How Much House?
So I set out today with Mother to find a house for rent and saw one or two suitable places, one place that Schmoopie liked sight (and low ceilings) unseen, and then it happened. In the beautiful and out of financial reach area called Broadview, Mother spotted a house for sale. I hadn't been paying any attention to the places for sale as they are very expensive, and I don't yet have an understanding of the layout of the town. That last point being said, I would take anything in the Broadview area on proximity principle (proximity to Carkeek Park that I mentioned before). So Mother wanted to stop, and we stopped. Turns out it's a really nice brick house painted white with green trim, 2700+ square feet, hardwood floors, ginormous pines in the back, and it also happened to be near to $600,000. Fuck. No way I can afford that. Then I read the flier- 100% finance and interest only financing available. (begin Scooby voice) "Ruugh?" (end Scooby voice). Well, I'm inclined to think this is a bad idea, and I admittedly don't have a solid track record with personal finances. Mother, as is her wont, offered to loan me down payment money, which is ridiculous. That I would want to be beholden to her in that way is absurd. But here is the lingering thought. In a market such as this, I don't expect that a house of this caliber will be within our means (at least comfortably), and south of here in the mighty expensive San Francisco, interest only loans are not uncommon (where the geologic risks are even higher). If we rent a house, we're looking at $1700 - $2000 monthly (for the style and location we seek), but if this same dollar amount can satisfy an interest only mortgage (which may or may not be possible) for a house such as this, then the only remaining risk of note is that the house would depreciate. For frame of reference, this area is tres chic and the modus operandi seems to be to buy a $500,000ish house, scrape the lot flat and build a million dollar (or near to) "Falling Water"-wannabe new post-modern house in that place. The houses in the area are commonly $100,000 more than this one (and for no discernible reason). Yeah, you are maybe thinking by now that I'm rationalizing a bad idea, and I can't say that's not so- I'm trying to make sense of this. It also me be the rationalization of a good idea, and I don't know that I'm informed enough to know the difference. I've seen online mortgage calculators that are frequently contradictory, Some of them show rates that are near to the same rate for a conventional mortgage, making me wonder if accurate, what the hell? Other resources show rates that would be within our (perhaps uncomfortably tight) budget.
The bottom line is this- if you had seen this place, about 12 block from the water, and up high enough to have a heavenly view of the sound (you could see from the house, were it not for the HUGE pine trees- or maybe you can see through them in places) in an awesome neighborhood, dog friendly, and all these amenities, you'd be tortured too...
The hunt continues.
posted by Stucco at 10:28 PM
11 Comments:
ou are better off buying, then renting, that is for damn sure. But the market will be flat for quite sometime. Are you SURE you want drolling Weekends most of the year?
The main question is in the long erm term commitment. A ten percent valuation on a 600,000 house is TWICE that of a 300,000 house. Perhaps you could rent out a room to a colege girl and all her friends. WHen Can I come visit after that?
that would be drooling weekends
You
and college.
Dastardly sticky keys!!
Danger! Danger!
end warning.
Even if Mother wanted to "loan" you the downpayment, she couldn't. It has to be a gift that doesn't have to be paid back -per lender's rules. There is no way we could pay her back that much money anyway. She is out of her gourd! She wants you to buy it because it has a possible MIL space ;)
I know I’m preaching to the choir but when calculating feasibility for a home payment that scrapes the ceiling of your budget, don’t forget to factor in a reasonable maintenance/calamity fund. Repair and maintenance costs can increase significantly with the value and age of the home. Also, if you run into a deal that seems way too low, play the 20 questions game. Start with, has anybody died from other than natural causes in the house, has there ever been a mold issue identified and is anybody aware of previous or current structural issues. Most standard contracts provide protection from latent defects but you would be surprised what tidbits of knowledge spill from the mouths of people when the right questions are asked. Silence is definitely the most underrated, difficult to master, and productive negotiating tactic in the history of humankind. Those who master the awkward pause usually come out on top.
100% financing plus an interest only loan? Sounds like a financial bear trap to me. Of course, I'm completely uninformed and unqualified to even voice an opinion. But that won't stop me.
You DO NOT want to put yourself in this position, great house or not. Even a portion of the traditional 20% down payment, say a 5% down payment, works out to close to $30,000. This would trigger a tax consequence if it was reported as a gift. And if it's a loan, well, it's just that much bigger a burden. And the whole fucking country's in a real estate bubble - you've just moved away from one of the worst ones. And ARMs are bad in a declining market. And on, and on, and on...Keep looking, man, keep looking.
OSF
Stucco ... you'd be better off playing around someone cleaning their bow and arrow than to take on an interest only loan. C
aren't loan calculators depressing? I put in my details and every time I get reading of 'peasent'!!!!
and stucco, good ideas dont not have to heavily defended, not to yourself any way!
Where's the post?
Yeah, what Schmoopie said!
/me looks around in utter bewilderment not knowing what post it is we are waiting for but feeling inclined to ask.
GBTW nothing to see here.
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