| Does it makes sense to buy a house in our situation |
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LaurenXX
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| Does it makes sense to buy a house in our situation |
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Do you think it makes sense to buy a house in our situation?
My partner and I have been renting an apartment for $1200 a month. That includes utilities. We are happy living there, we don't have kids and don't plan on it, so we really don't need more space.
Now with everyone buying real estate we are thinking or doing it as an investment.
Houses in our area go $350,000, at least that would mean a mortage of $1600 a month plus taxes $300 and utilities $300 total of $2200 per month. I am not including the cost of a second car that we will need or any maintenance or repair.
These caluclations are based on a mortage of 35 years. If we want to pay it off sooner we will need to pay more. So will only have it payed off when we retire.
We could buy a condo, but with maintance fees we would end up paying the same as a house.
I am not sure if home ownership would be worth the extra expense the stress. We can afford it, but we would not have the easy life we have now, and may have to cut back on some luxuries like vacations.
Do you think the payoff is worth the sacrifice?
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Wed Aug 26, 2009 4:26 pm |
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littleroc02us
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I strongly believe that you only take out no more than a 15 year mortgage on a house that is less than 30% of your take home pay. Anymore than that your asking for trouble. With the 15 year you will have it paid off faster. Also, only do this if you have no debt and can afford it. As for a car, I wouldn't take on more debt just to have that new car smell. Buy a used vehicle with cash. I am personally in the market myself for a car and we are saving up $10000 in cash and will not borrow. Keep in mind that if you have no debt it is easy to save that kind of money. Hope this helps.
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Wed Aug 26, 2009 5:33 pm |
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LaurenXX
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There is no way we can pay off the house in 15 years.
Still I don't want to pay rent in my old age. I want to plan for the future now.
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Wed Aug 26, 2009 5:40 pm |
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littleroc02us
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quote:
Originally posted by LaurenXX
There is no way we can pay off the house in 15 years.
Still I don't want to pay rent in my old age. I want to plan for the future now.
My thought is that if you cannot afford a mortgage of 30% or less of your take home salary and a 15 year mortgage, then you need to either save for a larger down payment or find a less expensive house. I was just trying help by suggesting to live within your means which will allow yourself more financial flexibility and more fun.
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Wed Aug 26, 2009 5:47 pm |
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oldguy
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quote:
Still I don't want to pay rent in my old age. I want to plan for the future now.
This is a key point. At 3% inflation your $1200/m rent will be about $2200/m in 20 years. And in 35 years rent will be about $3375/m. Meanwhile your house payment will still fixed at about $2200/m (altho the insurance will go up a bit over the years.)
More importantly, at Year35, the $1600/m will stop, the house will be paid for. But the rent will keep on going, first $3375/m, then 20 yrs later it will be $6100/m, and so on for the rest of your life.
So you are right to be giving this some thought. As for a condo vs a house, you say that a condo costs as much as a house - but the insurance and maintenance is included in the condo fee. Also, you need to decide which is worth more to you - if you like to have the exterior painting, new shingles, etc, done by someone else you might like the condo - same with yard work and snow removal. (35 yr notes are in CA and Canada, so I don't know if you have snow or grass?)
And I wouldn't want to prepay the mortgage if you can get a good rate, I would want to keep it for the 35 yr period. (I have a 30-note on one rental house that I got when I was age 64, I don't prepay it, it is inexpensive use of someone else's capital).
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Wed Aug 26, 2009 11:27 pm |
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Cherryl Hanson-Simpson
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Since you are concern about the future then start making plans on owning your house. After a couple of years the rent will increase while the mortgage will not even if the insurance does increase it will not be as high as the rent. At the end of the day the house will be yours. With regarding to the new car do you really need one if this is an necessities then think of getting a used one in good condition. 
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Wed Aug 26, 2009 11:48 pm |
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coaster
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When you're comparing the cost of renting vs. the cost of buying, remember to consider the NET cost of your home purchase. It looks to me like the only number you're looking at is the total cost. Rent, once paid, is gone forever. But an increasing percentage of that monthly mortgage payment will be going to purchase equity in real estate.
Is mortgage interest tax deductible in Canada? Don't forget to include the effect of that as well.
