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Need help making a decision of too much house too soon!

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JohnnyComeLately

Thread Starter
Freshman Member
Joined
Jan 15, 2008
Professional Status
General Public
State
Colorado
I'm a first time home-buyer, have about 10,000 in the bank, just became permanent at a job I've been working at for 1.5 years. In 2-3 years I'll be making around 3/4s of $100,000 annually. I may have a windfall of inheritance within`10 years <-- I know this is grim just stating the facts and would this be pertinent to a loan officer?

Here's my problem. I found a house in the exact location that I wanted in between work through the week and play on the weekends, and right across from the college and in a highly desirable neighborhood. This could possibly be a rental property one day, but I really like it enough to want to occupy it for a Long time. The house was built in the late 50s with heavy renovation to modern standards. Not sure about the roof would have to ask.

Anyway, I've been searching houses for about 3 weeks. I've considered nice condos though in a less desirable location for MY purposes, plus I LIKE the 50s style houses moreso than the rich facade-looking models of today. I like the unassuming look from the outside of the 50s ranch mentioned above. I Like the street name. I like pretty much everything about this property without having been shown it.

The only thing that I don't like about the property is the price @ $255,000 being my first home I don't know if I'll be able to swing it. I could offer a lower price, but still it will be 2 years before my salary Really kicks in. With $1600 in annual taxes and probably the same in insurance and no HOA fees @ 6.5% 30 year I figured the monthly pmt to be $1,600 maybe more. My parents say 15 year is what I should try to get and that I Can't afford this right now. I'll make about 40,000 this year 53,000 next year and so on never getting about 80,000 probably. All health, dental is covered. I have NO car note on 2002 truck. Food is about 350 a month. Car insurance 70/mo. Phone bill 50/mo. No cable. Car tags 100/yr. Household cleaning goods about 50/yr. Miscellaneous including tithing about 500/yr.

I really want this house! but will accept another cheaper one within the neighborhood or surrounding neighborhoods if I keep searching over the next couple of months, maybe a fixerupper! I have carpenter friends, helped install hardwood floors with one of them.

Is it advisable to just Go for this house? In two years I will be able to handle the pmt more comfortably, excepting we don't make any kids, but my insurance will 100% pay for that too early on. Thanks.

My job's pretty secure.
 

Lawrence R.

Senior Member
Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
Not exactly appraisal science, but.

i am going to suggest you go to your local BANK, not you local mortgage broker, and sit down with a real LOAN OFFICER(like as in officer of the company, not some fakey title) and lay out your income, and expenses. He can help you determine what is the best rule of thumb as far as what you can afford. Remember, a real lender will not want to lend you money that you cannot pay back. A mortgage broker will convince you that you can afford anything.

Also, if you are certian of your financial future(though nobody really can be) some kind of initial introductory rate that slowly adjusts could help you in this case.

I am not an advocate for those exotic loans, and tend to agree with your parents about 15 yr conventionals.

There are plenty of good books about budgeting your money after just starting out in your career.

My model, 10% to God first, 10% to savings second, 25%(MAX) to housing. If you can't do the first 2 first, then you don't do anything at all.
 

Mr Rex

Elite Member
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Jan 12, 2004
Professional Status
Certified Residential Appraiser
State
North Carolina
I suggest you read this book first.
 

Lawrence R.

Senior Member
Joined
Mar 27, 2007
Professional Status
Certified General Appraiser
State
South Carolina
Miscellaneous including tithing about 500/yr.

My job's pretty secure

Last time I checked, a tithe was to represent a tenth of your income. It seems like a big sacrifice, but if you can't do it with 30K, you will never do it with 300K.

And that 10%, seemingly large, is the MINIMUM God requires.

If you are "tithing" 500 bucks off of a 40K a year job, I wouldn't be so sure about job security.
 

George Hatch

Elite Member
Gold Supporting Member
Joined
Jan 15, 2002
Professional Status
Certified General Appraiser
State
California
Every market is different. What do the local newspapers say about the real estate market in your area? Are there a lot of headlines about falling prices and foreclosures or do things seem pretty stable?

