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Author Topic: Housing: Buy or Rent?  (Read 1451 times)
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rittchard
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« on: April 06, 2009, 11:11:06 PM »

(cross-posted from Wanderers site)

I know there's a lot of different opinions on this, and that everyones' situations are unique, but I thought it would be interesting to hear what people are recommending now in the midst of this current economy.

Within the past couple of months, I've had quite a few friends either purchase or looking to purchase their first home. It seems like the tide is changing, with prices lower/correcting and interest rates low, not to mention the tax credit for first time buyers. Conventional wisdom seems to say buying real estate is always a good investment in the longterm, but clearly some people have also been burned of late. And it still seems rather risky to pick up a huge debt/mortgage. What if you lose your job?

My present situation is, of course, unique and complicated in its own way. The numbers are there but to move to some of the places I like would essentially double my monthly housing payment, which was substantial to begin with.  Now I've been assured that after tax benefits this would be very different, but the fact remains at the outset I (and my partner) would have to come up with, effectively, double the rent, on top of the downpayment and fees and all that business. It's daunting. The area we want to live in has not really dropped in prices, which I guess is good value-wise but bad in terms of trying to get our foot in the door. Of course we could choose a cheaper area or a lesser/smaller place, but at this point in my life, neither of us wants to move down just for the sake of owning something.

Pros to buying a house

- Can finally "own" a place (kind of) and "make it our own"
- Tax benefits(?)
- Longterm investment, build equity for retirement

Cons

- Double the monthly at least, ouch!  No more frivolous electronic purchases!
- Lots of fees and expenses, first year could be verrrry tough
- Stuck in a location, could be bad if someone loses their job

So I'm kind of back and forth. I was pretty gung ho on buying a week ago. Then today I was thinking if we stayed renting and put away even $1000 a month instead, in 20 years we'd have close to $300k (assuming 2% interest). That should theoretically be enough to buy a decent retirement home (assuming that's one of the concerns), and in those 20 years we could spend pretty freely, and wouldn't be tied down to a mortgage.
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Scuzz
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« Reply #1 on: April 06, 2009, 11:47:33 PM »

if you can't pay for it then the tax breaks aren't going to help you...

i would say if you think you could afford the double "rent" then every month for awhile put that much money aside and if you can get buy then use the money for a downpayment (or other expenses)

part of owning a home is that you have lots of "little" things you may need to pay for that goes with it.
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Ironrod
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« Reply #2 on: April 07, 2009, 01:07:28 AM »

When we first bought our house the mortgage payments were staggering -- fully double what we'd paid in rent, plus we had to pay PMI and escrow our insurance and property taxes. 20+ years and two refinances later our mortgage is less than half of what we'd have to pay in rent. Rents are inevitably going to keep rising. Your mortgage should not.
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Shinjin
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« Reply #3 on: April 07, 2009, 01:27:49 AM »

Quote from: Ironrod on April 07, 2009, 01:07:28 AM

Rents are inevitably going to keep rising. Your mortgage should not.

Though if you don't handle your own escrow (for homeowner's insurance and property taxes), your payment will go up since your taxes and and insurance inevitably rise.  At least that's been my experience over the past few years.  I've never seen a mortgage payment go down.  Of course, I think you can count on your mortgage payment increasing less quickly than your rent payment. 

Are you currently renting a home?  If you like where you live, you are potentially screwed if the entity to which you pay rent ever decides to sell it.  The new owner may be someone who actually wants to live there.
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crumsteel
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« Reply #4 on: April 07, 2009, 01:32:27 AM »

Buy. It hurts at first but years down the road your payment stays the same or gets lower and does not go up like the price of rent. Plus you can do what you want with the yard and the inside of the house. Just hopefully you get good neighbors, because you cannot move like a renter.
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Shinjin
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« Reply #5 on: April 07, 2009, 02:05:11 AM »

Though you might want to find an area that you can afford rather than the neighborhood you've chosen.  You mention that housing values seem unaffected.  I'd fear that just means that the housing value correction hasn't hit that area yet.  And if the two of you can barely afford the mortgage right now, then that pretty much means you can't afford to live there.  As Scuzz points out, there will be many other costs that sneak up in addition to the mortgage.
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pr0ner
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« Reply #6 on: April 07, 2009, 02:29:02 PM »

Your mortgage payments would be double what you're paying in rent?!  Where do you live?
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Blackadar
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« Reply #7 on: April 07, 2009, 02:46:45 PM »

Quote from: rittchard on April 06, 2009, 11:11:06 PM


- Lots of fees and expenses, first year could be verrrry tough

Of everything you said, this concerns me the most.  This kind of financial gamble is one of the contributing reasons for the financial mess we're in right now.  Buying your first house should be a bit scary, but not excessively difficult.

