Buying a House in 2 yrs - Realistic Numbers?

[A_Harman]

Originally Posted By: supton
I find it crazy that interest rates could be double-digit. Then again perhaps people shrugged it off, due to the lower principle? I wasn't in the market back then.

http://www.jparsons.net/housingbubble/

10% interest on a $100k house (in 1990) would garner the same interest as 3% on a $330k house.


When I was in high school in the late '70's, interest rates were close to 20%.

I got my first mortgage in 1986, and the rate was 11.25%. Also had to get PMI because I only put 10% down.

Moved to Indiana in 1990, and got my second mortgage at 9%, and thought I was doing well.

Refinanced that mortgage in 1992 down to 7.625% and thought I had it made.

Moved to Michigan in 2002 and started out a 7-year ARM at 5.0%. Since the mortgage started adjusting annually, the interest rate has worked its way down to 2.875%.

 

[Shannow]

Originally Posted By: A_Harman
Originally Posted By: supton
I find it crazy that interest rates could be double-digit. Then again perhaps people shrugged it off, due to the lower principle? I wasn't in the market back then.

http://www.jparsons.net/housingbubble/

10% interest on a $100k house (in 1990) would garner the same interest as 3% on a $330k house.


When I was in high school in the late '70's, interest rates were close to 20%.


My parents around that time bought a great house (with air-con) for $40k (Oz), at 17.5%

supton, they never shrugged it off as the princiapl was low, they had stuff all in the way of wages to cover the loan that was going to last 25 years at the time anyway (to pay off $30k principal was 25 years).

We are told to tell our children about the wonders of compound interest, but are convinced to ignore compound growth inflation...as evidenced by a "dollar number" based reasoning in rationaalising interest payments then and now...

They always hurt more at 17% than 3%.

But worthy of remembering is that at that time in history, there were more people wanting to buy the houses, property, businesses and stocks, providing upward pressure on prices.

All those people who were buying then, are nearly all retired, or are in fact retired, and requiring to "sell down" to pay for their retirement...and there are less of us to buy them...

Oversupply will soon lead to lower prices, thus the need for arguments like "it's never been cheaper to buy stuff".

 

[supton]

Originally Posted By: Shannow
All those people who were buying then, are nearly all retired, or are in fact retired, and requiring to "sell down" to pay for their retirement...and there are less of us to buy them...

Oversupply will soon lead to lower prices, thus the need for arguments like "it's never been cheaper to buy stuff".


And that is a sobering thought for my day... Never thought about the population slow down; I'll have to think about what that means in the future.

 

[SwampSurvivor]

I think I am going to wait until 2016 to buy a house. I will still talk to the credit union as soon as I can.

Yes, interest rates are low. But, if I wait a year (and pay rent for another year), I still think I may come out ahead. That is an extra $12,000 that can be used for a downpayment.

- I can avoid PMI ($40-$100) a month
- Won't be paying taxes ($200 a month ... only "throwing out" 400 a month now)
- Won't be paying interest for an entire year(another few hundred a month)
- Lower utility bills

So, yes, interest rate may be higher, but I'll also have a bit more money to throw around. I just don't want to have to do the minimum down payment in order to keep a comfortable amount of savings.

 

[IndyIan]

Originally Posted By: Miller88
I think I am going to wait until 2016 to buy a house. I will still talk to the credit union as soon as I can.

Yes, interest rates are low. But, if I wait a year (and pay rent for another year), I still think I may come out ahead. That is an extra $12,000 that can be used for a downpayment.

- I can avoid PMI ($40-$100) a month
- Won't be paying taxes ($200 a month ... only "throwing out" 400 a month now)
- Won't be paying interest for an entire year(another few hundred a month)
- Lower utility bills

So, yes, interest rate may be higher, but I'll also have a bit more money to throw around. I just don't want to have to do the minimum down payment in order to keep a comfortable amount of savings.

Not a bad idea, if interest rates do go up, prices may well fall and suddenly you have much more than the minimum down payment.

 

[supton]

Won't hurt to start looking now. Might want to start a spreadsheet... I dunno, just take notes. Perhaps you'll find some property that is just sitting. If it sits long enough, it might become available for a song. But it won't hurt to just start looking once/month, and maybe make notes.

I'd still read up on houses, and what to look for, in terms of damage and design.

 

[SwampSurvivor]

Originally Posted By: IndyIan
Originally Posted By: Miller88
I think I am going to wait until 2016 to buy a house. I will still talk to the credit union as soon as I can.

