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| 5/25 |
| 2005/3/29-31 [Reference/RealEstate] UID:36951 Activity:kinda low |
3/29 Dear financial guru dans, for the past 3 years I've been trying to
save enough money for a down-payment in a decent house in N Cal.
However, no matter how much I save, it seems like the housing price
goes up much faster than I can save. I mean, this is pretty
frustrating. I can't even buy anything around $400,000 with what I
have saved (I have saved about 20% of that), and if I buy something
out of that range, I will not have enough to eat. Do you have any
suggestion for people like me?
\_ Well I can attribute some of the reasons why pricing is going up
faster than you can save. For one, a lot of people are buying 2nd
and 3rd houses for the purpose of investment. While that is good
news for people who already have money (and thanks to Bush, it's
much easier for them to do so), for each house that they buy for
investment, it is also one less house for first time home owners
to buy. Capitalism-- the more you own, the more you get to own.
\_ You're screwed. although, you can buy a $400k place with 10% or
even no money down if you want, well probably anyway.
Definition of "decent house" varies of course. Your choices are
1. buy whatever you can afford (1 bedroom sj condo?)
2. buy something somewhere else that seems like a better deal
and either rent that or move there
\_ but then you go back to the problem of not being able to buy
something and rent it and still make money. There's a
reason why its cheaper right now to rent than buy...
3. invest in something other than houses
\_ Although if you have < 20% down, most (if not all) lenders
will require you to pay for mortgage insurance.
\_ 42% of first time buyers bought with 0% down... FYI
http://csua.org/u/biq
\_ There are places less than $400K, with upside; West Oakland
comes to mind. You could also look at something like buying
a duplex and renting the other half to cover the mortgage. -tom
\_ Not really a great idea these days. Compare cost for duplex
vs. what you can actually charge in rent for half of it these
days. Rent : Mortgage+Tax+Ins ratios are shite these days.
\_ Stop thinking you need 2000 sq ft. There are plenty of smallish
places in halfway decent neighborhoods for $400k. Where do you work?
You might have to take in a border to make your mortgage.
\_ I agree with this. My sister bought a nice 2+2 townhouse in
Walnut Creek with a big fenced yard near BART for $439K a
year ago. With $80K in the bank you either waited too long
or make a really small income. Maybe you should take in a
border in the form of a gf/wife. Single people always have
trouble affording houses unless they have really good
careers.
\_ What's a 2+2 townhouse?
\_ 2 bedrooms, 2 bath
\_ Here ya go:
http://csua.org/u/biu
A cute starter home in an up and coming neighborhood with
a bedroom you can even rent out if you need to.
\_ Are you sure you won't have enough to eat if you go for a house over
$400k? I just ran a quick check on http://www.eloan.com with $400k and 20%
down, and you can get a 30yr no-point fixed loan with monthly
payment of $1944. How much do you make now, and how much rent (if
any) do you pay now? With a CS job this kind of payment should
leave you plenty of money to eat. Just stop going on frequent
vacations and driving a fancy car.
\_ + $4k+/yr in prop. tax =~ $333/month
makes that $2277/month. Going up just to $450k makes that
$2246 + 375 = $2621/month.
That's getting pretty pricey.
\_ You get a huge tax break from buying a house. Your property
tax and the interest on your mortgage is deductable. You
need to include this in your calculations.
\_ I wish I had an answer for you. I find myself in a similar
situation (though I am still saving for a downpayment). I actually
don't know much about loans and the housing market, though I've
heard that conventional wisdom states that if you are going to stay
in one place for three years or more, you are better off buying
then renting. The nice thing about buying is that your monthly
loan payments build up equity, whereas rent payments are just money
down the toilet (which I guess would make your landlord's pocket
the sewage system, apt description IMO). Ultimately, you just need
to run the numbers. How much would you spend on rent over the next
three years? How much would you spend on down payment/loan
payments over the next three years (don't forget to factor in tax
deductions from your loan interest payments). If you then sold
your house, how much of that would you recoup? Barring housing
bubble disaster, you should actually end up with a 5-15% profit,
but there's nothing to stop you from calculating the worst case
scenario where your home depreciates 10%. -dans
\_ Agreed. Don't forget property tax. There's also homeowner's
insurance, but it's negligible in the big picture.
