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Obviously, I need a roof over my head so it's not a waste in that regard, but the fact that I will never see the money again or have anything to show for it sickens me.
Hopefully bad real estate times are behind us, but there's no guarantee owning a house will give you "something to show for it." I lost $13,000 on a house I owned from 2006 to 2010.
You have been living and working in NYC for 3 years and do not realize the huge disparity in incomes between NYC and everywhere else, except DC.
No, NY Annie, I am not joking. There's this site, not sure if you've heard of it, it's called glassdoor (.) com and I would highly advise you go there so you can educate yourself. If you type in 'Account Executive' under various ad agencies in the Richmond and NYC area they will show you the average salary of people with that job title and you will find that it is right on par with NYC.
In fact, a lot of places in NYC do not even pay appropriate hourly/salary wages because of the fierce competition and anyone is essentially replaceable. If you just do a quick Google Search, you will find that Conde Nast, one of the largest publications in the world, was recently smacked with a lawsuit for hiring interns BELOW minimum wage. Why, you ask, since the cost of living is so much higher?? Because it's CONDE NAST! Millions of applicants a year would probably even do the job for free just to be able to add that on their resume. That is just one instance off the top of my head. It happens every day and every day and not just intern level unfortunately. Same with entry level and even mid-level.
So no, I am most certainly not joking. 'Huge Disparity'? YOU are joking, right?
In an ideal world, a city with a higher cost of living would afford higher salaries, but with NYC that is not always the case (especially with advertising and fashion which is are pretty competitive markets out here).
Hopefully bad real estate times are behind us, but there's no guarantee owning a house will give you "something to show for it." I lost $13,000 on a house I owned from 2006 to 2010.
Sorry to hear about your house - that's awful.
You are correct that there's no guarantee that owning a house will give me something to show for it. There is one guarantee though, renting a house will 100% definitely not give me something to show for it. So I could take a 50/50 chance or a 100% chance of losing money. If you look at it that way.
Plus, as I mentioned, I lived in Richmond for 4.5 years prior to moving to NYC so I am familiar with the area. I really will not be in a hurry to move or sell the house. I really see me settling down there for the next 5+ years at least and no one can predict what the RVA market will be like at that time.
Now, in regards to your original question, you definitely should have a job lined up in VA before you purchase; will make financing easier. However, you might need to wait a bit after moving before purchasing; most lenders will want to see some stable work history right after a move.
Thank you! Yes, I came to the conclusion yesterday after everyone's helpful advice that lining up a job is definitely Step 1. So, I will being job hunting next spring. My parents (former home owners) assured me that they will not penalize me for just getting a job, esp if I worked in the same industry for years. If it comes down to it though, after my lease is up June 2015, I will live with them in Northern VA and just have to commute to work in RVA until I've established enough time with the company for a lender to feel comfortable loaning me money. Either way, paying more rent after my lease is up is not an option. Although, I will most likely help my parents out financially if I stay with them. Don't want to be a 25 y/o moocher!
My parents (former home owners) assured me that they will not penalize me for just getting a job, esp if I worked in the same industry for years.
I assume by "they" you mean mortgage underwriters. I'm not saying your parents don't know what they're talking about, but be aware the mortgage industry has changed about 500% in the past few years due to mortgage fraud. What was fine a few years ago doesn't work anymore. It's a whole new ballgame out there....
You have a point- Okey Dokie. My parents have not been homeowners since about 5 years ago. Since they became empty nesters, they didn't feel it was necessary to have a 4 bedroom house so now they are renting an apartment in Northern VA. By "they," yes I meant mortgage underwriters/lenders. I will take a look at some articles about mortgage fraud. I want to make sure I do not come across as a risk, which is why I really wanted to keep my current job. I placed a Google Alert for 'home buying' so every day I read these articles so I can try to keep up with the current times. I haven't seen anything yet about how I can show myself trustworthy.
I was reading in one article that when trying to purchase a house, if I put down a 'Good Faith' down payment, that will show the Seller that I am committed to closing the deal. I'm wondering if there is anything I can do upfront during the lending approval process that is similar. I would like to prove to them that I am not a flake. I think having $20k+ in savings, a pretty good credit score, debt to income ratio, and a stable career should prove that to them, but if they need more I will do it what it takes.
I was reading in one article that when trying to purchase a house, if I put down a 'Good Faith' down payment, that will show the Seller that I am committed to closing the deal. I'm wondering if there is anything I can do upfront during the lending approval process that is similar. I would like to prove to them that I am not a flake. I think having $20k+ in savings, a pretty good credit score, debt to income ratio, and a stable career should prove that to them, but if they need more I will do it what it takes.
Thanks Okey Dokie! Appreciate your advice.
You're talking about earnest money, and that's more or less mandatory in a hot housing market. It's showing your willingness to consummate the deal, so much so you're putting "skin in the game." I don't know that you can do anything similar during the underwriting portion of things; it all just boils down to sheer numbers and there's not really any emotion involved.
What is pricing like for homes in the Richmond, VA area? Are seller paying closing costs? I'm assuming with only $20K in savings, you're either going FHA or low downpayment conventional. Couple of things to keep in mind: if you go FHA, you will be paying PMI for the life of the loan; that will add several hundred dollars to your monthly payment. Re: DTI,you want to keep the numbers 28 & 36 in mind; 28% is your front-end ratio, the percentage of your income that goes toward housing i.e. your PITI. 36% is your back-end ratio, the percentage of your income that goes towards all recurring debts i.e. housing costs, credit card debt, student loans, car payments, etc etc. Student loans can definitely wreck that back-end, so start figuring your ratios out now so you can make adjustments well in advance. Also, I know $20K in savings looks like a lot, especially at your age, but that can get eaten up pretty quickly by purchasing a home; you have earnest money, inspections, closing costs, the down payment, etc etc.; not to mention, you want to put aside at least 1% of your home's value every year for maintenance and home repair. At closing, a lot of lenders will also want to see you have enough liquidity in your account to cover anywhere from 3-6 months of payments; you'll also have escrowed taxes and insurance to keep in mind.
Sorry that got along; just want to make sure you're aware there's a lot of hidden costs associated with purchasing a home most first-time buyers aren't aware of, and don't consider.
No apologies needed! Like I said, I appreciate any and all helpful advice so thank you. There are a lot of hidden costs. I was aware of the inspections, 'earnest money', closing costs, and down payment. As for the 1% rule, did not know that. I knew I needed some nest egg built in for any repairs that would come my way, but didn't know the rule of thumb.
Pricing for homes in the RVA area really fluctuates, but the neighborhoods I'm considering (Chesterfield, Midlothian) begin at around $130K+. I am not looking to spend more than $160k. As for seller paying the cost, that is something that I will probably negotiate. It will depend on a few factors: how long the house has been on the market, and if the price was reduced any. If I feel I have the upper hand in the situation, or that the seller is (for lack of better words) desperate to sell, I will ask that they pay closing costs.
Plus, I will definitely be renting out 1 room in the house to ensure I can keep afloat the first year for everything. Depending on the size of the room, I could probably rent it out for $500-$600/month plus I would charge half of all utilities. So, if my mortgage were $850/month, I would just have to contribute ~$300/month for this. I'm trying to be as realistic as possible.
Also, the $20k in savings is the goal for 12/31/14. Since I am not going to be officially putting in offers until next spring/summer, it should be more than that. Again, I hear you on the fact that money gets eaten up quickly. That's why I'm working 3 jobs so I can save up a substantial amount!
Trust me- would not be straining myself if I were not serious about saving up!
Thanks!
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