Yes, interest rates are low. But, if I wait a year (and pay rent for another year), I still think I may come out ahead. That is an extra $12,000 that can be used for a downpayment.

- I can avoid PMI ($40-$100) a month
- Won't be paying taxes ($200 a month ... only "throwing out" 400 a month now)
- Won't be paying interest for an entire year(another few hundred a month)
- Lower utility bills

So, yes, interest rate may be higher, but I'll also have a bit more money to throw around. I just don't want to have to do the minimum down payment in order to keep a comfortable amount of savings.

Not a bad idea, if interest rates do go up, prices may well fall and suddenly you have much more than the minimum down payment.



Prices certainly won't be going UP in Syracuse - not much going on and people are leaving, kind of like Detroit. I like it here ... but there will be no booms happening anytime soon causing prices to skyrocket.


Originally Posted By: supton
Won't hurt to start looking now. Might want to start a spreadsheet... I dunno, just take notes. Perhaps you'll find some property that is just sitting. If it sits long enough, it might become available for a song. But it won't hurt to just start looking once/month, and maybe make notes.

I'd still read up on houses, and what to look for, in terms of damage and design.


Oh, definitely. I enjoy looking at stuff. Kind of like car shopping!

There is one for $33K that someone started a remodel and ran out of money. I drove by and from what I could tell, everything is in good shape. New wiring. FOr the most part, it just needs insulation, drywall hung.. Something like that would be nice to just build a small living area while I get the rest of the house in working order.

 

[Mr Nice]

Is your family wanting to stay in the area for the foreseeable future ?

If the area is dying like Detroit, why stay?

Do you really like your area that much not to want to relocate..... or are your career(s) keeping you in Syracuse area ?

 

[dja4260]

I put 5% down on a conventional loan.

 

[Shannow]

Originally Posted By: supton
Originally Posted By: Shannow

Oversupply will soon lead to lower prices, thus the need for arguments like "it's never been cheaper to buy stuff".


And that is a sobering thought for my day... Never thought about the population slow down; I'll have to think about what that means in the future.


Only just hit my radar screen the last fortnight...

 

[SwampSurvivor]

Originally Posted By: LT4 Vette
Is your family wanting to stay in the area for the foreseeable future ?

If the area is dying like Detroit, why stay?

Do you really like your area that much not to want to relocate..... or are your career(s) keeping you in Syracuse area ?



Family and a good job are why I'm staying.

Utica is dead. Syracuse is almost dead. I think Syracuse *may* have a rebound, but Utica is just done.

I like Syracuse, though. Has its quirks but isn't completely wasted away like Utica or (on a much larger scale) Detroit.

My comparison to Detroit is mainly crime.

 

[dparm]

You want the biggest downpayment possible.

3% is way too low -- that's how we got in trouble with people getting underwater on loans. I think 5% is really pushing it. My advice would be to do 10-15% down, and even up to 20% if you can swing it without cutting into your emergency savings. This might mean you need to wait another year to buy something to save up some extra cash, but it will be worth it in the end.

I am going through a similar exercise in the next few years and there is no way I am doing anything under 10-15% down, even if that means I have to rent for a few more years to do that.

 

[D189379]

A $50,000 to $80,000 home?

Wow, that's a car loan for most people around here.

 

[SwampSurvivor]

Originally Posted By: dparm
You want the biggest downpayment possible.

3% is way too low -- that's how we got in trouble with people getting underwater on loans. I think 5% is really pushing it. My advice would be to do 10-15% down, and even up to 20% if you can swing it without cutting into your emergency savings. This might mean you need to wait another year to buy something to save up some extra cash, but it will be worth it in the end.

I am going through a similar exercise in the next few years and there is no way I am doing anything under 10-15% down, even if that means I have to rent for a few more years to do that.


It seems you and I think alike. I have decided to wait until 2016. At which point, I would easily be able to do a 25-30% down payment on a house in my desired price range. I want a small mortgage payment, no PMI and shortest term possible.



Originally Posted By: D189379
A $50,000 to $80,000 home?

Wow, that's a car loan for most people around here.


Wow! That's a lot for a car loan! I thought financing $9000 on the brand new Focus was bad!

 

[JHZR2]

You did not tell us how much you make. Its a big factor here.

With the average home price in the $200k range, most responsible home buyers (not that there are many), would be putting down close to $50k on a mortgage for a home they are buying (20% down).

