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The Quest for a House Saga-Part 1

Discussion in 'Members' Lounge' started by corvetteguy78, Dec 13, 2011.

  1. corvetteguy78

    corvetteguy78 Well-Known Member VIP

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    So my fiance I have decided it's time to get serious about trying to buy a house. We are getting married on Oct 6 and its very likely that there will be kids and our 2bd 2 bth 894sq condo is already driving us crazy as its just way to small. It's sickening what we pay seperately each owning a condo. together between two mortgages and two sets of condo fee's we pay $2700 a month, thats one hell of a house. But we are looking at a mortgage more around the 2200-2400 range possible even less depending on what we find.

    Currently, like millions of other people, we are not in a very good situation with what she owes on her condo and what they are selling for. Based on recent condo sales in her Condo units, we are roughly $15,000- $20,000 upside down. However, we are in a pretty good situation to resolve this problem in a relativley short period of time.

    I also own a condo that i rent, in which I will be having new tenants move in January 1st at $1100/m on a 1 year lease which will renew to a month to month lease after that year. Awesome. If i don't have renters no biggie i can still afford the mortgage but can't save.

    We currently have 6k in savings. This we don't touch. It stays put.

    My plan: We are currently saving $575 a month in our savings account. We will no longer do this. I get $1100 in rent. Combined this is $1675 a month. This new amount will get applied to an EXTRA principle payment each month on her mortgage on top of her regular mortgage payment. Extreme times call for extreme measures.

    The good news. Besides not putting money into savings, this has abolsutely no effect on our current lifestyle. nothing changes. We both pay what we have been paying as we do now and live as we do now.

    The numbers: Here is the break down of how this payment effects the mortgage: As you can see from the chart below, year 4 is where we are at today. We are starting this plan this month. So essentially year 4-5 will be 12/2011 - 11/2012. She will go from 149,486 to 126,167. The condos are selling between 130k-139k.
    Once November hits, we will put her Condo on the Market and when it sells I will terminate the lease on my condo and move into my place and save that $1675(cause now she won't have a mortgage) towards a down payment towards a house and put my condo up for sale which i anticipate breaking even on.

    Any thoughts on this? Can anyone see anything different(besides saying stay where we are, this is not an option)

    [​IMG]
     
    Last edited: Dec 13, 2011
  2. Bob Vila

    Bob Vila ɐןıʌ qoq Admin VIP

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    what did you do with the 1100 from your condo if you're only saving 575 a month?
     
  3. corvetteguy78

    corvetteguy78 Well-Known Member VIP

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    I had a 10k loan i had to pay over 10 months, just finished paying it off in november
     
  4. B16

    B16 Super Moderator VIP

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    That seems like a high rate. I just re-fi'd for 3.875% 30 year fixed, paying no points and no fees. Nothing out of pocket.
     
  5. corvetteguy78

    corvetteguy78 Well-Known Member VIP

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    That rate is her current rate on the current mortgage and was really low at the time she bought the condo, the lowest possible through CHFA when financing 100% of your mortgage at the time for first time home buyers.

    That chart is a represenation of making that extra $1675 a month on top of her current mortgage payments. Essentially, she could own her home in 6 years, cutting off 20 years of mortgage payments. But that's not what we are looking to do :)
     
  6. eg6sir

    eg6sir Supa Mod Moderator VIP

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    hmm.. really.. might have to look into it
     
  7. D16Civic

    D16Civic Matt

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    Yeah we got a 30 yr fixed at 5% about 18 months ago. Rates have gone down quite a bit since then. Thinking about a refi but we may want to just go into a 15 yr fixed. We don't plan on moving, ever.

    As far as the OP is concerned, any chance you could sell yours and keep hers as a rental property when you decide to start looking for a house to buy? You could sock away that extra money for a down payment instead of paying down her mortgage in order to break even on a sale.
     
    Last edited: Dec 13, 2011
  8. corvetteguy78

    corvetteguy78 Well-Known Member VIP

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    where would we live until we find a house?
     
  9. D16Civic

    D16Civic Matt

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    lol, sorry. I meant live in hers until you buy a house, then move out and look for a tenant. I guess that's assuming you could qualify for another mortgage jointly.
     
  10. corvetteguy78

    corvetteguy78 Well-Known Member VIP

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    With banks these days it's better not having an existing mortgage when applying for a new one.
     
  11. reckedracing

    reckedracing TTIWWOP VIP

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    advice from experience

    buy small/less than you can afford
    and don't buy anything that looks all pretty and shiny and is going to end up getting you underwater on your mortgage in the next 5 years

    chances are after 2-3 years you are going to fucking hate the house, neighborhood, asshole neighbor, or your commute, or all of the above, so be prepared to sell within 5 years to move onto something bigger and more permanent.

    and even if you THINK this is going to be your permanent purchase for life, just consider what i'm saying because it will all come true.
    lose your job, have to work in a different town city
    have a child, or twins or worse, and you need even more room than you planned on
    shit changes man, everyone changes...
     
  12. corvetteguy78

    corvetteguy78 Well-Known Member VIP

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    Great points, and definitely something we are already considering. Like i said we are easily affording paying 2700 mortgage plus utilities the way it is now. But we feel that a 2200-2400 mortgage or possibly even less is where we want to be.