My rants against the whole real estate/mortgage industry are well known and have been posted before.  Here are some tips for you:

1.  Don't trust your agent at all.  They work for the seller, not you.  Assume everything they tell you is a half-truth at best.  Verify everything.  If they steer you to a mortgage broker, find 2-3 more quotes.  If they steer you to a real estate attorney, find your own.  NO ONE is your friend.  I hate to be that way, but it's the truth when it comes to buying a home. 

2.  Assume your real estate agent is going to push you to see more expensive homes and simply don't.  Pick a price that makes your payment comfortable and don't stray from that range.  Don't listen to what they say you're prequalified for - know what you want to spend in your budget and stick to it.

3.  Get it inspected, even on a new home.  Accompany the inspector to make sure he does a thorough job. 

4.  Buy what you NEED, not what you WANT.  Make a list and seperate the two.  If there's two of you, then a smaller two bedroom is plenty.  If there's 3 of you, then a small 3 bedroom is plenty.  A 2,600 square foot home on a lake may be beautiful, but if you don't use it, you're paying a lot of money for empty space and a decent view.  That 1,450 square foot house in a middle-class neighborhood is a far better investment when you use the whole thing and your mortgage is 1/2 as much.  Having that bonus room for the exercise equipment may sound great, but it'd cost you less to go to a gym.  Having that spare bedroom for visitors may be attractive, but they can stay in a hotel room or on a pull-out couch.  That whirlpool tub may look neat, but how often do you take a bath versus a shower?  That might be a great place for your dining set, but if you use a formal dining room 3 times a year it'd cost you a lot less to eat out.

My last house (with 3 people in it) cost almost $2k a month.  My current one (with a 4th on the way) costs less than $1k a month, not to mention lower heating/electric/tax bills.  Guess which one I'm damn glad to have in an economy where the unemployment rate is 15.6%? 

5.  If you're planning on living in the home for a while (and if not you should continue to rent), then the "resale" factor should be a smaller considerations.  Neighborhoods change over time, so buying one in a trendy place right now may seem prudent in terms of resale value, but 10 years from now it may not be the trendy place to be.  It sounds like you need to broaden your horizons from those hand-picked neighborhoods you have pre-selected.

6.  Before buying, meet your neighbors.  Knock on their door and introduce yourself.  Look at how they maintain their properties, both inside and out.  The greatest location in the world can be spoiled by a lousy neighbor.
« Last Edit: April 07, 2009, 02:51:36 PM by Blackadar » Logged

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Chaz
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« Reply #8 on: April 07, 2009, 02:56:57 PM »

Black, I'm assuming the items about the real estate broker only apply if you don't have a buyer's agent? We've been doing some research into buying, and it sounded to us like having a buyer's agent eliminates the risk of points 1 and 2.
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Blackadar
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« Reply #9 on: April 07, 2009, 03:18:51 PM »

Quote from: Chaz on April 07, 2009, 02:56:57 PM

Black, I'm assuming the items about the real estate broker only apply if you don't have a buyer's agent? We've been doing some research into buying, and it sounded to us like having a buyer's agent eliminates the risk of points 1 and 2.

No

Hell no.  Fuck no.  A thousand times, no.

Simply put, ask yourself (or them) how they are compensated.  Most take 3% of the sale price of the home.  Well, isn't in THEIR best interest to then steer you to the higher priced homes and not negotiate the price down as far as it could go?  After all, the more you spend, the more money they make.  As such, most are really seller's agents saying they're buyer's agents, even when they sign buyer's agent agreements.

Simply put, do you trust them to honor their fiduciary responsibility with you over their own profit motive?  Would you trust a car salesman to negotiate the best deal you can get on a car if he received a percentage of the sales price on the car, even if he signed a piece of paper saying he really represented you?  And the industry is far too cozy with hidden side deals, kickbacks and "incentives" for you to think your agent is acting 100% in your best interest.

