Is now a good (wise) time to buy a house?

#1
TheDeeble

TheDeeble

Guy on the Couch
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May 6, 2007
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#1
In this turbulant economy that is still struggling is buying a house a good investment of money and committment?

Maybe I'm just letting the fear of unknown in an awful economy and uncertain US economic future overtake me. I'm concerned about the strength of the dollar. Especially with all this talk of a global currency.

I'm not talking about a fancy house. I've found a basic 3 bedroom 2 bath foreclosed house in a good neighboorhood. About 20 years old, and needs little to no work. I could afford it fine without any gimmicky financing or ballon payments.

I'd be making a good downpayment. Roughly 33%.

I guess I'm just wondering if now is a wise time to make a large committment or hold on to what I have. :dunno:

Any advice is greatly appreciated. :hi:
 
#3
#3
Unless you get into a situation where the county you live in refuses to lower property values to the market demand...because the uber's are in control.
 
#4
#4
This is likely the best time to buy a house that you will see for years to come . . . if ever.

Most people reading your post would kill to be in your position - in the market with a ton of cash and no home that they have to unload before they can do a deal.
 
#5
#5
If first time homebuyer -- 8k. I would definitiely buy a place if I was in that situation and could afford it.
 
#6
#6
vols4sure said:
If first time homebuyer -- 8k. I would definitiely buy a place if I was in that situation and could afford it.
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That was going to be my next question. Wasn't there an 8k tax credit for first time buyers recently passed?
 
#7
#7
orangeblooded2 said:
Unless you get into a situation where the county you live in refuses to lower property values to the market demand...because the uber's are in control.
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What? Are talking about tax assessments?
Posted via VolNation Mobile
 
#8
#8
Why are you going to buy a house when Obama said he will pay for it and your gas also? :) I kid...I think your in a good spot with the interest rates at crazy lows. If you are willing to buy a house with that much cash in hand to put down, I say jump on it man.
 
#9
#9
TheDeeble said:
That was going to be my next question. Wasn't there an 8k tax credit for first time buyers recently passed?
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I had forgotten about that . . . Not sure about the details other than it cuts off sometime midyear.
 
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#10
#10
I would only put 10% down and keep the rest of that killer dp for rough times ahead. Having 6 months $$ in your hand is the only way to think today. I am in month 3 of no job and there are lots of people looking for those few new ones. :(
 
#11
#11
That's something to consider. You definitely don't want to tie up money you may need in the short term. That being said, I'd put at least 20% down if at all possible in order to avoid paying PMI.
 
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#12
#12
GAVol said:
That's something to consider. You definitely don't want to tie up money you may need in the short term. That being said, I'd put at least 20% down if at all possible in order to avoid paying PMI.
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This is great advice. If I were the OP I would put 20% down and bank the rest in some sort of money market account.
 
#13
#13
Not much of a real estate guru, I am in the same position of looking for a house and have a huge down payment to use. Looking at websites like Trulia.com and seeing what a certain house sold for within the last five to ten years vs what the current asking price is unsettling. In most cases the house has doubled or tripled in five years (even though they say they have been reduced). I think we still have a way to go before prices start to get where they should be.
 
#14
#14
Orange in Memphis said:
I would only put 10% down and keep the rest of that killer dp for rough times ahead. Having 6 months $$ in your hand is the only way to think today. I am in month 3 of no job and there are lots of people looking for those few new ones. :(
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I agree completely. I'm always thinking ahead (or at least trying to).

That downpayment amount above isn't everything I have. I'd still have about 12 months worth of cash available if needed afterwards.
 
#15
#15
I'd still go with 20% if you can comfortably swing the payments. Let the cash work (a little) in some safe, liquid investment.

Given interest rates and the housing glut, I think it's a great time to buy if you plan to be in the house for at least a few years. If you don't itemize deductions now, a house will definitely do good things for your tax bill as well.
 
#16
#16
volinbham said:
I'd still go with 20% if you can comfortably swing the payments. Let the cash work (a little) in some safe, liquid investment.

Given interest rates and the housing glut, I think it's a great time to buy if you plan to be in the house for at least a few years. If you don't itemize deductions now, a house will definitely do good things for your tax bill as well.
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Bite the bullet and do a 15 year mortgage. You will be glad you did.
 
#18
#18
Some advice from Forbes

Ten Things To Buy Before The Economy Improves - Forbes.com

Big Ticket Items
At the top of the list: housing. This may be the best time in a generation to buy a home. According to the S&P/Case-Shiller U.S. National Home Price Index, fourth-quarter 2008 prices were down 25% from the four quarter of 2006. The stimulus bill Congress passed in February includes an $8,000 credit for first-time home buyers. According to bankrate.com, average interest rates are beginning to dip below 5% for a 30-year, fixed-rate mortgage.
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The net of taxes interest rate on a 15 year mortgage is now between 3.0 and 3.6% depending on your tax bracket. That's about as close to "free money" as you will ever find. Even a modest rise in house values will make it truly free money.
 
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#19
#19
volinbham said:
The net of taxes interest rate on a 15 year mortgage is now between 3.0 and 3.6% depending on your tax bracket. That's about as close to "free money" as you will ever find. Even a modest rise in house values will make it truly free money.
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bingo. inflation could easily average that over 15 years.
 
#21
#21
oklavol said:
You better believe it, and you will be surprised that the payments arent that much more :thumbsup:
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Depending on the terms, it may even be better to get a 20 or 30 year loan and pay it like a 15. When it is all said and done, your effective interest rate could end up being lower. Plus, you have the benefit of having a lower payment to fall back on in case times get rough.

Personally, I got a 30 year loan and should have it paid off in about 10-11 years with how I am accelerating the ammortization schedule with extra principle payments. I thought having that flexibility in payments was worth it in case something happened.
 
#22
#22
I'd argue at these interest rates that investing the money rather than paying down the principle would be a much better long term investment.
 
#23
#23
droski said:
I'd argue at these interest rates that investing the money rather than paying down the principle would be a much better long term investment.
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Long term I agree. With my wife and I, we have short term goals and would like to expand our family. Paying off the house and upgrading is a priority for us. I max out my 401K, I have an IRA, and I trade penny stocks here and there...but I want to take advantage of the low payments I have with my current mortgage and completely own that asset.
 
#25
#25
Lexvol said:
Bite the bullet and do a 15 year mortgage. You will be glad you did.
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I'd never even considered a 15 year. Like someone above said, I just figured I'd go longer, but pay extra to pay it off. If tough times do hit, I'd have a smaller monthly note.

Although I've never bought a house before and know little about the advantages of 15 vs 30 year mortgage.
 
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