Flagpole, Home buying advice

Be careful. Invest in gold and pay off ALL debts before buying a house. I do consulting on the side...let me know if you're interested and I'll give you my contact info. We can work out some type of side deal.

How can you say you are debt free when you have a car payment ?

company lease. then I get to buy it out in 2 years at significantly less than Black book. it's well worth it.

Thats fine but you are not debt free.

I'm 100% debt free, but I have 2 car payments, a house payment, and 4 credit card payments.

1) You aren't debt free if you have a car payment.

2) My advice would be to wait for 1 year after you are married before you by a house...gives you both time to figure out what you really like, and exactly where you want to live. But...

3) ...if you're going to buy a house, you really need to get past thinking you're debt free when you have a car payment...can't emphasize that enough. Then, you need to decide if and when you're having children and if and when one of you will stay home with them and for how long. This makes a BIG difference in what I would say to you.

If no kids in future, with $82,000 base right now and interest rates still around 5% for a 30 year mortgage, you could likely handle a $200,000 loan, but you really should do the math. You should PLAN to spend no more than about 25% of your take home pay on the mortgage. If you continue to invest as you are (which is GREAT) then your take home pay is lessened. If you two are still young and don't plan to have kids, $200,000 is easily handled.

If you are having kids in the next 3 years or so, then you really need to base this house on your income only UNLESS you can take 100% of her income over the next 3 years and throw it at the house. Again, it's all about math. The target is 25% of your take home pay going toward the mortgage. You could decide to invest LESS for a few years if you really want a certain house, but then plan to make more income with raises or different jobs so that you can eventually invest at the level you currently are.

If by Marysville, you mean Marysville, OH, then you've picked a nice small town. I'm in and around Marysville frequently.

Honestly, (you didn't say how old you are, but I'm assuming not too old) young couples starting out making $82,000 and potentially more than that can just KILL it with regard to winning financially. I have a friend who makes about $55,000 and he's getting married in summer 2011 to a newish public school teacher, and their combined income is going to be about $91,000. Their plan is to save $40,000 a year and in 4 years just flat out buy a $160,000 house (or put down a HUGE downpayment on one slightly more expensive one). They can easily do this. You could do it too...however, you could actually get the loan and just throw money at the mortgage to get it gone...my buddy just doesn't like loans of any kind.

Good luck!

I wouldn't pay over 125k for a house in Marysville. There are a lot of great houses you could buy for that.

Go here

http://www.realtor.com/realestateandhomes-search/Marysville_OH

and start looking. Look every single day until you find the house that you want to buy. With the foreclosures not expected to peak until the middle of next summer, you should easily be able to get a great house that sold for 175k+ a few years ago.

I am seeing a lot more foreclosures that are virtually move in condition and only need minimal cleaning and repairs.

When you find a house you like, you can get more info by going to the auditors site here

http://www2.co.union.oh.us/parcelSearch//

If you are patient, you can save a bundle of money and get the house that you both like.

Good Luck

This is what is BS about our tax system. What would be best is to live frugal for a couple years and share a small one bdrm apt with the future Mrs. Looks like in a couple years you could have the car paid off and have money saved for a hefty downpayment. But with apparently no kids, not being in school, and not owning a home, you are going to be taxed a hell of a lot when you combine fed income tax, state and local taxes, and payroll taxes. The government rewards debt in your home with the mortgage interest deduction, not ownership of a home which you have to pay with after tax dollars. If they promoted ownership of a home they would drastically raise the standard deduction and cut payroll taxes. But both major parties are against that.

Its a tough call for you. A huge factor is how dependable you feel that 82K is for the forseeable future. And what are are the housing prices like in Marysville? Where is Marysville anyway? Also, I'm not clear on your savings. Remember that you can withdraw the contribution portion of your Roth, penalty free and tax free. Moreover, the first 10K of earnings accumulated in the Roth can be withdrawn for the purchase of a first time home. Are you saying that you have 5K in savings + two ROTHs that you have already contributed the maximum amount to? That would go a long way towards a healthy downpayment right there, before you even get to your parents.

Assuming the income is solid and you can find a decent house that you can reasonably expect to retain value in the 150K to 200K range, I think you should consider getting a 15 year loan. That way you get a lower interest rate, much more of a housing payment would go to equity (which is key), you still get a nice tax benefit from the mortage interest deduction.

If things turn south financially I don't think its too much of a problem to revert to a 30 yr mortgage. Assuming you keep your personal spending about the same, you should still be able to make out the 401K and/or IRA.

[quote]ryan foreman wrote:

But with apparently no kids, not being in school, and not owning a home, you are going to be taxed a hell of a lot when you combine fed income tax, state and local taxes, and payroll taxes.

WTF? You think having kids and a mortgage saves you money?