Now if you're hiring a buyer's agent on an up-front flat or hourly fee basis, you may have some expectation of them honoring their duty to you.  Even then, I'd be wary as hell.  But if their compensation is a percentage of the sale, then you shouldn't expect them to do shit for you because their own interests (profit motive) is in direct conflict with your interests (best value on a home).
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« Reply #10 on: April 07, 2009, 04:37:24 PM »

We're in a similar boat.

We've sort of outgrown our house and have our eye on what would consitute our dream home.  The mortgage would be about 500.00 more per month which is about 50% more than what we pay now.

However, it's a foreclosure home and the purchase price is well below what it's 'actually' worth assuming the economy recovers.

It will require some belt tightening for a while and I'm kind of nervous about getting it, but we made the mistake once of buying a cheaper home instead of one just outside our budget and while we made good money when we sold it, we could have had a much nicer house, requiring almost no work, and sold it for more money.

That said, rritchard, double the cost of your rent is a possible red herring.  True, the costs will be more, but you're basically throwing money out the window right now. When the economy recovers, the house you buy should be a solid investment- and homes for the most part have been up until the last year or so- so the short term pain may be worth the long term gains of home ownership, appreciating values and the ability to say 'hey, that's my home.'  That last part is intangible, but it's neat.

Also, we're near pretty much the bottom of the market- many different people disagree whether we are were or will be but we're in the ballpark...so that's something to consider. The place you buy now that's 2x your rent may be 3 or 4x in 12 to 18 months.

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ATB
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« Reply #11 on: April 07, 2009, 04:40:17 PM »

Quote from: Blackadar on April 07, 2009, 03:18:51 PM

Simply put, ask yourself (or them) how they are compensated.  Most take 3% of the sale price of the home.  Well, isn't in THEIR best interest to then steer you to the higher priced homes and not negotiate the price down as far as it could go?  After all, the more you spend, the more money they make.  As such, most are really seller's agents saying they're buyer's agents, even when they sign buyer's agent agreements.

Simply put, do you trust them to honor their fiduciary responsibility with you over their own profit motive?  Would you trust a car salesman to negotiate the best deal you can get on a car if he received a percentage of the sales price on the car, even if he signed a piece of paper saying he really represented you?  And the industry is far too cozy with hidden side deals, kickbacks and "incentives" for you to think your agent is acting 100% in your best interest.

Now if you're hiring a buyer's agent on an up-front flat or hourly fee basis, you may have some expectation of them honoring their duty to you.  Even then, I'd be wary as hell.  But if their compensation is a percentage of the sale, then you shouldn't expect them to do shit for you because their own interests (profit motive) is in direct conflict with your interests (best value on a home).


There's a lot of truth to this. We are using the same realtor who we used 3 years ago. She's competent on the details and has very good judgement and an eye for things on a house being awry.  She also has great contacts in the business (inspectors, financial folks, etc) and she point blank told us pretty much what Adar said though more gently. House that are full commission (which is rare in the current climate) are more attractive to her.

We knew this as we're not strangers to how the game works, but it was actually pretty refreshing to her it come out of her mouth in such an upfront and honest way.
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ATB
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« Reply #12 on: April 07, 2009, 04:43:05 PM »

One more point: Don't go crazy. Statistically speaking, chances are you'll only be in a house for +/- 5 years.

We never thought such would be the case for us, but circumstances change, needs change, jobs move, etc.

Our first house that we planned on retiring in we lived in for almost 6 years.

This one, if we move (it's not decided yet) would be 3 1/2 years when all is said in done.
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« Reply #13 on: April 07, 2009, 05:18:12 PM »

Quote from: SensuousLettuce on April 07, 2009, 04:43:05 PM

One more point: Don't go crazy. Statistically speaking, chances are you'll only be in a house for +/- 5 years.

Truth.

We bought our current home ~5 years ago.  2 years ago we replaced one room (it was in piss-poor condition).  Figuring that we'd be in this house for a very long time, we spent quite a bit on the work.  Now here we sit with our house on the market, preparing to move out of state.  Even if we get what we are asking for it, we'll still be taking a loss (considering original purchase price + renovations + realtor fees on the sale).
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Ridah
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« Reply #14 on: April 07, 2009, 06:12:18 PM »

Also don't forget about paying property taxes every year once you own a home. Not to mention homeowner's insurance.
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rittchard
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« Reply #15 on: April 07, 2009, 06:22:05 PM »

Thanks for all the feedback, definitely appreciate all of the different points of view.  I'll throw in some more info just to address some of the comments here and from the Wanderers thread.

