To Buy or Not to Buy?

[killer2021]

Originally Posted by mrwumpus

1st time buyers in certain income brackets have access to some nice down payment assistance via Affordable Housing Clearinghouse and I heard recently that in June, Corona was going to offer up to $100k assistance if you buy a foreclosure. At a seminar I attended, the lady from the OC MAP program was saying her daughter bought an $850k house near Temecula three years ago and today it's valued at $385k. Ouch.

What about those ARM loans resetting in 2010/2012. Someone on another thread was saying the reason Irvine hasn't dropped like other areas is because of all the ARM loans in 2004/2005 haven't reset yet.

Yup those loans going to reset in 2010/2012 because the loan balances on those loans were higher so people were able to buy into more expensive upper class areas. Everyone thinks that the upper class areas are immune to this crisis - they aren't. We are just waiting for the loans in those areas to reset and cause foreclosures.

60minutes is the only show that has even covered this. You'll start hearing about it more around the end of 2009 because that is when the loans start resetting. You might even see another stock panic as a result of it.

[wvspecialkvw]

The last thing I'll say about my situation is true i contribute a decent amount each month basically on behalf of my tenant as someone else already pointed out. However, my tax returns the past two years have somewhat canceled out the loss. We claim a loss on the rental each year and get back about 80% in income tax of what we dished out for the year to keep it.

[mrwumpus]

I was hoping to buy this year. As a 1st time buyer, I got all excited with the Mortgage Assistance Program (MAP) and the CHDAP which pays closing costs. Plus we'd get that $8k tax credit if we close before Nov 30th. But I keep hearing wait until 2010/2012 for bigger drops in the more desirable OC areas. Is it really that predictable? Realtors and lenders certainly aren't going to tell me to wait.

I know the 2br condo I rent near Foothill Ranch sold for 170k in 2001, and 250k in 2003. Similar units sell for around 260k right now. So technically in that area we're at 2003 prices already.

[Francine1998]

Buy cautiously if you must, but there's a financial storm brewing in our future.

[nmnita]

Originally Posted by wvspecialkvw

Hello everyone, I'm hoping on getting some solid financial feedback from people on the board. Of the other similar posts I have read on here, I've seen a good amount of research and advice from the posters and I'm hoping for more of the same on my current situation.

My wife and I followed jobs out to Irvine about a year and a half ago and we are currently renting a one bedroom in a very nice complex for $1950/mo. We own a three bedroom townhouse (Interest Only Fixed Rate) mortgage that we are renting out for roughly 70% of the monthly mortgage payments. We have a decent amount of credit card debt as well as school loans.

My question is, in this volatile real estate market where it seems as though home prices are somewhat affordable, do we go ahead and try to buy the beach condo we dream of (if affordable) or do we play wait and see what the market does, in the meantime pay off credit and refinance our townhouse with a more respectable loan?

Even though the market can still spiral down somewhat, I do believe we would make out in the long run if we intend on living there for 10+ years.

Your opinions are greatly appreciated,


Kyle in Irvine

Kyle, if it were me and I could afford it I would certainly buy. Sure prices can even decline more than they have but you are right, they will come back again. I think something that is hardly, if ever brought up: you can take $20,000 put it into say, a CD at 4.5% interest (just throwing figures out there) your return will be 4.5% on $20,000. Put that same $20,000 into a home that costs say, $200,000 and your return will be on the 200,000 not the $20,000. plus the property will be yours, yes, you have maintainance but your rents do not constantly increase and you gain a tax write off.

Everyone has an oppinion, this is mine. The only time I think renting is a better investment is: 1-you are newly married or vary young and to be a home owner would be a struggle, 2-you intend on living in an area less than 2 years or 3-you are senior, on a fixed income and can do absolutely no maintainance on your own.

Nita

[nmnita]

Originally Posted by stockproipi

I think it's definitely time to buy. My brother in-law just bought a 3bdrs house in Lake Forest for 430K last month. He used to live in 2 bedrooms apartment and the rent is about the same as the his mortgage plus taxes. OC property values are high not just because of the good weather but jobs (a lot more than Riverside and San Diego).

Just keep three things in mind, location, location, location.

I agree with you, for whatever reason, I have trouble with seeing things the way economist do, they are wrong more than the weather people.

Nita