renting vs buying (Phoenix, Scottsdale: mortgage, good credit, loan)

[shadow91]

Is it better to rent a home than buy one here in AZ? If you have no down payment and want to buy a $400,000 plus home what would your mortgage be? I know rent is extremely high so what would be the best option?

[Cj81]

Well rents are really not that high here in Phoenix, You can prob rent an average size home in a nice area for around $1200 - $1500 per month maybe less. By avereage I am estimating 1500 sf , 3 bdrm, 2 bath. If you were to buy a $400,000 home your payment will be much higher! Over $2000 per month depending on your interest rate and property taxes. Most lenders will require a down payment of at least 3% anyway, and that is pretty low. The best thing for you to do is contact a realtor and they will refer you to the right people to see what you qualify for. To qualify for a $400,000 home, you will probably need to be making at least $100,000 per year with very little debt and a good credit score. A good rule of thumb for what you will qualify for is: take your anual income and multiply it by 3, that is approx. what you can qualify for. So if you make $50,000 per year, you will most likely need to look for a home that cost approx $150,000. I would strongly advise you to just apply for the standard 30 year fixed loan. Lenders will try to get you into interest only and ARM's but they are really not a good idea for a beginner.

[AksarbeN]

A home is a big investment and for it to be a good one you need to have the right home. People will be helpful in telling you what they like or dislike about areas or neighborhoods but that isn’t always the best fit for you and your family. If you rent you have time to look around and get the feel of what really works for you, and when you buy a home, it will be in the right area.

It’s easier to buy a home then to get out of one by selling it. So rent for a while and find just the right home that works for you.

[JustinH]

My girlfriend and I are moving from Buffalo, NY to Phoenix at the end of this summer, and here is our plan of attack.

Rent a condo or a privately owned apartment. I really hate apt complexes, they seem to be less classy than a private condo anyways.

Renting a condo is usually a little less than a apt complex style apartment, and you get a little more. The unit is usually a little nicer, but you don't get perks such as a fitness room, etc.

Once the market turns around, we'll buy a house in one of the phoenix suburbs.

[sablebaby]

Originally Posted by JustinH

My girlfriend and I are moving from Buffalo, NY to Phoenix at the end of this summer, and here is our plan of attack.

Rent a condo or a privately owned apartment. I really hate apt complexes, they seem to be less classy than a private condo anyways.

Renting a condo is usually a little less than a apt complex style apartment, and you get a little more. The unit is usually a little nicer, but you don't get perks such as a fitness room, etc.

Once the market turns around, we'll buy a house in one of the phoenix suburbs.

This isn't really true. I think you should live here before you start telling others how it is. MANY of our apartment complexes turned condo in the last few years, so they have lots of the amenities. Since you're coming from Buffalo, you will notice a huge difference here with apartments, at least the luxury ones, which are more popular.

I have seen so many apartments that were a lot nicer than condo complexes. Take a look around when you get here and you will see what I'm talking about.

I also wouldn't say renting a condo is cheaper than an apartment. Because it's not. I responded to this on of your other posts about this for the reason.

[aj661]

Originally Posted by shadow91

Is it better to rent a home than buy one here in AZ?

If you move a lot, rent. But if you plan on staying, it's always better to buy. There are no tax breaks to renting. You don't build equity in a rental.

[budylove68]

CJ81, I'm just a bit confused. You mentioned the best rule of thumb is to multiply your salary by 3 for what you would qualify for. But you mentioned to qualify for a $400,000 home, you will probably need to be making at least $100,000 per year with very little debt and a good credit score. Which direction should one take to figure out which is the qualifying amount? I'm trying to get my hands on this to possibly purchase myself.

[brittZ]

At 6.25% a $400k mortgage would run about $2500/mo. There will be a lot of factors in that though such as your credit score, down payment, type of loan, loan to value ratio etc. . .

If you are considering renting v. buying there are many factors to consider. How long will you live in the property, can you qualify for mortgage, can you afford all of the additional expenses that come with owning ie. maintenance, emergencies, property insurance, property taxes, and hundreds of other little things that home owners need to tend to.

As far as how much of a mortgage you can qualify for - there are no simple answers. the "rule fo thumb" that used to be present has evolved over the years from buying a house that was no more than a years salary, to 3 times your annual income, and with current home prices it is simply a matter of what the bank will give you and what you can legitimately pay each month. Stay away from interest only, pay options, ARMs, and all of the other forms of "creative financing'.

As for when is a good time to buy - i would not heed JustinH's advice. Homes are sitting around not being sold and inventories are climbing quickly. Right now sellers both new and used are begining to offer all types of incentives and price breaks. it may not be the perfect time to buy but it certainly isn't a bad time unless you can't actually afford a house right now.

[AZ_singlemother]

Originally Posted by JustinH

My girlfriend and I are moving from Buffalo, NY to Phoenix at the end of this summer, and here is our plan of attack.

Rent a condo or a privately owned apartment. I really hate apt complexes, they seem to be less classy than a private condo anyways.

Renting a condo is usually a little less than a apt complex style apartment, and you get a little more. The unit is usually a little nicer, but you don't get perks such as a fitness room, etc.

Once the market turns around, we'll buy a house in one of the phoenix suburbs.

Most of the privately owned condos for rent were apartments and are apartment style. You will find "luxury condo/townhouse," used to be a regular apartment but they will not tell you that.

Trust me, I ran into this moving from one state to AZ and it was a reality check...never trust the advertisements here in AZ, especially in Scottsdale. Luxury townhouse had leaking sewage seeping out of the floor next to the toilet and roaches all over. Nothing worked, place smelled like dog, was filthy and had very old appliances.

Watch out and research - what was a condo conversion vs what is a real condo set up.

[AZ_singlemother]

Originally Posted by budylove68

CJ81, I'm just a bit confused. You mentioned the best rule of thumb is to multiply your salary by 3 for what you would qualify for. But you mentioned to qualify for a $400,000 home, you will probably need to be making at least $100,000 per year with very little debt and a good credit score. Which direction should one take to figure out which is the qualifying amount? I'm trying to get my hands on this to possibly purchase myself.

The rule applies with renting and apartment/condo. Most landlords in Scottsdale will not allow you to rent unless you make 3x the amount of the monthly rent.

Rent for a 2 bedroom averages $1000 in North Scottsdale. You will need to make $3000/month minimum qualify for a lease on a unit.

For a home loan, lendors are restricting the income qualifications for a home loan rapidly. You will need to contact your lendor for their income criteria.