Should I Buy a House?

I am far from an expert but I would think in a pricey market like LA you would be hard pressed to find a mortgage payment as low as $1400-unless you put a ton of money down. You should have somebody run the numbers for you on a scenario closest to what you would be in-adding in all of the taxes and fees that you need in CA. Might shock you.

I think the following links will be helpful - we used a lot of the advice found here before purchasing our first home. They all address your moving concerns and discuss money as well. I wish you luck!

http://www.daveramsey.com/article/how-much-house-can-you-...

http://www.cbn.com/finance/ramsey090109.aspx

http://homebuying.about.com/od/buyingahome/f/Reasons-Not-...

I'm a mortgage loan originator in Texas, not CA, so I'm not soliciting... I did do lots of loans in CA back when I was with a large national lender, but it's been years and I can't remember how expensive property taxes and insurance are there.

Just because your mortgage payment is the same as your rent, doesn't mean that's the end of the expense. There is also taxes, homeowner's insurance, and potentially mortgage insurance and Homeowner's association dues. Also, don't forget that maintenance isn't covered - you can't just call your landlord to come fix the leaking shower pan.

CA real estate has always been speculative and now is even more so. Not to mention, lending restrictions have become very tight with regards to credit, income, down payment, and reserves. I don't know of anyone in CA who didn't lose at least some of their home's value over the last few years, and with the rate things are going, it doesn't look like we've hit bottom yet.

You might talk with a reputable mortgage consultant (given to you by personal referral), and get a prequalification done to even see if buying the home you want is an option.

Best of luck!
C.

Hi! I'm a Realtor in No. Cal and I thought I'd offer my two cents :)

It sounds like it is a good time for you to start investigating it more, that's for sure. Take some time to evaluate your financial standing: do you have a down payment, how is your credit score, would you qualify for a loan. Talk with your accountant/tax advisor and also a mortgage broker re: your possibilities for a loan (they can't give you an absolute answer but can give you an idea).

3-4 years is not a terribly long time in the Real Estate market and you may or may not realize a profit if you sell then. It would be very important to choose your property carefully and get a good price. Any profit would also depend on the amount of your down payment, loan terms and rates & expenses associated with buying/selling. Can you look at neighborhoods that you would want to be in for a longer time (ie in the school dist you like).

A note about Capital Gains: Capital Gains taxes are due on the gain recognized at the sale of your primary residence IF the gain is more than $500k ($250k for single people). Notice, this is the gain and not the sales price so if you purchase a house for $500k and sell it for $600k, you only have $100k in gain. You do not have to pay tax on this gain. If you buy for $500k and sell for $1.3m, you would have $800k in gain. You get $500k in gain tax free so you would pay taxes on $300k (the amount over $500k). Now, obviously, I'm not an accountant but that is the bare bones of it. Talk with an accountant for information specific to you.

Another point to keep in mind. When you own a home and have a loan on the property, all of the interest is tax deductible. All of it. And when you first buy, your monthly payment will be about 99% interest. So, 99% of your payment is deductible against your income. This is where homeownership really pays off over renting since your rent is not tax deductible. So while you do need to budget for PITI (Principal, interest, taxes & insurance) and maintenance, you also get a very large deduction for your mortgage interest payments.

So, talk with a local accountant, mortgage broker and Realtor for specific information. It could be a great time for you to buy. At the very least, it sounds like it is time for you to start making plans for buying.

HTH & GL!
:-)

If you buy a house and are paying 1400 in rent. You wouldn't want your mortgage payment with tax and escrows to be over 1000 because you have to be the one to pay for fixing things. the other 400 would go into savings for emergencies. This is just an example but inportant to know.

I would speak with a financial planner, or go straight to a mortgage lender to run your credit and the numbers with you (hint: "prequalify" with at least 3 different lenders).

As long as you live in the house for 2 years, you don't have to pay some RATHER hefty taxes when you sell (capital gains, for one).

