of character and anything with "character" in our parts tends to be 200K and up.
Pretty much the same here. I need a "pretty" house, too, something with architectural interest. And with the boys, I can't go too small. We recently saw a 900 sf home with three bedrooms! That is TOO small for us. To get the minimum kind of house we want, and still maintain a bit of savings, we will need to save up about $40,000 more than what we already have (unless house prices continue to drop the next couple of years! That would be awesome for us! Not counting on it . . . )
post #26 of 37
Thread Starter 
Hey, I like your sense of humor about this. I guess that is what I need since I pretty much feel the same way.

And fwiw, I'm not blaming my problems on anyone else. I know why I am where I am now. I just think that some folks do inherently have it easier than others in some way, shape, or form. Heck, I'm sure I have it easier than somebody else. I guess we just have to thank our lucky stars that we have a roof over our head.

That, and maybe watching "The End of Suburbia" again. That sort of has a way of squashing these idealist American Dream visions. I highly recommend anyone who hasn't checked it out to have a look. I found it on google video myself.
post #27 of 37
What was shocking to me when we bought our home was the closing costs. We didn't have a lot to put down, but we managed to save about $12k... that covered 5% down and the closing costs. Our house only cost $109k. We did end up going with a 15 year mortgage (because it would save so much in the long run and only be about $200 more/month and we could afford that), but there's definitely been a lot of unexpected expenses.

The house appeared to be in perfect shape when we bought it. Everything looked pristine. The first time I took a shower here, the porcelin faucet handle crumbled in my hand. I barely put any pressure to turn it. That was a shock of a first expense, not high, but still annoying. Since then, our water heater has exploded (I think that ran us between $1k and $3k... no hot water until we got it done), we didn't have a washer/dryer but we had the hook ups so we bought those, our furnace is original to the house (we think) so that'll have to be replaced soon (um, between $2k and $5k, I think?, our roof has had a couple leaks and has lost a few shingles so that'll have to be done soon although we've thrown some tar on there for now ($2500-$6k depending on if dh does it or not). Our toilet thingy broke so it was leaking through the ceiling downstairs... we fixed the toilet for like $30, I think, but we still have to fix the ceiling. The garage door rotted through (they had mushrooms growing on them, I'm not real clear on how that happened) so we replaced the bottom pannel with the rot - I think it was a few hundred $$ but I'm not sure... FIL got it through his work. OH! the garage door opener's cable broke that was $40 or so. The cost would go up a lot if we didn't have these things fixed ourselves, you know?

We've only owned our house for 5 years. I guess my point is, sh-t happens and sometimes it's just nice to be able to call the landlord and let it be their problem. :

OH, and one thought as to why your rent may be less than it could be to own (beyond problems that crop up) is that if your landlord bought it at a lower price, before the housing bubble started, then he'd be able to offer lower rent. Also, if it hasn't been assessed for taxes in a while, they may be lower than some other places :
post #28 of 37
a gentle 'no' from me too.... not without savings. You can look back at my posts to see my rants about how much more a house costs than advertised.

It sounds like you are renting a great place though! Is home ownership one of your goals?
post #29 of 37
We're in the same place. People sometimes tell me that with dh's income we could be homeowners, but I know there is no way we could pay for anything that went wrong... renting is much safer for us right now.
post #30 of 37
Have you checked http://www.michaelbluejay.com for his mortgage guide yet... he has some really helpful suggestions.
post #31 of 37
The housing market has NOT hit bottom. Clean up your credit and wait another 2 yrs, make sure you dh still ahs a job and you have enough saved for a down payment on what will likely be a much better deal on a house
post #32 of 37
Quote:
Originally Posted by pixiewytch View Post
...My parents constantly remind me of how stupid we are for not owning a home....

And yes, 115K here would buy a trailer or a really undesirable house. ....
You are really smart to not own if you can rent for $800 a month or own for $2000. Many, many homeowners right now regret their home ownership. Some of the regretful homeowners are right here on MDC.

Don't buy a trailer or an undesirable house on a busy street. In a down housing market, those will be the last to sell. You might look into "rent to own" if you could get the right deal... but only if.

If your parents demean your housing choices again they are sadly out of touch. Many people bought houses they could not afford, with the expectation that they could resell quickly at a profit if they needed to. Turns out they were wrong. Many, many first time home buyers were encouraged to buy the biggest possible house they could be approved for with am "ARM" mortgage. The mortgage broker is not your friend.
post #33 of 37
Quote:
Originally Posted by traceface View Post
I think renting is great if you really like the place you rent. I love calling my landlord when something breaks . And honestly, I get tired of homeowners constantly talking about some renovation they are undertaking. Personally I don't want to spend my weekends at Home Depot.
See my LL wouldn't fix things. I personally LOVE spending my weekends at Home Depot (wishing they were open 24 hours! ) I was frustrated in an apartment because I couldn't fix/change/update things as I please. First 6 months we lived here we put in shelves, got a new kitchen countertop, sink & faucet and it has been the BEST! Homeowning makes sense for me, while it doesn't for Traceface - so do what is best for YOU.

We actually bought our house while DH was unemployed. Not something I would recomend, but it can be done. We had some savings, but most of that ended up being spend on new appliances since the apartment came with appliances. We did qualify for the first-time home buyer state programs, without that we would not have been able to buy a house at that time.

