Honest Opinion Required!

[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.

[creechrr]

If you haven’t done so already, go apply for a mortgage. During the process, you may run into something that you hadn’t considered. That something could be a game changer for you.

The process doesn’t take much time and it’ll help confirm what you thought you knew or help to further enlighten you.

My wife and I recently did this. During the process, we discovered that our lender of choice now requires a 15% downpayment on all condo/TH mortgages. We also discovered that PMI would be about half of what I had thought it would be.

Once we sat and ran the numbers based on what we learned, we decided it was not the time for us. After downpayment and closing, our reserves were well below comfort level.

I’d also like to echo what has been said above about children. I’m probably a few years older than you and having my son changed my perspective on a number of things, one of which are the neighborhoods that are acceptable to me.

One thing that has helped me wade through some of the BS, is having some well grounded mature friends (co-workers, friends of the family, family, etc.) to bounce ideas off of and ask questions. I don’t mean the flashy guy that’s constantly talking about all the “stuff” he has. That guy is probably actually broke. I’m talking about the quite sensible guy that has been plugging away for years. This guy can be a source for wealth of knowledge and experience. Take the opportunity to learn from his mistakes.

OT:
Always be mindful that your realtor has a vested interest in your purchase.

Good Luck!

[creechrr]

If you haven’t done so already, go apply for a mortgage. During the process, you may run into something that you hadn’t considered. That something could be a game changer for you.

The process doesn’t take much time and it’ll help confirm what you thought you knew or help to further enlighten you.

My wife and I recently did this. During the process, we discovered that our lender of choice now requires a 15% downpayment on all condo/TH mortgages. We also discovered that PMI would be about half of what I had thought it would be.

Once we sat and ran the numbers based on what we learned, we decided it was not the time for us. After downpayment and closing, our reserves were well below comfort level.

I’d also like to echo what has been said above about children. I’m probably a few years older than you and having my son changed my perspective on a number of things, one of which are the neighborhoods that are acceptable to me.

One thing that has helped me wade through some of the BS, is having some well grounded mature friends (co-workers, friends of the family, family, etc.) to bounce ideas off of and ask questions. I don’t mean the flashy guy that’s constantly talking about all the “stuff” he has. That guy is probably actually broke. I’m talking about the quite sensible guy that has been plugging away for years. This guy can be a source for wealth of knowledge and experience. Take the opportunity to learn from his mistakes.

OT:
Always be mindful that your realtor has a vested interest in your purchase.

Good Luck!

[creechrr]

If you haven’t done so already, go apply for a mortgage. During the process, you may run into something that you hadn’t considered. That something could be a game changer for you.

The process doesn’t take much time and it’ll help confirm what you thought you knew or help to further enlighten you.

My wife and I recently did this. During the process, we discovered that our lender of choice now requires a 15% downpayment on all condo/TH mortgages. We also discovered that PMI would be about half of what I had thought it would be.

Once we sat and ran the numbers based on what we learned, we decided it was not the time for us. After downpayment and closing, our reserves were well below comfort level.

I’d also like to echo what has been said above about children. I’m probably a few years older than you and having my son changed my perspective on a number of things, one of which are the neighborhoods that are acceptable to me.

One thing that has helped me wade through some of the BS, is having some well grounded mature friends (co-workers, friends of the family, family, etc.) to bounce ideas off of and ask questions. I don’t mean the flashy guy that’s constantly talking about all the “stuff” he has. That guy is probably actually broke. I’m talking about the quite sensible guy that has been plugging away for years. This guy can be a source for wealth of knowledge and experience. Take the opportunity to learn from his mistakes.

OT:
Always be mindful that your realtor has a vested interest in your purchase.

Good Luck!

[creechrr]

If you haven’t done so already, go apply for a mortgage. During the process, you may run into something that you hadn’t considered. That something could be a game changer for you.

The process doesn’t take much time and it’ll help confirm what you thought you knew or help to further enlighten you.

My wife and I recently did this. During the process, we discovered that our lender of choice now requires a 15% downpayment on all condo/TH mortgages. We also discovered that PMI would be about half of what I had thought it would be.

Once we sat and ran the numbers based on what we learned, we decided it was not the time for us. After downpayment and closing, our reserves were well below comfort level.