If there is a lot of foreclosure activity and prices are in decline in your area you might do better to wait. If the market is relatively stable you might do okay by buying now.

What area of Colorado are you located in? We have some Colorado appraisers who participate here who would probably be more familiar with your market and who could more specifically answer your questions.
 

Michigan CG

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Joined
Nov 1, 2006
Professional Status
Certified General Appraiser
State
Michigan
Before you go to a real banker (which is good advice from Larry -- no mortgage brokers) get in touch with a local reputable appraiser. Ask them what they see in the Market. Ask them if it looks as though things are turning around or if prices are still declining (assuming they are in your area). Ask them to give you some advice about the area. You will need to pay them for this service but it will be money well spent.

Do not go to a Realtor for these questions. They are in the business to sell houses. They are starving right now. They want you to buy a house NOW. They won't lose any sleep if you buy a house in a Market that is still declining. I was just told by two Realtors in SE Michigan that the Market is getting better there. Yeah right, and I am the Pope.

There are a number of Colorado appraisers on this site, it might help if you posted the community you are looking at.
 

Dee Dee

Elite Member
Joined
Jan 16, 2002
Professional Status
Certified Residential Appraiser
State
Colorado
Listen to your parents.
 

JohnnyComeLately

Thread Starter
Freshman Member
Joined
Jan 15, 2008
Professional Status
General Public
State
Colorado
Every market is different. What do the local newspapers say about the real estate market in your area? Are there a lot of headlines about falling prices and foreclosures or do things seem pretty stable?

If there is a lot of foreclosure activity and prices are in decline in your area you might do better to wait. If the market is relatively stable you might do okay by buying now.

What area of Colorado are you located in? We have some Colorado appraisers who participate here who would probably be more familiar with your market and who could more specifically answer your questions.
Well foreclosures are off the map here. To get a job here is almost impossible unless you've been here for a while.

Regarding the tithing, I have been tithing even when I was unemployed, so I've never "withheld" from God just not give the exact amount because I haven't been stable financially YET. I'm becoming more and more stable now with NO debt. I've never really carried debt in my time on this planet, and I've been alone fighting for myself for at least 5 years now. All of my family is 1000 miles away. So I've come to where I am on my own. No one's given me handouts.
 

Obsolescent

Senior Member
Joined
Jul 6, 2004
Professional Status
Certified Residential Appraiser
State
Minnesota
You will qualify for a loan with what you make now....not what you think you're going to make in the future.

Don't count on money you don't have when making this decision. (ex: assuming a larger future salary in the very short term and inheritance.)
 

JohnnyComeLately

Thread Starter
Freshman Member
Joined
Jan 15, 2008
Professional Status
General Public
State
Colorado
Before you go to a real banker (which is good advice from Larry -- no mortgage brokers) get in touch with a local reputable appraiser. Ask them what they see in the Market. Ask them if it looks as though things are turning around or if prices are still declining (assuming they are in your area). Ask them to give you some advice about the area. You will need to pay them for this service but it will be money well spent.

Do not go to a Realtor for these questions. They are in the business to sell houses. They are starving right now. They want you to buy a house NOW. They won't lose any sleep if you buy a house in a Market that is still declining. I was just told by two Realtors in SE Michigan that the Market is getting better there. Yeah right, and I am the Pope.

There are a number of Colorado appraisers on this site, it might help if you posted the community you are looking at.
I DO have a great appraiser friend who's lived here for 30+ years. I will talk to him sometime this week about it. I'm seriously leaning towards waiting a few more months, because I went by the house I've been talking to you about in person today and while I still like it, it needs a touch up on the paint outside. Inside looks just as pictured. I love the street and most all of the houses on it, some more than this lone one that's for sale.

Location is the key. I know where I want to live now. I've honed in on it. But it doesn't have to be This house. I may make an offer Well below the asking price of 250,000, maybe 210,000 just for the sake of offering it to them if they get desperate. I don't think that they will though because All of the brochures were gone.

My parents think that I should be looking in the 120,000 - 145,000 range. How much more is $100,000 if that's what you really want to sacrifice for? Can't moving be just as costly as getting what you Really want? I don't want to have to move for a long time is what I'm saying.
 
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