[TMNT]

Well I am currently 26 years old and 3 1/2 years out of college. Recently I've been thinking about selling my 04 330ci that I bought two years ago and buying a CPO'd 335i coupe for roughly around the same amount, but probably a little more.

However now I've been thinking that maybe I should just save the money over the next year and buy a place next spring. I always told myself that I don't want to be 30 years old living with roommates and paying someone elses mortgage.

But is now the right time to buy or is time on my side and wait it out and enjoy the finer toys in life?

Two things that work in my favor:
-Virginia has first homeowner buying programs that currently offer 5% interest rates and only require a 3% downpayment. I qualify. I really like the fact that I only need a 3% downpayment as I don't have 10-15% laying around.
-The housing market is down, and places are becoming more affordable again for someone like me.

Two things that aren't in my favor:
-You don't get much house for what you pay for in the DC area. 200k doesn't get you much. Maybe a 2bd 1 bath condo that isn't in the greatest of conditions or location.
-I'm young and would consider moving/relocating if my company ever offered me a higher paying job in a different location.

What do you guys think? What did you guys do? If I do decide to buy a place, how do I go about getting my finances in order to buy as much home as possible?
Do banks consider total debt? Or just my monthly debt responisbilities...or both when deciding how much to lend me? My credit card debt is pretty low. I just basically have school and a car loan.

What should I be doing now to prepare myself for buying a home in 1 year?

Your thoughts are appreciated!

[yomama69]

Originally Posted by TMNT

Well I am currently 26 years old and 3 1/2 years out of college. Recently I've been thinking about selling my 04 330ci that I bought two years ago and buying a CPO'd 335i coupe for roughly around the same amount, but probably a little more.

However now I've been thinking that maybe I should just save the money over the next year and buy a place next spring. I always told myself that I don't want to be 30 years old living with roommates and paying someone elses mortgage.

But is now the right time to buy or is time on my side and wait it out and enjoy the finer toys in life?

Two things that work in my favor:
-Virginia has first homeowner buying programs that currently offer 5% interest rates and only require a 3% downpayment. I qualify. I really like the fact that I only need a 3% downpayment as I don't have 10-15% laying around.
-The housing market is down, and places are becoming more affordable again for someone like me.

Two things that aren't in my favor:
-You don't get much house for what you pay for in the DC area. 200k doesn't get you much. Maybe a 2bd 1 bath condo that isn't in the greatest of conditions or location.
-I'm young and would consider moving/relocating if my company ever offered me a higher paying job in a different location.

What do you guys think? What did you guys do? If I do decide to buy a place, how do I go about getting my finances in order to buy as much home as possible?
Do banks consider total debt? Or just my monthly debt responisbilities...or both when deciding how much to lend me? My credit card debt is pretty low. I just basically have school and a car loan.

What should I be doing now to prepare myself for buying a home in 1 year?

Your thoughts are appreciated!

Buy now. There has been no better since the day of your birth. You'll get an 8K tax credit. Don't worry about "ballin out" so to speak. Buy what you can afford. No matter what it is, it will appreciate.

Banks consider you under a debt/income ratio.

[MCS]

My 2 cents:

Buy if you think you have a good probability of staying for at least 5 years.

You're a young person, so a move for personal or work reasons is not far fetched...

Financially, if you qualify - kudos to you. The hardest part about buying the first home is coming up with the 20% down payment. I may of not read closely, but if you got the scratch - good for your discipline.

I do agre with the previous poster about their's never been a better time, but warning/disclaimer - Some economists/financial guys still predict a 10-22% drop in housing prices... Therefore, be sure you have the time horizon in mind to stick around until your purchase appreciates (hence the 5 year window)

[JeepJeep]

If you're worried about being relocated, ask the higher-ups if this is even a possibility. If you have a place in mind that you want to go (like Texas or something) then get the ball moving.

Otherwise yomama is exactly right. If you can, buy money, buy houses, buy cars, buy whatever. Everything is going to appreciate.

[yomama69]

Originally Posted by MCS

My 2 cents:

Buy if you think you have a good probability of staying for at least 5 years.

You're a young person, so a move for personal or work reasons is not far fetched...

Financially, if you qualify - kudos to you. The hardest part about buying the first home is coming up with the 20% down payment. I may of not read closely, but if you got the scratch - good for your discipline.

