How shall we buy our first house?

[bearishgurl]

[quote=captcha][quote=AN]Snowboarding/skiing is not a cheap sport…[/quote]
Unless you live 30 minutes from a resort :)[/quote]

hijack: I plan on living in town in South Tahoe on the free bus line to Heavenly. A season pass purchased the previous summer is $359. Of course, you take your chances with an early purchase that it will be a bad season. But with the lift-ticket prices of today, $359 = only 4 days of skiing. It would have to be a REALLY bad year not to be able to get in at least 4 full days of skiing! A multi-resort season pass issued by Vail Resorts (purchased the previous summer) is about $599. This will get you unlimited lift privileges at Heavenly, Vail, Beaver Creek, Breckenridge, Keystone and Northstar at Tahoe. Colorado very rarely has bad ski seasons and the Vail Resort pass is a GREAT deal if you can afford to travel! That’s enough resorts for anyone to ski in any season :=]

The biggest expenses of skiing in order of amount are: lodging, per-diem food (if eating at restaurants on the mtn or otherwise), lift tix, convenient parking and locker rental midway (if packing lunch). $8-$10 day lockers can be rented by the season for about $100 (or about $150 for ski-length lockers).

A “local” residing at South Tahoe pays $359 season for a season lift pass plus locker rental of their choice :=)

There are quite a few 40-55 year-old SFR’s there, situated on 6K to 14K lots right in town that are currently listed for $175K to $350K.

[end of hijack]

[Scarlett]

[quote=FormerSanDiegan][quote=Scarlett]

I didn’t consider property taxes since it’s kind of a wash with interest deduction, IIRC.

$2400 P&I, $450 PMI, $250 for 401K loan (for the 5%), $100 for insurance.Assume his rent is $2200/mo. Assuming no HOA, or MRs.[/quote]

Assuming the taxes and tax write-off are a wash.
This totals 3100.

However, $550 + per month is principal … and the 401K loan is being paid directly to his retirement account.

Of course there is opportunity cost (or alternatiuvely a benefit if the retirement account declines during the loan payback period) in the 401k loan.

But these numbers, with PMI come pretty close to Rent + a car payment.
My rule of thumb for a new homeowner is if you can buy a house for rent plus a modest car payment in San Diego, it’s worth driving your old beater of a car.

If he can come up with the cash to eliminate PMI, it seems more than reasonable to buy, given those numbers.[/quote]

I thought it was $3200. Anyhow, $900 difference wouldn’t be a modest car payment. $400-500 would be. My 3 yr loan payments on a new Accord are close to $700/mo. It’s true about the 401k loan, that it goes back to him eventually; I was thinking about his cash flow.

[Scarlett]

[quote=FormerSanDiegan][quote=Scarlett]

I didn’t consider property taxes since it’s kind of a wash with interest deduction, IIRC.

$2400 P&I, $450 PMI, $250 for 401K loan (for the 5%), $100 for insurance.Assume his rent is $2200/mo. Assuming no HOA, or MRs.[/quote]

Assuming the taxes and tax write-off are a wash.
This totals 3100.

However, $550 + per month is principal … and the 401K loan is being paid directly to his retirement account.

Of course there is opportunity cost (or alternatiuvely a benefit if the retirement account declines during the loan payback period) in the 401k loan.

But these numbers, with PMI come pretty close to Rent + a car payment.
My rule of thumb for a new homeowner is if you can buy a house for rent plus a modest car payment in San Diego, it’s worth driving your old beater of a car.

If he can come up with the cash to eliminate PMI, it seems more than reasonable to buy, given those numbers.[/quote]

I thought it was $3200. Anyhow, $900 difference wouldn’t be a modest car payment. $400-500 would be. My 3 yr loan payments on a new Accord are close to $700/mo. It’s true about the 401k loan, that it goes back to him eventually; I was thinking about his cash flow.

[Scarlett]

[quote=FormerSanDiegan][quote=Scarlett]

I didn’t consider property taxes since it’s kind of a wash with interest deduction, IIRC.

$2400 P&I, $450 PMI, $250 for 401K loan (for the 5%), $100 for insurance.Assume his rent is $2200/mo. Assuming no HOA, or MRs.[/quote]

Assuming the taxes and tax write-off are a wash.
This totals 3100.

However, $550 + per month is principal … and the 401K loan is being paid directly to his retirement account.

Of course there is opportunity cost (or alternatiuvely a benefit if the retirement account declines during the loan payback period) in the 401k loan.

But these numbers, with PMI come pretty close to Rent + a car payment.
My rule of thumb for a new homeowner is if you can buy a house for rent plus a modest car payment in San Diego, it’s worth driving your old beater of a car.

