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Old 03-26-2008, 04:35 PM
 
19 posts, read 59,679 times
Reputation: 11

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Hi everyone,

I'm finishing school and have an enormous amount of debt ($250K, with estimated monthly payments of $1700). Fortunately my job has a high salary ($160K). After a lot of research and a summer spent in the area, we've decided to relocate in North Arlington, and we look forward to my kids taking advantage of the public schools there (they will be 4 and 1.5 when we move this fall).

After reading lots of recent posts, my head is telling me that we should rent. I think we can afford $2500 -$3000 per month for rent, which I think would get us a nice 3-bedroom in the area. It's probably the safe thing to do, considering the housing market and everything.

But... my wife and I have been moving (and renting) at an excruciating rate (about fifteen different places in the past fifteen years), and the thought of renting again is somewhat exhausting. We would love to buy a house this summer, though we would want to be in a McKinley, Nottingham, or Jamestown school district and have a house with 3 bedrooms plus an office, on a quiet street, etc.

Does anyone think this is possible and not totally imprudent, or should we resign ourselves to renting yet again? I'm not sure if I'm being wise or just afraid of purchasing a first home. What kind of mortgage do you think we could afford (we'd maybe have about $50K for a down payment)? I don't want to be house poor...

Thank you, everyone, for your helpful replies on all subjects. This board has been a wonderful resource!
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Old 03-26-2008, 05:01 PM
 
Location: Richmond, VA
2,306 posts, read 1,370,959 times
Reputation: 949
I would just call an agent and have them run the numbers for you. A GOOD agent will tell you the real deal.
If you have that much money to put towards rent...Renting is like throwing money away so it would be good to have an investment like a home. BUT, you are doing the right thing by hestitating as it is a huge commitment and not only do you have the mortgage, but a lot of times HOA fees, insurance fees, cable and utilities, and then you need money for repairs.
If I were you, I would look into buying a home (so you would be investing) but I would buy in a different, cheaper area (still nice, though) and live there for at least 5-10 years and then move up to the area you ideally want to be in. (Unless you can afford your target area...and by afford I mean be able to cover all the costs I mentioned PLUS pay your other bills, such as your loans and what have you, and have emergency money)
You may want to call the mortgage company of your choice as well to see what you qualify for...there is no harm in this and at least you will be able to make an informed decision.
I think a lot of people are afraid of the market right now so you may get a lot of "don't buy right now"'s BUT there is something to be said for having an investment and not throwing your money away in rent.
Do your homework: call a mortgage company, a realtor, and then sit down with your financial advisor and wife and do what is best for you all. (If you don't have an advisor, I suggest you get one...just my opinion!)
GOod luck!!
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Old 03-26-2008, 05:23 PM
 
Location: Washington, DC
65 posts, read 264,746 times
Reputation: 29
I just did a quick calculation and with $50,000 down you could afford $600-$650k (taking into account your $1,700/mo debt, your debt to income ratio would be 45% or lower).

If you're looking for a more definitive answer, talk to a mortgage company.

Good luck!
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Old 03-26-2008, 08:29 PM
 
Location: Chesterfield, VA
1,218 posts, read 4,565,283 times
Reputation: 535
A lot of owners are also offering rent-to-own options, so that at least a small portion of the rent will apply towards the purchase. There are many options out there right now, so good luck and let us know what you end up doing!
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Old 03-27-2008, 01:08 PM
 
1,949 posts, read 5,316,453 times
Reputation: 1280
I'm not sure how anyone could tell you what you can afford without having all the facts. You only told us your gross pay and your debt. What about other expenses? Gas for commuting, any tolls, etc.? Kid expenses? I don't see how some could say you can afford X without knowing all of this and knowing what the property taxes and insurance would be in the area you are looking in. Definitely talk to a mortgage person and/or use one of those on-line mortgage calculators so you can see the payments and add the taxes and insurance as well as all of your monthly expenses. See how that looks to you and then you can decide if you should rent or buy.
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Old 03-27-2008, 06:26 PM
 
Location: Northern VA
26 posts, read 130,095 times
Reputation: 19
Quote:
Originally Posted by lindsayd View Post
I just did a quick calculation and with $50,000 down you could afford $600-$650k (taking into account your $1,700/mo debt, your debt to income ratio would be 45% or lower).

If you're looking for a more definitive answer, talk to a mortgage company.

Good luck!
That sounds high to me! Hey do you like to go to restaurants, take vacations, LIVE in general? Its very expensive here. You spend $600K on a house & trust me you won't have a cent of leeway. I've been down this road recently, and no offense to any realtors... but my experience was that they will take you to the high end of your price range. Next time I go househunting, it will be without my husband and I will determine the price range. Keep in my when you buy a house you have things like yard upkeep, and things break... like washers, dryers, refrigerators, garage doors, etc. Plus you'll need furniture and food & clothes for the family... and its nice to have a little flexibility with your money, too.
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Old 03-27-2008, 06:29 PM
 
Location: southern california
55,663 posts, read 74,604,692 times
Reputation: 48168
think small. also think of something where you could let out a separate granny flat on the back (shadow apt). you can write it off. write offs are good at that salary range.
rent is not a write off.
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Old 03-27-2008, 08:52 PM
 
2,675 posts, read 4,535,676 times
Reputation: 2131
Hi, MWQ, how long do you plan to stay? What are the odds that the job may not turn out to be all that you hoped? If you buy a house, you may limit your ability to look for another job and move, because you would be losing the transaction and moving costs at least (which you would have far less of with renting) and in today's market, you could lose money on a house if you have to sell soon after you buy (you could also gain, but that seems less likely). I realize this isn't your desired outcome, but unless you can rule it out, it is a risk that would be exacerbated by owning a home. Also, unfortunately, the $650000 someone noted might be the maximum you could afford will not buy you much of a SFH in North Arlington; there might be more choices in townhouses. Sorry to be a downer - I do wish you the best in your new position and hope whatever you decide will work out well.
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Old 03-28-2008, 05:29 AM
 
19 posts, read 59,679 times
Reputation: 11
Thanks, everyone--your advice is all very good and I'm happy to absorb it.

I haven't ever heard much about the rent-to-own option, and while it could save us a move (which I would appreciate), I'm guessing that financially it's like leasing a car in that it preserves some flexibility--but paying for that flexibility ultimately costs the buyer extra and often isn't worth it. Has anyone had a good experience with these?

We're now thinking about looking for a rental and trying to get a six-month lease, so we can look for housing without waiting too long but also have a better chance to really look at neighborhoods up close, rather than on the one- or two-day visits we currently take.

Does anyone think six-month leases will be possible, or are those hard to come by?

Thanks again to all who have posted!
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Old 03-28-2008, 07:14 AM
 
1,261 posts, read 5,615,349 times
Reputation: 553
Quote:
Originally Posted by ManWithoutQualities View Post
Does anyone think six-month leases will be possible, or are those hard to come by?
You can find a short-term lease, but they are harder to find and you are likely to pay more per month. You can look online for them, but a realtor may be more useful in locating those because sometimes howeowners won't say they are willing to consider a short-term lease.
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