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Old 03-28-2010, 06:50 PM
 
5 posts, read 11,192 times
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I will be moving to Albuquerque in the summer, been renting for almost 10 years and hate wasting the money. So I am looking at a house or condo to buy soon. I will be working at Kirtland but for only about 3 years, anyone have any info on the current outlook on the housing market. Would be looking at around 125-150k to spend, hate driving but prefer safety over that inconvenience. Any feed back would be great.
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Old 03-28-2010, 08:27 PM
 
Location: Colorado Springs
1,633 posts, read 3,742,077 times
Reputation: 498
Anyone got a magic ball??

To be honest you will hear a lot of different things from a lot of different people. Some people think prices will still come down, some think we are close to the bottom, some even think they will rise soon. Don't be fooled by the recent rise in market sales, the First Time Home Buyers Tax Credit is about to expire and people are buying before the expiration date.

If you plan on renting your property out after you leave and then sell further down the road then it is probably a good idea, however, if you are buying now to sell in 3 years you stand to lose money, because you will probably need the value to increase just so you can break even.

I would go check out a title companies website which can give you an idea of a sellers netout (what it will cost you to sell), I just checked with the site I usually use http://www.stewart-albq.com/netout/ (Rich if this is a forbidden thing to link then I apologise) and they give a rough estimate of $13k closing costs on a $150k property. Take into consideration that you pretty much only pay interest at the start of a mortgage, there are a couple of mortgage calculators out there which have amortization tables on them, the one I used gave these results at 10% down, 30 years and 5% interest.

Year Interest Principal Balance
2010 $3,364.81 $983.45 $134,016.55
2011 $6,654.45 $2,042.06 $131,974.49
2012 $6,549.98 $2,146.53 $129,827.96
2013 $6,440.16 $2,256.35 $127,571.60
2014 $6,324.72 $2,371.79 $125,199.81
2015 $6,203.37 $2,493.14 $122,706.67
2016 $6,075.82 $2,620.69 $120,085.98
2017 $5,941.74 $2,754.77 $117,331.20
2018 $5,800.80 $2,895.71 $114,435.49
2019 $5,652.65 $3,043.86 $111,391.63

From this you can see that you really have to wait until the end of the 2015 just to break even at closing.
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Old 03-29-2010, 07:29 AM
 
Location: Bella Vista, Ark
77,771 posts, read 104,726,020 times
Reputation: 49248
Quote:
Originally Posted by berncohomes View Post
Anyone got a magic ball??

To be honest you will hear a lot of different things from a lot of different people. Some people think prices will still come down, some think we are close to the bottom, some even think they will rise soon. Don't be fooled by the recent rise in market sales, the First Time Home Buyers Tax Credit is about to expire and people are buying before the expiration date.

If you plan on renting your property out after you leave and then sell further down the road then it is probably a good idea, however, if you are buying now to sell in 3 years you stand to lose money, because you will probably need the value to increase just so you can break even.

I would go check out a title companies website which can give you an idea of a sellers netout (what it will cost you to sell), I just checked with the site I usually use http://www.stewart-albq.com/netout/ (Rich if this is a forbidden thing to link then I apologise) and they give a rough estimate of $13k closing costs on a $150k property. Take into consideration that you pretty much only pay interest at the start of a mortgage, there are a couple of mortgage calculators out there which have amortization tables on them, the one I used gave these results at 10% down, 30 years and 5% interest.

Year Interest Principal Balance
2010 $3,364.81 $983.45 $134,016.55
2011 $6,654.45 $2,042.06 $131,974.49
2012 $6,549.98 $2,146.53 $129,827.96
2013 $6,440.16 $2,256.35 $127,571.60
2014 $6,324.72 $2,371.79 $125,199.81
2015 $6,203.37 $2,493.14 $122,706.67
2016 $6,075.82 $2,620.69 $120,085.98
2017 $5,941.74 $2,754.77 $117,331.20
2018 $5,800.80 $2,895.71 $114,435.49
2019 $5,652.65 $3,043.86 $111,391.63

From this you can see that you really have to wait until the end of the 2015 just to break even at closing.
that isn't necessarily true, many things control the market, these are just a bunch of numbers.

OP, I would at least look a purchasing a home and then decide what would be best for you.

