U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 12-01-2013, 12:51 PM
 
47 posts, read 174,225 times
Reputation: 40

Advertisements

My wife and I are looking at purchasing property in the East Bay (San Francisco area). The housing market is slowly climbing back out of the slump and seems to be a good time to buy in anticipation of the housing market becoming "healthy" (i.e. over-inflated again). We cannot afford anything that is up-to-date and both properties would require kitchen remodel and new flooring throughout. Also keeping in mind the HOA fees are $400 a month for both situations.

We are stuck between two scenarios:

1. Purchase a "cheaper" 2 bedroom/2 bath condo at $350k which would result in a mortgage payment similar to our rent. We know we do not like the area/community and would want to move within 3-5 years, but realize it's better than blowing away money on rent and could possibly appreciate.

2. Purchase a 2 bedroom/2 bath townhouse at $550k, which is 1.5x our current rent, but would be a location we could see ourselves in for the next 10+ years.

Is it best to go with the short term cheaper condo or the long term more expensive townhome?

Or do we continue to rent and keep socking away money for a large down payment in 5 years (considering that home prices are rising - homes have increased in value from $60k - $150k in the last year)?
Reply With Quote Quick reply to this message

 
Old 12-01-2013, 11:51 PM
 
Location: Southern California
4,350 posts, read 4,929,984 times
Reputation: 2129
I think option 1 is bad because you don't like the place and because when you move the place you move to will have appreciated more than your existing.

If to can do 2 with all expenses tax , ins ,hoa , and still save money, that is the way to go.

I don't know what a larger down payment equates to, but if there is appreciation, it may increase faster than your savings. I don't see the Bay Area depreciating again any time soon, but you never know.

What % down are you planning on?
Reply With Quote Quick reply to this message
 
Old 12-02-2013, 11:11 AM
 
47 posts, read 174,225 times
Reputation: 40
Hi. Thanks for the reply.

We can put down 3.5% at this moment.
Reply With Quote Quick reply to this message
 
Old 12-02-2013, 12:04 PM
 
Location: Southern California
4,350 posts, read 4,929,984 times
Reputation: 2129
Quote:
Originally Posted by Benjamin Olson View Post
Hi. Thanks for the reply.

We can put down 3.5% at this moment.
Have you talked to a lender yet? Unless you are socking away $2200 a month, I don't think you can easily go from a $350k house to a $550k mortgage. Have you calculated your Mortgage insurance, taxes , and HOA dues? If you are saying that the $350k house is close to your rent, I'm guessing the rent is about $2000 and the $550k house mortgage is going to be closer to $3300 and I didn't throw the property taxes in there. That be over $4000 a month with taxes and HOA . Sure you might get some money back in taxes.

If you could afford a $550k place and you are socking away over $2000 a month, it will take you a year and a half to save 10% down. If you chose to buy and sell as in option 1, you'll end up paying 5-6% on the transaction just to sell it.

Right now you are chasing the market, if the prices go up, you probably won't be able to afford the monthly , even if you had a larger down payment in the future.

The other thing to consider, is FHA 5 year ARM, save continue to save money for the next 5 years. In the future you might not be able to afford the mortgage after the payment adjust, but if you are saying that you can afford the current mortgage of a 550k house now , the rates would have to go to something like 9% before you can't afford the mortgage. If you can't afford the mortgage you become a renter again. If you can't afford the mortgage as it adjust , you also can't afford the 550k mortgage today.

I'm now leaning towards option 3 because you don't like the neighborhood of option 1.
Reply With Quote Quick reply to this message
 
Old 12-02-2013, 09:16 PM
 
47 posts, read 174,225 times
Reputation: 40
Thank you! Very good insight and has a lot for my wife and I to ponder. Really appreciate you taking the time to help us:-)
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top