How shall we buy our first house?

[UCGal]

Hey – you stole my name. Just kidding.

So you’d be putting $55k down, and financing $495k if you stay at $550k house.

The $65k you have liquid will be eaten up entirely by the purchase if you put 10% down. $55k for the down, and $10k for various closing expenses and the inevitable trips to home depot once you purchase.

In an ideal world I’d try to figure out a way to stay with financing at $417k or less. I know that’s very hard to do in San Diego. Maybe impossible in your timeframe.

Your income is good… What is your job stability? Are you working in areas that are grant based – where funding could go away? (I’ve got friends who are both PhDs – and one or the other is always scrambling for the next gig when the grant runs out.)

Since you have good income, but less cash… I’d look at areas that are lower cost. I’d rule out most of north county coastal and Carmel Valley. I’d consider larger townhomes even though that may feel less than optimal… you can sometimes get more bang for your buck in attached homes vs detached. I’d look for good pockets in more blue collar areas… Showing my bias towards central San Diego here – I’d be looking in Clairemont, Tierrasanta, PQ, Allied Gardens/Del Cerro, and Poway. Schools are important – but parental involvement is MORE important in the outcome of a kids academic journey.

[UCguy]

Sorry UCGal, I did not have much imagination, did I? 🙂 So at least I imitated the username of a poster I like and agree with. 😉

Thanks for the input!

I work in biotech in North County and my wife in UCSD so commute wise we wouldn’t consider anything south of 56 (except PQ, Poway, Sabre Springs). Actually PQ, RB and Poway are the areas we are targeting. We need a larger home with minimum 4 bdr and 2000 sf since we will have in-laws living with us in a few years. So a townhome is out of question. Our job stability is ok given the current economy – though it does rely on grants/contracts – so far we fared well.

[UCguy]

Sorry UCGal, I did not have much imagination, did I? 🙂 So at least I imitated the username of a poster I like and agree with. 😉

Thanks for the input!

I work in biotech in North County and my wife in UCSD so commute wise we wouldn’t consider anything south of 56 (except PQ, Poway, Sabre Springs). Actually PQ, RB and Poway are the areas we are targeting. We need a larger home with minimum 4 bdr and 2000 sf since we will have in-laws living with us in a few years. So a townhome is out of question. Our job stability is ok given the current economy – though it does rely on grants/contracts – so far we fared well.

[UCguy]

Sorry UCGal, I did not have much imagination, did I? 🙂 So at least I imitated the username of a poster I like and agree with. 😉

Thanks for the input!

I work in biotech in North County and my wife in UCSD so commute wise we wouldn’t consider anything south of 56 (except PQ, Poway, Sabre Springs). Actually PQ, RB and Poway are the areas we are targeting. We need a larger home with minimum 4 bdr and 2000 sf since we will have in-laws living with us in a few years. So a townhome is out of question. Our job stability is ok given the current economy – though it does rely on grants/contracts – so far we fared well.

[UCguy]

Sorry UCGal, I did not have much imagination, did I? 🙂 So at least I imitated the username of a poster I like and agree with. 😉

Thanks for the input!

I work in biotech in North County and my wife in UCSD so commute wise we wouldn’t consider anything south of 56 (except PQ, Poway, Sabre Springs). Actually PQ, RB and Poway are the areas we are targeting. We need a larger home with minimum 4 bdr and 2000 sf since we will have in-laws living with us in a few years. So a townhome is out of question. Our job stability is ok given the current economy – though it does rely on grants/contracts – so far we fared well.

[UCguy]

Sorry UCGal, I did not have much imagination, did I? 🙂 So at least I imitated the username of a poster I like and agree with. 😉

Thanks for the input!

I work in biotech in North County and my wife in UCSD so commute wise we wouldn’t consider anything south of 56 (except PQ, Poway, Sabre Springs). Actually PQ, RB and Poway are the areas we are targeting. We need a larger home with minimum 4 bdr and 2000 sf since we will have in-laws living with us in a few years. So a townhome is out of question. Our job stability is ok given the current economy – though it does rely on grants/contracts – so far we fared well.

[UCguy]

Thanks sdr! I agree roughly with your calculations. There is also the PMI which for a 500K loan, with 10% down, is likely to be about $400/month. Property Taxes are likely to cancel out the mortgage interest tax deduction, or so I gathered – but it’s better to not count on that. Yes we are looking to have no or low MRs and definitely low HOAs – if any.

We were also leaning toward borrowing 5% from the 401K…and have some cash (roughly 6 months of P&I) on hand – assuming that the house will not need immediate remodelling. (We’ve seen some older houses in PQ and RB in very good shape for that price).

Still the amount we will pay for housing will be a bit staggering – more than $1500 than our current rent….Just wondering if it’s worth buying at all…

[UCguy]

Thanks sdr! I agree roughly with your calculations. There is also the PMI which for a 500K loan, with 10% down, is likely to be about $400/month. Property Taxes are likely to cancel out the mortgage interest tax deduction, or so I gathered – but it’s better to not count on that. Yes we are looking to have no or low MRs and definitely low HOAs – if any.

