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Old 03-02-2013, 09:55 AM
 
Location: Chester County, PA
1,077 posts, read 1,427,128 times
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One additional part of the equation that should be considered is the tax deduction, both federal and state, you will get for mortgage interest, property taxes, and possibly PMI. Depending upon your tax bracket and whether you currently itemize your deductions, it can make the effective cost of a mortgage less than than the same amount paid in rent. As others have said, you need to factor in the costs of maintaining a home/condo as well - I think a pretty conservative estimate for this is 1% of our home's value per year, but that can vary depending upon the condition of the home you buy and what sort of things are covered by the HOA.
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Old 03-02-2013, 10:09 AM
 
493 posts, read 1,007,763 times
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The market's not great, in terms of supply and cost, as a previous poster said. But I still think you should start investigating what's out there and the loan process. You need to get a broader feel for the types of condos, locations, whether the drive is doable or in the long run tiring and annoying (you might have to take a highway that you are not currently taking, and that can make a big diff, obv.). Go to open houses, get the listing sheets (which most often have other cost details, like average heating/cooling and annual taxes. Then you can also try to talk to residents in complexes that you like to get a feel for any previous special assessments (like a roofing project) that in some places the HOA handles and bills you, in other places you might be responsible for. Condo buildings also potentially charge for parking, so that's another cost.

You can always get a pre-approval for a loan. I think it'd be a good thing to spend time investigating the area and figuring out where you might want to buy. Going to open houses also will let you find your own Realtor.
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Old 03-02-2013, 10:40 AM
 
Location: NoVA
160 posts, read 235,923 times
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Correct me if i am wrong, but I don't think the tax break on a 150k condo would be a very significant. Maybe 1000$ a year or so. About 100$ per month.
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Old 03-02-2013, 01:43 PM
 
Location: northern va
1,584 posts, read 2,123,071 times
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Quote:
Originally Posted by snowdenscold View Post
No way. Not after you factor in PMI, property taxes, condo fees, and HO insurance. Not to mention your upkeep and depreciation of major items.
$1170 with FHA, including the monthly condo fee.

this is everything, at a 3.25% rate
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Old 03-02-2013, 02:43 PM
 
1,784 posts, read 2,982,730 times
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Quote:
Originally Posted by TysonsEngineer
Assuming about 140k mortgage...
He didn't ask about a $140K mortgage. I was replying to his comparison of a $200K condo mortgage to $1100/mo rent.
Quote:
Originally Posted by kww View Post
$1170 with FHA, including the monthly condo fee.

this is everything, at a 3.25% rate
On a 200,000 mortgage?? No way.

First of all, he's not getting a 3.25% rate putting 5-10% down. Let's be generous and say 3.5% - that's $900/mo for P+I.

Property tax - about $190/mo. (higher for Falls Church, lower for Alexandria)
FHA MIP - $216/mo
Condo fees - $300/mo
HO insurance - $20/mo

Now, regarding deductions - you really can only include the amount that beats the standard deduction if you itemize for these comparative purposes (if you would be below the SD w/o mortgage interest, MIP and property tax of course). So I'll again be generous and assume he has $4500 in other deductions (state taxes, charity) now that he's itemizing, so he saves $212/mo through tax deductions.
Note that this amount will go down every year as he amortizes the loan.

Maintenance and depreciation - some people say it's 1%, but I'll go easy and say 0.5%... so another $83/mo

900 + 190 + 200 + 300 + 20 - 212 = $1414/mo.

So how did you get $1170?

After trying to give favorable assumptions to the OP, I have his monthly expenses going up 29%. Not the end of the world, but hardly break-even. Plus, his location may get worse for commuting/convenience, etc.

Now the good news is he's building a small amount of equity, so if he can handle the increased costs, it's actually not a terrible deal for him. But I do think the average monthly expenses do go up.
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Old 03-02-2013, 03:10 PM
 
Location: northern va
1,584 posts, read 2,123,071 times
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Quote:
Originally Posted by snowdenscold View Post
He didn't ask about a $140K mortgage. I was replying to his comparison of a $200K condo mortgage to $1100/mo rent.


On a 200,000 mortgage?? No way.
sorry, it appears that the links posted earlier in the thread have been removed. at the time, the property in question, IIRC was around $140,000. my mention of the condo fee being roughly equivalent to a $200,000 mortgage was from a lenders perspective. $295 monthly condo fee, where on average, every $5 = $1,000 more in mortgage.

295 / 5 = 59 = roughly $59,000 in purchasing power added to the original property price of $140,000.

current FHA rate is 3.25%, assuming the neighborhood even qualifies for FHA at the time
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Old 03-04-2013, 08:45 AM
 
42 posts, read 42,335 times
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I would never buy a condo farther out than Arlington. It's a far riskier situation.

I currently rent a 2 bedroom condo in Fairfax VA. They sell for around $200-$250k right now. But the condo fees are $500/month, and I don't like that. (Most of the utilties are tied up into the cost meaning people aren't inclined to save water, heat/ac.) It also takes a lot more time than a townhouse/single house to sell. I've seen the condos around here on the market for many months.
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Old 03-04-2013, 09:34 AM
 
2,185 posts, read 2,645,146 times
Reputation: 1616
I was going to chime in on the tax benefits too but I see other people have touched on that. Yeah you should probably just remove that from the Pros because they will be so minimal on a property that cheap. Not saying you shouldn't buy but that shouldn't weigh heavily on your decision. I think you're focusing on $$ too much in your pros. The main pro of owning I think is just having the control over your residence. Being able to do whatever you want to the place, stay as long as you want(probably not an issue if you're renting an apartment vs condo,townhouse or house), not worrying about your rent going up, etc. With that comes having to deal with maintenance which can be a pain. If you stay there for a long time you'll build equity and it can become a valuable asset but there is no guarantee this will happen quickly. People get into trouble when they look at homes purchases as potential lucrative investments and not just a place to live and be happy.
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Old 03-04-2013, 11:50 AM
 
1,784 posts, read 2,982,730 times
Reputation: 1270
Quote:
Originally Posted by snowdenscold View Post
900 + 190 + 200 + 300 + 20 - 212 = $1414/mo.

So how did you get $1170?

After trying to give favorable assumptions to the OP, I have his monthly expenses going up 29%.
Sorry, the above should really be:

900 + 190 + 216 + 300 + 20 + 86 - 212 = $1500, and going up 36% from $1,100.
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Old 03-04-2013, 02:59 PM
 
2,462 posts, read 8,042,957 times
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Quote:
Originally Posted by HokieFan View Post

Owning: You're committed. You will need to live there for years before you gain any equity (especially with no down payment). If you decide to change jobs, you will need to consider the commute and may have to limit yourself to where you will work. If you're renting, it's a lot easier to move closer. If you decide to rent it out, you will become a landlord or go through property management company (which charges a fee). You are responsible for scheduling, being available, researching the best contractor and paying the fees for maintenance/repairs. You are responsible for COA/HOA fees and any special assessments.
This. You have only lived in the area for a year. You don't have enough savings for a 20% downpayment, and, given your income, probably don't have a separate emergency fund. Your job or personal situation may change in the next several years, which means you either have to sell your condo under some pressure, or become a landlord. (I know a couple who, when they got married, had THREE condos to unload between them before they could move into a place big enough for both of them -- his tiny starter condo (rented out), his slightly larger upgrade condo, and her tiny starter condo. Who needs that kind of hassle?)

You like where you live now, and it works for you now. Keep building your savings, and buy only when you are reasonably confident that you can stay put for a few years.
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