SakiGT

The skinny: I need to move out within around 6 months. I can either rent with a friend for around $500 (the norm) or buy and pay a mortgage of around $900 with fees, etc. Paying the mortgage would require a roomie anyways.

Im looking at a new construction 2/2 condo in a developed, but growing (as of very recently) part of town. $135,000 and I qualify for a $25,000 intrest free assistant loan.

Is it silly to get into a payment you cant afford? Ill be getting a new higher paying job in about 2-3 months, but it will kick me out of the salary range needed to get the assistance loan. Im thinking if I need to live with someone anyway I might as well be the one renting the place out.

In any case, Im heading to the bank this week or next to see if its even plausible, but Im looking for opinions and things I may be missing.

Also, on top of the $25,000 I have cash saved to use as an emergency stash. I would have enough to pay a slacker roomie's way for at least 6 months...but probably more.

mamboking

me personally, I would only buy it if I could afford to pay it by myself without a roomate in the equation....

SakiGT

Thats how I feel, and Im 99% sure Ill be in that situation in a couple months...but Id be losing out on my first pick of these brand new condos as well as the intrest-free, doesnt have to be repaid until you sell, government assist $25,000.

I dont mind roomies, but when you have a bad one it leaves a sour taste in your mouth.

pebe

Rent till you can completely afford to own by yourself. thats what me and the wife are doing now

03SSMTL-S

renting sucks cause you get nothing back, but buying and not being able to pay the loans is even worse

NSXNEXT

iTrader: (2)

Don't be in a rush to buy. You're only 22. You have plenty of time to fuck up your credit.

SpeedyV6

Besides, if you're only making your minimum monthly payment you won't be accumulating anymeaningful amount of equity for at least five years.

MR1

If you are stable and in a work situation that will improve over time, consider buying now. If you see yourself as a person that can make a five year plan and stick to it, why not. The roommate sounds like a good backup plan to me. Only you knowing your situation can really answer if it is likely to work for you. I like owning things especially if someone else is paying for them and they (possibly) go up in value. So much the better if rents in the area come close to making the payment if necessary. Just my $.02

GreenMonster

I didn't buy my first home till I was 35... Should have done it sooner (30?), but I was too busy doing other stuff...

Would have I thought about buying in my early 20's... No way... I wasn't making enough to cover the expenses...

No shame in renting, and with the houseing market the way it is, it probably isn't going to hurt to wait a couple of years to see where values go...

SakiGT

It just seems like the next best financial decision...

My next job offers a great 401k which I will be doing.
I have decent savings.
My car will be paid off in less than a year (and I have no reason to get rid of it).

It just occured to me that when Im able to buy my "family starter" home, I could either start off with savings or have already had this 2/2 condo for 8ish years. Not to mention an actual history of making mortgage payments. When my car is paid off I wont have anything except CC payments.

I think Im going to just check it out...see exactly what the payments would be, etc. Everyone is saying to wait, but Im having a hard time justifying it. Im too young? Since when was that a legitimate excuse...if you are confident and capable (albeit (sp) a few months from now) then go for it.

NSXNEXT

iTrader: (2)

I would also find out what the Jacksonville real estate market is like. I've been reading that Florida's R.E. market is quickly cooling off. Not sure about where you're looking. Might want to wait a little bit to see what happens.

Andrea25

that's the same dilemna i'm in...if you have a reliable roomie lined up, i think it's a good idea to buy the condo...

GIBSON6594

I agree with you Saki, but the main thing right now is not your age, it is the market. As other have said, the market is spiked right now and there is a chance of seeing your property value drop in the upcoming future. It is a risky time time to buy.

SakiGT

I dont have a reliable roomie at the moment...but I havent asked around either.

As far as property value, Jacksonville is booming, but especially the condo market. I think some of the newer condos are overvalued at 200,000 for a 3/2 by maybe 10%. I dont see 1-2 old condos selling for much more than their original asking price. (I cant believe Ive been paying attention).

Also realize that "Jacksonville" is the entire duval county lines. There is a wide variety of land and suburban areas and its easy to find cheaper homes but you always go back to "location, location, location."

The area Im looking at has been booming over the last year. If you know 95 in the next 5 or so years the main road 2-3 miles from the development will become the completed 295 circle. Condos nearer this road (now small and pretty) are fetching 200k. Ridiculous, imo...but it does have a great view of the Walmart next door

Here are my 2/2 choices:
http://nfl.drhorton.com/plan.aspx?planid=14192
http://nfl.drhorton.com/plan.aspx?planid=17980

You can see the sq footage difference vs price. Im pretty low-maintance. I dont have a lot of crap, nor do I want a lot of stuff in my house. The only spoiler for me is the lack of a walk in closet...but for $20,000 less, I think I could manage.