If he can come up with the cash to eliminate PMI, it seems more than reasonable to buy, given those numbers.[/quote]

I thought it was $3200. Anyhow, $900 difference wouldn’t be a modest car payment. $400-500 would be. My 3 yr loan payments on a new Accord are close to $700/mo. It’s true about the 401k loan, that it goes back to him eventually; I was thinking about his cash flow.

[Scarlett]

[quote=FormerSanDiegan][quote=Scarlett]

I didn’t consider property taxes since it’s kind of a wash with interest deduction, IIRC.

$2400 P&I, $450 PMI, $250 for 401K loan (for the 5%), $100 for insurance.Assume his rent is $2200/mo. Assuming no HOA, or MRs.[/quote]

Assuming the taxes and tax write-off are a wash.
This totals 3100.

However, $550 + per month is principal … and the 401K loan is being paid directly to his retirement account.

Of course there is opportunity cost (or alternatiuvely a benefit if the retirement account declines during the loan payback period) in the 401k loan.

But these numbers, with PMI come pretty close to Rent + a car payment.
My rule of thumb for a new homeowner is if you can buy a house for rent plus a modest car payment in San Diego, it’s worth driving your old beater of a car.

If he can come up with the cash to eliminate PMI, it seems more than reasonable to buy, given those numbers.[/quote]

I thought it was $3200. Anyhow, $900 difference wouldn’t be a modest car payment. $400-500 would be. My 3 yr loan payments on a new Accord are close to $700/mo. It’s true about the 401k loan, that it goes back to him eventually; I was thinking about his cash flow.

[Scarlett]

[quote=FormerSanDiegan][quote=Scarlett]

I didn’t consider property taxes since it’s kind of a wash with interest deduction, IIRC.

$2400 P&I, $450 PMI, $250 for 401K loan (for the 5%), $100 for insurance.Assume his rent is $2200/mo. Assuming no HOA, or MRs.[/quote]

Assuming the taxes and tax write-off are a wash.
This totals 3100.

However, $550 + per month is principal … and the 401K loan is being paid directly to his retirement account.

Of course there is opportunity cost (or alternatiuvely a benefit if the retirement account declines during the loan payback period) in the 401k loan.

But these numbers, with PMI come pretty close to Rent + a car payment.
My rule of thumb for a new homeowner is if you can buy a house for rent plus a modest car payment in San Diego, it’s worth driving your old beater of a car.

If he can come up with the cash to eliminate PMI, it seems more than reasonable to buy, given those numbers.[/quote]

I thought it was $3200. Anyhow, $900 difference wouldn’t be a modest car payment. $400-500 would be. My 3 yr loan payments on a new Accord are close to $700/mo. It’s true about the 401k loan, that it goes back to him eventually; I was thinking about his cash flow.

[sdduuuude]

Wow. A housing-based thread with no political commentary and good advice. It’s like it is 2005 on Piggington again.

Late to the party. Advice I always give is this: Calculate the monthly payment (including ins, p&i, taxes, maintenance – everything) for the house you want with 20% down. Say, it is $3,500 / month.

Subtract from that from your rent and make sure you put that much into the housing fund every months. So, if rent is $2000/month, you put $1500 per month away. When you get to 20%, buy your house.

So, if you have 65K in cash and you need 110K, you need to save another 45K. At 1500 per month, with no growth, you could be there in 30 months.

Think about it for a while and you will realize what a great plan it is.

Admittedly, it is a bit of a moving target. As prices, interest rates and savings rates fluctuate, your buy date moves. But, it gives you a concrete plan that will ease your mind about being stuck in rental land forever.

It gives you an “out” with the wife, too. It shows her light at the end of the tunnel and gives you an explicit way of determining when to buy so there is no arguing. It is something you can work towards, watch, and achieve together. If you have to cheat a little with the 401K plan, maybe throw that into the picture to make the purchase a year earlier or so.

One thing that nobody has mentioned is the fact that, for the same monthly payment, it is better to buy with higher rates and a lower price than a higher price and lower payments for many reasons:
1) Higher tax deduction
2) More chance of appreciation, or lower chance of depreciation.
3) Can refinance to a lower rate if rates come down.

When you buying at a high price and low rates, you are stuck both ways.

I would put some justification to your comment that rates will rise but prices will not drop. Sounds like an unjustified position to me that you are using to rationalize a purchase.

From an analytical point of view, PMI is a disaster. Do what you can to avoid it.

————

Borrowing from 401K is an interesting idea I hadn’t considererd.

I am an independent, incorporated contractor. All my retirement money has been rolled over to a rollover IRA that I manage. Does anyone know if I can borrow from that or does it have to be a 401K within an employer ?