Don't get it wrote:

How can you say you are debt free when you have a car payment ?

is a zero interest loan debt free?

The New UncleB wrote:

[quote]ryan foreman wrote:

But with apparently no kids, not being in school, and not owning a home, you are going to be taxed a hell of a lot when you combine fed income tax, state and local taxes, and payroll taxes.

WTF? You think having kids and a mortgage saves you money?

I'm pretty sure he was just saying that the government incentivizes people to have kids and take out loans to purchase homes that they couldn't afford without the government programs. Holding all else equal, the OP's average tax rate would be lower if he had kids and onerous debt... he'd just be in a much more precarious financial position because of his new and massive expenditures.

Why have you only been able to save 5k? You really should have more in savings. Before you buy a house, you should live like you are on welfare for as long as you can stand it so you can save up enough money. When you move in, you will probably be spending money like candy on fixing up the house and getting all the house stuff (furniture, tools, lawn equip, etc.) you need. You will be surprised at how quickly you can spend 4-6k on everything from paint to carpet to appliances and so on. Even if you get a great home warranty, you will still be out of pocket a lot of money on repairs. I had to pay $2100 for plumbing after the home warranty paid its share. And you really a few thousand extra on top of that in case you have to walk away from a house because it fails inspection (that will happen). Really save your pennies for a year and then give it a shot. No trips, concerts, eating out, etc. Buckle down big time. You should be able to save another 5-10k in a year, if not more. That way you can move in with 10-15k in the bank and be ready for everything.

precious roy,

The guy saved 5k in the first 6 months he was employed. That is a great start.

While my frugality has allowed me to now own 12 houses, you really don't have to live like you are on welfare to get there. I lived like that while paying my way through college. It's all about balance.

irony killed the cat wrote:

Don't get it wrote:

How can you say you are debt free when you have a car payment ?

is a zero interest loan debt free?

No. Debt means you owe money.

WTF? I'm talking about taxes idiot. Yes, for taxes those things do save you money.

The New UncleB wrote:

[quote]ryan foreman wrote:

But with apparently no kids, not being in school, and not owning a home, you are going to be taxed a hell of a lot when you combine fed income tax, state and local taxes, and payroll taxes.

WTF? You think having kids and a mortgage saves you money?

He who make all decisions based on taxes end up with no income

ryan foreman wrote:

WTF? I'm talking about taxes idiot. Yes, for taxes those things do save you money.

]

I recently went through my first home purchase and now looking back on it, this is what I would do differently or do all over again:

1) Search, search and search for the house you want. Once you buy something, realize that you are stuck with it. Try to avoid telling yourself "oh I can live with that" because it might come back to haunt you.

2) You need a much larger down payment. I bought a 200k home with 60k down (4.6% interest rate) and I am paying interest out of my ass. Right now I am 110k in the hole and I still think I pay too much interest. Also the refund doesnt make up for having high interest payments.

3) Add up all your costs. For example I did taxes, mortage, condo fees, home owners insurance, car/motorcycle insurance, utilities, cable. Those were basically all my fixed costs.

My suggestions: Research all your properties. I looked at so many options that I could tell you what was a good deal and what wasnt. Find someone to go through the property with you. I wouldnt say you NEED a realtor just someone that knows what to look for when purchasing. Also put less money away in retirement accounts. If you would rather max out your retirement accounts then put off home buying. If you would rather buy a house then put off the retirement accounts. You just dont have enough saved up for both.

Good Luck

I had about 7k on credit cards I lived one for the last 6 months of school and a smaller student loan which are now paid off, so in the first 6 months of my job I have essentially put away about 14k. so yeah, currently I alone on my income can save about 25k a year, plus roth plus 401k.

I am currently looking at houses in the 130-170k range, I like the area and repo's seem to be the way to go. We plan to use her income to quickly pay back the down payment and then probably dump into the mortgage. We plan on having kids in 3-4 years, but her job would allow for very flexible hours and part time, hence the projected range which is dependent on how much she works.

I can turn the lease back in immediately if I wanted to with no penalty so currently I have no debt, although I plan to buy it out so I suppose It actually should be looked at as debt.

Just looking for reassurance that 170 would still allow us to be comfortable.

What is an ideal surplus to have in a budget, I've budgeted for everything and I'm coming up with $300/mo surplus while paying back the parents and then about $1100/mo once that is paid off. (car should also be paid off by then)

Why not wait? If you can make the down payment without borrowing, you will save @650 a month for five years. That would give you a 950 a month surplus. $300 a month surplus is very thin. And make sure that you include all the stuff you pay for with a house that you don't need renting (gas, electric, buglar alarm, water, property tax, homeowner association, life insurance, termite treatments, flood insurance, property insurance, tree service, and so on). Those may blow up your $300 a month surplus.