We were military and bought and sold houses ever 2 years. Rented twice (when the market was sky high - it does that every 10 years, btw, just look at tax records for the past 100+ years, houses typically double in value every 10 years), but we just made sure that if orders came at 18mo that we didn't put the house on the market until the 24 month mark.

Honestly, the mortgage payments aren't what you should be worried about. Look at the housing market in your area. If you needed to move quickly would you be able to do so? If you had to rent the house out for a period of time would it rent for enough to cover the mortgage? We can easily pay our mortgage every month, but are trying to sell to cut down on my commute and it's going to cost us over $30,000 out-of-pocket for the "pleasure" of selling our home so it's probably not going to happen anytime soon!

Also, remember that when you own a house and something breaks, you have to fix it! If you don't own a lawnmower, you need to either buy one or hire someone. Tools and maintenance equipment are very expensive, but hiring someone is even more so!

Take a really close look at your finances and see if you would be able to afford $1800-$2000 a month b/c that's more realistic once you factor in home owner's insurance, PMI (depending on your down paymet), taxes and upkeep.

Now is a great time to buy. House prices are down, mortgage rates are low.

As far as buying now and selling in a few years, that's a gamble you have to take. Our economy is not stable and no one can predict what house values will do. I read an article the other day, that indicated real estate values on slowly rising. Of course there are also other varibles to consider, like the downpayment amount, interest rate, etc.

I think it's something you should consider, especially if you have some money saved up for a downpayment and a good credit score.

although there are definitely bargains out there right now, I'd be VERY conservative as to your monthly payment. I do feel it's better to buid equity in a home as opposed to paying rent BUT I'd make sure:
1. Zero debt (no credit card balances)
2. Emergency fund in place (3-6 mos. expenses in an accessible savings vehicle)
3. NO or LOW car payments.

It always costs more to own a home (utilities, insurances, repairs, replacing things) than to operate in an apartment.

If I had bought a house at my max approved amount when I was single, I would have been eating cat food every day. Just estimate conservatively what you "can" afford!

)

I am a Realtor as well and everyone has great points. I am old fashioned and believe that real estate is a great investment for your family but the economy is unstable and I'd expect to maybe make a profit after 10 years or so. It is a great time to buy but I think it's the best value if you can hold onto it for a while. TtThere are too many variables to make a true guess on what the market will do. A few things to keep in mind are that you should figure in the cost of annual Homeowners Insurance and Property Taxes. To see what you can really afford talk to a financial advisor and get pre qualified and go from there.

I think it is a GREAT time to buy, if you can find something you can afford that will sustain you for 5-10 years......I would be a little hesitant to sell any quicker than that, if a profit is to be made.....The market is still shaky and it is going to take quite a few years for it to turn around where profits can again be made.......Just my two cents, lol!

Is there a cahnce you would want or need to move any time in the next 3 or 4 years? If the answer is a yes, even 50/50 yes,no, than you may want to wait. Also, we are possibly looking to buy because we are totally squeezed where we are, we are not underwater in house value so would get a little extra and prices are so low. However, a friend that works with mortgages told me we defintely want to pay off more bills as well as have at least 6 months worth of mortgage and necessities in the bank to get a good rate. I would second talking to a mortgage lender to see where you stand. A lot of times they will look at your credit to see how you stack up for just the cost of the report. You could probably pull your report yourself and take it in just for a look-see. https://www.annualcreditreport.com

I would call a loan officer and see what our possiblities are, you could end up paying less in a mortgage than you do in rent, we did and that is with the taxes included. There is so much out here I believe now is the time and it may not be a buyers market for a long time to come. You can always rent if you decide to move and that will generate income as well.

Buy if you have at least a years salary saved--aside from down & closing costs and any repairs/upgrades you want to do. Youd have to find a house at around 160k to keep that kind of mortgage. I bought 2 years ago for 330k my mortgage is 2500, Its tough.