Buying a house

[sasa]

Me and my BF have been dating for 10 years, we want to buy a house before we get marry. But the price to buy a house in California is scary

....I don''t know if we''ll ever be a home owner.

 

[MichelleCarmen]

Have you looked into other options like purchasing a condo, townhouse, or even a fixer? You may have to make sacrifices the first time around in order to nudge your way into ownership.

I know how much is sucks when it seems like all the cute homes are way out of price range. . . my husband and I are currently looking for a new house and we''re shocked that even after we decided it would be cheaper to move out of the city and into the middle of nowhere, we''re still looking at $400K+!

Good luck. . .

 

[Dancing Fire]

Date: 5/1/2005 6:42

2 PM
Author:^__*
Me and my BF have been dating for 10 years, we want to buy a house before we get marry. But the price to buy a house in California is scary

....I don't know if we'll ever be a home owner.

what ever you do,don't do a interest only purchase you're asking for trouble ,put at least 15% down,20% would be better to avoid PMI.

 

[sasa]

even the condos are expensive, they''re like $340K and up...I wonder if the price will ever go down..

 

[AChiOAlumna]

California''s housing prices have gotten astronomical!! We''ve had our house for 8 years and cannot believe the comps of houses in our tract as others are seling...Have you looked into possibly the idea of getting a foreclosure??

 

[sasa]

can we get that information from the Real Estate Agent??

 

[lost on 5th]

typically those dont stay on the market long.

you should start talking with a realitor to get an idea of the price range for different areas. next, start looking into financing (the realitor should have good contacts for this). you will start to see the benefit of deposit that DF is talking about.

keep in mind.. there is a good reason why they call a first house a "starter home" ...it may not be everything you want, but its putting you in a position to work towards what you really want

good luck

 

[sasa]

Thanks for all the advice.

 

[Dancing Fire]

Date: 5/1/2005 8:59:12 PM
Author: AChiOAlumna
California''s housing prices have gotten astronomical!! We''ve had our house for 8 years and cannot believe the comps of houses in our tract as others are seling...Have you looked into possibly the idea of getting a foreclosure??

there will be alot of these in the comming yrs.

 

[tawn]

We live in San Diego...but we own a house in Washington and just rent it out! Our friends just purchased a 1000sq foot condo...for $400 000, cute but pretty generic! The house prices are totally out of control here! I don''t know how people do it! Mind you...our rent here is almost double what the mortgage on our house in WA is!

I don''t even want to talk about the gas here...it $3.65 for premium full service at our little local station!

I can pump my own gas...thanks!

 

[njc]

If this is your first home, there are programs out there to help you. Talk to a mortgage lender, find out what you can really afford to pay for a house. Also, take into consideration how long you plan to be there. If you only think you will want to live in your starter home for 5 years or less, you can get a 5-year adjustable rate mortgage. This will lower your monthly payment, but if you want to buy something that you will stay in forever, you will need to look at 15 or 30-year mortgages. Seriously, talk to a lender and find out what kind of loans they have and exactly what your maximum high price is and take it from there.

FI and I had to do 100% financing, but were able to avoid the PMI because of good credit and being first time buyers. No way we could ever save $80K for 20% down, we could but, were talking years to save that. My parents arent happy about it, but when you are young and starting out in a ridiculous market, you gotta do what you gotta do. Prices on houses in the same neighborhoods go up *at least* $10K everytime one goes on the market. Thats another $2K you need to save up for a downpayment every other week! Between signing our contract and closing, we earned $25K in equity...

 

[NoonersMom]

There are a few different things that you can do to help get you into a house. Regarding foreclosure properties....a friend works as loan officer. He sends out notices to friends when they have properties for sale. I would try touching base with some of the local loan institutions, try to make a few contacts and get on their notification list if possible. You might be surprised once you cultivate a relationship.

If you don''t have the full 20% downpayment, you can take out a home equity loan on the house you are purchasing & apply that as your downpayment & it''s perfectly legal. Since we bought two properties last year & our savings were drained, we used this option to avoid the additional PMI expense (that we would never see). We had the 10% down, did the equity for the other 10% down. Our''s is built in as an automatic monthly payment. In our instance we could spread the payments out over 10 years, but we are shooting for half of that.

