Honest Opinion Required!

[Ms Pington]

Thanks for the replies evolusd and danielwis. The idea of economic stress is what is making us rethink this. We don’t want to buy solely for the tax credit if it doesn’t make sense for us right now. And the upfront costs associated with an FHA loan (which is the only one we can get right now) are a put-off too. We have been working with an agent and her idea is that it is good to buy now because of the low interest rates and “relatively” low house prices. Should we hold off on buying until we can go for a conventional loan and avoid PMI? Do we risk higher interest rates and not so good prices later? Again give it to us straight, we can take it!

[cv2]

I agree with other posters except for the 3X ration. The 3X ratio was derived from 30 year mortgage rate of over 7%. Currently the mortgage rate is sub-5% and I think 4X is a better representation of how much you should mortgage your future.

[cv2]

I agree with other posters except for the 3X ration. The 3X ratio was derived from 30 year mortgage rate of over 7%. Currently the mortgage rate is sub-5% and I think 4X is a better representation of how much you should mortgage your future.

[cv2]

I agree with other posters except for the 3X ration. The 3X ratio was derived from 30 year mortgage rate of over 7%. Currently the mortgage rate is sub-5% and I think 4X is a better representation of how much you should mortgage your future.

[cv2]

I agree with other posters except for the 3X ration. The 3X ratio was derived from 30 year mortgage rate of over 7%. Currently the mortgage rate is sub-5% and I think 4X is a better representation of how much you should mortgage your future.

[cv2]

I agree with other posters except for the 3X ration. The 3X ratio was derived from 30 year mortgage rate of over 7%. Currently the mortgage rate is sub-5% and I think 4X is a better representation of how much you should mortgage your future.

[AK]

I’d say if you can afford something now that you can live with for the next 10 years or so, buy now.

I think the “3x gross income” rule is a little bit too conservative, but better safe than sorry. You have to think about kids, retirement savings, all that good stuff. But if your car payment is only $380/mo you’re probably not living a lifestyle of lavish, reckless consumption. Congrats! 🙂

[AK]

I’d say if you can afford something now that you can live with for the next 10 years or so, buy now.

I think the “3x gross income” rule is a little bit too conservative, but better safe than sorry. You have to think about kids, retirement savings, all that good stuff. But if your car payment is only $380/mo you’re probably not living a lifestyle of lavish, reckless consumption. Congrats! 🙂

[AK]

I’d say if you can afford something now that you can live with for the next 10 years or so, buy now.

I think the “3x gross income” rule is a little bit too conservative, but better safe than sorry. You have to think about kids, retirement savings, all that good stuff. But if your car payment is only $380/mo you’re probably not living a lifestyle of lavish, reckless consumption. Congrats! 🙂

[AK]

I’d say if you can afford something now that you can live with for the next 10 years or so, buy now.

I think the “3x gross income” rule is a little bit too conservative, but better safe than sorry. You have to think about kids, retirement savings, all that good stuff. But if your car payment is only $380/mo you’re probably not living a lifestyle of lavish, reckless consumption. Congrats! 🙂

[AK]

I’d say if you can afford something now that you can live with for the next 10 years or so, buy now.

I think the “3x gross income” rule is a little bit too conservative, but better safe than sorry. You have to think about kids, retirement savings, all that good stuff. But if your car payment is only $380/mo you’re probably not living a lifestyle of lavish, reckless consumption. Congrats! 🙂

[danielwis]

[quote=Ms Pington]Thanks for the replies evolusd and danielwis. The idea of economic stress is what is making us rethink this. We don’t want to buy solely for the tax credit if it doesn’t make sense for us right now. And the upfront costs associated with an FHA loan (which is the only one we can get right now) are a put-off too. We have been working with an agent and her idea is that it is good to buy now because of the low interest rates and “relatively” low house prices. Should we hold off on buying until we can go for a conventional loan and avoid PMI? Do we risk higher interest rates and not so good prices later? Again give it to us straight, we can take it![/quote]

Based on your age, I think you will be OK no matter you decide to jump in now, or wait a few years, with a few caveats. Make a list of pro’s and con’s for each. IMO two huge factors you need to consider, are job security in general, and how long you plan to stay in the house that you purchase. IF your time frame for leaving your local is less than 5 years, it would make sense to rent. If your time frame is a decade or more, you’ll probably be fine jumping in at this time. The bottom line: no one has a crystal ball.

Some have suggested that if we experience inflation, and interest rates go up, that therefore house prices will also “inflate”. But real-estate usually goes counter to the general inflationary trend. If rates go up, there is a good chance that housing will drop further, as fewer people can afford the monthly payment at a given price level. This model was evident through the 1970’s and would likely hold today.

With that understanding, many also suggest that you are better off with a cheaper house at a higher interest rate, than a more expensive house at a lower interest rate. The cheaper house is easier to sell should the need arise. Remember that as interest rates drop, real estate prices usually rise. For a much better explanation of this than I have provided, go to patrick.net and read his editorial. He is still a bear, so factor that in, but he does have a lot of knowledge.

As for the amount of debt you are willing to take on, that is up to you, but again, I am always most happy and secure when I err conservatively. Under no circumstances would I feel comfortable having a home at 4 times my yearly annual income, but that’s just me. I would perhaps consider 4 times one persons income, but not four times both your incomes.