Ridah - the numbers I'm throwing out all include worst case scenarios with PMI and property taxes, HOAs and whatnot, all pre-tax benefit.  My broker guy tried to do some post-tax benefit types of calculations for us but they were kind of confusing.  Once those factored in, the "double the rent" number I threw out there was much closer to what we are presently paying in rent.  I don't really trust those post-tax benefit numbers so I have to learn how to figure that out as well.

The places we're looking at right now are somewhere in between starter and "dream" home but maybe closer to the dream side. We're both in our 40s now, and one thing we agreed on is we did not want to move to a place we liked less or was significantly smaller, etc. In terms of the area, we are extremely lucky right now in that both of us commute around 5 miles, which is pretty much unheard of in Southern Cal so shifting to another area is low on the list of compromises. So it's obviously an issue because you could say our standards are higher than our savings.  While we are OK/happy where we are renting now, there are quite a few things that could be better/nicer, but since we don't own the place, obviously we can't change anything.  This is not horrible, but it always leaves me with a "temporary" feeling, like I just can't fully settle down.  At age 40, I'm finally starting to feel like it might be time.

My partner asked me a question while we were looking at a pretty nice house, which made me feel kind of sad (I guess is the word), something to the effect like "do we even deserve to own a house this nice?" and I was like "ummm do you mean are we bad people so we don't deserve to live in a nice place, or something more financially?" While he said he worded it poorly, I could tell on some level he did mean the former. Anyway, it just made me feel like why the hell don't we deserve it, we've both worked hard all our lives, school for over 20 years for both of us, we rarely take vacations, we try to be nice to people, what the heck!

The area itself is the "South Bay" of Southern Calif, which is kind of its own little unique part of LA.  There's a big mix of different types of houses and housing communities.  You have to be careful because too far south or west (to the beach) it becomes insanely expensive.  Just a little too far east and you can enter some more dangerous neighborhoods.  The majority of the housing that we liked and could have afforded, because it's so crowded, are these 2 unit style condo/townhomes.  They look and are sized liked regular houses but they share a wall.  The problem with this is that they don't qualify for an FHA loan, which means you need to have a much higher downpayment - which as I mentioned we just don't have at the moment.  Sadly we are nowhere even near it, from my best guesstimate it would probably take 3 years to get a 20% downpayment together, maybe 2. The concern is by then we'd missed out on the (relatively) lower pricing and/or lower interest rates. We have a relatively unique situation where our present salaries are good but because of long years in grad school and poor spending habits, neither of us have saved much. So we are only now starting to have some extra earnings to invest.

I know most people would probably recommend we just start saving more aggressively, and that's certainly an option we've been talking about.  The question is how long do you wait, and might we "miss the boat" on interest rates, etc while waiting.  And would we even be able to save enough to make that much of a difference.  I've run a lot of number crunching scenarios, and it surprised me how little (relatively) the effects were of a higher downpayment until you got to 20% and could negate the PMI.

One factor I neglected to mention. My partner should qualify for the $8k new buyer tax credit this year, but he got a promotion recently so even if they still have it next year it will get scaled down significantly. So that's an $8k freebie incentive to do it this year!

Anyway, thanks for all the comments, it's helping me process info to just write some thoughts down and read others' experiences.
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ATB
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« Reply #16 on: April 07, 2009, 06:42:40 PM »

Quote from: rittchard on April 07, 2009, 06:22:05 PM

My partner asked me a question while we were looking at a pretty nice house, which made me feel kind of sad (I guess is the word), something to the effect like "do we even deserve to own a house this nice?" and I was like "ummm do you mean are we bad people so we don't deserve to live in a nice place, or something more financially?" While he said he worded it poorly, I could tell on some level he did mean the former. Anyway, it just made me feel like why the hell don't we deserve it, we've both worked hard all our lives, school for over 20 years for both of us, we rarely take vacations, we try to be nice to people, what the heck!

I don't understand the context or meaning of this question. I thought he was asking it from a position of philanthropy as in maybe we should give our money to people with even less than us...if not that, what did he mean? Why wouldn't you 'deserve' it?

Quote
They look and are sized liked regular houses but they share a wall.  The problem with this is that they don't qualify for an FHA loan, which means you need to have a much higher downpayment - which as I mentioned we just don't have at the moment.  Sadly we are nowhere even near it, from my best guesstimate it would probably take 3 years to get a 20% downpayment together, maybe 2. The concern is by then we'd missed out on the (relatively) lower pricing and/or lower interest rates. We have a relatively unique situation where our present salaries are good but because of long years in grad school and poor spending habits, neither of us have saved much. So we are only now starting to have some extra earnings to invest.

