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I am a 28 year old male still living at home and I have been trying to save money on my own for the last 5 years, but I still don't have enough for even a down payment on a condo. I do not want to get an apartment, I would like a condo or small house. How much do I need saved up to get a condo these days?
Thank you
I'm not sure how much you earn, but if you have been living at home for the past FIVE years (paying no rent I assume) and have not been able to even save up for a downpayment, are you sure you will be able to afford a condo or small house in your area?
Sorry if this sounds negative, but it doesn't sound like you are in a position to tackle the "true" costs of home ownership.
The 1st step is to obtain some idea of what a condo/home/etc. in the area you want to live in will cost you. I suggest this looking can be done online/in person/open houses/on site sale agents/etc. so no need of a real estate agent getting in the way. Do not sign any agreement. Just look.
Rough rule of thumb is you can afford to buy a home 2 to 2.5 your yearly income. Making $40K per year then a place that costs $80K to $100K. Another rough rule of thumb is your mortgage/rent should be no more then 25% of your take home pay. Some stretch this to 1/3.Again all rules of thumb but they are in the ball park.
There are all sorts of on-line mortgage calculators that will allow you to plug in information such as down payment, cost, mortgage rate, etc. to determine your monthly mortgage cost. If this "number" is not doable for you then there is little reason to continue. Bottom line is you cannot afford it.
Now if you find all of the above might could work, realize there will be upfront costs such as a down payment to obtain a mortgage. This could be as high as 20% but for sake of conversation figure about 10% so one the example above of a $100K unit, you will need $10K. Additionally there will be various closing costs which could well run about $5K. So you will need at least $15K on hand before you go any further.
If so far all is looking good, it would be time to shop for a pre-approval letter from a mortgage lender. Understand this is not a guarantee but at least they will look at your creidt/etc. and let you know if they might (and I say might) consider your for a mortgage. I would advice using the top banks as they will be the toughest to get approval from versus some mortgage lender who might be less fussy and take you down a primrose path.
$100K at 5%, fixed for 30 years will be about $536.00 per month.
$100K at 4%, fixed for 30 years will be about $477.00 per month.
Typically right now mortgage money is running about 4-5% for 30 year, fixed.
You need to be harsh and truthful with yourself about what you can afford and how secure your employment is.
If I were you, this is what I would do. First, ask everyone I know or work with if they have an agent they would recommend. I'd call that agent and ask to meet them at their office. If you can't find a recommended agent, look on Trulia for homes or condos that fit the price range you *think* you can afford. See who the agents are for those listings and call a few. Tell them that you are looking for someone you can work with to purchase your first place but make it clear that you are probably not likely to buy right away. If they are the patient, helpful, long term relationship-builder you need, that won't put them off. If it does put them off...move on to the next agent. Be honest with the agent, ask your questions, ask the agent to tell you the stuff you haven't even considered asking yet, be absolutely loyal to the agent and you'll get where you want to go in the appropriate amount of time.
Before OP calls up any agents or mortgage brokers, he needs to do three important things:
1. Budget! Using current take-home pay, figure out what monthly dollar amount he could pay for a home (mortgage, taxes, and insurance). Be sure to add up all other expenses - car, food, medical, entertainment, gifts, travel, charity, travel, cell phone, debt payments, savings, home bills (electricity, gas, cable, etc)
2. Use some online mortgage calculators to figure out what that monthly amount you have for housing will afford in your area. Bankrate.com has one I think. You plug in:
-your expected down payment (what you have saved)
-your property tax rate (ask your parents what their % rate is or look on the county tax office's website)
- your insurance (1% of home price is a good guess)
- expected mortgage rate (someone with good credit would pay no more than 5% right now)
- expected monthly HOA dues (probably around $200-400 but you can find that out on real estate listings in your area)
and it should help you calculate the amount of house you can afford.
3. Using that housing price from the calculator, search on realtor.com or another site in your area to see if you even like the condos in yor price range. If you do, then start working with a trusted realtor and mortgage broker. If not, keep saving!
Here are some of those "how much home can I afford?" calculators. Remember that YOU must take personal responsibility to run the numbers yourself. If the calculator says you can afford a $1400/mo mortgage and a $160k condo, it may not know that you spend $5k a year traveling and need $400/mo to save towards that hobby. Or that you have other unknown expenses.
I entered the exact same made-up criteria into each of the following calculators and got suggested home prices ranging from $111k to $162k. This is why you must use these as a data point and not the gospel truth.
I like your post. The only thing I don't like about condos is that they cost the same as a house when it comes to buying one. The main reason I am always told for that is the Amenitites. IMO that's baloney when there's no pool, club house, tennis court. Maintenance fees should cover what I am told is the amenities and that would be the Landscape, lawnmowing, snow removal, painting/maintaning common areas. If you like apartment living and know to watch out for scams it can be good move but beware the price it shouldn't cost as much as a house.
I agree. I looked at a $800,000 condo (way out of my range, but there was an open house and I was nosy.) It was beautiful--had four levels and was next to a marsh area with the bay just beyond--no buildings between it and the water.
In my situation, I got a $190K studio condo here in DC. I would have gone with the one bedroom but it was about $40K more and per my realtor, every $10K higher is $50 added to your monthly mortgage payment. So keep that in mind.
I only had to put 3.5% down, closing costs were given to me by the seller in the grand total of $5,000. Part of that was used to pay my HOA fees through mid-2012.
So I don't think you need to have $20,000 to get a condo. I think if you have for a downpayment and probably an extra thousand or two just in case for closing costs, you should be fine.
In my situation, I got a $190K studio condo here in DC. I would have gone with the one bedroom but it was about $40K more and per my realtor, every $10K higher is $50 added to your monthly mortgage payment. So keep that in mind.
I only had to put 3.5% down, closing costs were given to me by the seller in the grand total of $5,000. Part of that was used to pay my HOA fees through mid-2012.
So I don't think you need to have $20,000 to get a condo. I think if you have for a downpayment and probably an extra thousand or two just in case for closing costs, you should be fine.
Sounds like you are one step from the ledge, unless you have significant savings you didn't put down for some reason.
1. When did you buy your condo? Are you underwater? Do you have 10% equity? If not, selling will mean you're writing a hefty check at closing for realtors commissions and closing costs (yours and possibly the buyers if that is what is needed to close the deal). Think you won't need to move? What if you get laid off? Or meet someone and instantly outgrow that studio? Or get a job offer in another city that you can't turn down?
2. What about mandatory HOA assessments for major repairs and improvements? I live in a high rise area in my city and every single tower has had mandatory assessments in the past 5 years. They ranged from $10k to $45k for a 1 bedroom! Some were due within 60 days notice: others became a multi year payment plan. Keep in mind you can become foreclosed on for not paying these things!
I don't mean to pick on you, but your very situation (very little skin in the game) is a big part of why the real estate market collapsed. People didn't have enough equity to weather the storm or sell when they needed to (no equity).
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