I’d also like to echo what has been said above about children. I’m probably a few years older than you and having my son changed my perspective on a number of things, one of which are the neighborhoods that are acceptable to me.

One thing that has helped me wade through some of the BS, is having some well grounded mature friends (co-workers, friends of the family, family, etc.) to bounce ideas off of and ask questions. I don’t mean the flashy guy that’s constantly talking about all the “stuff” he has. That guy is probably actually broke. I’m talking about the quite sensible guy that has been plugging away for years. This guy can be a source for wealth of knowledge and experience. Take the opportunity to learn from his mistakes.

OT:
Always be mindful that your realtor has a vested interest in your purchase.

Good Luck!

[creechrr]

If you haven’t done so already, go apply for a mortgage. During the process, you may run into something that you hadn’t considered. That something could be a game changer for you.

The process doesn’t take much time and it’ll help confirm what you thought you knew or help to further enlighten you.

My wife and I recently did this. During the process, we discovered that our lender of choice now requires a 15% downpayment on all condo/TH mortgages. We also discovered that PMI would be about half of what I had thought it would be.

Once we sat and ran the numbers based on what we learned, we decided it was not the time for us. After downpayment and closing, our reserves were well below comfort level.

I’d also like to echo what has been said above about children. I’m probably a few years older than you and having my son changed my perspective on a number of things, one of which are the neighborhoods that are acceptable to me.

One thing that has helped me wade through some of the BS, is having some well grounded mature friends (co-workers, friends of the family, family, etc.) to bounce ideas off of and ask questions. I don’t mean the flashy guy that’s constantly talking about all the “stuff” he has. That guy is probably actually broke. I’m talking about the quite sensible guy that has been plugging away for years. This guy can be a source for wealth of knowledge and experience. Take the opportunity to learn from his mistakes.

OT:
Always be mindful that your realtor has a vested interest in your purchase.

Good Luck!

[danielwis]

Regarding PMI: I had PMI on a condo I once owned in Hawaii back in the late 1990’s. I did the FHA 3% that you are considering. I bought when prices were low for the area. 18 months after the purchase, prices jumped 20 %. I called the bank and said simply “prices are up, my assessed value on my tax bill is up, drop my PMI”. The PMI was dropped with no questions asked, because I now had the equity I did not have at the time of purchase. PMI worked out fine for me under those circumstances.

Now, we are in a completely different atmosphere now. Many analyst are not expecting 20 % price gains anytime soon. That said, the PMI is good because it allows you to make the purchase if you decide the timing is right. Its really all about your comfort level and what you are willing to pay.

Question for you: How long would it take for you to save the 20 % down payment in the price range you are considering? If your answer is 3 or 4 years, perhaps waiting would work well for you. If your answer is 10 years, then you might well have to pay PMI, or secure a second mortgage for 17 % of the purchase price.

[danielwis]

Regarding PMI: I had PMI on a condo I once owned in Hawaii back in the late 1990’s. I did the FHA 3% that you are considering. I bought when prices were low for the area. 18 months after the purchase, prices jumped 20 %. I called the bank and said simply “prices are up, my assessed value on my tax bill is up, drop my PMI”. The PMI was dropped with no questions asked, because I now had the equity I did not have at the time of purchase. PMI worked out fine for me under those circumstances.

Now, we are in a completely different atmosphere now. Many analyst are not expecting 20 % price gains anytime soon. That said, the PMI is good because it allows you to make the purchase if you decide the timing is right. Its really all about your comfort level and what you are willing to pay.

Question for you: How long would it take for you to save the 20 % down payment in the price range you are considering? If your answer is 3 or 4 years, perhaps waiting would work well for you. If your answer is 10 years, then you might well have to pay PMI, or secure a second mortgage for 17 % of the purchase price.

[danielwis]

Regarding PMI: I had PMI on a condo I once owned in Hawaii back in the late 1990’s. I did the FHA 3% that you are considering. I bought when prices were low for the area. 18 months after the purchase, prices jumped 20 %. I called the bank and said simply “prices are up, my assessed value on my tax bill is up, drop my PMI”. The PMI was dropped with no questions asked, because I now had the equity I did not have at the time of purchase. PMI worked out fine for me under those circumstances.

Now, we are in a completely different atmosphere now. Many analyst are not expecting 20 % price gains anytime soon. That said, the PMI is good because it allows you to make the purchase if you decide the timing is right. Its really all about your comfort level and what you are willing to pay.

