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Old 05-11-2010, 07:15 PM
 
6 posts, read 333,923 times
Reputation: 24

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In a few weeks, I may have my first home. Im starting to get a bit worried. It seems like a big step to take and perhaps, a step I shouldnt take.

I am going to putting up half a months income to live in this home (including home insurance/taxes). So right there maybe I shouldnt do this. I know some would say no way, others would say give it a shot the housing market will never be better for the buyer.

Im sure its normal to get the gitters when purchasing your first home but besides my mother telling me not to (she says I can find a home for a quarter of my income and that I should not take this risk) I have my g/f telling me its up to me but shell support me either way.

I cant help but think ill have regrets either way. To back out of this while I still can, or go ahead with it. Just to get more opinions, am I really making the right move here?

Im getting a home in Hamden for $230k. Down side is its just under 1200 square foot, but its got a fireplace and nice size front yard, and a basement that could provide extra room should I decide to finish finishing it. The rear yard is smaller but behind it is state owned forest area. Inspection went mostly well. There was a problem with the damper and chimney flashing but that is getting taken care of by sellers. 5000 level or radon in well but that isnt excessively high and measurements were taken at the bottom of the well.

Is it worth it? I only pull in roughly 3500 a month, should I spend half of that on a home? Im just sick of renting, and in my area there just isnt a whole lot out there in terms of clean, safe, nice places to live. I on the border of Fairfield country right now and God knows I wont get anything Id want to live in near there that I could afford. But perhaps I should just stick with renting, Im afterall, not entitled to own a home.
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Old 05-11-2010, 07:36 PM
 
3 posts, read 3,861 times
Reputation: 11
Default Personal Finance Advice

Hi Jack,

What you're asking for is more personal finance advice than CT-related info (unless you are interested in people's opinions of the prospects for real estate in the Hamden area).

You can read plenty of advice online regarding "rules of thumb" for how much to spend on a house. You will then need to filter/alter it for your personal situation.

Banks are not lending to people without SOLID financial credentials right now, so if you feel you will be close to the edge I wonder if the banks will lend to you (did you get preapproved yet?). If so, then of course it's your decision.

Some variables that matter:
- What other monthly payments do you have? Other debt?
- How much more will you be paying in mortgage/taxes/insurance than before in rent? Do you routinely save that much each month right now while renting? If not, why not?
- Do you have a large emergency fund (stash of cash) saved up?
- How stable is your job and what are your prospects for increased income in the future?
- Do you feel like you will stay in this home for a long time? You seem to be unmarried and perhaps without children. If you were to get married would this house no longer be suitable? Don't jump the gun on a house if your life circumstances may predictably change.
- Are you handy enough to perform a lot of home maintenance yourself or would you have to hire it out at extra cost?
- Have you factored in the increased costs of home maintenance, utilities, etc?

Those are just some things to consider. Good luck to you!

-progmtl.
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Old 05-11-2010, 07:46 PM
 
6 posts, read 333,923 times
Reputation: 24
Thanks for the response progmtl.

I guess I shouldve posted this in the Real Estate forum, but I did sort of want to get someones opinion on if im over paying or getting the home for a decent price *though to me, all homes in this state are way over priced*

Fortunately I have no other debt. No credit cards thank goodness.

Ill be paying double what I currently pay in rent and lately have gotten better at keeping an eye on my money and saving it.

I wouldnt say I have a large stash of money, but roughly 14k saved up for savings.

I feel that my job is pretty stable. I cant say I wont be fired tomorrow but itd be a shock to me, but I suppose anything is possible but I dont see it as likely.

