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Old 05-12-2014, 06:55 AM
 
Location: Research Triangle Area, NC
5,369 posts, read 4,004,728 times
Reputation: 7827

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Hey everyone,

I'm new to this forum but have read stuff on here before; and it seems like there are a lot of insightful people on here so I wanted to get some input.

I'm a single guy in my mid 20's. I graduated from UNC a few years ago (grew up in Raleigh/Wake County) and now work full time in Chapel Hill. I've been living here since graduation and as of December have started a full time position at the organization where I was working part-time since my senior year of college. My job is definitely "entry level" but is one that I enjoy and I can see myself staying at my current employer for a good while.

I like the idea of taking the next step towards adult-hood and owning a home. I was pre-qualified (not pre-approved, and I do know there is a big difference) for a loan of about $110k. I have $3500 in savings and qualify for an FHA loan with 3.5% down-payment. My dad has said he can help with some of the other up-front costs (inspection, pre-paid interest, appraisal, etc.)

I found a townhouse in Carrboro (in Canterbury Townhomes off 54) that I really liked, priced at $113k, offered $109 and eventually settled at $111k with 2k in seller-assist for closing costs. So I am now technically "under contract".

Now that it is getting "real" I'm starting to get pretty anxious and having some doubts. My dad is a builder in the area (mostly in Wake County though) and knows real estate pretty well and assures me this is "the time to buy" and that interest rates won't be this low for long and he has really always wanted me to own property. However it is just a very big financial and even social commitment. I don't make a ton of money; $26k a year. I am very frugal in general and don't have any debt. I pay off my credit card at the end of every month, pay all rent and bills on time; but still the thought of having a monthly payment of over $800 when my monthly take-home pay is around $1600 is a little daunting (they pre-qualify you based on gross income, not net income). The townhouse has 2 bedrooms and 2 bathrooms; so if I got a roommate who would pay market rate rent ($425/month + half of utilities) I know I'd be in pretty good shape. The area of Carrboro the place is in is very popular for UNC Grad/Professional students (2 nursing students currently live there; their lease ends in 2 weeks) so in theory I should have no problem finding a roommate; but still I have some hesitation. What if the only way for me to move up in my career is to go to a different area, what if I meet a girl and want to take things to the next level? etc.

My parents and some close friends I've told about this have all said it's "a no-brainer" and at times, I agree with them and think "this is a great thing for me". And then other times I think "this is insane, I'm not ready for this much of a commitment yet".

Sorry for the exceedingly long and dramatic post. But if anyone would like to offer some input/insight; I'm open to it!
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Old 05-12-2014, 06:58 AM
 
Location: My House
34,827 posts, read 32,989,050 times
Reputation: 26185
What percentage of your pay would go to your mortgage?
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Old 05-12-2014, 07:18 AM
 
Location: Research Triangle Area, NC
5,369 posts, read 4,004,728 times
Reputation: 7827
Mortgage+interest+hoa+taxes+estimated insurance is about $830/month. My gross pay is about $2100/ month...take home pay is $1600 per month and I know they say you should budget for about 35% of take-home pay for housing. If I had a roommate (which is definitely part of the plan, may even have somebody lined up but not 100% sure yet) they would pay half of that and we'd split utilities. So; percentage wise that would be me paying 52% of my take-home pay without a roommate and 26% with a roommate.

Something else I forgot to mention. I currently rent an apartment that I share with a roommate with rent of $870/month. My roommate is getting married in July which is also when our lease ends; that is what what brought about the search for a new place to live in the first place.
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Old 05-12-2014, 07:26 AM
 
Location: My House
34,827 posts, read 32,989,050 times
Reputation: 26185
My thoughts:

It sounds logical (your plan), but having a roommate in a house that is solely your responsibility is far different than a roommate situation where you both are renting a place that someone else has to repair and maintain.

If you lose a roommate and have trouble finding another, your money will be very tight. Do you have a car payment?

Do you have savings to cover unexpected problems/repairs?

I would not buy a property without 20% down unless I REALLY needed to own a property (room for kids, stability for family, etc).

I think your folks mean well, but you already sound like you feel iffy over this transaction and that's a bad intro to home ownership.

Your point about career opportunities, moving, etc is a good one.

I suspect they might be angling to get you tied down to the area. And they might not even realize it.
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Old 05-12-2014, 08:52 AM
 
Location: Chapel Hill
744 posts, read 1,161,780 times
Reputation: 710
Your parents and friends are right, it is a no-brainer. I suspect after you deduct your mortgage interest against your income taxes, your housing cost will be lower than what you're paying in rent. If you meet Ms. Right you ask her to move in with you and then she can help out with the mortgage (if she doesn't offer that, she's not Ms. Right). If you find another job, you will have no problem selling or renting out the townhouse to UNC students.
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Old 05-12-2014, 09:14 AM
 
Location: Raleigh NC
23,235 posts, read 12,679,041 times
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Since you haven't said otherwise, I'd operate from the assumption that your father wants what is best for you, and that he considers this a positive outcome for you. And that NO ONE would have your best interests at heart more than your parents.
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Old 05-12-2014, 09:18 AM
 
Location: Chapel Hill, N.C.
36,502 posts, read 49,402,245 times
Reputation: 47677
You are to be commended for thinking so hard about this. I think you know several things
---you will NOT have a problem getting a good roommate
---You NEEd to get a roommate to feel better about this endeavor
---Of course you might move, your job might not be the best, etc-
---this should NOT keep you from taking this step
---It is a good location. You will NOT have problem selling when the time is right
---The SOONER you stop paying rent the earlier you can build up some equity.
---Stop living in the land of WHAT IF. You are way too young to be so scared of change.
---you are responsible with your finances. You will made necessary adjustments to make this work.
---your dad can help you with any repairs necessary and teach you a great deal about homeownership. Take advantage of this resource while you can.
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Old 05-12-2014, 09:19 AM
 
Location: River's Edge Inn, Todd NC, and Lorgues France
1,641 posts, read 2,234,085 times
Reputation: 2562
Quote:
Originally Posted by Sant View Post
Your parents and friends are right, it is a no-brainer. I suspect after you deduct your mortgage interest against your income taxes, your housing cost will be lower than what you're paying in rent. If you meet Ms. Right you ask her to move in with you and then she can help out with the mortgage (if she doesn't offer that, she's not Ms. Right). If you find another job, you will have no problem selling or renting out the townhouse to UNC students.
At his income level the mortgage interest deduction is not much of a factor.

As a renter he will have basically no upkeep or maintenance to worry about or pay for.

You should not consider a hypothetical Ms. Right in the decision to purchase real estate.

It is certainly not a no-brainer.
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Old 05-12-2014, 09:22 AM
 
7 posts, read 12,929 times
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I think it's a great idea. I own a townhome in Carrboro that is priced 50% higher than the one you're buying, and I received a contract within 10 days of putting it on the market. You should not have any trouble renting or selling if you ever need to. Best of luck!
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Old 05-12-2014, 09:34 AM
 
Location: Chapelboro
12,383 posts, read 14,031,086 times
Reputation: 10476
I think you'll be okay.

If you need to move to further your career you can rent out your Carrboro townhome or sell it. Shouldn't be a problem to do either in our area.

If you currently rent for more than your mortgage will be I think why not! You'll learn a lot. Although it may seem like it, it's not a huge investment. You have your parents as resources — if your dad is a builder presumably he's a pretty handy guy to know if things break, which they always do eventually.
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