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Your brother is giving you one hell of a deal. IMO I would not count out getting a house. I've been watching the market in that area and prices are dropping by tens of thousands. I'm looking at this house that dropped 10% from 650 to 590. And still active. The market is cooling off. I would start looking in fall winter and throw some offers if you want to buy in FV.
But I have to give you props. You're being smart about purchasing. I'm actually thinking of maybe buying this winter but it depends on what prices do. I think you can just swing it IMO. We have a rental in FV. I'm charging a pretty decent amount. If you were renting at full pop I would personally STRONGLY suggest you buy.
Are you trying to get your kids in Masuda elementary? Or FV High? Why do you have to pay $800 a month for three years? Can't you just transfer the kids to a public school?
Depends on the house. I'd picture a $600K 1400 sq ft single family home in OC as more of a 'fixer upper' that requires constant outlays for maintenance, repairs and renovations - is that something you can take on with a child?
Depends on the house. I'd picture a $600K 1400 sq ft single family home in OC as more of a 'fixer upper' that requires constant outlays for maintenance, repairs and renovations - is that something you can take on with a child?
I'm a father of 3 and we keep our house payment (mortgage, tax, insurance) to the equivalent of 1 week take home. We could easily afford a much larger, more expensive house. Recent unplanned expenses related to children plus my wife staying at home really convinced me that the decision not to purchase larger home was a good one.
A coworker of mine (married two incomes no kids) have a HH income closer to 200k and have recently fulfilled a dream of living in NYC in a property costing about the $500k. I'm happy for him but he has brought up several times that they stress about living expenses now. They are cornered into a dual income situation plus high COL. IMO, what's the point of living there if you are going to stress over maintaining it.
1. Your skill set. Are your skills in high enough demand that you could easily get another job with similar salary?
2. The regional demand of your skill set in OC.
3. Do you have a 6 month emergency fund (or could you build one up in the next few years before you buy)?
4. Are your contributing at least 15% to retirement?
5. Can you afford PITI (principal, interest, taxes, home owners insurance) +~$500 a month to save for small and big ticket home maintenance?
If you can do all of these things, I would do it. I say that because we have a similar salary and did it. You will also get a GINORMOUS tax rebate once you start itemizing. It basically pays for your property taxes and then some. We didn't change our deductions for the first year and got a huge tax refund.
I think buying and building equity (I don't see OC's demand decreasing in 20, 30 years time) as a way to make long-term plans for you and your daughter. I would stay put, save, and figure out what you want and what your limits are for home improvement/maintenance.
1. Your skill set. Are your skills in high enough demand that you could easily get another job with similar salary?
2. The regional demand of your skill set in OC.
3. Do you have a 6 month emergency fund (or could you build one up in the next few years before you buy)?
4. Are your contributing at least 15% to retirement?
5. Can you afford PITI (principal, interest, taxes, home owners insurance) +~$500 a month to save for small and big ticket home maintenance?
If you can do all of these things, I would do it. I say that because we have a similar salary and did it. You will also get a GINORMOUS tax rebate once you start itemizing. It basically pays for your property taxes and then some. We didn't change our deductions for the first year and got a huge tax refund.
I think buying and building equity (I don't see OC's demand decreasing in 20, 30 years time) as a way to make long-term plans for you and your daughter. I would stay put, save, and figure out what you want and what your limits are for home improvement/maintenance.
1. Your skill set. Are your skills in high enough demand that you could easily get another job with similar salary? Yes, I am getting an offer from my previous company to go back. I am an experienced Engineer in a very specialized field with 4 competitors located in LA or OC. I believe the other two companies in the same area would most likely hire me if I approach them.
2. The regional demand of your skill set in OC. Yes see #1
3. Do you have a 6 month emergency fund (or could you build one up in the next few years before you buy)? No. I have about only $20K left after down payment and fees. This is before buying furniture and appliances. If I stay put for another two years then the answer should be yes.
4. Are your contributing at least 15% to retirement?
No but I probably can answer yes here. In addition to 4.5% 401k matching, I also have a company pension that contributes about 3% of my salary.
I maxed out at 15% in the last 5 years. However, I have recently reduced it to 10% to save cash. I have a balance over $200k, I am 38.
5. Can you afford PITI (principal, interest, taxes, home owners insurance) +~$500 a month to save for small and big ticket home maintenance?
This is a tough question. This roughly equals $3400. My monthly take home is $6000. I have an $800 preschool tuition so that leaves me $1800 for everything else. Probably not.
Your take home will increase when you change your W2 deductions. We have 2 kids and went from 4 deductions to something crazy like 14. And we still get a $5k refund from the state (to change one's state deduction, you need a PhD in tax law methinks). I don't remember exactly how much of a difference it made in take home, but it is significantly more and would most likely cover the $500 for maintenance and stuff. But I think people (including us) underestimate how much maintenance and upgrading costs. Maybe get an accountant a visit to run the numbers for you.
I would wait until your daughter is in K and you don't have the private preschool tuition and you could have 20% down payment and 6 month emergency fund. Otherwise, with your skill set and pay, the home mortgage interest deduction is a huge incentive that you're missing out on to build equity and thus wealth for you and your daughter. Good luck!
Wait a bit jamesOCguy. Prices seem to be dropping because I really feel that sellers overshot the pricing. People still think its 2013 selling season. I have a feeling that prices are gonna keep coming down this fall/winter.
If it is still relevant in your market, with your housing situation being fairly laid back you have the flexibility to give the bank owned/short-sale houses a shot.
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