Can you borrow from a Roth IRA, pay yourself %20 interest, write off the interest you pay on the loan, and not pay taxes on the growth of the Roth IRA due to the interest ?

[sdduuuude]

Wow. A housing-based thread with no political commentary and good advice. It’s like it is 2005 on Piggington again.

Late to the party. Advice I always give is this: Calculate the monthly payment (including ins, p&i, taxes, maintenance – everything) for the house you want with 20% down. Say, it is $3,500 / month.

Subtract from that from your rent and make sure you put that much into the housing fund every months. So, if rent is $2000/month, you put $1500 per month away. When you get to 20%, buy your house.

So, if you have 65K in cash and you need 110K, you need to save another 45K. At 1500 per month, with no growth, you could be there in 30 months.

Think about it for a while and you will realize what a great plan it is.

Admittedly, it is a bit of a moving target. As prices, interest rates and savings rates fluctuate, your buy date moves. But, it gives you a concrete plan that will ease your mind about being stuck in rental land forever.

It gives you an “out” with the wife, too. It shows her light at the end of the tunnel and gives you an explicit way of determining when to buy so there is no arguing. It is something you can work towards, watch, and achieve together. If you have to cheat a little with the 401K plan, maybe throw that into the picture to make the purchase a year earlier or so.

One thing that nobody has mentioned is the fact that, for the same monthly payment, it is better to buy with higher rates and a lower price than a higher price and lower payments for many reasons:
1) Higher tax deduction
2) More chance of appreciation, or lower chance of depreciation.
3) Can refinance to a lower rate if rates come down.

When you buying at a high price and low rates, you are stuck both ways.

I would put some justification to your comment that rates will rise but prices will not drop. Sounds like an unjustified position to me that you are using to rationalize a purchase.

From an analytical point of view, PMI is a disaster. Do what you can to avoid it.

————

Borrowing from 401K is an interesting idea I hadn’t considererd.

I am an independent, incorporated contractor. All my retirement money has been rolled over to a rollover IRA that I manage. Does anyone know if I can borrow from that or does it have to be a 401K within an employer ?

Can you borrow from a Roth IRA, pay yourself %20 interest, write off the interest you pay on the loan, and not pay taxes on the growth of the Roth IRA due to the interest ?

[sdduuuude]

Wow. A housing-based thread with no political commentary and good advice. It’s like it is 2005 on Piggington again.

Late to the party. Advice I always give is this: Calculate the monthly payment (including ins, p&i, taxes, maintenance – everything) for the house you want with 20% down. Say, it is $3,500 / month.

Subtract from that from your rent and make sure you put that much into the housing fund every months. So, if rent is $2000/month, you put $1500 per month away. When you get to 20%, buy your house.

So, if you have 65K in cash and you need 110K, you need to save another 45K. At 1500 per month, with no growth, you could be there in 30 months.

Think about it for a while and you will realize what a great plan it is.

Admittedly, it is a bit of a moving target. As prices, interest rates and savings rates fluctuate, your buy date moves. But, it gives you a concrete plan that will ease your mind about being stuck in rental land forever.

It gives you an “out” with the wife, too. It shows her light at the end of the tunnel and gives you an explicit way of determining when to buy so there is no arguing. It is something you can work towards, watch, and achieve together. If you have to cheat a little with the 401K plan, maybe throw that into the picture to make the purchase a year earlier or so.

One thing that nobody has mentioned is the fact that, for the same monthly payment, it is better to buy with higher rates and a lower price than a higher price and lower payments for many reasons:
1) Higher tax deduction
2) More chance of appreciation, or lower chance of depreciation.
3) Can refinance to a lower rate if rates come down.

When you buying at a high price and low rates, you are stuck both ways.

I would put some justification to your comment that rates will rise but prices will not drop. Sounds like an unjustified position to me that you are using to rationalize a purchase.

From an analytical point of view, PMI is a disaster. Do what you can to avoid it.

————

Borrowing from 401K is an interesting idea I hadn’t considererd.

I am an independent, incorporated contractor. All my retirement money has been rolled over to a rollover IRA that I manage. Does anyone know if I can borrow from that or does it have to be a 401K within an employer ?

Can you borrow from a Roth IRA, pay yourself %20 interest, write off the interest you pay on the loan, and not pay taxes on the growth of the Roth IRA due to the interest ?

[sdduuuude]

Wow. A housing-based thread with no political commentary and good advice. It’s like it is 2005 on Piggington again.

Late to the party. Advice I always give is this: Calculate the monthly payment (including ins, p&i, taxes, maintenance – everything) for the house you want with 20% down. Say, it is $3,500 / month.

Subtract from that from your rent and make sure you put that much into the housing fund every months. So, if rent is $2000/month, you put $1500 per month away. When you get to 20%, buy your house.