I don't think PMI should sway your decision one way or the other. There are several ways around it (or there used to be). For example: You can get two mortgages. So let's say your house is 200,000 and you have say 10k saved toward down payment.  That leaves 190k left over. You can do an 80/20 mortgage where you get one mortgage for 80% of the remainder and one for 20% of the remainder.  My wife and I did this in our first home.  When rates were better (not likely to happen as they're about at their lowest) we rolled the two together.  That way you're paying against two mortgages without the PMI...you actually save money. The drawback is that typically the second 'trust' will have a higher rate than the first. You'll have to do the math.

Second option would be some kind of equity line of credit. Not sure how that would work as you dont' have a home to put up as collateral or draw equity from, but again if you can get a low interest rate loan for your downpayment, that would also be away around PMI.

Talk to various mortgage companies for the best options. Lots has changed since I went through this 9 years ago. There apparently aren't even bridge loans anymore... Even if you have to pay PMI, usually in the long run appreciation of the property is worth it in the short term as long as you can get out of it before too long.

As for saving vs buying now. I'd lean toward the latter. If you're disciplined enough you might save 20% over time, but that's also time that your home could be appreciating.  I guess there are pros and cons each way...you just have to crunch the numbers...

Or you could move to Raleigh where you get lots for your money! slywink

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« Reply #17 on: April 07, 2009, 07:09:01 PM »

Another note about PMI - you won't be stuck paying for the life of the loan.  Once you get the debt to value ratio down to 80% you should be able to get PMI removed.  That's where those extra principal payments can come in handy.  But I suspect there's a minimum amount of time they'd want you to continue paying it before allowing it to be removed.
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« Reply #18 on: April 07, 2009, 08:28:50 PM »

Quote from: Ridah on April 07, 2009, 06:12:18 PM

Also don't forget about paying property taxes every year once you own a home. Not to mention homeowner's insurance.

Homeowner's insurance won't cost much more than renter's insurance. You are buying renter's insurance, aren't  you?
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rittchard
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« Reply #19 on: April 07, 2009, 09:47:41 PM »

Quote from: SensuousLettuce on April 07, 2009, 06:42:40 PM

Quote from: rittchard on April 07, 2009, 06:22:05 PM

My partner asked me a question while we were looking at a pretty nice house, which made me feel kind of sad (I guess is the word), something to the effect like "do we even deserve to own a house this nice?" and I was like "ummm do you mean are we bad people so we don't deserve to live in a nice place, or something more financially?" While he said he worded it poorly, I could tell on some level he did mean the former. Anyway, it just made me feel like why the hell don't we deserve it, we've both worked hard all our lives, school for over 20 years for both of us, we rarely take vacations, we try to be nice to people, what the heck!

I don't understand the context or meaning of this question. I thought he was asking it from a position of philanthropy as in maybe we should give our money to people with even less than us...if not that, what did he mean? Why wouldn't you 'deserve' it?

- -

Or you could move to Raleigh where you get lots for your money! slywink

Funny you mention Raleigh, about 6 years ago the company I was at decided to up and move from CA to the bay area and tried to bring some of the engineers (myself included) with them.  They tried to entice us with the gigantic mansions we could supposedly buy and part of the deal was they would pay selling/buying costs.  I didn't have a place (obviously) so the deal didn't mean as much to me.  Luckily I didn't go, as I heard the company ended up falling apart a few years later lol.

Regarding the first question, I believe his question came from a low-self-esteem point of view, something we've both struggled with in the past.  We both came out of the closet late in life and at a time when things weren't nearly as "gay friendly" which I believe contributed to a lot of depression and anxiety.  I think I've moved past my issues for the most part, but I get the sense there's a part of him deeply buried that never thinks anything he does is good enough, and/or that he simply does not deserve to be happy or have good things happen to him.  Sometimes it comes across as noble and self-sacrificing, other times as disturbing and like some sort of martyr-complex.  That's why the use of the word "deserves" was very telling to me, even though he later tried to pass it off as something else.

But enough psycho-analysis lol, this is a home buying thread!  Ironrod, we do have renter's insurance but I don't think it is anywhere near what the homeowner's insurance estimate is/was going to be.  I'll have to check on this.

