Kaston and I have been looking around lately at various options for home ownership. We’ve talked to a mortgage broker at Wells Fargo, talked to a realtor, and have been looking at lots of new townhome developments around the Lewisville/Carrollton area.
Kaston is pretty much set on buying a house (or townhome/condo) at this point, and says that there is no way she wants to continue renting when our current lease runs out in January (be it at the same apartments or elsewhere).
After talking to some guys up here at work and reading articles like this one, though, I’m not feeling so sure about buying a home right now. The housing market has been going downhill for a year or so now, and until it shows signs of stopping I feel like we might be getting ourselves into a financial black hole (especially if we do a zero-down mortgage like we would need to if we wanted to buy a house before January).
So I just wanted to get opinions from the various folks who read our blog. Should we buy a new home/townhome or fixer-upper (and either fold costs for improvements into our mortgage or spread out various home improvements over a few years as we have the available savings) before interest rates go up? Or should we continue to rent and save up a down payment for when the housing market really bottoms out and we can get better appreciation of the home (if perhaps not quite as good an interest rate)?
We’re at the point right now where our finances are finally well under control. We’ve got two incomes now, and our student debt is getting payed off rapidly. I just want to get some advice from all of you older and/or wiser members of our friends and family to help us make the best decision.
April 25th, 2007 at 7:20 pm
One: I would not base a choice like buying a home solely on one article.
Two: this only applies to new/newer homes. Foreclosures and fixer-er-uppers do not apply
Three: number 2 is only valid if the article is true.
Four: there was no mention of Dallas in it
I know I am biased because i really do want a home. I feel I have long out grown living in an apartment.
I make our house hunting more difficult because I get carried away with little details that I should not be. We need a starter home, not our dream home, and I need to start remembering that.
April 25th, 2007 at 8:56 pm
My opinion is Kas is right in saying you need a starter home and not a dream home. key will be finding an area of town that you can expect to appreciate
April 26th, 2007 at 10:11 am
I third that statement. You’re in your mid-20’s– it will be more rewarding when you’re older to get that dream house when you’ve worked your butt off for it (not that you aren’t working hard yet, but it will take a lot of it!) and are in a place that it will be a GOOD thing, not a financial stressor.
Dean’s right about the housing market– and it’s not like he’s putting all his faith in ONE article–
an article that mentions that Dallas and Fort Worth have the 9th an 10th highest foreclosure rates in the country…
And there have been tons of others, too.
Not to say that you guys couldn’t do it, especially if you keep in mind that some day you can have perfect marble counters and 16 foot ceilings but that doesn’t have to be now!
April 27th, 2007 at 1:10 am
The high rate of foreclosures in the area is to our benefit. If we can find one we like, we can save a lot of money!
April 27th, 2007 at 8:26 am
but isn’t that sort of a “it could happen to you” indicator?
April 27th, 2007 at 9:01 am
Most of those people got caught up in the interest only loans that get you screwed. We have good credit and can get a normal loan. We know what we feel comfortable paying a month and have a pre-approval that reflects that.
Barring any severe injury or illness on our behalf, foreclosure is not a real likely scenario because of where we are at in life.
April 27th, 2007 at 6:32 pm
When you get a 0% down payment mortgage, you pay through the nose in other ways — like a higher interest rate than if you are able to put down at least 10, preferably 20%. That’s an argument for saving up enough down payment to get into a starter-type home.
Too, what about graduate school? If you lock yourself into a mortgage and a geographic location as well, aren’t you really limiting that option for yourself?
April 27th, 2007 at 6:37 pm
P.S. Whatever you do, don’t get an adjustable rate or balloon mortgage.
P.P.S. Did that book I got for you guys have any good advice on this kind of decision?
April 27th, 2007 at 7:02 pm
Wells Fargo is a good lender. Stay with a reputable commerical bank because they will stay out of risky lending and won’t make a loan to a customer who can’t service the loan terms. They don’t want to foreclose and become a property owner.
Have you thought about getting advice from an accountant or financial planner? You do have two incomes, but what would happen if one of you lost your job or became unable to work? If you are still paying off other loans, that’s a consideration.
Spring is the intense sell/buy time. It might be prudent to watch what happens through this season and get prepared to buy in late summer. By then, unsold properties will be reduced and you’ll know more about how the overall market is going. Just a thot.
April 28th, 2007 at 10:40 am
Last night’s “Now” program on PBS had an in-depth feature on this very subject, from lots of different angles. It would be well worth watching, and the website includes video, as well as real estate finance tips in the form of a Q&A from an expert on predatory lending.
Past Due and Payday
Housing in the United States is taking a big hit as “too-good-to-be-true” home loans fail, refinancing dries up, and foreclosures surge. How did the market plummet so quickly — and are current homeowners paying the price?
http://www.pbs.org/now/shows/317/index.html