I totally get not wanting to buy more house than you need. Some may desire a lot more space, even if they dont really use it, but dont let realtors or anyone else talk down to you or talk you into it if youve thought it through thoroughly. To me, its a reasonable decision if you know what you get space-wise and have done a reasonable assessment of what you need, what you want, your requirements for parking, hobbies, entertainment, visitors, etc. Less space is less to heat and cool too.

But again, $50k isnt a lot of money. If youre really looking in that price range, you may want to see if there is something you can buy cash, and avoid any sort of mortgage, interest, closing costs, etc. Sure, it will need to be re-titled and some costs will exist, but not all the lending closing costs necessarily.

If you have to get a loan, or choose to for whatever reason, definitely stick with 15 year loans, and try to have way more than 20% down.

Also try to understand what the rental market looks like in your area, vs selling the home if you ever want to move on.

 

[SwampSurvivor]

Originally Posted By: JHZR2
You did not tell us how much you make. Its a big factor here.

With the average home price in the $200k range, most responsible home buyers (not that there are many), would be putting down close to $50k on a mortgage for a home they are buying (20% down).

I totally get not wanting to buy more house than you need. Some may desire a lot more space, even if they dont really use it, but dont let realtors or anyone else talk down to you or talk you into it if youve thought it through thoroughly. To me, its a reasonable decision if you know what you get space-wise and have done a reasonable assessment of what you need, what you want, your requirements for parking, hobbies, entertainment, visitors, etc. Less space is less to heat and cool too.

But again, $50k isnt a lot of money. If youre really looking in that price range, you may want to see if there is something you can buy cash, and avoid any sort of mortgage, interest, closing costs, etc. Sure, it will need to be re-titled and some costs will exist, but not all the lending closing costs necessarily.

If you have to get a loan, or choose to for whatever reason, definitely stick with 15 year loans, and try to have way more than 20% down.

Also try to understand what the rental market looks like in your area, vs selling the home if you ever want to move on.


I make mid 40s. I'm a very frugal individual.

In all honesty, the 1 bedroom apartment I have now is perfect, space wise, for me. If I could remove the one bedroom apartment from the complex, put it on its own lot with a detached garage ... I would be set.

A big portion of wanting a house is so I can fix it up and work with my hands. I want to be able to remodel the kitchen if I want. I would like something where I could burn wood for heat. Would love a place to work on vehicles for fun. Want to learn to weld.

If I waited until I am 30 (25 right now), I could easily buy a house in my range with cash saved up. That may be a viable option if I can find a decently price apartment. No car hobbies, but I'm sure I can put that off.

Renting is not hard thanks to SU being close by.

 

[pandus13]

Originally Posted By: Miller88
Originally Posted By: dparm
You want the biggest downpayment possible.

3% is way too low -- that's how we got in trouble with people getting underwater on loans. I think 5% is really pushing it. My advice would be to do 10-15% down, and even up to 20% if you can swing it without cutting into your emergency savings. This might mean you need to wait another year to buy something to save up some extra cash, but it will be worth it in the end.

I am going through a similar exercise in the next few years and there is no way I am doing anything under 10-15% down, even if that means I have to rent for a few more years to do that.


It seems you and I think alike. I have decided to wait until 2016. At which point, I would easily be able to do a 25-30% down payment on a house in my desired price range. I want a small mortgage payment, no PMI and shortest term possible.

Originally Posted By: D189379
A $50,000 to $80,000 home?

Wow, that's a car loan for most people around here.

Wow! That's a lot for a car loan! I thought financing $9000 on the brand new Focus was bad!


in the mean time, just study your market. be prepared for the deals. or just see how quickly they disappear. when it's time, you will know how long (time-wise) is your window of opportunity. plus maybe when you will have your money ready, all the investors types will have consumed their reserves or sit quiet.
your deal will come, but again know your market. time to wait and some money in the bank can sometimes be a good recipe.
learn to "see" a house: meaning when you enter, see what you need to fix/problems.
in the end, it's your money and is between you and the bank/lending institution. take our advices with a grain of salt.

 

[SwampSurvivor]

Well ... I found a house. I can comfortable afford a 20% downpayment (or even a 50% downpayment).

It's for sale by a realtor? What do I do now!?

 

[Mr Nice]

You and your wife need to look at houses in your financial budget. What is the maximum house you can afford ?

Don't have your heart set on one house cause it could have lots of problems and be a money pit.

 

[JayhawkRoy]

Contact the realtor or decide whether you want to be represented with a buyer's agent. You need to take a good walk-through before going any further. How are you doing on arranging financing? If you are very serious, some banks/credit unions will pre-quality you.