Im rambling out loud, but all this is very helpful.

Mike 350Z

If I were you, I'd buy, like I did last summer. (Actually I would have saved a bit more first, then bought). But I don't know your market and I don't know if you'd like to sacrifice some things like I did (like spending $200 a weekend to eat and get drunk like some of my friends do). The situation with me is that my sister and i went in on a TH together, so it has the benefit of a 100% guarantee she'll pay her half of the mortgage every month, but the reward isn't as high on the other side of course. And my half is pretty much what most rents are going for around here for 1BR apts.

Since you'll own it all yourself, you'll see greater reward at the end, but essentially getting someone else to pay part of your mortage is not as reliable.

Don't forget about things like furnishing it, that you might not like the blinds, cost of utilities, and food for yourself. My share of the utilities is another $160 or so per month, plus 150-200 for groceries.

Although I will say that 9-10k of deductions is a nice present each year

Also, don't mess with that interest-only or ARM garbage now, especially in a cool market. IMO, if you can't afford a conventional 30-yr fixed now, you can't afford the house

paranode

The rates are low now, true, but if you know you won't be staying there long-term there's no sense in wasting money on a conventional 30yr IMO.

Mike 350Z

True, but having no equity or even having the principle increase = no fun, especially if your home value is stagnant or increases very little.

For me it was only .25% or .5% higher so it wasn't that much more expensive, plus they threw in a 1% buydown for the first year (but I wouldn't count on getting one of them).

fuzzy02CLS

iTrader: (2)

940 sq feet is TINY. Even the 1100 isn't all big. $125K however is a bargin given the FL market. Yeah it's cooling off, but the prices you see now aren't going to come down all that much.

I'd rent & see what happens in the next year. This will also allow you to save some $$. That's what I'm doing.

If you need a roomate to pay for the condo, then you can't afford it & should stay away till you can.

GIBSON6594

If i could get 940 ft 2/2 where i live for 125K I would sing songs to the property Gods

SakiGT

Right now I would not be able to afford the payment without a roomie...

In a few months I will be able to handle it on my own but will have the roomie so I can may extra payments, invest, etc.

The issue is that the $25,000 subsidized loan wont be available to me if I make more than 30k (around that number...). Not to mention the fact that the unit in the building that I want may not be available.

So its basically a 6 month risk. If I can pull this off my payment would be at most 25% of my income (with a roomate)....

Ill call Suntrust tomorrow once I have my ducks in a row. They may just laugh me out of the bank

Mike 350Z

Ehh, you're young. Give it a shot. If it fails you can always move back home and rent it out to a couple or something.

moeronn

A couple of things to think about:
1. How long do you really plan on staying in the area? If you have no intention of leaving then maybe.
2. How sure are you that you will have this new job? If it's less than a 99.9% probability, then pass.
3. Would you be able to make the payments between jobs without eating up too much of your savings? You don't want to eat tuna and crackers everyday just so you can make your payments.
4. Would you have to cut out so many things you're acustomed to that you will hate your life? If so, then pass.
5. If/when you get a roommate, would you be able/willing to be firm and stand up to the roomie if they are late on payments?

If you honestly answered the questions above and the answers point you toward buying, I would go for it, now rather than wait. If any of your answers steer you away from buying, then definitely wait.

It's not very often that you hear people say "I wish I waited to buy that place" Even with a slight downturn, if you're sticking around for a while, it won't make much of an impact. Good luck.

MR1

This is a good guide and good points. You do have to live somewhere, nice to get a steak in your home. I bought my first house @ 24, 56 now, old as dirt I know. Never regretted one purchase for long, we now own income properties. Tax savings and profits have paid for lots of stuff over the years. you will have to sacrifice for a little while but it does pay off kind of like formal education - but that is a different subject. Everyone always has excuses of why you should wait to buy. Let us know what the bank says. FWIW, I am a Real Estate Broker in CA, might be a little biased but not much.

SakiGT

1. Jacksonville hasnt given me a reason to leave. Goog jobs, good growth, nice beaches, growing downtown, good weather, and no hurricanes

2. Am I sure about any job in particular, not really. But I have a fallback job I can get very easily and make 30k until something better comes along. Im just trying to pull the "college graduate" string with these employers.

3. I live fairly simply now. I spend the equivilent of a payment paying off debt (which will be gone in a month). The bulk of my money is spent on my car and travel. If I spend more than $25 or so on a night out I feel disgusted...and that includes food and drinks.

4. My car would be paid off if I got the house (since the reason Im keeping the payment is for a steady credit history). If I can keep my PT Cruiser and cats all the other material stuff can go for all I care (in fact, thats pretty much how it is now).