We were also leaning toward borrowing 5% from the 401K…and have some cash (roughly 6 months of P&I) on hand – assuming that the house will not need immediate remodelling. (We’ve seen some older houses in PQ and RB in very good shape for that price).

Still the amount we will pay for housing will be a bit staggering – more than $1500 than our current rent….Just wondering if it’s worth buying at all…

[UCguy]

Thanks sdr! I agree roughly with your calculations. There is also the PMI which for a 500K loan, with 10% down, is likely to be about $400/month. Property Taxes are likely to cancel out the mortgage interest tax deduction, or so I gathered – but it’s better to not count on that. Yes we are looking to have no or low MRs and definitely low HOAs – if any.

We were also leaning toward borrowing 5% from the 401K…and have some cash (roughly 6 months of P&I) on hand – assuming that the house will not need immediate remodelling. (We’ve seen some older houses in PQ and RB in very good shape for that price).

Still the amount we will pay for housing will be a bit staggering – more than $1500 than our current rent….Just wondering if it’s worth buying at all…

[UCguy]

Thanks sdr! I agree roughly with your calculations. There is also the PMI which for a 500K loan, with 10% down, is likely to be about $400/month. Property Taxes are likely to cancel out the mortgage interest tax deduction, or so I gathered – but it’s better to not count on that. Yes we are looking to have no or low MRs and definitely low HOAs – if any.

We were also leaning toward borrowing 5% from the 401K…and have some cash (roughly 6 months of P&I) on hand – assuming that the house will not need immediate remodelling. (We’ve seen some older houses in PQ and RB in very good shape for that price).

Still the amount we will pay for housing will be a bit staggering – more than $1500 than our current rent….Just wondering if it’s worth buying at all…

[UCguy]

Thanks sdr! I agree roughly with your calculations. There is also the PMI which for a 500K loan, with 10% down, is likely to be about $400/month. Property Taxes are likely to cancel out the mortgage interest tax deduction, or so I gathered – but it’s better to not count on that. Yes we are looking to have no or low MRs and definitely low HOAs – if any.

We were also leaning toward borrowing 5% from the 401K…and have some cash (roughly 6 months of P&I) on hand – assuming that the house will not need immediate remodelling. (We’ve seen some older houses in PQ and RB in very good shape for that price).

Still the amount we will pay for housing will be a bit staggering – more than $1500 than our current rent….Just wondering if it’s worth buying at all…

[UCguy]

I also wondered if waiting 3-4 years to save the cash so we need financing for just 417K will be wise – given the fact that rates will be higher, possibly MUCH higher and prices not that much lower – especially in the areas we are looking at – RB, PQ – which have not seen *THAT* much distress. (Well, I suppose if the rates are much higher, one can take a longer ARM and refi to a 20-30 yr FMR when the rates come down. Of course, still making extra principal payments).

Shall we raid out our 401Ks completely (we can borrow 50% of them) so we can bring it to 417K? I have a funny feeling that HLS would agree with that strategy…

[UCguy]

I also wondered if waiting 3-4 years to save the cash so we need financing for just 417K will be wise – given the fact that rates will be higher, possibly MUCH higher and prices not that much lower – especially in the areas we are looking at – RB, PQ – which have not seen *THAT* much distress. (Well, I suppose if the rates are much higher, one can take a longer ARM and refi to a 20-30 yr FMR when the rates come down. Of course, still making extra principal payments).

Shall we raid out our 401Ks completely (we can borrow 50% of them) so we can bring it to 417K? I have a funny feeling that HLS would agree with that strategy…

[UCguy]

I also wondered if waiting 3-4 years to save the cash so we need financing for just 417K will be wise – given the fact that rates will be higher, possibly MUCH higher and prices not that much lower – especially in the areas we are looking at – RB, PQ – which have not seen *THAT* much distress. (Well, I suppose if the rates are much higher, one can take a longer ARM and refi to a 20-30 yr FMR when the rates come down. Of course, still making extra principal payments).

Shall we raid out our 401Ks completely (we can borrow 50% of them) so we can bring it to 417K? I have a funny feeling that HLS would agree with that strategy…

[UCguy]

I also wondered if waiting 3-4 years to save the cash so we need financing for just 417K will be wise – given the fact that rates will be higher, possibly MUCH higher and prices not that much lower – especially in the areas we are looking at – RB, PQ – which have not seen *THAT* much distress. (Well, I suppose if the rates are much higher, one can take a longer ARM and refi to a 20-30 yr FMR when the rates come down. Of course, still making extra principal payments).

Shall we raid out our 401Ks completely (we can borrow 50% of them) so we can bring it to 417K? I have a funny feeling that HLS would agree with that strategy…

[Author]

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