STYLETHREAD -- LET'S TALK SHOP!

Karina · Chanel

How do you know when you're ready to buy a house?

NCshopper · Hermes

I think we knew we were ready to buy a house when our upstairs neighbors were fighting on their balcony one night at 2 am and in a rage I went outside and told them to "shut the fuck up or I'd call the cops!" That was bad.

But seriously we decided to buy when we both had steady jobs and we realized that we'd live here for at least the next two years. Housing in our area is pretty affordable and we had the money for a down payment, so really there was no reason not to buy.

I think major factors to consider are: how long you're planning to live in the house (if you move within two years, you're realtors costs will probably outweigh your profits) and affordability.

I love having a house, but oh my god, the first night we stayed there was overwhelming. It was like this sudden realization that if anything goes wrong, you have to fix it. Yikes! But I got over that feeling quickly and now we don't have any upstairs neighbors to yell at! Woohoo!

itsapinkthing · Coach

Probably not the best way but hubby and I got serious when we found out about this baby. We knew what we could afford monthly for a mortgage and what houses in the area we wanted to buy cost. So we went to a friend who is a mortgage broker and basically asked to start the preappoval process just to "see what we could get". We were approved for an amount we would never spend, but it helped us know what price range was acceptable for us to start looking at.

As far as factors we considered for where to buy, school district was #1, followed closely by the fact my husband need to be within the residency for the fire department he works for. The are we live housing is pricey and taxes are high, but it's a really good area. So we had to consider that in going a bit lower on what we were willing to spend on a house. Basically we got less house for out $ than if we went somewhere else, but we knew it would be a "starter" house and that this was THE area we wanted to live in.

-- Edited by itsapinkthing at 12:39, 2005-12-07

halleybird · Hermes

hmmm... short answer would be "when you no longer want disposable income." LOL

Seriously, though, buying a house is one of the smartest things you can do, but you have to be willing to compromise, like itsapinkthing said. We bought our first house at age 23, when we had basically nothing -- it was in a brand-new, outlying section of town, and definitely not where we wanted to live forever, but we made almost $100k on it when we sold it two years later. We were then able to use that money to buy this house, which is in a very nice part of town and is big enough to raise kids in if we want to stay here forever. If we had waited, we would NEVER be able to afford the house we're living in.

Sometimes I wish I only had to deal with rent, but in the long run, I think it's worth it. I would only do this if you can stay in your house for at least 2-5 years, though, because the market is starting to slow down. HTH!

MissMee · Kate Spade

Well, my first house was purchased because we hated living in an apartment and wanted a place to do as we wished and be "grown-ups". It was very small, but it had a massive yard. My second house was an upgrade when we found out we were having a baby. It was bigger (about 1850 s.f., but a small yard). Those were w/ ex-hubby.

My next house was already occupied by my hubby, so I had no choice. It was terribly small, anyway. My third house was yet another upgrade because we found out we were having a second baby. We built that one, and it had 6 bedrooms and 2 acres of property. Our fourth house was because we wanted to move further inland (#3 was on the Cape) and be closer to the grandparents. It was about 3000 s.f. and had 5 bedrooms and a little over 2 acres but in a tiny neighborhood w/ no kids. And house #5 (our current house) was chosen because it is bigger, we hated the city where house #4 was located, and the neighborhood is humongous and full of kids.

Whew! I move a lot! Seems that maybe I haven't figured out the answer to your question yet!

jj · Kate Spade

Because I was too lazy to move! Seriously. I was renting an apartment and my landlord wanted to sell it. I scraped together the downpayment and bought it.

Turns out it was the smartest dumb thing I have ever done. It doubled in value in two years, I got married and we were able to use the $$$ from the sale to buy asignificantly bigger condo.

As far as knowing, in DC it really comes down to

1. having the downpayment - places here are seriously scary-expensive

2. being comfortable with you monthly payment. I never want to be "house poor."

Now we are looking at single family homes, and at first I was FREAKED OUT. There was something about having a free-standing structure with lots of space that made me feel vulnerable, even though we will be paying the same monthly payment.