5. I wouldnt choose a roomate who couldnt afford to live with me and I could make payment plans flexible enough so that if they couldnt afford to pay I would not only be surprised but have enough arguements to cover any excuse they had.

My life has pretty much been run by work hard now and it will pay off later. Ive worked at least 30 hours a week since I was 16 and am graduating with a 3.5 GPA (note I was on the 5 year plan). That kind of stuff doesnt happen on accident. If I have to eat PBJ a couple months to have a steady home at a good price in a nice neighborhood, so be it. But I dont thats going to be an issue.

Mike 350Z

sounds like you have a good head on your shoulders. let us know what the bank says.

SakiGT

Ok. So I got off the phone with a lender, asked some basic questions then filled out the online application.

Just with the basic info I gave him he says Im in good shape and that the monthly income wouldnt be that big of an issue...even if I kept my car payment. Thats mainly because of the $25000 down payment and what not. He seems like a cool guy and I probably sound like an easy commission.

Ill keep this updated. Im sure it will be helpful to someone like me. I know I could have used something like this about a year ago.

moeronn

Sounds like this could easily work out.

A couple questions about the $25k loan:

You mentioned that there is a salary limit. Is there any penalty if your salary goes over the $30 AFTER you get the loan?

What kind of loan is it? You just pay back the principle and the interest if forgiven if you stay in the place for X years? Is the whole loan forgiven if you say in the house X years?

SakiGT

Income at time of purchase is what they look at...if if was dependent throughout the loan I wouldnt be able to make more than 30,000 for 30 years

The loan is zero intrest and non-amortizing. I have to repay if I sell, transfer ownership, or refinance. Good deal, eh?

NSXNEXT

iTrader: (2)

repay what? The interest on the loan? At what rate? How is what you have to pay back determined?

SakiGT

All questions I need to ask the broker. The information I downloaded doesnt go into it. For me, its pretty much a non-issue because I plan on staying in the home for quite a while. All the loan is for is down payment assistance. It would become a problem if the home lost approx 20% of value over 8 years (not gonna happen).

moeronn

There should be a time requirement - like you have to live there for at least 5 years. It can't be indefinite. Make sure you ask about that, too.

SakiGT

The first lender is slacking so I contacted another.

I also found a 3/2.5 home in a comparable neighborhood (established but not growing like the condo) but its 1500 square feet, has a garage and is $10,000 less. Things that make ya go hmmmmm...

SakiGT

So its looks like Ill be paying off my car early to get my monthly payments down.

Add on the fact that Im in the medical field and get a discounted rate through the state of FL...

30 fixed @ 5.31% My car loan was 5.25!

Man I hope this works out.

gatrhumpy

iTrader: (1)

Good luck Lauren! I know we're going to be heading that way in a couple of months. In mid-May, we're going to be driving to Jacksonville to house-hunt. We're really excited about it.

So what you're saying is that the rate you were offered on the home for 30 years was 5.31%? If so, that's a really good deal.

What is the car scene like down in Jacksonville? Any clubs or anything like that?

Oh, and I'm excited about the beaches too!

MikeCLS6

I wish the Northern Virginia market was that cheap!!! I need to move down to Flordia with those prices, wanna roomate?

SakiGT

If everything goes like I want Ill need one to split a 3/2.5 @ $400 a month plus utilities

SakiGT

Yea. He told me my credit score was awesome so he had no issue getting me that rate.

Lots of car clubs in Jacksonville, but the cops are crazy about street racing so be careful. We have Saturday hangouts that tend to be popular, and most of the time the modded Ford GT from all the videos show up, so thats interesting.

Personally I never have the time or patience...most of the time its F&F style.

The beaches rock. The water isnt crystal clear but even on the busiest day of the year you park at most 3 blocks away to get to it. Most days I get sand-side parking

MikeCLS6

I was just checking RENT at a place in Northern Virgnia (Alexandria) to be exact and it was 1,600 a month.

400/month + utilites would be a blessing!

Too bad i enjoy the living on my on my farm city life is only a 30min. drive

gatrhumpy

iTrader: (1)

It's a good thing that we're heading down there then! I love the beaches, and so does the wife and my dog. Do you have any other hobbies down there? Personally, I love playing tennis.

gatrhumpy

iTrader: (1)

Yeah we were paying $1045/month when we first moved to the DC area. That was in Waldorf, MD. When we got a townhouse, the monthly mortgage payment jumped to $1350, but we could handle that. Now, when we move to Jacksonville, our after-tax income with jump slightly (no FL income taxes), and we'll cut our mortgage payment in half!