~Tim~
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Thu Aug 27, 2009 2:44 pm |
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LaurenXX
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Thank you all so much for your replies.
I can certainly see both perspectives.
If it was up to me I would buy a condo, but my husband is very much against it.
He does not want to pay for work that he could easily do himself.
Living in a condo would allow us to live in Richmond hill, instead of moving north
and we would still be aquring equity.
I find that all the smaller townhouses are so poorly layed out that I really would prefer to live in an apartment.
Another "little issue" he filed for bankrupcy a few years ago so he does not qualify for any loans, which would mean that the mortgage is on my name and I am putting up all downpayment, which is only 20k. And we would have very little money left after that.
I suggested that we should save more and buy in 6 months to a year. He insists that we buy now, because the rates are low and the prices would go up so it does not make sense to save and buy later. He sais that we either buy in the next 2 months or we don't buy at all. I should probably see a couples therapist instead of asking for financial advise, but do you think there is a logical way to convince him?
Also in our area the real estate market is way too hot right now, not too many houses are on the market and there are a lot of buyers, so people end up paying over asking price, I would wait for that reason alone.
I am not buying a brand new car, we just got a used car for $1500 from a family member. I am not going to drive it and have insurance on it until we move to the house, that is if we move. I take the buss now because it is convenient, but if we move to a house it would be too much of a hassle, to far. So we do need a second car and the insurance and maintenance costs that go along with it.
Last edited by LaurenXX on Fri Aug 28, 2009 2:57 am; edited 1 time in total |
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Fri Aug 28, 2009 2:21 am |
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oldguy
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quote:
but my husband is very much against it.
He does not want to pay for work that he could easily do himself.
Not a very good reason - and there may come a time in about 35 years where he will appreciate it that a 'service' does the snow removal for him. (I assume that this is near Totonto?)
Do you need a second car if you move North into a house? If so, that is a huge offset in favor of the Condo - cars depreciate at $4000/yr - plus the running costs.
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Fri Aug 28, 2009 2:44 am |
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LaurenXX
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I know, old guy, but what do I tell him???
I am 31 and he is 42. He said that he is getting too old to be buying his first house and if we don't buy now a year later is too late???
I am really not exited about driving and commuting too far, but he sais condo is a bad investment!
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Fri Aug 28, 2009 2:59 am |
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littleroc02us
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quote:
Originally posted by LaurenXX
He sais that we either buy in the next 2 months or we don't buy at all. I should probably see a couples therapist instead of asking for financial advise, but do you think there is a logical way to convince him?
What I am seeing from this post is that he seems to be a bit immature for 42 years after looking at this posting above. Who says that? My personal opinion is, do you really want to be taking the advice of someone who declared bankruptcy and was unable to handle their own finances? To me it seems that you have the better financial decision making mind. I would advise that you save up a 20% down payment, rent cheap for a while and then take out a 15 year mortgage.
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Fri Aug 28, 2009 1:23 pm |
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sweethome
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It is much better to look for a house rather than a condo considering that you may have a family and kids later on so it is much better to buy an ideal house for the kids
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Fri Sep 18, 2009 4:49 pm |
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Nick Brian
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quote:
Originally posted by littleroc02us
quote:
Originally posted by LaurenXX
He sais that we either buy in the next 2 months or we don't buy at all. I should probably see a couples therapist instead of asking for financial advise, but do you think there is a logical way to convince him?
What I am seeing from this post is that he seems to be a bit immature for 42 years after looking at this posting above. Who says that? My personal opinion is, do you really want to be taking the advice of someone who declared bankruptcy and was unable to handle their own finances? To me it seems that you have the better financial decision making mind. I would advise that you save up a 20% down payment, rent cheap for a while and then take out a 15 year mortgage.
I sure agree with you. Rent it first and then solve the mortgage. Thanks. Nick Brian.
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Sat Sep 26, 2009 10:12 pm |
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Nick Brian
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Condo is a long term expensive thing. Don't go for it. Of course it's advisable and I do. But at the same time it's just an opinion. If you have other better plan then go for that.
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Sat Sep 26, 2009 10:28 pm |
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