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  1. #1
    Join Date
    Jun 2005
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    1,785

    Default when do you know you are ready to buy a house?

    we're renting right now, and we aren't sure when we will / can afford to buy... financially speaking, when is 'ready'?

  2. #2
    Join Date
    Jun 2005
    Location
    Melbourne, Australia
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    274

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    For us it was as soon as we could scrape together the minimum required, which also happened to be wedding planning time, not the smartest mov, but we managed in the end. We just got sick of renting, knowing we were giving money to someone else when it could be going towards our own mortgage. Our mortage ended up less than it costs to rent a lot of places too.
    Married 20/9/03... Ruby 18/5/04... Chloe 29/3/06

  3. #3
    Join Date
    Jun 2005
    Location
    Milan, Italy
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    4,405

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    We're basically in the same situation as crazycaro mentioned. We spend about 10k euro a year in rent and we've been renting for the last 7 years. That's 70k euro we've given to someone else.

    We currently live in a 1BR apt. For the same amount that we spend in rent each month, we could buy a 1BR apt in the area we currently live in or nicer. If we are willing to move a little further away from the hubub of activity, we could possibly squeeze in a 2BR. I just don't see the point in renting considering these circumstances. We'd be going into the investment with precisly that in mind -- it's an investment for us that we later plan on renting, especially since we may move back to the US at some point.
    "He who knows he has enough is rich" - Lao Tzu
    --<--@ Tiffany @-->--
    LJ ~ Chart

  4. #4
    Join Date
    Jun 2005
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    10,940

    Default

    i would draw up a budget and decide if you are financially ready to buy a house. personally, i would wait until you had 20% to put down. we didn't do it, and we regret it bc we are paying a lot of money towards interest. we can afford the house according to our budget, but we still wish we would have waited until we had a bigger down payment.

    also, something to consider is home maintenance. not only the money, but also consider the time it takes. we spend about 1% of the value of our home in home maintenance each year. i have spent several w/e's and nights after work doing home improvement. also, consider if the house is bigger than your rental you are going to spend more time cleaning and doing yard work.

    you should also have an emergency savings account, so if something big breaks or needs repairs you could use that. also, you would need an emergency account if one of you were to lose your job, so you could still keep up the mortgage payments.

  5. #5
    Join Date
    Jun 2005
    Location
    Minneapolis, MN
    Posts
    2,198

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    We weren’t sure we were ready, but we went to talk to a mortgage consultant and she showed us some options that were available to us with our current savings/income situation. I am so glad we bought when we did. Because our income was relatively low, we were able to get a low rate FHA loan without having perfect credit or 20% down. Not only are we not paying someone else rent, but our home is a good investment – it’s appreciated 10% a year so far, which is much more than we’d have ever been able to save. After 2 years we have more than 20% equity in our home, and are hoping to put 20% down on our next non-starter home.

    So in my experience, if you run the numbers and find that you can afford to buy without being totally broke, than you’re ready to buy!

  6. #6
    Join Date
    Jun 2005
    Location
    Chicago
    Posts
    5,592

    Default

    I agree with the PPs.

    I think you need to have some money down on your house. Obviously more is better, but the 20% rule isn't so hard and fast with the different financing options. Definitely make sure you have some savings left for emergencies (either repairs or mortgage payments) and home improvements.

    Sit down and make a budget of your current situation - just simple ins and outs. Then take out the things that will go if you move. Now add in all the expenses that come with owning a home - utilities, etc. The residual will be used for savings and your house payment (plus escrow). From there, you can find out how comfortable you are.

    I think everyone has different tolerances for what they have left each month. I personally don't feel comfortable being house-poor, so we chose a house payment that was just over our old rent payment. Being in a house is no fun if you can't buy things for it or continue a reasonable lifestyle.
    She'd be his wife and make him her husband 5/03Ds1 12/22/09...Ds2 8/31/12

  7. #7
    Join Date
    Jun 2005
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    10,940

    Default

    ummmm - also, consider if you live in a cold climate, you heating bill will be considerably more. in nyc, you don't pay heat as a tenant, so our heating bill skyrocketed. we pay close to $300/mo in the winter.

  8. #8
    Join Date
    Jun 2005
    Posts
    1,785

    Default

    thank you all!! really helpful.

    rebjc - you are right, right now we only have to pay for electricity, internet and phone. all other utilities are paid for and it's definitely cold here!

    I guess another factor we have to consider is that we'll probably be in the same town for the next couple of years, but we aren't sure what we'd do after that (it really depends on the job situation after I graduate from grad school, which i'm diong p/t at the moment). so i wonder if it'd be hard to sell...

  9. #9
    Join Date
    Jun 2005
    Posts
    10,940

    Default

    yes, i wouldn't count on huge increases on your equity in the next couple of years. they keep saying things are going to slow down. i heard a financial advisor say once that you should think twice about buying a home if you plan on moving in the next five years.

  10. #10
    Join Date
    Oct 2005
    Location
    Ohio
    Posts
    570

    Default

    Quote Originally Posted by crazycaro
    For us it was as soon as we could scrape together the minimum required, which also happened to be wedding planning time, not the smartest mov, but we managed in the end. We just got sick of renting, knowing we were giving money to someone else when it could be going towards our own mortgage. Our mortage ended up less than it costs to rent a lot of places too.
    That's how we feel right now. We've found a condo that we really want, and isn't too pricey. We're going to find out the minimum to put down and hopefully get a home

    We've been renting since April 2004 and are sick of throwing money into a place we can't keep. Plus we are moving back home and wanted a place of our own, not another apartment. We are hoping everything works out and we can get this condo in a few months!
    julie & jason ~ 06.03.05
    furballs ~ laci & checkers

    My LJ

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