I think ill be in the home for quite a while. Im currently unmarried, no kids, but when we do marry the home will be suitable for me and her and even a kid if that happens

The home maintenance/utilities is what Im unfamliar with. Im sure oil heating will hurt me during the winter but other than that I think I practice good energy conservement and wont kill myself with electricity costs. I think I can be handy when need be and ive got a father whos great at that sort of thing when I need advice
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Old 05-11-2010, 08:18 PM
 
Location: In a house
13,258 posts, read 34,669,759 times
Reputation: 20198
Home maintenence begins the moment you take ownership, and doesn't end til you vacate. The thing is though, owning a home isn't just a way of avoiding rent headaches. It is an investment in YOU.

$3500 monthly income isn't too overwhelming. Taxes in Hamden suck. But it'll be built into your mortgage in an escrow account anyway, so you won't have to deal with the added bill. Utilities shouldn't be too bad as long as your house is well insulated, and you go easy on the heat and air conditioning. If the fireplace is an efficient heat source (rather than merely a romantic addition), or if it can be made into one (there are blowers you can buy), then you could probably use it in conjunction with your usual heat, and lower the costs that way. But again, it depends on how well-insulated your house is. If it isn't, then don't waste the wood, and just use it on date-nights

The most expensive "usual" things you'll need to worry about, is the foundation and framework (especially termites in the basement support beams), the roof, and the pipes. If those are in good shape, you'll just have all the smaller expenses. A roof can easily wipe out your $14000 savings. Pipes aren't expensive themselves, but hiring someone to deal with them can be ridiculously costly. As for termites, they're easily taken care of by termite professionals, however any existing damage could cost you a fortune if the weight-bearing walls and/or beams need to be replaced.
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Old 05-11-2010, 08:23 PM
 
3 posts, read 3,861 times
Reputation: 11
Hi Jack,

Well it does seem that you generally have a conservative approach to finances, which is a good thing when considering taking on financial risk. Having no other debt (presumably including no auto loan debt) puts you in a strong place and is likely why banks would be willing to lend to you despite the high ratio of mortgage cost to monthly income.

I would say from the little that I know that it is still a risky move but not a "you are nuts if you do this" type of risk. If you can maintain financial discipline and continue your pattern of not accumulating consumer debt then you can probably handle the payments and the house.

One other thing to consider that I forgot to mention in my first post is whether you will be sacrificing retirement contributions in order to handle the expense. If you feel that you can put sufficient funds away for retirement each month while handling this expense then it could all work out for you. Assuming some growth in your income you may find that in 5-7 years you feel quite comfortable with the financial burden.

Good luck!
-progmtl.
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Old 05-12-2010, 03:08 PM
 
2,383 posts, read 6,084,660 times
Reputation: 2029
Just returned home after repairing our home in Vernon,five weeks.I am and have been wondering if we can afford CT.Previosly I was told maybe not.
Our retirement income same as above and we own property free and clear.Taxes over $300 per month.
He has much more expense,can't see how he can do it with all the expenses.
We will probably complete move.Ct very expensive state.
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Old 05-13-2010, 09:35 AM
 
Location: Connecticut
24,615 posts, read 40,185,826 times
Reputation: 6984
Quote:
Originally Posted by DanBev View Post
Just returned home after repairing our home in Vernon,five weeks.I am and have been wondering if we can afford CT.Previosly I was told maybe not.
Our retirement income same as above and we own property free and clear.Taxes over $300 per month.
He has much more expense,can't see how he can do it with all the expenses.
We will probably complete move.Ct very expensive state.
DanBev - Your situation is a bit different. The OP is young and just starting out. Their potential for increased income in the future is greater so it may be fine for them to extend themselves further. That is their decision. Also, they work here and are not interested in leaving the area. Jay
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Old 05-14-2010, 01:25 PM
 
56 posts, read 123,366 times
Reputation: 37
Only you can really know what you can/can't afford. But I would caution you to listen to YOUR gut. Forget what mom says, are you nervous about paying not only the mortgage, taxes, insurance but for the upkeep as well? If you are, then that might mean THIS deal isn't for you...but perhaps something less expensive.

Wondering why you chose Hamden? Only 15 minutes on the Merritt to the Ansonia or Derby hilltop and you can find some adorable small starter homes in lovely, safe neighborhoods for less money.