One last option that a friend in NYC did. They are a teacher & professional musician. There is no way that they can save for the 20% down required in NYC where a 2 bedroom co-op goes for 300-350,000. They spoke with one of their parents & inquired if it was possible to receive part of their inheritence early to be applied as the down payment. Her parents said yes as long as her sister was comfortable with it. They are drawing up documents for the "gift" noting the transaction so that when (hopefully not for a *long* time) they have to divide the estate, it is noted that my friend will receive an amount equal to her sister''s less the down payment.

Good Luck! With a little smart maneuvering & staying within your means you can do it. Just make sure that your debt is paid off (excluding student loans).

 

[moremoremore]

Best of luck! You''ll find something!

And can I just mention that I live in NY but yet I am obsessed with this CA real estate web site. Most are expensive, but some a very reasonable (maybe in really bad areas?)...just thought I''d post this site.

http://www.bjdroubi.com/2941Harrison.html (p.s. that blue bedroom is to die for )

 

[sasa]

what is a PMI

? sorry...as you can see...I am a first time home buyer!

 

[njc]

PMI is Private Mortgage Insurance. If you have to finance more than 80% of the cost of the house, the mortgage companies will make you buy this insurance that is expensive and just adds to your monthly payments, but there are ways around it.

As i said before, if you are a first time buyer, there are programs out there where you can avoid having to get this insurance. We were able to do so (we did 100% financing). Talk to some mortgage companies and find out what kind of loans/programs they have for first time buyers. Knowing what kind of loan you want (there are hundreds out there) will give you a better understanding of what you will be able to afford.

This is a link about types of mortgages: http://www.bankrate.com/brm/news/mortgages/20041216a1.asp

Some info about low down payments: http://www.bankrate.com/brm/green/mtg/basics3-3a.asp

And a little somthing about PMI: http://www.bankrate.com/brm/green/mtg/basics3-4a.asp

I got all those links by doing a quick google search. They are all the same website, use the little chart on the left to learn more about mortgages. But seriously, contact a mortgage company to find out what will work for you and be sure to tell them you are a first time buyer!

 

[MichelleCarmen]

Date: 5/2/2005 3:32:40 AM
Author: tawn
We live in San Diego...but we own a house in Washington and just rent it out! Our friends just purchased a 1000sq foot condo...for $400 000, cute but pretty generic! The house prices are totally out of control here! I don''t know how people do it! Mind you...our rent here is almost double what the mortgage on our house in WA is!

I''m SO glad I don''t live in CA. . .I live up in WA and I guess I''m lucky re: housing prices. lol (it does rain and/or cloud over a lot here, however, so there are disadvantegeous - but we do have lots of espresso stands to make up for this. . .lol)

 

[MichelleCarmen]

Have you looked into possibly the idea of getting a foreclosure??

I just want to mention that often times foreclosures aren't the best option.

My husband and I found our dream house about four years ago and it was a foreclosure that had been on the market for almost six months. The house was worth about 30K LESS than the asking price because of real estate values AND because it needed a new roof and painting before fall. The bank would NOT budge on the price and rejected our offers. . . the house ended up sitting for an additional six months before someone was willing to pay full asking price.

The same case occurred with a house a few blocks from our previous residence. The bank wanted top dollar and chose to let the house sit for over a year rather than sell it for its value at $35K less.

Basically, the bank has nothing to loose by letting a house sit so they often do this!

 

[MrsFrk]

My husband and I bought a house (a very modest one) in The Silicon Valley when we were very young, not making much money (I'm talking still being paid hourly at the time). Save, save, save, and make sure your credit is exquisitely clean. Our income was pathetic, but our FICO scores where phenomenally good, which carries a lot of weight with the lenders, and since we carried no consumer debt, our debt to income ratio was decent. It is not easy, but it is totally doable. We sacrified a LOT, and ate tons of top ramen and mac and cheese, but it's the best thing we've ever done. Best of luck!

P.S. He was my boyfriend when we bought. When we got married it was with a cheapo gold band. Now I have a semi-honker. All the deprivation was totally worth it. It sucked at the time, but now we look back on those day nostalgically misty-eyed.

 

[tanuki]

You''re right to mention the maintenance.

I have painters in my house right now and it''s between three and four thousand dollars every four or five years for exterior maintenance. If you don''t budget a cushion for maintenance the investment in the house can be significantly damaged.

