Main > Everything Else

Buying a first home

(1/17) > >>

shmokes:
I know absolutely nothing about this subject.  My wife and I are moving to Miami soon, and we know we will be there for at least three years.  Up to this point, we've always rented an apartment, but we're toying with the idea of buying instead of renting so we can start building up some equity, etc.  But I have no idea how this works.  Is it even reasonable for me to hope to buy a new house in a new city when I currently have no equity so there can't be some huge down payment?  Why would a lender even consider giving us a mortgage?  Our current jobs would be practically irrelevant, I would think, since we're obviously not going to commute from Miami to Cedar City, UT for work.  They may give some idea of the type of salaries they can expect us to be able to pull in, I suppose (I hope not since either of us would be making far more money doing the same thing in any large city compared to the rural city we currently live in).

Do lenders consider things like, "Okay . . . this guy is a law student, which makes him a pretty safe borrower since he'll make good money when he finishes law school."

It seems like if we bought a really inexpensive home that our mortgage wouldn't be too much more than rent would be, and we wouldn't just be throwing all the equity in the toilet.  What are your thoughts?  Is it even worth trying?  Am I better off waiting until we are established in a city with good jobs, etc., before trying to buy a first home?  Am I better off from an investment standpoint to wait until I can go a little bigger, since first-time homeowners get various incentives like tax breaks or something (from what I understand).  Are there signs of an impending housing bubble bursting soon that say I should wait?

FWIW, my wife is currently applying for jobs and will hopefully have a job before we ever move out there.  The rest of our income, at least for the first year, but likely for the second and third as well, will come from student loans.  We're hoping that she can get paid enough that my student loans will only have to cover tuition, but depending on how much she makes we may have to take care of some living expenses with loans as well.  Not the most exciting thing to look forward to, but . . .

Thoughts?

shardian:
First off, Miami+cheap house= :laugh2: :laugh2: :laugh2:

Secondly, if you will only be there for 3 years, do not buy a house. You will not build equity in three years.

Thirdly, I would personally love to be at the mortgage office when you ask if going to law school qualifies you for a loan. Comedy gold right there.

Can't help but pick on ya dude, you know its all in fun. ;D
If you seriously want to look into buying, get "Home Buying for Dummies". I Read that one cover to cover before going to the mortgage place. Also go ahead and get a credit check now to see where you stand.

ChadTower:

You don't get credit from a lender for what you might be someday.  You get credit for what you have actually done over the last 5 or so years... or more often you get penalized for it.

I'd advise against buying anything until you know you want to stay there.  If you don't want to stay, don't buy, it's just not worth it.

Chris G:
I'm a strong proponent of buying (pride of ownership, equity, tax benefit), but I also happen to live in an area with a strong housing market.  For only a 3-year commitment, I doubt the appreciation would make it a good financial choice.  If you plan to sell (versus keeping it as a rental, etc) there are commonly some significant selling expenses which reduce your overall return (I know you're a law guy, so perhaps you could sell it yourself and save some cash).  You also have to factor in the property taxes and repair & maintenance costs you incur as a home-owner that drag down your return.

AtomSmasher:
Well, your first step would be to contact a mortgage broker and let them figure out what kind of loan you can get and how much you can spend on the house.  100% loans were pretty common for a while, but with the increasing number of forclosures, it might be difficult to get now.  If you are able to put 5% down, then you would get a much better interest rate.  It doesn't cost you anything to let a broker run the numbers for you, so theres no reason not to check and see.

As for the housing market in Miami....I have no idea.  I keep a close watch on the housing market in southern California, but that doesn't help you much.

While shardian is correct that you probably won't make much equity in three years, at least every penny of the loan interest you pay (which is most of your mortgage payments for the first several years) is tax deductible, which means your not just throwing the money away anymore.  I pay my taxes in one lump sum at the end of the year and buying a house last year dropped my tax payment literally in half.

In my experience, the best way to get quick equity in a house is to find a new housing project that is either in a very early phase of building, they sell each later phase at higher prices, so the earlier you get in, the more equity you will build up.  If you can't do that, then start checking with the new homes sales offices and see if anyone dropped out of buying a home at the last minute.  They can't have any standing inventory, so they sell them at unbelievable deals.  Thats how I got my house, I got it for $25,000 under market price and they paid $10000 to the mortgage company to buy down my interest rate.

Navigation

[0] Message Index

[#] Next page

Go to full version