[danielwis]

[quote=Ms Pington]Thanks for the replies evolusd and danielwis. The idea of economic stress is what is making us rethink this. We don’t want to buy solely for the tax credit if it doesn’t make sense for us right now. And the upfront costs associated with an FHA loan (which is the only one we can get right now) are a put-off too. We have been working with an agent and her idea is that it is good to buy now because of the low interest rates and “relatively” low house prices. Should we hold off on buying until we can go for a conventional loan and avoid PMI? Do we risk higher interest rates and not so good prices later? Again give it to us straight, we can take it![/quote]

Based on your age, I think you will be OK no matter you decide to jump in now, or wait a few years, with a few caveats. Make a list of pro’s and con’s for each. IMO two huge factors you need to consider, are job security in general, and how long you plan to stay in the house that you purchase. IF your time frame for leaving your local is less than 5 years, it would make sense to rent. If your time frame is a decade or more, you’ll probably be fine jumping in at this time. The bottom line: no one has a crystal ball.

Some have suggested that if we experience inflation, and interest rates go up, that therefore house prices will also “inflate”. But real-estate usually goes counter to the general inflationary trend. If rates go up, there is a good chance that housing will drop further, as fewer people can afford the monthly payment at a given price level. This model was evident through the 1970’s and would likely hold today.

With that understanding, many also suggest that you are better off with a cheaper house at a higher interest rate, than a more expensive house at a lower interest rate. The cheaper house is easier to sell should the need arise. Remember that as interest rates drop, real estate prices usually rise. For a much better explanation of this than I have provided, go to patrick.net and read his editorial. He is still a bear, so factor that in, but he does have a lot of knowledge.

As for the amount of debt you are willing to take on, that is up to you, but again, I am always most happy and secure when I err conservatively. Under no circumstances would I feel comfortable having a home at 4 times my yearly annual income, but that’s just me. I would perhaps consider 4 times one persons income, but not four times both your incomes.

[danielwis]

[quote=Ms Pington]Thanks for the replies evolusd and danielwis. The idea of economic stress is what is making us rethink this. We don’t want to buy solely for the tax credit if it doesn’t make sense for us right now. And the upfront costs associated with an FHA loan (which is the only one we can get right now) are a put-off too. We have been working with an agent and her idea is that it is good to buy now because of the low interest rates and “relatively” low house prices. Should we hold off on buying until we can go for a conventional loan and avoid PMI? Do we risk higher interest rates and not so good prices later? Again give it to us straight, we can take it![/quote]

Based on your age, I think you will be OK no matter you decide to jump in now, or wait a few years, with a few caveats. Make a list of pro’s and con’s for each. IMO two huge factors you need to consider, are job security in general, and how long you plan to stay in the house that you purchase. IF your time frame for leaving your local is less than 5 years, it would make sense to rent. If your time frame is a decade or more, you’ll probably be fine jumping in at this time. The bottom line: no one has a crystal ball.

Some have suggested that if we experience inflation, and interest rates go up, that therefore house prices will also “inflate”. But real-estate usually goes counter to the general inflationary trend. If rates go up, there is a good chance that housing will drop further, as fewer people can afford the monthly payment at a given price level. This model was evident through the 1970’s and would likely hold today.

With that understanding, many also suggest that you are better off with a cheaper house at a higher interest rate, than a more expensive house at a lower interest rate. The cheaper house is easier to sell should the need arise. Remember that as interest rates drop, real estate prices usually rise. For a much better explanation of this than I have provided, go to patrick.net and read his editorial. He is still a bear, so factor that in, but he does have a lot of knowledge.

As for the amount of debt you are willing to take on, that is up to you, but again, I am always most happy and secure when I err conservatively. Under no circumstances would I feel comfortable having a home at 4 times my yearly annual income, but that’s just me. I would perhaps consider 4 times one persons income, but not four times both your incomes.

[danielwis]

[quote=Ms Pington]Thanks for the replies evolusd and danielwis. The idea of economic stress is what is making us rethink this. We don’t want to buy solely for the tax credit if it doesn’t make sense for us right now. And the upfront costs associated with an FHA loan (which is the only one we can get right now) are a put-off too. We have been working with an agent and her idea is that it is good to buy now because of the low interest rates and “relatively” low house prices. Should we hold off on buying until we can go for a conventional loan and avoid PMI? Do we risk higher interest rates and not so good prices later? Again give it to us straight, we can take it![/quote]

Based on your age, I think you will be OK no matter you decide to jump in now, or wait a few years, with a few caveats. Make a list of pro’s and con’s for each. IMO two huge factors you need to consider, are job security in general, and how long you plan to stay in the house that you purchase. IF your time frame for leaving your local is less than 5 years, it would make sense to rent. If your time frame is a decade or more, you’ll probably be fine jumping in at this time. The bottom line: no one has a crystal ball.

Some have suggested that if we experience inflation, and interest rates go up, that therefore house prices will also “inflate”. But real-estate usually goes counter to the general inflationary trend. If rates go up, there is a good chance that housing will drop further, as fewer people can afford the monthly payment at a given price level. This model was evident through the 1970’s and would likely hold today.

With that understanding, many also suggest that you are better off with a cheaper house at a higher interest rate, than a more expensive house at a lower interest rate. The cheaper house is easier to sell should the need arise. Remember that as interest rates drop, real estate prices usually rise. For a much better explanation of this than I have provided, go to patrick.net and read his editorial. He is still a bear, so factor that in, but he does have a lot of knowledge.

As for the amount of debt you are willing to take on, that is up to you, but again, I am always most happy and secure when I err conservatively. Under no circumstances would I feel comfortable having a home at 4 times my yearly annual income, but that’s just me. I would perhaps consider 4 times one persons income, but not four times both your incomes.

[Author]

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