The painter and I were just out in the yard looking at my house and comparing it to my next door neighbor. Both of our homes were built at about the same time. I''ve kept up with the painting and he hasn''t. You can look over at his chimney and see the wood rotting.

If a home is in forclosure the people probably haven''t had the cash to spare for this sort of thing for a while. A home inspection by a reputable firm (this is someone you hire yourself - not someone the real estate agent tells you to use - they are interested in closing the sale so their inspector is likely to go easy).

 

[AChiOAlumna]

Date: 5/2/2005 12:59:16 PM
Author: MichelleCarmen
I just want to mention that often times foreclosures aren''t the best option.
Basically, the bank has nothing to loose by letting a house sit so they often do this!

Michelle...

You are correct that they aren''t always the best option, but sometimes you can get lucky...if you know a friend who is a professional housing inspector, they can come along to determine the problems with the house before you make an offer to determine what you''re getting into. I''ve seen new houses go into foreclosure because the previous owners put everything they had into the down payment and then couldn''t afford the monthly mortgage!!

It''s a wearing process, but sometimes you can find a "diamond in the rough"

 

[MichelleCarmen]

Date: 5/2/2005 2:46:12 PM
Author: AChiOAlumna


Michelle...

You are correct that they aren''t always the best option, but sometimes you can get lucky...if you know a friend who is a professional housing inspector, they can come along to determine the problems with the house before you make an offer to determine what you''re getting into. I''ve seen new houses go into foreclosure because the previous owners put everything they had into the down payment and then couldn''t afford the monthly mortgage!!

It''s a wearing process, but sometimes you can find a ''diamond in the rough''

Yes, I do agree. . .my mom is one lucked out w/a forclosure. . .but the house she bought had been put up for auction rather than standard MLS. . . she purchased the house for $100K!!! Imagine her cozy little mortgage payment!?! lol (I''ve never seen ANYTHING like this around where I live. . .)

You really need to know people in the trade to find great deals (or at least this was the case with my mom. . .she lived in a small town, knew everyone, found amazing deals. . .)

My husband wants me to get my real estate liscense so I can network and find us great bargains

lol

 

[sasa]

I know I have great credit. I don''t know about him, but I know it''s not as good as mine, because he have a house (his parents) under his name (it''s a Asian thing).

We''re saving like crazy now....the only luxury we have is the occasional dining out. But here is another question, since we''re paying for our wedding, should we buy a house first then get marry or vice versa??

Thank you guys for all your opinions...it''s really a lot of helpful info. I''m getting

 

[MrsFrk]

Asian thing, LOL. My mom lives with me and my husband (who is a white dude) DEFINITELY an Asian thing.

Personally, I would buy a house first. A big, big part of a successfull marriage is financial stability, and I would vote for buying a house that is invariably going to build equity before spending big bucks on a wedding. We were on our own financially as well, and we chose to elope.

 

[lost on 5th]

you might go nuts doing wedding planning and house shopping at the same time! it all depends on location and costs. as to what you decide to do.

and to comment on the above few postings, it does really help to know people in the profession when looking for a deal! my perspective is a little skewed since im an architect who grew up around realitors and contractors and lenders etc.

also, find an appraiser who will dig into every corner and findthings that could be wrong or cause problems. knowing what will need to be maintaned and fixed over the next 5 years (and also 10) will help you in your budgeting.

 

[MichelleCarmen]

My husband and also eloped. We used the money we could have spent for a wedding and paid off college tuition every quarter and upon graduation, we started saving toward our future. . .

I''m glad we chose this route

 

[NoonersMom]

I would purchase the house first (we did this first in our situation due to low interest rates). Although right now, the advise is to hold off in the US for a year or two. Prices are outrageously high. They are going to have to start receeding at some point. The gentleman that predicted the dot com bust has predicted this about the housing market. Very interesting story on the CBS Sunday morning show yestrerday morning.

I think in your situation I would sit down with a financial planner, discuss where both you & your BF/SO current financial situation(sorry can''t remember if you''re engaged). Then discuss your goals/priorities. Then have your advisor run the numbers with different top priorities (home vs wedding). Look at both scenarios and see where the numbers land and what you think is best (this includes tax write offs for interest on mortgage, etc). If you rent for another year or two, you can create a better cushion for yourself in the event of emergencies or a better down payment.