This is one example. I used to live on this street, although this isn't my properly. We sold ours 2 years ago. Our first home was a great investment. These houses were built very solidly.

property details connecticut real estate from william raveis real estate, one of the leading real estate agencies in connecticut, featuring homes for sale in ct: fairfield, ridgefield, hartford, greenwich, stamford, litchfield

And these houses in Ansonia, former military housing that's been completely renovated. Beautiful area and surrounding neighborhoods:

property details connecticut real estate from william raveis real estate, one of the leading real estate agencies in connecticut, featuring homes for sale in ct: fairfield, ridgefield, hartford, greenwich, stamford, litchfield

Another great neighborhood, this is a short sale. Great price:

property details connecticut real estate from william raveis real estate, one of the leading real estate agencies in connecticut, featuring homes for sale in ct: fairfield, ridgefield, hartford, greenwich, stamford, litchfield

Not trying to push you into backing out of your deal, or into any of these homes. Just wanting to point out that if the cost of the current deal is concerning you, it IS possible to find a home in a nice, safe family neighborhood that is less expensive and will get you out of renting, with less stress on your wallet.

Good luck whatever you decide!
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Old 05-14-2010, 02:05 PM
 
87 posts, read 190,283 times
Reputation: 51
Quote:
Originally Posted by JackJohns View Post
In a few weeks, I may have my first home. Im starting to get a bit worried. It seems like a big step to take and perhaps, a step I shouldnt take.

I am going to putting up half a months income to live in this home (including home insurance/taxes). So right there maybe I shouldnt do this. I know some would say no way, others would say give it a shot the housing market will never be better for the buyer.

Im sure its normal to get the gitters when purchasing your first home but besides my mother telling me not to (she says I can find a home for a quarter of my income and that I should not take this risk) I have my g/f telling me its up to me but shell support me either way.

I cant help but think ill have regrets either way. To back out of this while I still can, or go ahead with it. Just to get more opinions, am I really making the right move here?

Im getting a home in Hamden for $230k. Down side is its just under 1200 square foot, but its got a fireplace and nice size front yard, and a basement that could provide extra room should I decide to finish finishing it. The rear yard is smaller but behind it is state owned forest area. Inspection went mostly well. There was a problem with the damper and chimney flashing but that is getting taken care of by sellers. 5000 level or radon in well but that isnt excessively high and measurements were taken at the bottom of the well.

Is it worth it? I only pull in roughly 3500 a month, should I spend half of that on a home? Im just sick of renting, and in my area there just isnt a whole lot out there in terms of clean, safe, nice places to live. I on the border of Fairfield country right now and God knows I wont get anything Id want to live in near there that I could afford. But perhaps I should just stick with renting, Im afterall, not entitled to own a home.
I don't envy the young folks starting out now. When I bought my house I borrowed 73000.00 put 10 grand down and had to buy all my appliances, the house was new.
That was 25 years ago now its all paid off but now replacing all of the items that wear. New well pump the year before, last year new furnace and central air, this year its going to be a roof and window and siding, plus all of the interior updates that I have done. It doesen't end when the mortgage is paid.
I don't think I could spent that much on a house, although I do realize thats what they cost.
What will be the total cost when its all paid? What if you put the differance between rent and what the house payment would be in savings what would you have in the bank in 30 years? Just something to think about.
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Old 05-16-2010, 12:07 AM
 
Location: Cheshire, Conn.
2,102 posts, read 6,811,082 times
Reputation: 521
Quote:
Originally Posted by Roadkill95 View Post
What if you put the differance between rent and what the house payment would be in savings what would you have in the bank in 30 years? Just something to think about.
All things being equal, a purchase today should be 2 to 2 1/2 times one's yearly salary. If the salary is $50,000, then the purchase price should be $100,000 to $125,000. Otherwise, it's going to be difficult/impossible.
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