I just graduated from college and I have a debt of close to 50,000 dollars that I owe to the US DEPT of Education. I have 3000 dollars take home pay. I also have 50,000 dollars in my savings account. Zero credit card debt. I am looking to buy a townhome in northwest suburbs of chicago. I've already been preaproved for the loan. The house I am looking to buy is around 170,000. The assmt fees is 160/monthly and 3000/annual taxes. I don't have any other bills besides a cell phone , car insurance and my health insurance which is 300 combined. Would you consider buying a house in my situation?? Do you think it would be risky. I only plan to do a 5% downpayment. My loan also has 0 closing costs..and 6.625 interest rate thru Bank of America.
2007-06-09 15:32:29 · 9 answers · asked by Anonymous in Business & Finance ➔ Renting & Real Estate
I am not paying PMI by doing 5% down.. Bank of america just started a new mortgage with NO PMI for less than 20% down.. and no closing costs.. the interest rate is fixed 30 yrs at 6.625. I do not like to spend all my savings on my downpayment. I rather get another weekend or seasonal job and make extra payments on my morgage. I know how hard it is to save cash.
2007-06-09 19:17:52 · update #1
Always buy if you can afford it.
If Renting is 100 cheaper a month, just think for 100 more dollars you can be OWNING that house. A Much better investment.
2007-06-09 15:39:47 · answer #1 · answered by Gump023 4 · 0⤊ 0⤋
If you have 50,000 in a savings account why are you only putting down 5%? Are you putting that onto your student loans? If the money you have saved is not giving you a greater return than what your student loans or your mortgage will cost you - why not put it towards that? If you are only going to put 5% down - I don't know if I would buy, as you will have to pay PMI - which will increase your mortgage payment.
Owning your own home has many great rewards, but it is also risky. You must be prepared to pay for home maintenance. It doesn't matter how new or old your home, you will have to fix something and you have to stay on top of regular maintenance to keep things from getting to the point of more expensive repairs. You should also be committed when buying a new home - is this really where you want to be for the next 2 or 3 or more years? Personally I wouldn't buy a townhome, because they typically have many rules and regulations that you must follow. So make sure that you read the regulations carefully and make sure you can abide by them or that it won't get on your nerves. I could never abide by all of the rules in a townhome for very long.
You have a lot to consider and are in a very good position. Buying a home is a wonderful event and I highly recommend for those who are able and fully prepared.
2007-06-09 17:49:11 · answer #2 · answered by Jas 3 · 0⤊ 0⤋
Buying a house is a better option if you plan to live there for 3+ years. It's actually an investment that has a possibility of paying you back money when you do decide to sell. If you rent a house, you just pay money away and don't really receive anything that you can keep in the long run. In my opinion, b/c you have few debts besides your school loans, you're in a GREAT situation to buy a home. I bought a house one year after I graduated (the only reason I waited was b/c I moved to a new city and wanted to find the right area), in spite of all my school debts. Now, just 3 years later, if I would sell my house it would sell for about $20,000 more than what I paid for it! That would pay off most of my remaining school debt!!
2007-06-09 15:40:51 · answer #3 · answered by trustme_imascientist 3 · 0⤊ 0⤋
You have to take into consideration the cost of owning and maintaining your home. Factor in the utilities, maintenance, emergency money for repairs. You say you have 3k in take home pay that has to cover the mortgage, insurance, gas, food, etc plus your outstanding student loans. Since you aren't putting down the required 20% you have to pay PMI insurance also on the note. I suggest using a rent vs. buy calculator here http://mortgages.interest.com/content/calculators/rentvsbuy.asp
and figure it out to the penny. There are benefits to rent versus owning, however, having the tax write off when you own a home, makes most people opt for home ownership.
If you do decide to own, put the 20% down to avoid the PMI.
Good luck!
2007-06-09 15:51:45 · answer #4 · answered by wq4you 2 · 1⤊ 0⤋
You say you have $3K take home pay. Is this monthly or annually. If its monthly, then buy. You can afford the monthly assessment fee and the mortgage payment. However, I would work also to pay off the student loan as quickly as possible. The more principal that you pay off, the lower your interest payments will be. Think about doubling up on the payments, paying principal and interest the first on the month, and a payment of principal only on the 15th.
2007-06-09 15:39:38 · answer #5 · answered by rb_cubed 6 · 0⤊ 0⤋
I also live NW of Chicago. This is a hot real estate market. This looks like a fair price for the loan in today's market. Buy it if you are planning to stay put at least 3 years, otherwise, your transaction costs when you sell it will eat up your profits. Renting is for people who can't qualify for loans or who get lots of work related transfers.
2007-06-09 15:40:58 · answer #6 · answered by Ted 7 · 1⤊ 0⤋
I would most definitely consider buying a house in your situation. And being that it is a buyers market - I would buy one at a STEEP discount. This can be done by making a lot of low ball offers - it may mean not getting your dream house, however your first home should not be a "dream" house, but one that will build your personal wealth.
2007-06-09 15:36:59 · answer #7 · answered by Christopher B 6 · 0⤊ 0⤋
i think if you can afford to buy now, buy... you'll save a lot of money that way.
2007-06-09 15:40:28 · answer #8 · answered by lnfrared Loaf 6 · 0⤊ 0⤋
i would rather buy then rent
2007-06-09 15:37:09 · answer #9 · answered by moonlightkitten 2 · 0⤊ 0⤋