I got over it a few weeks ago when our upstairs neighbor started hammering something at 6 a.m. on a Saturday, then someone's car alarm went off on the street and a fire truck went raging by all by 6:15 a.m. Now I can't wait to move!!

Elle · Hermes

We have been considering own vs. rent ourselves. We are planning to live in Denver for the next 5 years or so, but the housing market here is SO. FREAKIN'. RIDICULOUS. that we just can't afford to live in the city. 1 bd/1 bth condos go for upwards of $200k here! If we weren't paying for our expensive-ish wedding out of a single years' income, we probably would be able to afford a house. But we can't do both - having a house would eat up our savings for a down payment, a monthly payment almost double what we pay in rent, not to mention mortgage insurance, homeowners insurance, property taxes (also really high here), maintenance, upgrades/improvements, increased utilities, yard care, Fa lalalala lala lala.

On top of all that, most mortgage companies WAY overapprove you as far as an amount you can 'afford'. Just for example, FH and I applied for a house loan when I was 18 and he was 19 and we were making maybe $35k or so a year between us. They approved us for a $200k house loan! Stupids! Soooo many people get caught up in 'owning is the smartest thing you can do' these days - many times it's true, but IMO it's led to people buying when they aren't financially sound enough to do so and getting monthly mortgages that are way too high for their incomes. It doesn't matter how much money you make, if 95% of it is tied up in set monthy expenses, it's going to be a very very tight way to live!

If you are comfortable with the state of your finances right now as far as breathing room goes, the kids have college funds, your savings/retirement is on track, you don't have any outstanding high-interest credit card debt, your cars are paid off/at a low interest rate, etc then run some percentages and figure out what your maximum 'comfortable' mortgage payment could be per month. Then figure backwards and see how big of a mortgage that would be to find out which houses would truly be in your price range, instead of falling in love with a house only to run the numbers and find that it's twice what you'd want to pay per month.

Whew! HTH!

halleybird · Hermes

also, do NOT get an interest-only loan. I don't think you have to be free of debt to buy a house (we definitely weren't), but make sure you look in the price range you can afford (NOT in what you're approved for, like LMonet said). I think if you do want a house, you just need to figure out what you're willing to sacrifice. For us, that means no big vacations or lots of spending money for the next 3 years or so -- and I can live with that.

The best thing to do (according to Suze Orman and my mom ) is to look at your finances and try to live with your new house payment now, before you initiate the process. For example, if your rent is $1000 and you think you'll get a mortgage with a $1500 payment, then put that extra $500 away somewhere in a separate account each time you pay your rent. If you can do that and still live comfortably, then that's a good payment range for you.

You may also want to look into an FHA loan, which is what we used the first time. It allows first-time homebuyers to put down a lot less money (i think as low as 3-5%).

erin · Chanel

well..we had been wanting to buy a house when we moved back to the area, but rented for a little under a year before buying. the last straw was when the people who lived above us (who were disgusting) flooded their toilet and the water was coming through our ceiling! the landlord took about a week to do something about it, and that's when i decided we were DONE there. we ate about two months of rent, but i didn't care by that point.

our house is an eternal work in progress. we got totally shafted with our first mortgage, but now we refinanced to a 15 yr instead of a 30 yr and we are paying almost the same amount. (stupid fucking countrywide. DIE.DIE.DIE.)

oh duh, halleybird and i had the same thoughts on the orman tip.

-- Edited by erin at 08:01, 2005-12-08

NCshopper · Hermes

halleybird wrote:

The best thing to do (according to Suze Orman and my mom ) is to look at your finances and try to live with your new house payment now, before you initiate the process. For example, if your rent is $1000 and you think you'll get a mortgage with a $1500 payment, then put that extra $500 away somewhere in a separate account each time you pay your rent. If you can do that and still live comfortably, then that's a good payment range for you.

This is a great idea. You can try it for a few months, put that extra money in a savings account, and then put it towards your down payment once you buy.

Also, depending on where you live and your down payment and everything, it may actually be cheaper for you to buy than it is to rent, which was our case. I don't know how common that is, but it's pretty nice!