First clean up your credit. That is SO important. DH and I did that, and the banker was amazed that we qualify for all the low income and first time homebuyer stuff and still have over 720 credit scores for both of us. He said most of the people who qualify on the low income levels don't have good credit. We got a REALLY great fixed rate, and the state paid our down payment and closing costs - all because we have good credit. AND our mortgage is $150 less than we used to pay for rent to the crappy LL. For us, it's great.
post #34 of 37
If you are happy renting then I would stick with renting right now. Don't buy a home just because everyone else does.

The cost of a house may be more than your current rent.
With a house you pay for-
mortgage
property taxes
insurance
all repairs
lawn and tree care
all utilities
trash collection

We've lived in our home for 2 years. We have had to fix the roof, paint interior walls, fix plumbing, one emergency electrical repair, and 2 trees fell during an ice storm and clean up was somewhat costly. We have had to buy tools for doing some of our own repairs and yard maintenance. It adds up.

We were probably doing better financially renting. However we were tired of repairs not being done and not feeling like it was really our home.
post #35 of 37
Quote:
Originally Posted by jentilla View Post
The housing market has NOT hit bottom. Clean up your credit and wait another 2 yrs, make sure you dh still ahs a job and you have enough saved for a down payment on what will likely be a much better deal on a house
This is an EXCELLENT point. If your family bothers you again, point out that it makes more financial sense to see where the bottom of the housing bubble is before buying in and losing money. Plus your payments will be lower. PLUS you'll be able to save more (if you can) before you buy a house. Makes waaaay more sense. I'd have to be getting a serious bargain (think half price on the house of my dreams) buy a house right now.
post #36 of 37
Only you know your true financial situation, so I would not let relatives or friends push you into anything.

If you do buy, consider budgeting an extra $200 or so a month for maintenance and other costs (more if you have it). So if your mortgage was $1000, pretend it is $1200 a month, and send the extra $200 to a "home" account (like a money market or something). Use that money to maintain your home and to buy things for it.

I realize there are many ways to save money for home maintenance, but this is an easy way. There WILL be maintenance and all kinds of costs. Build that idea into your mortgage payment. Home ownership is not cheap. It's much more than just the mortgage payment. Good luck with whatever you decide!
post #37 of 37
Oh my--

Absolutely you should not let anyone in your family comment about your choice to rent. Especially in this market, especially in Florida.

We are Floridians too, I know what it is like down here. Our 1800 sq ft house has taxes of about 2,000 and insurance is about 1,700 a year. Our insurance rate is considered *good* actually...most of my friends pay 2,500-3,500 a year for their homeowners policy. We're not in a flood zone either. And, our house is a newer home...I hear insurance for the older, lower hurricane standard homes is MUCH higher. Most of the homes here have to deal with not only hurricane risk, but also sinkholes.

You're probably wondering why our taxes are so low for FL. It's because of the fact we bought our home in 99. They are capped here in FL on how much they can raise it (save our homes) each year. So while most of our neighbors who bought in the last few years pay $5500-6000 a year we pay less because we bought it when our home value was low.

However, for us, we made the right choice in home ownership. The main reason why was because we bought BEFORE the boom. We bought our home in '99...the boom here in FL really started to happen the next year. A year or two ago our home would have sold for $330,000...we paid $124,000 for ours. Even with the big drop right now (they're pricing out around $210,000 or so now) because we bought long ago and have a 15 year mortgage we still have a lot of equity.

Home ownership in FL has been WAY off from what salaries are here in FL for quite a while now. With our 15 year mortgage, taxes and insurance our payment each month is what you can afford...just about $1,200. Figure too that each year you're going to have at least 2,000-3,000 in maintenance costs. If you don't put that aside for when things break...like the a/c, appliances, roof, odds and ends (yes--kids break things too)...you'll be hit with some rather unexpected bills. And some years there aren't as many costs, but you need the money there for when it happens. And, of course there are utilities that may be covered by your rent which you would have to pay for as a home owner. Plus, you may have home owner's association dued. We have them in ours...but ours are cheap $300 a year. Our fees are about the cheapest I've seen anywhere. I know our inlaws pay $600 quarterly. But they do take care of their landscaping where they are. It would honestly be nicer to not be in a deed restricted area, but where we are (a good location as it is pretty close to everything and 5 min from DH's work) for decent subdivisions you can't find it. :

It is so important with a family to live beneath your means, to have that emergency fund there. So, when something happens you're prepared. I do realize too that my mortgage payment still would be considered 'high' by some. But, we did opt to do the 15 year mortgage (we refinanced actually a few years into our first loan when rates plummited), in our case we decided we would rather pay the extra $300 or so since we knew we would be in our home long term. So, we could have had a cheaper payment if we wanted back then.

However, I have to think nowadays, it would be comparable to a 30 year....like you said, it's pretty hard to find anything that is decent for less than 200,000. And, mortgage rates are higher and you need to have a good down payment--very good credit.

I have to say though, in comparison to the majority of my friends and neighbors here we are among the few who are very happy with their decision to purchase in FL. So much of it wound up all about timing. At that point when we purchased we could afford it...but if we had tried two years ago, there was NO WAY we could have purchased our house.
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