I do agre with the previous poster about their's never been a better time, but warning/disclaimer - Some economists/financial guys still predict a 10-22% drop in housing prices... Therefore, be sure you have the time horizon in mind to stick around until your purchase appreciates (hence the 5 year window)

That depends on your market. For instance, my market didn't drop all that much over the last couple years and has been increasing steadily over the last 2 months. We barely have any foreclosures on the market now. And, if the OP can get a great deal on an REO property, that would be even better.

[808six]

get locked into a fixed rate..they are so low right now...plus shop around for a house, you should be able to find good deals esp now even it means taking advantage of a foreclosed house...someone mentioned a 8K tax credit which is basically 8 g's in you rpocket next tax season..which probably will never happen again so with those things in mind and the other things you mention in your first post it would be a great time to seriously look into a purchase for yourself at this present time . hopefully your job is stable and you dont have too much other debt..maybe you can put all your debt into this 1st mortgage. r u married? or is this strictly for you to live in alone

[UncleWede]

You need some cash in savings, about three months of mortgage payments. And those payments are NOt just the 200K/30 years. Property taxes should be included in your calculations, as well as about $110/month for mortgage insurance (with 3%, you WILL be required to have it)
Check out what local jurisdictions are offering in terms of 2st time buyers assistance. Some of them will give you cash if you go thru their savings program. They might give you 3-5% as down payment, as long as you sign agreement to stay in the house. If you leave early, they ask for portions of the money back.
When you consider the tax releif, you will get all the points and loan fees taken off your gross next year, in addition to any interest you pay. With a good calculator, you can make it so you withhold less each pay period and come out even at the end of the tax year.

[blue-coupe]

In my opinion, home ownership is highly over rated. first of all, unless you buy a pretty expensive home, there really aren't any tax benefits. Second, the increase upkeep, in time & money, can be a serious drain.

If you have to move within the first 4-6 years, your best hope is to break even.

I suggest finding out how much house payment you can afford (lets say $2,000), and then rent a nice, modest place for $1,100. Put the $900 in savings/investments each month, and you will come out ahead of 95% of home owners.

Buy a house when you plan on living there for 20 years.

[solefald]

don't forget that its not only the price of the house. it is also twice a year (in CA) property tax, in a lot of cases $300-400 monthly HOA fee, insurance, utilities (most likely way more than you would pay in an apartment). So when you find a house in your price range, add another $1000 to your monthly payment (like splitting your property tax over 12 months instead of paying 2 large payments twice a year.)

i'd love to buy a house, but unfortunately due to a huge child support payments i do not have enough monthly cash flow to afford one. and i am not about to take on any roommates.

[yomama69]

Originally Posted by blue-coupe

In my opinion, home ownership is highly over rated. first of all, unless you buy a pretty expensive home, there really aren't any tax benefits. Second, the increase upkeep, in time & money, can be a serious drain.

If you have to move within the first 4-6 years, your best hope is to break even.

I suggest finding out how much house payment you can afford (lets say $2,000), and then rent a nice, modest place for $1,100. Put the $900 in savings/investments each month, and you will come out ahead of 95% of home owners.

Buy a house when you plan on living there for 20 years.

With a house, you'll be able to itemize and deduct mortgage interest and property taxes. The vast majority of people who rent and don't own a business can't itemize. You might be saving money by renting, but you've got nothing to appreciate. Renting is throwing money away, IMO.

[jaiman]

Originally Posted by blue-coupe

In my opinion, home ownership is highly over rated. first of all, unless you buy a pretty expensive home, there really aren't any tax benefits. Second, the increase upkeep, in time & money, can be a serious drain.

If you have to move within the first 4-6 years, your best hope is to break even.

I suggest finding out how much house payment you can afford (lets say $2,000), and then rent a nice, modest place for $1,100. Put the $900 in savings/investments each month, and you will come out ahead of 95% of home owners.

Buy a house when you plan on living there for 20 years.

I hate this argument against buying and it seems to be the first one people throw up. What is forgotten here is that the $2000/mo place should be larger/nicer/in a better area than the $1100/mo place. Its not a fair comparison. The fair comparison is look at the $2000/mo mortgage against a $2000/mo rental. Then assume you invest the property tax and maintenance you don't need to pay as a renter. Don't forget to include the fact that rent will rise pretty much yearly, and pretty close to the rate of inflation. And then see how far ahead you are.

Actually, I just ran some numbers, assuming a 370k mortgage, 5% for 30 years, property pirces and rent increasing 3% per year, property taxes of 1.25% and annual maintenance of $1800, you break even between renting and buying.