\_ Also, don't forget about HOA fees (for townhomes and condos),
although you might be able to recover some of the costs for
property tax from the tax break. You may want to start small
and several years later after your property appreciates,
upgrade to a more comfortable home. Another option is
to invest with a trustworthy and reliable partner.
\_ Wait for the next big al kida attack. Seriously though, I
don't recommend you buying right now. The housing market is
in what a lot of experts agree as a bubble. Now people own
homes obviously do not want to believe that, but the best
time to buy when you have cash would be when the market is
not doing so well. Unless you have urgent needs for a
house, ie, you are getting married, or something, renting
is a better option for you right now. If you really having
been saving for 3 years, then you should've bit the bullet
and bought the biggest house you could afford when US
attacked Afghanistan, everyone is selling, it was a buyer's
market. I even bargained the price down by 20k. right now
the housing market is stock market in 2000, do NOT go in
with all your savings. You'll be sorry.
\_ Find an ugly (or not so ugly) chick that has a house! Yes,
they are around. :) In a few years it won't matter (whether
they are ugly or not), and having more cash to spend each
month (for you, your family, and kids) could mean more to you
than banging the girl you really want when you are 40. ;) This
is an equal society, guys should be allowed to marry for money
too!!
\_ what if you're gay?
\_ tell her to work out until she has nice broad shoulders and
looks good from behind and make sure you're on top.
\_ Marry an ugly guy then.
\_ Marry an ugly rich guy then.
\- FYI: there is a Nolo book called How to buy a House in CA
which seems decent to me. --psb
\_ Even though Bay Area is nice, maybe you guys should just dump
the Bay Area and move somewhere else. |
| 5/25 |
|
| csua.org/u/biq -> money.cnn.com/2005/03/07/real_estate/financing/riskyloans/index.htm SUBSCRIBE TO MONEY R isky real estate moves Put nothing down and don't worry much about monthly payments -- what's th e worst that can happen? March 8, 2005: 11:26 AM EST By Sarah Max, CNN/Money senior writer How much did they put down? The majority of first-time buyers had downpayments of less than 10 percen t Size of downpayment First-time buyers putting this much down 0% 42% 1%- 9% 27% 10%- 19% 12% 20% - 29% 10% 30%- 39% 2% 40% - 49% 1% More than 50% 6% Source: National Association of Realtors SALEM, Ore. Gone are the days of saving a hefty down payment and striving to pay off your house in 30 years. Today, the typical first-time home buyer or vaca tion-home buyer might finance the entire cost of the house and pay only the interest owed on the loan for the first several years. A monthly "minimum payment" that doesn't even cover th e interest. Such innovations have, no doubt, been a boon to buyers who might have oth erwise spent years socking away a down payment or paid a premium for a 3 0-year fixed-rate loan on a house they planned to own less than five yea rs. And judging by historically low default rates, homeowners have been able to handle their growing debt burdens. Then again, buyers have been experimenting with more aggressive financing in the best of all times, when interest rates remain low and home price s continue to appreciate. "Mortgage markets have been so flush with cash that home buyers are able to layer one risk on top of the other," said Keith Gumbinger, vice presi dent of HSH Associates. "It's possible to borrow more than the value of the home, put in no money of your own and pay a minimum monthly payment. Consider the danger with three increasingly popular loan structures. According to a recent survey by t he National Association of Realtors, in fact, 25 percent of all buyers f inanced 100 percent of the purchase price, and 42 percent of first-time home buyers bought with no money down. Though small down payments are the norm, borrowers with less than 20 perc ent to put down must either pay private mortgage insurance or borrow the ir down payment using a home equity loan or line of credit. Most choose the latter option, also known as a "piggyback" loan. That mak es sense if you can afford to make your regular mortgage payment and pay more than the minimum owed on this loan. The danger: A home equity line of credit, which is the most common such l