Home Buying Advice? part 404

I live in the Greenway Plaza area (right behind Highland Village). It's a great place to live. The property values in that area have been steadily rising over the last decade or so...even more so lately due to people tearing down the single family homes in the area and building large two-story houses. Afton Oaks and Hyde Park have gone up quite a bit. I don't think it's reached it's plateau. West U is almost totally developed (smaller houses being torn down for larger ones) and it seems as if the Greenway Plaza area is following the same pattern (though a lot slower). Due to the location, I don't see the property values falling and it seems as if Houston, due to energy, is not going to be hit as hard as other markets in the future. We'll see.

Depending on where you want to move in the area, you might need more than what you want to spend (We rent)

 

Here you go, this is a good basic online calculator.

LINK

Good luck with house hunting!

 

You left out a couple key numbers...are you debt-free? Do you have a 6 month emergency reserve? How much are you going to put down?

But all of that doesn't really matter to me or the advice I have for you.

#1 Don't pay any attention to how much the bank says you are qualified for. They put the numbers too high. Basically, you will be in a world of hurt if you buy that much house and anything at all goes wrong.

#2 30% is the magic number IF you want to be financially successful. Keeping your house payment to this amount should allow you to save money as you pay off your house.

#3 Houses are more expensive than you think. Our house is paid off, and we are still paying $650/month in insurance and taxes. Add increased utilities and repairs to this and we are looking north of $1k for this month. ($250 for electricity, avg $200 for repair budget)

I wouldn't count OT and bonus as part of your income - use these things as a way to get rich, not as a way to get by.

So, $230K mortgage gives you about $1400 in payments. Add in $575 at a 3% property tax rate and you are at roughly $2K.

That gives you a target income of $6666 per month. If you are maxing out your 401K, that's about $112K per year, or maybe $100K if you don't contribute, which would be a poor decision.

Good Luck.

 

buy a cheaper house.

 

Do not buy the biggest best house you can barely afford. The recent subprime mortgage should have taught people a lesson. You should not buy a home that is even close to your maximum affordability.

 

Which is exactly why I chose to purchase my first house inside the loop. In the past 9 years, my home value has more than doubled.


Don't risk it. If you are concerned that you might not be able to afford the house, then it's probably a dangerous purchase and it would be wise to go with a slightly lower-priced house.

Another piece of advice:

Don't buy the nicest house in a not-quite-so-nice neighborhood.
Buy the not-quite-so-nice house in a nice neighborhood.

 

i am also looking for a house...i would be a first time home buyer. i've heard that you would have to be working at least for two years with a steady job to get a loan for some of first time home buyer programs.

what is the best way to finance a house for the first time home buyers?

 

If you can get a FHA loan, that should be better rates than regular mortgage loans.

 

You probably don't want to hear this, but...

The best way to finance a house is to spend years saving money for a 20% down payment, working at the same job (demonstrating stability) and building good credit. Then go with a 30-year (maybe 15 year) mortgage.

It's the old-fashioned way, and, in my opinion, is the best way.

 

Just an added point, do not go for those variable rate low initial interest type loans unless you plan to sell the home for profit soon, go for a fixed rate mortgage.

 

Fixed

 

ugh! you're right, I didn't want to hear that!

i have a decision to make soon - i'm still living at home but paying the bills for my 'rents in exchange of rent which is less than a normal rent. i graduated last year and i've held a steady job with the same company for a year...i really don't want to waste my money on rent where i can save money if i live at home BUT my privacy would be minimal(it's hard to play) and i have an overbearing mother(hispanic mothers, you know). i really wouldn't be able to get a roommate (my friends are either married or still in school or broke) if i pay $1000 on rent then that easily can go to my savings or pay off my car faster if i stayed home. it's either to wait until i get a raise next april or just move out already and i won't see a house in 10 years or until i get married. anyone go through this before? in addition, i'm going back to get my masters in spring. last thing, i want to happen is to get pregnant then i'm screwed

 

Since you are planning to go to school again soon, you should be saving your money and live at home! You should not be taking on a mortage at this point. Privacy is so overrated.

If you happen to get pregnant, sell the baby for good money (just joking )

 

you would understand if you had my mother (i love her to death but jeez!). if i go back to school part-time and work full time, it's going to take me 3-5 years to finish. i can't stomach the thought by still living at home if i'm not married already.

 

anyone else have any more good links for people looking to a buy a home for the 1st time?

its a thought that has crossed my mind and really considering it. like some mentioned already, i dont want to throw away money into a apt when i can invest in a house i can own.

 

Disclaimer: I live in San Diego, to give context.

General Advice: Currently, given the sub-prime situation that's going on, it might be a difficult time to buy a home right now. Feel free to talk to a local agent about the below points.

1st: Current mortgage lenders seem to be screening possible clients more closely now, making sure that they are steady and reliable. I've recently re-fi'ed but I do know of several cases where planning-buyers simply couldn't get the loan.

2nd: In my opinion, with all the foreclosures that's going on, y'all might want to wait a bit (i.e. early 2008) and let the prices continue to drop. There are lot of stubborn sellers that still believe that they can get away with making a profit or even breaking even.

@ Regarding Pirc's Points: I agree that a typical 15 to 30 Fixed is a solid move, but if you know what you're doing, the 5 to 7 year Interest Only can work for you. It all depends on your situation, and as someone alluded, whether you're planning to sell the place after the 5 to 7 year fixed timeline. A good mortgage specialist will give you the pros and cons and let you know what's feasible. But don't simply rely on that, do your research.

@ Lady Di: I agree with everyone that you definitely should not overextend yourself, especially if you're planning to hit Grad School. You know yourself and your financials better than any of us, so I'm sure you'll make the right move if you plan correctly. Also, I don't know if they have much in Townhome or Condos where you are, but you might want to look into those if you can't afford a single family house. Make sure though you talk with an agent about how the Townhome/Condo market is in your area.

 

I've actually looked at some Townhomes/Condos in my area. This is something that I can definitely afford. Any pros and cons about this living arrangment?

 

Well, for the cons....you share walls with other tenants. That may or may not be a con....depending on who you are sharing the walls with. But it's always a risk. In addition, and this may be my stigma, but they seem to have the apartment "feel" to me. Usually the yards are very small or nonexistent. May not be an issue if you are not planning on raising a family there or planting a garden.

As for pros...they can be affordable, can easily be converted to rental properties when you move into the next house, and usually you can find them with management companies that take care of the yardwork and landscaping for you.

 

Well, since you are ready to have his babies, why don't you move in with him?