If homes appreciate closer to the historical 6% you end up ahead over 750k. And you own a place to live for the rest of your life.

And I didn't include investing the tax refund you could receive as an owner.

[wuufer001]

just by looking at the title, i will say yes in general.

just last week, i bought a new house which is still in the process of getting built.
but this week, these lots that are still for sale shot up $10,000.

this is my first house and i have to say i do not have any experience or knowledge in buying houses but thanks to friends and family. and plus the 8K really made me do it, although it can only cover up a year of my property tax, but $ is $ and its from uncle sam

have to take lots of consideration before buying something that big.

from different sources, i think houese are becoming more and more expensive. people actually took this economical situation for advantage and started buying houses.

i have been looking at "used" house everyweekend for the past 2 months and many of them i like are sold within days, so i can see that there are more people out there taking this situation as an advantage.

GL with your decision.

[wuufer001]

Originally Posted by yomama69

That depends on your market. For instance, my market didn't drop all that much over the last couple years and has been increasing steadily over the last 2 months. We barely have any foreclosures on the market now. And, if the OP can get a great deal on an REO property, that would be even better.

+1
don't know if true or not but i have heard quite a bunch of people and realtors say that houses in TX did not really get affected, maybe few did but not most. my house isn't built yet but already the house price is alredy increased at 3%

[fobunited]

I'm 25 and own a home outright and was thinking about purchasing a 2nd home for rental income. Considering your age, I could consider your living situation pretty uncertain. You could easily move due to girlfriend, family, job, etc. When looking at a home, make sure not only that you like it, but that it would be a great rental that you could easily generate a positive cash flow from if you decide to move.

The above posts are correct in stating that there is a seemingly once in a lifetime tax credit for first time home buyers. Obviously you should read the IRS release and if you have any CPA friends, check with them to see if you qualify.

There are great opportunities and rates available right now, such as 3% down, and I've seen some 30 year fixed rates as low as 4.25. Usually, to qualify for all these you need exceptional credit, I would say at least 720 and up. I would try to get the 20% down, however otherwise you will have to pay PMI.

Usually, 2 bedroom 1 baths aren't really marketable. I mean, if you were renting a 2 bedroom 1 bath out, most likely it's to a student or something right? You want a 3 bedroom 2 bath and try to get a young family. You'll know most neighbors are probably in a similar situation, aren't noisy, aren't going to have 5 of their friends' cars parked out from, and won't trash your place.

If you're looking at an investment property, speak to a tax advisor. If you don't live in it for a couple years, you will have to pay tax on the gains when you sell the home. Furthermore, as I mentioned, you will have to pay PMI. So look at home much money you will be making through rental income and the possible appreciation of the home, minus taxes on your profit when you sell, income tax on rental income, PMI, Mello Rouse, Insurance, Property Tax, etc. and see if you'll come out on top.

[number335]

If you are intending to purchase a home by next spring, you may as well do it this year to take advantage of the 8k tax refund as some suggested and the low interest rates. 200k doesn't get you much in southern cal either, but at least it's affordable again and your mortgage payments are going to be equivalent to what rent would be. If anything, think of the purchase as a long term investment. IMO, this is the best time to buy a property for a home or investment. I'm currently shopping for a 2 bedroom condo for my primary residence and once I do that, I plan on looking for investment properties to rent out.

[BMW2006]

Originally Posted by 808six

get locked into a fixed rate..they are so low right now...plus shop around for a house, you should be able to find good deals esp now even it means taking advantage of a foreclosed house...someone mentioned a 8K tax credit which is basically 8 g's in you rpocket next tax season..which probably will never happen again so with those things in mind and the other things you mention in your first post it would be a great time to seriously look into a purchase for yourself at this present time . hopefully your job is stable and you dont have too much other debt..maybe you can put all your debt into this 1st mortgage. r u married? or is this strictly for you to live in alone

I just purchased a place myself. It needs a lot of sweat equity (which isn't a bad thing if you enjoy the work) but I will make money off of the place even if I don't do a single thing to it. I just need to stay here for a few years.

As far as the tax credit goes, you can file an addendum to your taxes and get that $8,000 THIS YEAR. I don't think it turns around as quickly as an e-file but I should have the money within a month. It will help immensely as your start up costs, even if you estimate high, will be considerable (depending on your situation and what you already own, I can't go near a Home Depot without burning $350)

If you have the $$ there is no better time to buy. Yeah the market might go down some more, but everything you are buying you are purchasing at a discount. don't let the need for work on a place deter you if you know it's a good place. Contractors are starving for work almost everywhere you can get quality labor at a bargain price. Carpet? Appliances? flooring? everything is cheaper than it was 6 months ago.

