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My wife and I recently got married, and we've been saving for a house while simultaneously paying down our debt from credit cards and such. We have good credit, and make a decent wage.
Our biggest problem right now, though, is with the current credit crisis, we're beginning to realize that we can't save enough for a 20% down payment for housing we want in NJ for another 2 years - and by that time, the good prices and the low interest rates will be gone. (Maybe.)
We've been renting for most of our adult lives, and I find the idea that property taxes will be the same as what we're paying in rent absolutely abhorrent.
We haven't talked to a mortgage person yet, but we're guessing with our current financial situation combined with the credit crisis, there isn't a lot of help we'd get there.
We don't want to move into a townhouse or a condo. We want a house. We want a backyard.
We recently brought up the idea of moving to the Phoenix metro. The wife wants to go back to school and if my work allows it, I can work out of their Phoenix office.
Arizona, right now, is a real estate disaster and we can get so much more for our money out there than we can here. We love Arizona, and my parents have retired out there. So it's something I'm giving a distinct thought to.
Does anyone have any feedback? Should I wait out the storm? I love New Jersey, but I don't want to be locked into a bad investment just so I can have the American Dream.
If it was me, and I had the option of heading to Phoenix with my job, I'd be there in a heartbeat. While there's vast differences between the two areas (obviously), Phoenix is a great place. Bear in mind though, that while you can buy a house there for under $100k, you're still going to spend the better part of $250k if you want to get into some of the better areas. Of course, to do the same in NJ, you'd spend $400-500k, and pay 4x the property taxes.
As Yogi Berra said " Predictions are hard to make, especially about the future."
I'm not going to try to convince you to stay in NJ...I left years ago and don't regret it, but:
There's no reason to believe that home prices will be higher two years from now. In the past, after price declines, things stayed flat for quite a long while, so there's no reason to believe that NJ prices will be higher two years from now, and there's no reason to believe that Phoenix prices won't also continue to decline.
You're looking to buy a house because you'll feel good owning a home, it's maybe not the best thing to look at a home as an investment, and the NJ market has held up pretty well.
You didn't state where in NJ you live and where work is. Northwestern and parts of Central/Southern NJ offer a lot more house for the money.
But, yes, it's a very good thing not to have lots of your income go to mortgage and taxes, and if you can find employment in Phoenix at a salary that's not a whole lot lower, then you'll have a lot more money to either save or have fun with, as home prices there are a lot lower....At the same time, if your rent is low and you're managing to save, you shouldn't feel that you need to buy right now. Many real estate agents will tell you that you need to buy right now, but is it because they care about you, or because they're paying a big mortgage themselves?
[quote=SweepTheLeg;4102575Our biggest problem right now, though, is with the current credit crisis, we're beginning to realize that we can't save enough for a 20% down payment for housing we want in NJ for another 2 years - and by that time, the good prices and the low interest rates will be gone. (Maybe.)[/QUOTE]
On question... why 20%?
The percentage downpayment is meaningless nowadays, PMI aside. And, for that matter, PMI is put aside now with many mortgage options being offered. The question isn't whether or not you can save 20%, but whether or not you can afford the mortgage payments, still save 1-2% of the home's value annually ("just in case something breaks" money), etc.
FWIW, I think the piggyback loan is a bad idea. My brother did it, it worked for him financially, and he spent alot of time crunching the numbers - but it wouldn't have worked for me. I put 5% down, don't pay PMI, and didn't have to pay for closing costs either (this is a BOFA no fee mortgage, other major lenders have similar offers now). While lenders are more restrictive about who they are lending to, and how much, they are alot more giving in terms of options for a qualified borrower.
This will apply whatever your choice, here or phoenix.
Seems like alot of lenders are looking to see 20% down, because they're afraid prices will continue to erode. If you've only for 5% or 10% in the game, the chances of them getting upside down on a house are greater if the prices fall further. There was a time when you needed 20% just to get a lender to speak to you- sounds like we may be heading back in that direction.
My wife and I recently got married, and we've been saving for a house while simultaneously paying down our debt from credit cards and such. We have good credit, and make a decent wage.
Our biggest problem right now, though, is with the current credit crisis, we're beginning to realize that we can't save enough for a 20% down payment for housing we want in NJ for another 2 years - and by that time, the good prices and the low interest rates will be gone. (Maybe.)
We've been renting for most of our adult lives, and I find the idea that property taxes will be the same as what we're paying in rent absolutely abhorrent.
We haven't talked to a mortgage person yet, but we're guessing with our current financial situation combined with the credit crisis, there isn't a lot of help we'd get there.
We don't want to move into a townhouse or a condo. We want a house. We want a backyard.
We recently brought up the idea of moving to the Phoenix metro. The wife wants to go back to school and if my work allows it, I can work out of their Phoenix office.
Arizona, right now, is a real estate disaster and we can get so much more for our money out there than we can here. We love Arizona, and my parents have retired out there. So it's something I'm giving a distinct thought to.
Does anyone have any feedback? Should I wait out the storm? I love New Jersey, but I don't want to be locked into a bad investment just so I can have the American Dream.
If you can tolerate Phoenix, go there. I imagine you can get a great brand new home for way under 300k right now.
Don't forget about the impact having the deductible interest will have on your taxes. The year we bought our first home, we were stretching and did not have enough to avoid PMI. We thought about saving for another year to have the 20% down.....we were so glad we didn't. Without the tax deductible mortgage interest that year, we would have paid a fortune in income taxes.
The better decision in the long run was to get the home earlier rather than later.
Good Luck!
Last edited by bluetobe; 06-14-2008 at 03:43 PM..
Reason: spelling
We can get a house that we could adore for 220K in the Phoenix metro. You can't even get a townhouse in a nice area in Central NJ for that, and even then, the property taxes are much lower.
I work in Somerset County, and I commute from Middlesex. It's not a bad commute at all. But it just feels like I need to get something more, and the idea of "You can't always get what you want" is ringing true in NJ.
As Bob Ingle said yesterday, we have Ann Milgram running around gloating that she got someone for allegedly stealing 12 dollars worth of gas, but we've had billions of dollars disappear on useless programs. Meanwhile, property taxes are through the roof.
I really do love this state. I grew up here, I went to college here, and some of my fondest memories are here. But here's the thing:
I could move to Ocean County or even further south than that, and get a good deal on a house, but then I'd kill all those savings in gas costs getting to work.
We can get a house that we could adore for 220K in the Phoenix metro. You can't even get a townhouse in a nice area in Central NJ for that, and even then, the property taxes are much lower.
I work in Somerset County, and I commute from Middlesex. It's not a bad commute at all. But it just feels like I need to get something more, and the idea of "You can't always get what you want" is ringing true in NJ.
As Bob Ingle said yesterday, we have Ann Milgram running around gloating that she got someone for allegedly stealing 12 dollars worth of gas, but we've had billions of dollars disappear on useless programs. Meanwhile, property taxes are through the roof.
I really do love this state. I grew up here, I went to college here, and some of my fondest memories are here. But here's the thing:
I could move to Ocean County or even further south than that, and get a good deal on a house, but then I'd kill all those savings in gas costs getting to work.
It's just so frustrating.
As someone said, sounds like you're already half way there, especially if you have family there. Ask at work first and see if they will let you move and what your salary would be - at least then you would have an idea of the feasability.
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Don't forget about taxes.....