Question for you: How long would it take for you to save the 20 % down payment in the price range you are considering? If your answer is 3 or 4 years, perhaps waiting would work well for you. If your answer is 10 years, then you might well have to pay PMI, or secure a second mortgage for 17 % of the purchase price.

[danielwis]

Regarding PMI: I had PMI on a condo I once owned in Hawaii back in the late 1990’s. I did the FHA 3% that you are considering. I bought when prices were low for the area. 18 months after the purchase, prices jumped 20 %. I called the bank and said simply “prices are up, my assessed value on my tax bill is up, drop my PMI”. The PMI was dropped with no questions asked, because I now had the equity I did not have at the time of purchase. PMI worked out fine for me under those circumstances.

Now, we are in a completely different atmosphere now. Many analyst are not expecting 20 % price gains anytime soon. That said, the PMI is good because it allows you to make the purchase if you decide the timing is right. Its really all about your comfort level and what you are willing to pay.

Question for you: How long would it take for you to save the 20 % down payment in the price range you are considering? If your answer is 3 or 4 years, perhaps waiting would work well for you. If your answer is 10 years, then you might well have to pay PMI, or secure a second mortgage for 17 % of the purchase price.

[danielwis]

Regarding PMI: I had PMI on a condo I once owned in Hawaii back in the late 1990’s. I did the FHA 3% that you are considering. I bought when prices were low for the area. 18 months after the purchase, prices jumped 20 %. I called the bank and said simply “prices are up, my assessed value on my tax bill is up, drop my PMI”. The PMI was dropped with no questions asked, because I now had the equity I did not have at the time of purchase. PMI worked out fine for me under those circumstances.

Now, we are in a completely different atmosphere now. Many analyst are not expecting 20 % price gains anytime soon. That said, the PMI is good because it allows you to make the purchase if you decide the timing is right. Its really all about your comfort level and what you are willing to pay.

Question for you: How long would it take for you to save the 20 % down payment in the price range you are considering? If your answer is 3 or 4 years, perhaps waiting would work well for you. If your answer is 10 years, then you might well have to pay PMI, or secure a second mortgage for 17 % of the purchase price.

[danielwis]

[quote=creechrr]If you haven’t done so already, go apply for a mortgage. During the process, you may run into something that you hadn’t considered. That something could be a game changer for you.

The process doesn’t take much time and it’ll help confirm what you thought you knew or help to further enlighten you.

My wife and I recently did this. During the process, we discovered that our lender of choice now requires a 15% downpayment on all condo/TH mortgages. We also discovered that PMI would be about half of what I had thought it would be.

Once we sat and ran the numbers based on what we learned, we decided it was not the time for us. After downpayment and closing, our reserves were well below comfort level.

I’d also like to echo what has been said above about children. I’m probably a few years older than you and having my son changed my perspective on a number of things, one of which are the neighborhoods that are acceptable to me.

One thing that has helped me wade through some of the BS, is having some well grounded mature friends (co-workers, friends of the family, family, etc.) to bounce ideas off of and ask questions. I don’t mean the flashy guy that’s constantly talking about all the “stuff” he has. That guy is probably actually broke. I’m talking about the quite sensible guy that has been plugging away for years. This guy can be a source for wealth of knowledge and experience. Take the opportunity to learn from his mistakes.

OT:
Always be mindful that your realtor has a vested interest in your purchase.

Good Luck![/quote]

Agree completely with your OT statement. Realtors have an economic interest in you purchasing a home NOW. Your realtor might be a perfectly fine human being, as many if not most of them are, but you should NEVER rely on their advice. Again, read what Patrick has to say on patrick.net regarding “who will tell you that now is a good time to buy”. The number one person that will tell you its a good time to buy, is the realtor you hired to help you with the process.

[danielwis]

[quote=creechrr]If you haven’t done so already, go apply for a mortgage. During the process, you may run into something that you hadn’t considered. That something could be a game changer for you.

The process doesn’t take much time and it’ll help confirm what you thought you knew or help to further enlighten you.

My wife and I recently did this. During the process, we discovered that our lender of choice now requires a 15% downpayment on all condo/TH mortgages. We also discovered that PMI would be about half of what I had thought it would be.

Once we sat and ran the numbers based on what we learned, we decided it was not the time for us. After downpayment and closing, our reserves were well below comfort level.

