Taking more mortgage

[rmissourimule]

Originally Posted by proudowner

Yes, prices in the east are horrible, especially in good school districts. New houses $850+ range at least.

Edison, 20yr houses $700k, etc. Yes, you are right that it's too much to bear for me as first home owner, and I don't know idiosyncrasies of what goes in the house maintenance. Thank you for sane advice.

My wife is always watching these RE programs and our heads spin at the zoomy prices out east and elsewhere. Do they pay that much more money on the east coast or does everyone have a money printing press in their basement?

I wasn't exaggerating that a person could have a "castle" here for a whole lot less and brand spanking new. I know a thing or two about home construction and have seen these homes go up and they are truly gorgeous. I suppose the homes might be larger where you live. For that matter most older homes where we live are larger but command much lower prices per square foot than newer homes.

We recently moved into our (hopefully) last home in a very nice area. The square footage is about 1,820 and there was nothing that needed to be done but it was 20 years old but very well maintained and updated. It sure didn't cost what you are looking at.

A brand new home might cost $60,000 more. But as I say it has all the bells and whistles, privacy, lawn upkeep, nothing to do except live there. In the 1990s we had a new 2,400 square foot home built, all brick, that was to die for. Unfortunately we moved from our "dream home" because there was concern over the house payments. We had 12 foot ceilings in the living area, real hardwood floors on premium sub-flooring, 800 square foot bedroom, and a walk in shower that was fantastic and all the privacy in the world on five acres. We had about $220,000 total including the land valued at $50K.

So when I see the prices you are looking at, my head spins around like the girl in "The Exorcist." I just don't see how people live with these prices. Boggles my mind. I guess you all must make a ton of money out east.

In any event, the current interest rates are very inviting. Wish we could find some buyer to take our other house off our hands. I guess it would go for half a million where you live. Just unbelievable.

But back to the subject at hand. Don't buy a money pit. There is nothing magical or wonderful about home ownership if you have to keep plowing money into an old home. And to top it off, you will never be happy in all probability. I'd keep looking and don't worry about the money you have already spent to have it checked out. That is the best $800 you will ever spend. You'll find what you want if you keep looking. And don't overlook the foreclosed or short sales either. Banks DON'T want to have a foreclosed home on their hands. They would, in most case, rather have you living there for free than have to have it on their hands; not always, but most of the time. A foreclosed home actually becomes a liability rather than an asset to the bank. It may not count that way on their balance sheet but that is the reality unless the market is red hot.

[willow wind]

Windsor township is making you pay a premium to be near Princeton. Just start looking 10-15 miles further out- say in Cream Ridge or Upper Freehold and you can get a lovely, newer home in the $500,000 range.
The schools there are fine.

Just because on paper a lender says you can qualify for a giant mortgage doesn't mean you should. You'd be paying 50% of your income on mortgage only. Then you'd have to figure in car payments, taxes, other costs, utilities. And God forbid one of the kids needs braces.

Buy in a price range where you're financially comfortable and can sleep at night. Good luck

[karen_in_nh_2012]

Originally Posted by proudowner

I'm 50, never bought a house. Earn good salary $130-150k, saved good amount of cash($400-$500k) being in a apartment. I've a family with 12 yr old son. I've missed boat to buy home previously and grudgingly decided to buy a home. Never comfortable to buy home > $550k. I want to move to west windsor NJ area for good schools. Not found a good home in that price range. I've found home that is $750,000 in west windsor NJ area, bit pricier knowing myself but finally decided to bite the bullet. Putting 20% down payment comfortably. I plan to be there 10 years at least. No loans what so ever.

Question is: Should i take $600k jumbo (750-20% 150) at 4.75% rate about $5000 monthly,
or take non-jumbo $417,000, 4.5%, monthly mortgage of $3000. If I take $417,000, I have to put down a lot of cash $183,000 more. I'm torn between these two, lower monthly payment, less interest obviously but losing opportunity on $183,000. Or $600k mortgage, more interest and possible opportunity to invest elsewhere.

Thanks for your suggestions and appreciate your help.

With a $130k annual salary (since banks will be conservative and probably go with the lowest), a PITI of $5,000 would equal >46%. I'm surprised a bank would go for that kind of house-only ratio, even with your large reserves.

I would almost always go with the lower monthly payment because I know I can always pay more. (Of course you have to be disciplined about this and actually PAY more instead of just thinking about it. )

But as others have said, that house sounds like it would be a money pit so definitely run away from it!!

Originally Posted by willow wind

Windsor township is making you pay a premium to be near Princeton. Just start looking 10-15 miles further out- say in Cream Ridge or Upper Freehold and you can get a lovely, newer home in the $500,000 range.
The schools there are fine.

Just because on paper a lender says you can qualify for a giant mortgage doesn't mean you should. You'd be paying 50% of your income on mortgage only. Then you'd have to figure in car payments, taxes, other costs, utilities. And God forbid one of the kids needs braces.

Buy in a price range where you're financially comfortable and can sleep at night. Good luck

^^^ Good advice. I don't know New Jersey so don't know about the schools, but Willow Wind seems to be on to something.

[proudowner]

All of you appear to have similar mindset as of mine. But when I see in NJ, people buying houses I can't get why and how they are putting such a money to be just a homeowner. But it's just me.