So, if you have 65K in cash and you need 110K, you need to save another 45K. At 1500 per month, with no growth, you could be there in 30 months.

Think about it for a while and you will realize what a great plan it is.

Admittedly, it is a bit of a moving target. As prices, interest rates and savings rates fluctuate, your buy date moves. But, it gives you a concrete plan that will ease your mind about being stuck in rental land forever.

It gives you an “out” with the wife, too. It shows her light at the end of the tunnel and gives you an explicit way of determining when to buy so there is no arguing. It is something you can work towards, watch, and achieve together. If you have to cheat a little with the 401K plan, maybe throw that into the picture to make the purchase a year earlier or so.

One thing that nobody has mentioned is the fact that, for the same monthly payment, it is better to buy with higher rates and a lower price than a higher price and lower payments for many reasons:
1) Higher tax deduction
2) More chance of appreciation, or lower chance of depreciation.
3) Can refinance to a lower rate if rates come down.

When you buying at a high price and low rates, you are stuck both ways.

I would put some justification to your comment that rates will rise but prices will not drop. Sounds like an unjustified position to me that you are using to rationalize a purchase.

From an analytical point of view, PMI is a disaster. Do what you can to avoid it.

————

Borrowing from 401K is an interesting idea I hadn’t considererd.

I am an independent, incorporated contractor. All my retirement money has been rolled over to a rollover IRA that I manage. Does anyone know if I can borrow from that or does it have to be a 401K within an employer ?

Can you borrow from a Roth IRA, pay yourself %20 interest, write off the interest you pay on the loan, and not pay taxes on the growth of the Roth IRA due to the interest ?

[sdduuuude]

Wow. A housing-based thread with no political commentary and good advice. It’s like it is 2005 on Piggington again.

Late to the party. Advice I always give is this: Calculate the monthly payment (including ins, p&i, taxes, maintenance – everything) for the house you want with 20% down. Say, it is $3,500 / month.

Subtract from that from your rent and make sure you put that much into the housing fund every months. So, if rent is $2000/month, you put $1500 per month away. When you get to 20%, buy your house.

So, if you have 65K in cash and you need 110K, you need to save another 45K. At 1500 per month, with no growth, you could be there in 30 months.

Think about it for a while and you will realize what a great plan it is.

Admittedly, it is a bit of a moving target. As prices, interest rates and savings rates fluctuate, your buy date moves. But, it gives you a concrete plan that will ease your mind about being stuck in rental land forever.

It gives you an “out” with the wife, too. It shows her light at the end of the tunnel and gives you an explicit way of determining when to buy so there is no arguing. It is something you can work towards, watch, and achieve together. If you have to cheat a little with the 401K plan, maybe throw that into the picture to make the purchase a year earlier or so.

One thing that nobody has mentioned is the fact that, for the same monthly payment, it is better to buy with higher rates and a lower price than a higher price and lower payments for many reasons:
1) Higher tax deduction
2) More chance of appreciation, or lower chance of depreciation.
3) Can refinance to a lower rate if rates come down.

When you buying at a high price and low rates, you are stuck both ways.

I would put some justification to your comment that rates will rise but prices will not drop. Sounds like an unjustified position to me that you are using to rationalize a purchase.

From an analytical point of view, PMI is a disaster. Do what you can to avoid it.

————

Borrowing from 401K is an interesting idea I hadn’t considererd.

I am an independent, incorporated contractor. All my retirement money has been rolled over to a rollover IRA that I manage. Does anyone know if I can borrow from that or does it have to be a 401K within an employer ?

Can you borrow from a Roth IRA, pay yourself %20 interest, write off the interest you pay on the loan, and not pay taxes on the growth of the Roth IRA due to the interest ?

[Scarlett]

Good point, sdduuude! Esp. about the higher rates and lower prices. That’s what we are waiting for. Seriously, are they going to ever let those rates go really UP? When?

How much you assign for maintenance, let’s say for a year 1970s, 80s or 90s house?

[Scarlett]

Good point, sdduuude! Esp. about the higher rates and lower prices. That’s what we are waiting for. Seriously, are they going to ever let those rates go really UP? When?

How much you assign for maintenance, let’s say for a year 1970s, 80s or 90s house?

[Scarlett]

Good point, sdduuude! Esp. about the higher rates and lower prices. That’s what we are waiting for. Seriously, are they going to ever let those rates go really UP? When?

How much you assign for maintenance, let’s say for a year 1970s, 80s or 90s house?

[Scarlett]

Good point, sdduuude! Esp. about the higher rates and lower prices. That’s what we are waiting for. Seriously, are they going to ever let those rates go really UP? When?

How much you assign for maintenance, let’s say for a year 1970s, 80s or 90s house?

[Author]

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