I’d also like to echo what has been said above about children. I’m probably a few years older than you and having my son changed my perspective on a number of things, one of which are the neighborhoods that are acceptable to me.

One thing that has helped me wade through some of the BS, is having some well grounded mature friends (co-workers, friends of the family, family, etc.) to bounce ideas off of and ask questions. I don’t mean the flashy guy that’s constantly talking about all the “stuff” he has. That guy is probably actually broke. I’m talking about the quite sensible guy that has been plugging away for years. This guy can be a source for wealth of knowledge and experience. Take the opportunity to learn from his mistakes.

OT:
Always be mindful that your realtor has a vested interest in your purchase.

Good Luck![/quote]

Agree completely with your OT statement. Realtors have an economic interest in you purchasing a home NOW. Your realtor might be a perfectly fine human being, as many if not most of them are, but you should NEVER rely on their advice. Again, read what Patrick has to say on patrick.net regarding “who will tell you that now is a good time to buy”. The number one person that will tell you its a good time to buy, is the realtor you hired to help you with the process.

[danielwis]

[quote=creechrr]If you haven’t done so already, go apply for a mortgage. During the process, you may run into something that you hadn’t considered. That something could be a game changer for you.

The process doesn’t take much time and it’ll help confirm what you thought you knew or help to further enlighten you.

My wife and I recently did this. During the process, we discovered that our lender of choice now requires a 15% downpayment on all condo/TH mortgages. We also discovered that PMI would be about half of what I had thought it would be.

Once we sat and ran the numbers based on what we learned, we decided it was not the time for us. After downpayment and closing, our reserves were well below comfort level.

I’d also like to echo what has been said above about children. I’m probably a few years older than you and having my son changed my perspective on a number of things, one of which are the neighborhoods that are acceptable to me.

One thing that has helped me wade through some of the BS, is having some well grounded mature friends (co-workers, friends of the family, family, etc.) to bounce ideas off of and ask questions. I don’t mean the flashy guy that’s constantly talking about all the “stuff” he has. That guy is probably actually broke. I’m talking about the quite sensible guy that has been plugging away for years. This guy can be a source for wealth of knowledge and experience. Take the opportunity to learn from his mistakes.

OT:
Always be mindful that your realtor has a vested interest in your purchase.

Good Luck![/quote]

Agree completely with your OT statement. Realtors have an economic interest in you purchasing a home NOW. Your realtor might be a perfectly fine human being, as many if not most of them are, but you should NEVER rely on their advice. Again, read what Patrick has to say on patrick.net regarding “who will tell you that now is a good time to buy”. The number one person that will tell you its a good time to buy, is the realtor you hired to help you with the process.

[danielwis]

[quote=creechrr]If you haven’t done so already, go apply for a mortgage. During the process, you may run into something that you hadn’t considered. That something could be a game changer for you.

The process doesn’t take much time and it’ll help confirm what you thought you knew or help to further enlighten you.

My wife and I recently did this. During the process, we discovered that our lender of choice now requires a 15% downpayment on all condo/TH mortgages. We also discovered that PMI would be about half of what I had thought it would be.

Once we sat and ran the numbers based on what we learned, we decided it was not the time for us. After downpayment and closing, our reserves were well below comfort level.

I’d also like to echo what has been said above about children. I’m probably a few years older than you and having my son changed my perspective on a number of things, one of which are the neighborhoods that are acceptable to me.

One thing that has helped me wade through some of the BS, is having some well grounded mature friends (co-workers, friends of the family, family, etc.) to bounce ideas off of and ask questions. I don’t mean the flashy guy that’s constantly talking about all the “stuff” he has. That guy is probably actually broke. I’m talking about the quite sensible guy that has been plugging away for years. This guy can be a source for wealth of knowledge and experience. Take the opportunity to learn from his mistakes.

OT:
Always be mindful that your realtor has a vested interest in your purchase.

Good Luck![/quote]

Agree completely with your OT statement. Realtors have an economic interest in you purchasing a home NOW. Your realtor might be a perfectly fine human being, as many if not most of them are, but you should NEVER rely on their advice. Again, read what Patrick has to say on patrick.net regarding “who will tell you that now is a good time to buy”. The number one person that will tell you its a good time to buy, is the realtor you hired to help you with the process.

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