Nita
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Old 03-29-2010, 07:39 AM
 
Location: Marlborough, MA
1,732 posts, read 4,449,960 times
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Quote:
Originally Posted by nmnita View Post
that isn't necessarily true, many things control the market, these are just a bunch of numbers.

Nita
LOL, if you buy a house that costs X and you are paying Y% in interest, those numbers CANNOT change unless you refinance.

I sometimes think that home buyers really do not understand how much they actually are paying for a house, and where that mortgage payment goes every month.
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Old 03-29-2010, 08:19 AM
 
Location: Colorado Springs
1,633 posts, read 3,742,077 times
Reputation: 498
Karma is right, new home buyers usually do not even consider closing costs (check the site for buyer netout) and then there is also PMI (Private Mortgage Insurance) unless you are putting 20%+ down.
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Old 03-29-2010, 08:37 AM
 
Location: Marlborough, MA
1,732 posts, read 4,449,960 times
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I don't think there are many markets in the US now that would allow for a profit for a three year investment. Frankly, you'd be better off trying to find someway to invest the money you have ( $0 to $150k, it's unclear from the post ) and renting. If your monthly rent vs monthly payment is about the same ( say $1000 ) you actually come out ahead if renting.
You really have to work your actual numbers and also figure in the ( slight, overall ) tax break you get for homeownership.
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Old 03-29-2010, 09:57 AM
 
1,938 posts, read 4,749,864 times
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I recently had a similar discussion with some friends about 15 or even 10 year
mortgages vs. a 30 year being paid off on an accelerated schedule. The numbers
involved can be very surprising to most people and what intuitively seems best
often is not.

In a bit over 20 years I sold two properties we were living in and made very
good profits from each, but we bought this house with the understanding that
we'd almost certainly loose money if we sold it in anything less than 5 years.

It's a home, not an investment..
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Old 03-29-2010, 10:24 AM
 
Location: Albuquerque
5,548 posts, read 16,081,122 times
Reputation: 2756
Quote:
Originally Posted by Clayton81
... been renting for almost 10 years and hate wasting the money. ...
Not all rent is "wasted." Some of it is consumed as maintenance.

Not all ( usually most ) of a mortgage payment is "waste."

Buying right away in a market that you are not familiar with is
almost always reckless.

Quote:
Originally Posted by Mike Horrell
It's a home, not an investment..
For the past 60 or so years it's been both.

Unfortunately, for most people, the only pension they will ever
get is from Social Security and the only "savings" that they have
is the equity in their house.

It's not always a good investment in that home prices don't always
go up, but then what has? For most people, buying too much home
is a much better use of their money than buying too much truck.

Quote:
Originally Posted by karmathecat
... home buyers really do not understand how
much they actually are paying for a house ...
People, in general, don't understand the concept of compounding
interest and how it can work for you or against you.

I remember in 1999 when I was told what an idiot I was for only
settling for AAA-rated bond investments that "only" paid 8.5%.
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Old 03-29-2010, 10:27 AM
 
Location: Albuquerque
366 posts, read 869,142 times
Reputation: 366
Quote:
Originally Posted by Clayton81 View Post
I will be moving to Albuquerque in the summer, been renting for almost 10 years and hate wasting the money. So I am looking at a house or condo to buy soon. I will be working at Kirtland but for only about 3 years, anyone have any info on the current outlook on the housing market. Would be looking at around 125-150k to spend, hate driving but prefer safety over that inconvenience. Any feed back would be great.
I wouldn't expect the housing market to post gains like they did the first part of this decade, in which case you would be wasting money by buying a house, especially for 3 years. Think Interest, property taxes, PMI, repairs/maintenance, and the 6% cut to the agents to sell it.

Maybe if you pay cash for a foreclosure and sell it yourself in 3 years you can make money, but if you have that kind of cashing sitting around it is probably better in some diversified investments.
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Old 03-29-2010, 03:43 PM
 
Location: Bella Vista, Ark
77,771 posts, read 104,726,020 times
Reputation: 49248
Quote:
Originally Posted by berncohomes View Post
Karma is right, new home buyers usually do not even consider closing costs (check the site for buyer netout) and then there is also PMI (Private Mortgage Insurance) unless you are putting 20%+ down.
many buyers can now get the sellers or builders to pay part or all the closing costs. Both of my granddaughters got this just recently and my daughter bought a second home and the sellers paid $4000 of the closing costs. Not to mention first time buyers are getting the government rebate.

Nita
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