Rent or Buy?

[SmootSmack]

So the lease on my apartment expires in a couple of months. After three years of renting an apartment I think it might be time to own.

I'm thinking of renewing my lease for another six months to give me some time to find a place.

Here's what I'm hoping you guys could help me with (Redskins_P, I know you are pretty knowledgable in this area), how do I go about determining how much I can afford (factoring in mortgages, property taxes etc.)

Also, if there's any other advice you homeowners out there have I'd greatly appreciate it. I'm probably looking at getting a condo or maybe a townhome

[Redskins8588]

The only thing that I can suggest is to escrow(SP) your home owners ins and taxes in to one monthly payment. That way you dont have to worry about making insurance payments and paying your realestate taxes.

[John Hasbrouck]

owning is the way to go

[EternalEnigma21]

Hey tafkas, my wife actually does mortgages for a living. She has access to over 650 lenders (though she usually only uses about 6 or so) and Im sure she would be willing to meet with you and discuss your options without obligation. There are literally hundreds of ways to structure loans to suit someones needs...

80-20 second trusts to avoit pmi

first time buyer programs offering 100% financing

Intrest only loans at low rates to make payments on usually unaffordable homes affordable

The qualification formula for someone based on income usually looks something like this:
Mortgage Qualification Calculations based on Annual income of 65555

Inputs

Gross annual income:
$65,555.00

Monthly debt payments:
$650.00

Down payment:
$5,000.00

Annual interest rate:
5.250%

Monthly Private Mortgage Insurance (PMI %):
0.00%

Monthly insurance:
$40.00

Monthly property tax:
$73.00

Length of the mortgage:
30

Maximum mortgage payment to income ratio (%):
28.00%

Maximum debt payments to income ratio (%):
36%

Results

Downpayment:
$5,000.00

Loan Amount:
$217,972.10

Home Price:
$222,972.10

Monthly Payment:
$1,203.65

Dont know if that helps but email me if you have any more questions & Ill get my wife to talk to you.

[EternalEnigma21]

BTW with the housing market in the area the way it is if you are able to buy, no matter what it is, you should buy. Every month you pay rent you just piss your money away... and i just plugged in some b.s. #s to a formula to show you an example up there.

[TheMalcolmConnection]

I'm renting til December then hopefully my girlfriend will FINALLY be back in Lexington and we can buy. We should have like a combined income of around 75k.

Would you say we could afford about a 135-140k house comfortably? I have a 350 dollar a month car payment.

[EternalEnigma21]

With 75k you could easily get approved for 735-140 conventionally, or you could look in a higher range with an interest only loan depending on your credit...generally how they work is you are only obligated to pay the interest on the loan and the interest rate is discounted below prime, however they're usually structured as a short-term arm (adjustable rate mortgage) with a cap around 2% above original rate. this does not always change your payment, but may add a balance at the end of the loan, but what you're banking on is the equity you build in the house to use toward the new mortgage when u refi, or sell the home.

Conventional financing in your case malcom wouldnt be a prob. as long as your credit is decent, and you could easily get into more than that if you needed to, depending on your credit rating.

[EternalEnigma21]

135-140 not 735-140... sorry

[TheMalcolmConnection]

That's great. Thanks for the advice!

I also forgot to mention that W&L University where I work offers a 1.6% interest rate to its employees, so that pumps me up even more!

[EternalEnigma21]

1.6?? hell are they hiring.. lol

[EternalEnigma21]

Actually my wife just informed me that she just did a re-fi @ 1.25% from washington mutual, and another @ 1.3% from chevy chase. both are interest only option arms, and thats probly what you're looking @ with your credit union.

[Sheriff Gonna Getcha]

The only thing about buying right now is it's a seller's market. Sure, interest rates are low, but the prices of homes right now are inflated - there are so many people looking to buy. On the other hand, it sucks paying rent when you never see that money again.

Best of luck.

[NY_Skinsfan]

canthetuna,
I have a question about loans. My wife and I are expecting our second child in July. My wife works in a school so she wants to take at least five months off which would be through next January (summer not included). What I am looking for is a loan that will give us enough cash to get us through January so I can pay all our bills regularly and then when my wife goes back to work we can start paying the loan off then. Is there anything out there that will fit our needs.

[BrudLee]

A lot of your urgency to buy should depend upon the property values in your area. I live at the beach, so while everything is expensive, the values have almost no chance of dropping. In fact, in two years, my house has been appraised 35% higher than the purchase price.

With almost all mortgage interest being deductable, and a likelihood of your property increasing in value, it's a pretty easy decision to make.

[That Guy]

my condo iss worth 50k more than when i got it 6 months ago i believe... fairfax/burke property is insane :/

I don't know where you're located, but my mother does a lot of real estate in N Va and if you're looking up here she knows a lot about the market.