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Just remember ability to buy is not the same as ability to afford. I would buy based on your income level now and not what you might be making in the future. If you can pay cash do it. You will still need to do maintenance and pay the utilities, taxes and insurance. Far too many people that come into a windfall of money end up buy way more house than they can actually afford and end up losing it. BTW I think it's awesome that you had a grandfather with such insight and wisdom to do something for his family.
On my last comment I mean "not overly large".
Now that is out of the way.
Yes, we plan to purchase something based on what my income would be with hers for this house and then when my new career takes off, we will purchase something a little nicer.
Right now we are thinking 120-200k - we would like to keep it on the lower end if possible, but Alaska has a funky market, especially in my neck of the woods.
Just wish Zillow had all the listing in our area. Picked up a magazine for local real estate and found another 10 houses that match our criteria and are under 150k with three bedroom and 2 bath, plus a garage.
Edit: Thanks for the nice words about my grandfather. He was wise with investments and set up my entire family. He owned a very large and successful newspaper business that he sold off back in 1999 after 40 years of writing.
Last edited by MillerThyme; 12-11-2015 at 11:33 AM..
Reason: Reasons :-)
No. In order to get a mortgage for $200,000, the house would be worth more than $200,000. So, he would have a $200K mutual fund plus a house worth over $200,000. Buying a house with a mortgage does not reduce someones net worth.
If you get a USDA loan you could in fact get 100% LTV. Net worth is what you own minus what you owe. In theory you could factor in equity into net worth, but that's really subjective to the market and actually selling your home. You might get that and you might not.
$200K in assets - $200K in debts = ZERO net worth
$200K in assets - $0 in debt = $200K net worth
Buying a home with a mortgage does in fact lower your net worth. You don't own the house outright yet.
Buying a home with a mortgage does in fact lower your net worth. You don't own the house outright yet.
Nonsense.
If I have $250,000 and put down $50,000 on a $250,000 house, I have $200,000 and $50,000 in equity.
I may have reduced my liquidity, and I may have altered my cash flow, but I have not necessarily lowered my net worth.
This sort discussion illustrates exactly why the OP should talk to a fee for service planner who will look at the OP's full picture, not merely kneejerk him into possibly unwise action.
If you get a USDA loan you could in fact get 100% LTV. Net worth is what you own minus what you owe. In theory you could factor in equity into net worth, but that's really subjective to the market and actually selling your home. You might get that and you might not.
$200K in assets - $200K in debts = ZERO net worth
$200K in assets - $0 in debt = $200K net worth
Buying a home with a mortgage does in fact lower your net worth. You don't own the house outright yet.
An excellent example of why some internet posts aren't worth the paper they're not printed on.
Probably a no. Interest rate is historically low, the smart money is to finance your house and invest your cash to get a better return. Plus, your mortgage interest is tax deductable.
I'd suggest you go to lendingtree.com and see if you can get a loan before putting down an all cash offer.
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With a cashiers check in hand its physiologically easier to make low ball offers. You literally have cash in had and can close that day or the next day the title company is open.
I would offer what you are willing to pay, not nessicarily what they are asking.
Also unless you are an incredibly savy investor its unlikely you will make more in the market than you are paying in mortgage interest in terms of total dollars. If you have no interest and tenants on top of that that is gravy and you don't have the stress of the downs in the market of which there are a lot more now than there used to be.
With a cashiers check in hand its physiologically easier to make low ball offers. You literally have cash in had and can close that day or the next day the title company is open.
Huh?
As for the second line, have you ever bought any real estate?
Yes I have and I am getting ready to be a buyer again. If you are litterally buying something with a cashiers check directly with a seller the only person that has to be involved is the title company perhaps a lawyer on retainer. It is much easier to make a low ball offer because alot of flim flam is taken out of the sale. Mabye pay an appraiser and an inspector. But if he is savy he will be knowlagable enough to also inspect along side the inspector.
I have also bought airplanes this way, the more people you get involved the more expensive it gets. If the seller does not like the offer you shake hands and go away or you say have a nice day and hang up the phone. I am also in the process of buying a hangar in the next few years.
Quote:
Originally Posted by jackmichigan
Huh?
As for the second line, have you ever bought any real estate?
Probably a no. Interest rate is historically low, the smart money is to finance your house and invest your cash to get a better return. Plus, your mortgage interest is tax deductable.
I'd suggest you go to lendingtree.com and see if you can get a loan before putting down an all cash offer.
.
It's all about risk. The smart thing to do would be negate the risk and buy the home and invest the money that you would be sending the bank in interest payments into your investment funds. You might sleep a little better at night knowing you won't lose your house because of a job loss.
As long as you get it for the right price and still have plenty of liquid cash. Owning a home is not just a mortgage, you have taxes and utilities that go on. If someone has enough money to buy a house with cash then a job loss should not effect them as they could pay on the mortgage for a long time. But you avoid the interest.
But the bottom line is don't over pay.
Quote:
Originally Posted by weaverra
It's all about risk. The smart thing to do would be negate the risk and buy the home and invest the money that you would be sending the bank in interest payments into your investment funds. You might sleep a little better at night knowing you won't lose your house because of a job loss.
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