Food for thought.

 

[aljdewey]

Date: 5/2/2005 11:27

2 AM
Author: NoonersMom

If you don't have the full 20% downpayment, you can take out a home equity loan on the house you are purchasing & apply that as your downpayment & it's perfectly legal. Since we bought two properties last year & our savings were drained, we used this option to avoid the additional PMI expense (that we would never see). We had the 10% down, did the equity for the other 10% down. Our's is built in as an automatic monthly payment. In our instance we could spread the payments out over 10 years, but we are shooting for half of that.

This is a GREAT option - and it's what hubby & I just did.

Because we were first-time buyers with excellent credit, we did an 80/10/10. We put down 10%; took the first mortgage for 80%, and took the 2nd mortgage for the remaining 10% as a home-equity loan. Not only did we get a GREAT rate on our first (30-year) fixed.....we actually got a 30-yr fixed for our 2nd too, so we aren't under the gun to pay it before it balloons.

Our first was 5.625%; our 2nd was 7.625%.

Oh, and doing this--an 80/10/10--allows you to avoid paying PMI because the primary is only 80%. If we had to pay PMI, it would run us another $125-175 per month at least.

Our first was 5.625%; our 2nd was 7.625%.

Even though our 2nd is 30-year fixed, we intend to pay it off as soon as possible by rolling any tax refunds due to claiming the interest deduction every year until it's paid. Once we do that, our mortgage goes down about $250 a month.

 

[aljdewey]

Date: 5/2/2005 3:21:52 PM
Author: NoonersMom

Although right now, the advise is to hold off in the US for a year or two. Prices are outrageously high. They are going to have to start receeding at some point. The gentleman that predicted the dot com bust has predicted this about the housing market. Very interesting story on the CBS Sunday morning show yestrerday morning. .......If you rent for another year or two, you can create a better cushion for yourself in the event of emergencies or a better down payment.

I dunno.....I know this will be true at some point, of course--what goes up must eventually come down--but I wouldn't hold off buying decisions hoping that you'll catch it on the downswing. You could be waiting a very long time.

I gotta say, for the last five years, all I've heard *repeatedly* is "oh, the market's on the cusp of a downturn in 6-9 mos." Yet, five years later, it still hasn't happened yet. In the two years leading up to my wedding last July, the prices here went up a staggering 25%! Houses that had run $260-270K are now going for $330-340K. We were planning to wait until this coming summer to look, but with such ridiculous rises, we decided not to wait.

In our case, we considered that we were blowing nearly the equivalent of a house payment every month on rent---money that was just lost. AND we were losing the interest deduction that comes with home ownership.

To us, blowing another $20k in rent for a year plus the $6-9K deduction......all on the HOPE that house prices would not only drop, but drop enough to offset that $26-30K out the window......just didn't seem prudent. So, we began looking in earnest after returning from the honeymoon, and we bought this past December.

Since then, another 5 months have gone by......with no drop in pricing. However, the interest rate has gone up considerably - I think about a half-point in these five months. I'm glad we didn't wait.


.......If you rent for another year or two, you can create a better cushion for yourself in the event of emergencies or a better down payment.

I have to say, waiting with the idea of amassing a larger downpayment just isn't worth it UNLESS you're on one of the "cusps" where a little more downpayment would bump the interest rate down a bit. We were initially going to put down 5%, but found that we could get a better interest rate if we put down 10%.

Beyond that, though, it wasn't worth it to come up with a bigger downpayment. For every $10K we could save, it would only knock about $100 off our mortgage payment. Looking at how long it would take us to save another $10-20K....and then realizing that in that time, we'd be losing the $20k in rent for a year......well, it wasn't worth it.

 

[Dancing Fire]

Date: 5/2/2005 3:13:59 PM
Author: lost on 5th


knowing what will need to be maintaned and fixed over the next 5 years (and also 10) will help you in your budgeting.

last yr i paid $24k for a new roof

this house was purchase new in 87.

 

[AChiOAlumna]

My house, also built in 1987, just went through $3k for a new partial roof and another $50K for new landscaping, needed new to poor grading when the house was first landscaped, causing flooding, cracked concrete, etc. (We bought the house in 1997).