Something I found out over lunch.  Apparently FHA loans (3.5% down minimum) can max at over $700k (I forgot the exact number) and still maintain today's 5%ish interest rates.  There may be some other fees associated that I need to learn about but that's kind of nice to know.
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« Reply #20 on: April 08, 2009, 01:04:55 AM »

Several years ago I would have said that buying was the best route, once you considered how fast homes were appreciating. Now I think it is a wash. If you buy: taxes always go up, when something breaks you are on the hook for it, PMI, possible association fees, etc. Also, when you go to sell invariably you need to remodel or fix several items depending upon the marketplace and how meticulous the buyer's inspector may be.

A possible piece of good advice my friend told me- when you buy a home add $100-$150 per month for upkeep costs. This can save your ass when that dryer, washer, heater, roof, etc decides to ruin your day.
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« Reply #21 on: April 08, 2009, 02:56:16 AM »

Well, we were outbid on our dream house. Oh well.  crybaby
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« Reply #22 on: May 02, 2009, 11:44:45 PM »

Quote from: SensuousLettuce on April 08, 2009, 02:56:16 AM

Well, we were outbid on our dream house. Oh well.  crybaby

Looks like we might be making an upward move. Another house has been identified and while it's not 100% of what we want, the potential for the future is enormous.  Only real issue is it's about 125.00 per month above what we want to pay...but in this current market it's easly 75,000 below value. What to do...?

And rritchard. Any updates?
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« Reply #23 on: May 03, 2009, 12:14:51 AM »

Don't forget about the upkeep costs of home ownership vs. renting as well.  I realize we're the exception rather than the rule here, but in the 5 years we've been in our house, we've had to unexpectedly replace:

-  Air Conditioner
-  Fridge
-  Washer & Dryer
-  Water Heater
-  Sprinkler system
-  Sections of vinyl fence
-  Garage door opener
-  2 ceiling fans
-  Dishwasher
-  Garbage disposer

That stuff really starts to add up over time.
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« Reply #24 on: May 03, 2009, 12:55:15 AM »

Quote from: SensuousLettuce on May 02, 2009, 11:44:45 PM

Quote from: SensuousLettuce on April 08, 2009, 02:56:16 AM

Well, we were outbid on our dream house. Oh well.  crybaby

Looks like we might be making an upward move. Another house has been identified and while it's not 100% of what we want, the potential for the future is enormous.  Only real issue is it's about 125.00 per month above what we want to pay...but in this current market it's easly 75,000 below value. What to do...?

And rritchard. Any updates?

How far have the property values dropped in yours and rittchards areas? I wouldn't pull the trigger on a home until at least July. If your market values have not fallen then you might be ok. Fact is that there's a lot of speculation that this thing we're in isn't going away in the next 3 years; we might be looking at a 5 year turnaround. Better to rent than to be tied to an investment that may currently drop.
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naednek
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« Reply #25 on: May 03, 2009, 02:01:16 AM »

We just bought a house Wednesday.  Brand new.  Took a look at it on Monday, thought it over on Tuesday, made the offer on Wednesday, found out we got that evening.  Monday we lock in our rate, house will be ready in July.
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Odin
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« Reply #26 on: May 03, 2009, 06:46:08 PM »

It's hard to imagine a better time to buy a home than right now. My brother lives in SF and didn't expect to ever be able to own a home. He and his wife just moved in last month. If a couple of teachers in CA can do it, seems like darn near anybody can.

The clincher about buying a home for me is the equity. Someday, in theory, you're only paying your property taxes, utilities, repairs, etc. The mortgage is paid off and you're the proud owner of your home. That will never happen when you're renting.
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« Reply #27 on: May 03, 2009, 08:02:55 PM »

I've been of the mind that owning a home is neither a bad nor a good investment.  The purpose of buying a home is to pick a place you've decided you want to stay in long term.  The financial advantages of owning a home are marginal (or possibly even negative) in the short term, so really buying a place should be a long term decision.  I also second the thought that you need to keep in mind there are additional costs to owning a home than just the mortgage + insurance.  You don't want to overextend yourself on the mortgage cause the other stuff can really bite you in the ass.

Personally, since I have an irrational need to live IN San Francisco, I don't want to buy a place until I can afford the place I want.  If that means waiting another 5+ years to save up the down payment, so be it.  I'm not willing to take the short term hit in the hopes that the market goes up and I get equity that way - I'd rather just invest the money.

gellar
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