There is a lot more scrutiny into your finances when you apply these days, which is a good thing. If you're ready for a home loan, the bank will approve you.

I only got an FHA loan which is the suck (one of my ratios was off 2 %), I view PMI as money down the drain and can't wait until I can re-finance that (&#& out of my payment a few years down the road.

You drive a nice car now, but most of the time, they are a massively depreciating asset. Trading one for another won't help you as much as sticking with what you have. Homes will begin to appreciate again, you just need to be patient. Put off the 335i and start spending money where it will work for you.


-BMW2006

[JB135i]

A bit of advice, speaking from someone who used to be a Realtor and have bought/sold several houses.

Make SURE you know the area you intend on buying in. And by that I mean take more than a couple trips in with your agent. Actually take a few walks in the area, at differing times of day and differing days of the week. Really get a feel for the neighborhood.

Is it noisy, are there trains, traffic issues, crime potential, where is the shopping, parking, parks, are the neighboring houses well maintained. Drive in from different directions too.

There is an area near where I live that literally has near-slums on one side and $500K plus houses on the other. If you never drove into this area from the west you would NEVER know you were up against!

I will echo some of the above too. Now is a good time to buy IF you can stay a few years, the botton SEEMS to be close, but it may not be here yet. If you guess wrong or have to move relatively soon, you could be in for a world of hurt still.

Oh and get a lawyer for the transaction. 9 times out of 10 you may not need one but the time you do he/she will save your bacon. And since this is your first real estate purchase consider the lawyer cost as an education for the rest of the deals you will hopefully make.

[TMNT]

Thanks for all of the info so far guys, this is really good stuff!

Virginia offers a 1 day class for new home buyers so I am going to attend that as well, but learning from peoples experiences like those on this board is something you can't get in a classroom, so thanks again everyone!

It looks like I have a lot of money to save in the next 12 months. I won't be able to purchase this year (apt lease that won't let us sub lease).

[Zephyr15]

Originally Posted by JB135i

A bit of advice, speaking from someone who used to be a Realtor and have bought/sold several houses.

Make SURE you know the area you intend on buying in. And by that I mean take more than a couple trips in with your agent. Actually take a few walks in the area, at differing times of day and differing days of the week. Really get a feel for the neighborhood.

Is it noisy, are there trains, traffic issues, crime potential, where is the shopping, parking, parks, are the neighboring houses well maintained. Drive in from different directions too.

There is an area near where I live that literally has near-slums on one side and $500K plus houses on the other. If you never drove into this area from the west you would NEVER know you were up against!

I will echo some of the above too. Now is a good time to buy IF you can stay a few years, the botton SEEMS to be close, but it may not be here yet. If you guess wrong or have to move relatively soon, you could be in for a world of hurt still.

Oh and get a lawyer for the transaction. 9 times out of 10 you may not need one but the time you do he/she will save your bacon. And since this is your first real estate purchase consider the lawyer cost as an education for the rest of the deals you will hopefully make.

Great advice. Research is the name of the game if you are at all interested in minimizing risk (which you should be). Talk to people who live in the area, call the police and ask about the neighborhood, if there is open land nearby call the zoning/planning office and find out what could go in those places in the future. Ask your seller about the neighbors if you can or grill some poor sap walking the dog. Even Google Earth is your friend these days (albeit not necessarily up to date).

I just had an offer accepted on a place that we really wanted, but weren't sure about originally because of a planned development nearby. Only by talking to a half-dozen township officials, driving/researching that developer's other properties and digging up records of public meetings did we feel comfortable moving forward.

I also agree that you should be cautious about buying right now if you think you may not stay for several years.

[Prissy]

yes buy it! good time to buy now as i am 28 and just bought a new home this month, now waiting for closing. If you decide to buy, do it now, u migh tnot ge tthe $8000 after december 2009

[wuufer001]

for the 8K, i think you have to close at end of November, but don't quote me on that.
i just hope my house will get finished and will able to close before deadline.
this weather here is just killing me. been nearly 2 weeks the builders didn't do crap.

[UncleWede]

Originally Posted by wuufer001

been nearly 2 weeks the builders didn't do crap.

And what does THAT have to do with the weather???