Suggestion for buying first house (Sacramento, Elk Grove: for sale, real estate, apartments)

[ryuns]

Originally Posted by hydro

Buying below your means is fine, but if you qualify for the loan, you can afford it.

I disagree--the person making the decision should decide what they can afford after weighing the pro's and con's. It's a matter of how much it affects the other decisions you make in life. Stretching for a house, as I said in an earlier post, works out totally fine for a lot of people. But for others, it might mean making a lot of sacrifices: less money to put away for retirement, not being able to save for your next car, not having enough for an emergency, being chained to a job you don't like because your expenses are too high, not being able to live the life you want to live because you don't have a lot of disposable income.

Originally Posted by hydro

It forces you to INVEST your income, not SPEND your income. I would rather be in the market and have it stay stagnant than to stay out of the market and kick myself later. Staying out of the market is a bigger risk

It does force you invest to some degree, but something like 80% of your payment just goes to interest, not principle. A house is not the only savings vehicle we have available to us as Americans. If someone has a problem committing to saving, the solution isn't to finance an expensive asset and try to pay it off. The solution is to automate their savings, putting a portion of every paycheck away before having a chance to spend it.

[slash_lucky]

Thanks you everyone for your valuable suggestions.
It really means a lot to me.
What do you guys think of buying a new house(2010+) opposed to old ones (2010 -)?
This house looks ok but it was built back in 1970s which is too old. So, when they say 1972, does that mean the structure is old but everything is new or what should I understand from it ?

http://www.realtor.com/realestateand...13-41254?row=3

or this one

http://www.realtor.com/realestateand...5-86428?row=10

[xenxes]

Hydro has a point, but it really depends on where you are in life.

We're of a similar age as OP, and I think for OP it makes sense to edge on the side of caution and stay flexible. Factor in your life style, job stability, etc. You don't want to have to relocate, and be stuck under water, things look good now but there is always a risk. Keep in mind that even in an up-market, as soon as you buy the house you're out at 6% in commissions + closing costs.

From the investment perspective, it would certainly make sense to lock in right now for a jumbo mortgage at a wholesale rate (Buffett Says). But this is presuming you have the money and flexibility to invest.

My parents are doing something like this, maxing out a new mortgage while they still have an income before retirement and renting the property out. However, they can do this because they have plenty of retirement savings to live on, and a $500k mortgage isn't as big a deal to them. Moreover, the $500k locked in at <4% frees up liquidity they can in turn invest at a conservative return of 7% per year. To them it's like "free money" and a no brainer, but for me it's too great a risk, especially given that $500k+ properties take much longer to sell than a $300k one.

[LoriBee62]

Originally Posted by hydro

Buying below your means is fine, but if you qualify for the loan, you can afford it.

That's correct: Until you lose your job, or you have a baby and would like to cut back hours or become a stay-at-home parent, or become ill and need to take a leave, or have kids and need to add a couple more mouths to your weekly grocery budget. The list goes on.

Most people, especially young people, only consider the cost of the mortgage when they think about the cost of their home. They forget about the increased cost in filling and maintaining a bigger home. Now that my group of friends are all hitting our 50's it's pretty clear. The ones who bought small homes are far more financially independent than the ones who bought the McMansions. In fact, I know two people who have taken on second jobs now that their kids are in college, in order to still pay for the house and help with tuition. (Hint: They aren't the ones who bought below their means).

[hydro]

The older home is better investment

[hydro]

Chicken little just called and said that the sky is going to fall. When it does, luckily you have this thing called an asset. You could either a. Sell it, or b. rent it out.

[NinaN]

Originally Posted by slash_lucky

Thanks you everyone for your valuable suggestions.
It really means a lot to me.
What do you guys think of buying a new house(2010+) opposed to old ones (2010 -)?
This house looks ok but it was built back in 1970s which is too old. So, when they say 1972, does that mean the structure is old but everything is new or what should I understand from it ?

[/url]

Newer vs. older has a couple considerations. First, layouts have changed a lot since the 70s. Some might find the older layouts non-functional compared to today's expectations. And ceiling heights low. Those are things that are hard to change or update but that's a matter of personal style.

Then there is cosmetics. Whether or not the home has been updated and whether or not a buyer cares is another thing.

As a home ages, even quality construction will eventually need new HVAC units, new hot water heaters, new roofs, new windows, etc. When looking at an older home, it's important to investigate the condition of these items to understand when they might need to be replaced and the cost to do so. Some homeowners meticulously maintain their home, others just let everything ride and that will impact your cost to maintain the home.

In general the older homes have bigger lots with mature trees. These days it seems that the goal of every developer is to squeeze as many homes into the smallest space possible leaving you with no lot, no space, and certainly no mature trees since those get cut down to build the houses. Once again, a matter of preference.

And newer homes in California tend to come with HOA fees and Mello Roos which can significantly impact the cost of owning a home. Don't go into this blindly, it can add hundreds of dollars per month of fees. Ask before getting to far along in the process.

[xenxes]

You should buy this one and take the rail to work https://www.redfin.com/CA/Sacramento.../home/19431571, if we weren't already locked in that would have been our next choice.

Do Mello Roos come up in property tax assessor records? Or is there an online registry, etc.?

[NickB1967]

Originally Posted by hydro

Buying below your means is fine, but if you qualify for the loan, you can afford it. It forces you to INVEST your income, not SPEND your income. I would rather be in the market and have it stay stagnant than to stay out of the market and kick myself later. Staying out of the market is a bigger risk

There is more than one market. IS the real estate market best, relative to other investments? Going in with less than 20% down is playing with fire, IMHO.

[NinaN]

Mello Roos are part of the tax bill. It's hard to track down without an agent or title company doing the research but it's very quick and easy to it if asked.