oan, carries a variable rate and has no fixed payment schedule. If you m ake only the minimum payment, the balance of this loan will remain the s ame. What's more, the interest you pay is immediately affected when the Federal Reserve raises short-term interest rates. Interest only loans As the name suggests, an interest only loan requires that you pay only th e interest due on the loan for the first five, 10 or 15 years of the loa n It's a popular option in areas where high home prices have made it to ugh for buyers to afford monthly payments that include principal and int erest. According to RJ Arnett, executive vice president of national wholesale lending for MortgageIT, an interest-only loan makes sense for first-time buyers whose incomes will likely go up in the next few years or investo rs who don't want to commit to paying principal every month -- but could afford to pay the higher amount if needed. "If you're the gambling sort, you could get into an interest-only product and bet that the market will build equity for you," said Gumbinger, exp laining that paying down principal is not as much of a concern for peopl e with shorter time horizons, particularly if home prices are going up. The danger: Homeowners who are using these loans to buy more house than t hey can afford could get into serious trouble if they don't budget for h igher payments down the road. And if you stay in the house longer than you planned, your mon thly payment jumps drastically after your interest-only honeymoon period . The 'minimum payment' option The mortgage du jour -- which is marketed as a cash flow ARM, option ARM or flex ARM -- gives borrowers three or four payment choices each month. They can pay the old-fashioned principal and interest of a 30-year loan. Or, they can make a "minimum payment" and add the rest of the interest th ey owe to the balance of the loan. Lenders put a limit on how much interest borrowers can pile onto their lo an. Still, borrowers who consistently pay the minimum will see the balan ce of their loan go up rather than down over time. com, ref erring to the payment option his company rolled out in February. Still, Hsieh cautions that this not the best bet for everyone. "If you ha ve seasonal income or are self-employed with monthly income that is inco nsistent, this loan may be great for you," he said. "You can pay the min imum monthly payment a few times per year, but catch up by making extra principal reduction in months when your income is higher." If, however, you're using such a loan to push the limits on how much you can afford, you could be setting yourself up for trouble. "Not only do you not own any of your home, but you may be piling up addit ional debts that could quickly exceed the value of the home," said Gumbi nger, adding that the interest rates on these loans adjust every one to three months. "There are no guarantees that rates will remain at comfort able levels and no guarantee that home prices will continue to go up." "You could find yourself in a rather uncomfortable circumstance," he said . |
| csua.org/u/biu -> www.realtor.com/FindHome/HomeListing.asp?snum=1&locallnk=yes&frm=bymap&mnbed=0&mnbath=0&mnprice=0&mxprice=400000&js=off&pgnum=1&fid=so&mnsqft=&mls=xmls&areaid=823&typ=1%2C+2%2C+3%2C+4%2C+5%2C+6%2C+7&poe=realtor&ct=Oakland&st=CA&sbint=2&presort=sbint&sid=0 Send to your REALTOR Request a Showing Printable Brochure Your Area Specialist has listed yet ANOTHER cute, very affordable home in the beautiful Laurel district! com/Prop/1045 695620 This listing is brokered by: PRUDENTIAL CALIFORNIA REALTY Office: (510)834-2010 Property Features * Single Family Property * Area: Oakland Zip Code 94619 * County: Alameda * Subdivision: LAUREL * Year Built: 1926 * 2 total bedroom * 1 total bath * 1 total full bath * 4 total rooms * Approximately 748 sq. The Estimated Payment and Mortgage Calculator are offered as a tool for y our convenience and is not an offer of credit. Ac tual mortgage rates and fees may vary, so check with your local lender f or information. Broker may not have reviewed or approved listing enhancements. All infor mation provided by the listing agent/broker is deemed reliable but is no t guaranteed and should be independently verified. For Professionals REALTORS, did you know that you could have special features like Virtual Tours on your listings? |
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