Quote:
|
Originally Posted by Lord Snooty
If I were you I would wait another year.... Repossessions are underway in most major cities and if you wait you will pick up a house way above what you were able to afford a year ago. Things are looking distincly like the early 90's (for those that can remember that far back!)
Just make sure you can make the repayments... and stay away from home equity loans. (The reason for most of the the repossessions) It is a shame that someone has to lose their home at all, but the bank really doesn't care and if you don't buy it, the government will, and use it for affordable housing. They are already in negotiations in California for several huge brand new unsold housing developments for just that purpose..
|
Every day you wait is giving away money for rent rather than gaining the tax deduction, paying into equity and gaining appreciation on your home - of course you need to but in an area when the prices aren't dropping. And even if they did drop, it would be part of a cycle.
Most defaults are actually from sub-prime mortgages, not equity lines. ARMs start at a low rate and then increase after one, five or ten years. Many people can't handle a 2% rate increase in one year but don't think about that in the beginning. Then, if the housing cycle is down they can't afford to sell their home.
Quote:
|
Originally Posted by Baraka_Guru
Some things to consider:
- On a house of that value, your down payment should be at least $20,000 to avoid paying an unnecessary amount of compounded interest in a mortgage. The higher the down payment, the better. Mortgage interest can be a killer. You want to do everything you can to avoid having paid too much interest once the mortgage is paid off. Do the math. Calculate your total expected interest expenses vs. your anticipated increases in property value. If the numbers are out of whack, ask yourself if the timing and finances are right for buying. You'd be surprised to hear how much people end up paying for the homes when their mortgages are paid off. Imagine paying as much as half the value of your home in interest to the bank.
- Do your research!
|
You can get a morgage for as little as 2.5% down if it's an FHA loan. You will have to pay mortgage insurance at that level of down payment. To avoid the insurance you'll need to put down 10% which is only $11,000 on a $110,000 home.
Home loans cover 30 years so there really isn't a way to project as was mentioned above. If your credit is good you will receive a competative rate.
The real thing you can calculate now will be the tax advantages. For example, if you have a $1,000.month payment you're probably paying ~$800 in interest in the beginning, $50 in equity and $150 in escrow for taxes and home owners insurance coverage. That $800/month in interest is easily worth $2,000 or more in tax deductions, not to mention the same for the taxes you pay. If you're paying the same amount in rent you miss the deduction, the equity and the ability to itemize your taxes and potentially claim other itemized deductions like charitable giving, work expenses, etc.