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Old 03-24-2013, 10:26 PM
 
Location: Lexington, Kentucky
6,274 posts, read 3,571,701 times
Reputation: 11065

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It is almost never a mistake to live below your means.
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Old 03-24-2013, 11:02 PM
 
Location: New Orleans
525 posts, read 917,608 times
Reputation: 478
Yes my family operates that way: live way below your means.

I never understood why someone would risk so much on something that could take 30 years to pay off. I would be frightened if I was strapped to hoping I had the same income, etc for 30 years, etc. I definitely wouldn't be spending more than I could afford. I guess people have HOPE that they will reach their goals of attaining a higher salary down the road.
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Old 03-24-2013, 11:40 PM
 
13,710 posts, read 22,821,151 times
Reputation: 18521
Quote:
Originally Posted by packer43064 View Post
Wow! If I lived where you lived we would be having a bidding war!

I thought there was some cheap houses in Ohio, but that is awesome. Unless it is in the ghetto, that's a deal at least compared to what I'm used to.

There are a lot of cheap houses similar to the one posted above throughout Ohio. And many of them are NOT in high crime areas. For example:

1415 Blueorchard Dr Cincinnati OH - Home For Sale and Real Estate Listing - MLS #1347985 - Realtor.com®

1290 Nicholson Ave Lakewood OH - Home For Sale and Real Estate Listing - MLS #3370147 - Realtor.com®
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Old 03-24-2013, 11:56 PM
 
8,195 posts, read 10,205,914 times
Reputation: 7485
I'm confused.
I posted a question similiar to this in the real estate forum..my income is 100,000 but I wanted to purchase a home for 63,000.
All I kept reading were that homes that cheap have major issues like bad plumbing or a new roof.
Did any of you buy that low(whether short sales,etc..)
Did fixing it up end up costing about the same amount as it would have if you bought a decent home outright?
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Old 03-25-2013, 12:28 AM
 
13,710 posts, read 22,821,151 times
Reputation: 18521
Quote:
Originally Posted by jerseygal4u View Post
I'm confused.
I posted a question similiar to this in the real estate forum..my income is 100,000 but I wanted to purchase a home for 63,000.
All I kept reading were that homes that cheap have major issues like bad plumbing or a new roof.
Did any of you buy that low(whether short sales,etc..)
Did fixing it up end up costing about the same amount as it would have if you bought a decent home outright?

There are dozens of factors that impact the home values - neighborhood, schools, regional economics, condition of the property, etc. Right now, coming out of a recession, there are a number of homes available at affordable prices that are in good to decent shape.

Before you purchase ANY home, you need to pay for an independent home inspection to identify ALL the problems that affect that property. Once you have a good idea of what the problems are, you can adjust your offer on the property or decide that you do not want the property.

The last house that I purchased immediately needed a new furnace AND a new rood in 2-3 years. I adjusted by offer down $4,000 (and it was accepted). I replaced the furnace immediately which paid for itself in 3-4 years with lower natural gas consumption. The roofs were replaced over the next couple of years.

I hardly consider an older home that needs a repair or two as "not decent." I more than made up the amount I spent for home improvements when I sold the property five years later.
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Old 03-25-2013, 02:02 AM
 
24,711 posts, read 26,777,106 times
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Quote:
Originally Posted by sweetana3 View Post
When you diversify, houses and such become less and less of your overall net worth. They are not liquid and not much help in a crisis. It is hard to pull money out.
Best reason to buy a house below your means.
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Old 03-25-2013, 02:22 AM
 
Location: San Francisco
15,812 posts, read 4,930,121 times
Reputation: 48032
We bought our house in 1986, a 2 br, 1 ba cosmetic fixer that was the last house to sell for under $200K on our street. We bought it despite its ugly duckling appearance because we loved the neighborhood. The house is in a quiet residential area across the street from a forested park and has forest and ocean views from the deck.

We probably could have qualified for a more expensive house, but we have always believed in living below our means. Because we bought a cheaper house than we could have afforded, we were able to make a 30% down payment, avoid PMI and keep the mortgage payment as low as possible. Interest rates were very high at the time. (We thought we were doing really well to get a loan at 11.5%)

With the money we saved on mortgage payments, we have made improvements to the house over the years. When interest rates went down in 1993, we refinanced to a 15-year loan at 9.5% (still a good deal at the time). Then we started making extra principal payments with the goal of having the house paid off by the time we retired and our incomes went down.

Things didn't exactly work out as we'd planned as we had some eldercare expenses with both our moms, and then my job was eliminated, and I had to take early retirement at 60. But within a couple of years of retirement we made our final house payment and have been debt-free ever since. We didn't have to worry about downsizing either because we were already pre-downsized when we bought such a small house!

Another advantage of buying less house than we could have afforded is that, with California's Prop. 13 tax laws, we got a low tax rate grandfathered in. It was set at one-point-something percent of the sales price and is only allowed to rise a fraction of a percent per year. After 26 years in the house, our yearly property tax is only about $3,000. People gripe about what a terrible place California is to retire in, but our experience has been just the opposite, and the house that we paid $192,000 for is now worth about $700,000.
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Old 03-25-2013, 02:49 AM
 
Location: St. Louis, MO
4,009 posts, read 5,170,189 times
Reputation: 4525
Quote:
Originally Posted by jerseygal4u View Post
I'm confused.
I posted a question similiar to this in the real estate forum..my income is 100,000 but I wanted to purchase a home for 63,000.
All I kept reading were that homes that cheap have major issues like bad plumbing or a new roof.
Did any of you buy that low(whether short sales,etc..)
Did fixing it up end up costing about the same amount as it would have if you bought a decent home outright?
Definitely not true- it would entirely depend on your local real estate market. DH & I spent closer to 100k on our house but we looked at a lot of houses in the $60k-$70k price range as well. Sure, most of them needed a bit of cosmetic work and possibly a few updates, but for the most part, the repairs would fall somewhere between $5000-$10,000.

The house that we did end up buying, cost us a little under $5000 in repairs- but we knew that going in and negotiated accordingly.

Each market is different though- $63k in one city may get you a perfectly fine house, but a total disaster in another. St. Louis is one of those cheap markets where bargains definitely still exist.
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Old 03-25-2013, 02:58 AM
 
Location: Summerville, SC
3,383 posts, read 6,836,762 times
Reputation: 1434
2-2.5 annual salary? Is that household income?

Then I guess we did buy below our means. I believe I got approved for 400k, we paid about $175k.

We were looking for $150k, this house just had so kuch more then a lot of houses we looked at and we likex it also was a 4 bed. We planned 2 kids, so that left us with a spare bedroom for hobbies and lots of visitors. All of our family is out of state.

I thought we stretchex ourselves a little but we have been paying the same amount in rent the last 4-5 years.
Sent from my SPH-L710 using Tapatalk 2
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Old 03-25-2013, 05:56 AM
 
Location: Vermont
5,439 posts, read 14,324,626 times
Reputation: 2609
Quote:
Originally Posted by jerseygal4u View Post
I'm confused.
I posted a question similiar to this in the real estate forum..my income is 100,000 but I wanted to purchase a home for 63,000.
All I kept reading were that homes that cheap have major issues like bad plumbing or a new roof.
Did any of you buy that low(whether short sales,etc..)
Did fixing it up end up costing about the same amount as it would have if you bought a decent home outright?
Is the house a fixer upper? Or in a bad location? 63k is a very small amount of money for a home, but without knowing where it is, the amount is not a great reference.
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