    We have seen some pretty much new construction houses in our price range for 309k asking and an absolutely gorgeous condo on a lake 2800sq feet with and two car garage huge huge basement with walk out for 288,000 8 Canoe Birch Court Unit: 8 Berlin CT - Home For Sale and Real Estate Listing - MLS #G607746 - Realtor.com®...

    there are plenty of options for us out there not to have a big mortgage, but we definately want and will get a house that needs 0 work. No bathroom remodels or kitchen remodels or even painting. We've seen over 12 houses that fit this criteria in our short search and we are prettying much open to 5 towns.
     
  13. Celerity

    Celerity Well-Known Member

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    I agree with Recked. Make sure that overall things, you're paying the smallest monthly payment you can get away with. Even a 50 year mortgage.

    Trust me on this. I went to "My budget", that got totally blown out of the water (Twice my original budget now) and I was out of work for a few months.

    $2000 a month, and being 4 months behind translates to 16 months of $2500 to get back on track. And that's just 4 months out of work. If you lose your job now, and get another in 4 months you're pretty lucky.
     
  14. corvetteguy78

    corvetteguy78 Well-Known Member VIP

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    Yeah defiantely,i already know we would qualify for around $450k mortgage maybe more. We orignally were looking at houses near $375k- $400 but after searching and searching we found just as nice houses in the lower 300's, maybe not as big of yards and sq feet but we narrowed down what we want.

    She makes good money $74,000 + bonuses and has been at her job for 9 years as a Director and i made ok money at $66,500 at my new job at a financialy strong company rated highly with AM Best. At $140,000 combined income i think we will be well off with a low $2000 ish mortgage.

    We don't want all of money going to our mortgage payments, we still want vacations and savings and stuff like that.

    At the same time i'm never one to worry about, "what if i loose my job". I can't live like that. mine as well worry everything then.

    if it happens we deal with it. but we will still be prepared with savings just in case.

    May sound queer but we learn allot watching house hunters and property vigirns on hgtv
     
  15. Briansol

    Briansol Admins Admin VIP

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    Unless you have a 30 year lease, having rental property is considered a liability, not an asset, when running numbers. Assume 0 rental income, and just expense in your figures, because that is what the bank will run.


    IMO, wait. You don't NEED a house yet. She's not prego YET. The baby doesn't need it's own room for 6-8 months anyway even if she was. And have you considered the cost of a child? the wedding? 6k.... is the photographer and cake.

    I'd stay where you are as long as possible and hope for a better market in a year or 2. At the very least, you'll be less upside down
     
  16. reckedracing

    reckedracing TTIWWOP VIP

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    so let me ask you this?
    have you actually made a budget based on a year or more worth of bills?
    what does all your expenses average out to?
    phone/cell tv, internet, electric, house gas/propane, car insurance, car payment, auto gas, etc
    then you factor in your mortgage...
    and then... whats left for BOTH your rainy day fund and your retirement funds?
    i am guessing you are probably not factoring those 2 things into your budgets/plans, or they are being minimized to afford a 2400 a month mortgage
    always think of the future, you aren't getting any younger
    and get a prenup
    and dont put shit in your neighbors mailbox, just because...
     
  17. B16

    B16 Super Moderator VIP

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    My opinion..

    6k is not enough for savings. We don't let ours drop below 20k just in case I lose my job.

    You can make it on that income comfortably, but you'll probably need to drop the other properties. Like B said, they are liabilities.

    My mortgage is 340k. I make similar to what you guys make combined; I'm the only person working in my family. We live very comfortably and have money for vacations. But we stay within our means and our only debt is the single mortgage.

    I say trim the liabilities, maybe stay in her condo until it is at least even when you want to get out. Save for a down on a new house (20%) and keep that savings at 20k+.
     
  18. corvetteguy78

    corvetteguy78 Well-Known Member VIP

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    of course, i have several budget spreadsheets...

    for instance this is for when we buy a house:

    our combined take home is $7652/m(after 401k and personal savings from her paycheck is directly deducted)

    monthly expenses:
    Mortgage $2400(max including taxes, insurance and PMI)
    Combined Car payments $750
    Combined Car Insurance $250
    Cable/internet $150
    Cell phone $80
    electricity $400
    gas $200
    Combined savings $800
    Combined Car gas $400
    groceries $400
    Combined CC/loans $350

    Leaves $1472 for anything else which means more savings and entertainment
     
  19. corvetteguy78

    corvetteguy78 Well-Known Member VIP

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    Hmmm not really sure what you mean by drop the other properties? We don't plan on holding on to hers or my condo. not sure if you read what i wrote entirely?

    Staying in her condo until we are even is the plan...like said i am paying it all down in 1 year.

    And 99.99% of middle class Americans don't have 20k in savings and in 2010 the median house hold income was $50,000 That's awesome that you were able to keep 20k in savings. Once we actually buy a house we can save a 800- 1000 a month easily we'll be at 20k in no time
     
  20. B16

    B16 Super Moderator VIP

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    Sorry, I must have missed the part where you said you will be selling the other two. Looks like you've got a pretty good plan (if I would have actually read it all..).

    Yes, put away 1k a month. That is what I do today. Do you work for a publicly held company? If so, take advantage of their ESPP if they have one. I use ours purely for our savings account.
     
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