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it is not an easy comparison because most of us buy much more house than we rent .
especially where multi family apartments are available . homes where we are start at 7 figures , but a nice 2 bedroom 2 bath apartment can be had for 2500 bucks a month in an apartment style building . that is what we did ..
we also tend to sink a lot more money in to our homes. when we had a house ,especially the early years we couldn't go anywhere without coming back with something pertaining to the house .
it really can be a case of the house owns you instead of you own the house .
the good thing about our area is cost of living is high because generally that is where you will find the better job opportunities and pay . cost of living does not happen in a vacuum .
the nice thing is those higher levels of income can lead to substantial differences in wealth if you later relocate to cheapsville .
a 800k house that appreciated just 3% a year over time is a whole lot more than a 200k house appreciating the same 3% over time .
higher wages lead to a lifetime of higher social security payments too . there can be substantial differences in checks . a higher earning couple can see more than 80k in just ss payments . national averages for checks are about 16-17k per person . considering we can spend almost as much time in retirement as we did working it should be a factor in the long term plan .
compared to cheapsville so someone relocating from the tristate area who had a fair amount of equity in their home and a strong work history generally blows away locals in these cheaper areas if they relocate from this area.
there is far to much money squandered in our area but it still can be worth it if you can earn decent money and plan to relocate at retirement.
we were going to relocate at one time to the poconos where we had a 2nd home.we could make do with about 1/3 less income . but pay was 1/2 so we killed that idea .
Last edited by mathjak107; 03-05-2018 at 04:51 AM..
I may just save save up and rent for a few more years and buy a house in full before I raise a family, but I'm not a fan of paying rent in a small apartment which I don't own. Long Island is expensive I know but if I can pay $4000 or less a month on a house a year to own then I should be fine. I may even pay the house off early. I may regret it or I may not.
Under $4k is WAY doable. I pay a little over 2500 month including taxes, PMI, etc. House was 355k. Agree on finding a place that you want to stay in 'forever,' it makes more sense than gambling and selling to buy a bigger/better place.
Honestly not looking for "just move" as an answer or "you can't afford it", I may just ask this question again but rename it "what do you pay for your home yearly with/after a mortgage". I just want an idea of how much it would cost. just pretend I'm a millionaire and want to buy my first home and am looking for a guesstimate to how much the cost would be.
People are just being frank with you as to the realities of home ownership. when calculating the monthly figure $1000 a month for taxes and $100 a month for insurance, actual figures may vary. Anticipate a few hundred per month for utilities, fuel oil etc...
I would rent and save till the point you save up like $150k - 200k for down payment. You can easily get a 500-600k house for that money in a decent school district. Unless you are sure the market is on the upswing, buying and selling do cost you money. Imagine, every closing on mortgage loan is about 12-15k. And if you sell, 6% real estate fees. End up you are losing 30k+ for that.
You can also think about how many kids you want? If you only want 1, might be ok to live in some not so good SD, and send the kid to private school.
Just give you an idea, We bought a house back in 2008 from first owner. We probably throw in 100k for repairing since then. House is expensive.
Okay, now that all the grumblers, or at least a good bunch of them have had their say, I'll give you my opinion of the question you actually asked. You say your rent is $1500 a month so you're not living in the Taj Mahal. You also say you're looking to spend about $300,000 so you're obviously not expecting to buy the Taj Mahal.
You're going to use an FHA loan so I'm figuring on thirty years fixed rate. I'm also figuring about ten grand for taxes and maybe $125 a month for insurance. You're probably already paying at least your electric which shouldn't go up too much moving to a house and your heat if gas or oil in a small house might average about $100-125 a month.
With all that in mind you should be able to cover everything for about $2800-2900 a month, well below your $4000 ceiling.
Keep a couple hundred aside for day to day maintenance and a few thousand handy if your water heater blows. Somebody else mentioned to get the smallest or cheapest house in the nicest neighborhood and that should be stressed. You can fix your house up but you can't fix the whole neighborhood. That will be very important when you're ready to move on to something bigger and better. Don't let all the whiners get you down and don't worry about it if somebody parks in front of your house. Good luck!
Consider the associated costs, if you are not certain that this will be a place yo will live in for a while. The closing costs and moving costs can add up if you have to do it twice.
I would rent and save till the point you save up like $150k - 200k for down payment. You can easily get a 500-600k house for that money in a decent school district. Unless you are sure the market is on the upswing, buying and selling do cost you money. Imagine, every closing on mortgage loan is about 12-15k. And if you sell, 6% real estate fees. End up you are losing 30k+ for that.
You can also think about how many kids you want? If you only want 1, might be ok to live in some not so good SD, and send the kid to private school.
Just give you an idea, We bought a house back in 2008 from first owner. We probably throw in 100k for repairing since then. House is expensive.
Agree that closing costs can be $10k, but spending $100k for home repairs is way on the high side. Our first house for 8 years, we didn't ever have to replace anything... not the roof, boiler, windows, nor the fridge or any other appliance. They were all in good working condition when buying and while selling. We paid about $6k/yr in taxes but we got a lot back with the sell price. What I'm saying is, having a starter house isn't always expensive. If you see a really old boiler or roof in a potential house, negotiate the price lower for it and make it up that way.
In our situation, paying those taxes and making some back was better than never getting it back from renting 5+ years. As for investing the money in stocks/bonds to grow it instead - a lot of people say it but never do it. I'm especially not the investor kind of person, at all.
Agree that closing costs can be $10k, but spending $100k for home repairs is way on the high side. Our first house for 8 years, we didn't ever have to replace anything... not the roof, boiler, windows, nor the fridge or any other appliance. They were all in good working condition when buying and while selling. We paid about $6k/yr in taxes but we got a lot back with the sell price. What I'm saying is, having a starter house isn't always expensive. If you see a really old boiler or roof in a potential house, negotiate the price lower for it and make it up that way.
In our situation, paying those taxes and making some back was better than never getting it back from renting 5+ years. As for investing the money in stocks/bonds to grow it instead - a lot of people say it but never do it. I'm especially not the investor kind of person, at all.
I think the argument people are making now is that we are in another bubble, so the idea of buying and selling because you might get a gain is dangerous in this market. I bought into that mentality and got burned a little over a decade ago. If you buy a house you are going to stay in,.you won't have to worry about you appreciation or depreciation for 25-30 years and by that time, chances are the market will be up from where you started.
So, if you look at a starter home as a springboard to the next house, you are looking at it as an investment. It's probably a bad investment right now.
I think the argument people are making now is that we are in another bubble, so the idea of buying and selling because you might get a gain is dangerous in this market. I bought into that mentality and got burned a little over a decade ago. If you buy a house you are going to stay in,.you won't have to worry about you appreciation or depreciation for 25-30 years and by that time, chances are the market will be up from where you started.
So, if you look at a starter home as a springboard to the next house, you are looking at it as an investment. It's probably a bad investment right now.
The thing about starter homes - cost is reasonable and stay reasonable. We bought at around $325k just after 2000 and it has never dropped below that at any point. That has lived through many mortgage rate changes between 3.5% - 7%. Granted, there are fewer sub-$400k now than 8 years ago when we sold at that range, but they're out there.
There doesn't need to be a net gain, just not as big of a loss as renting would be. 5 years of rent money on LI is over $100k guaranteed loss.
Last edited by ovi8; 03-06-2018 at 01:55 PM..
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