purchasing home

[Edmunster]

With uncertainty in the near future would right now be a really bad time to purchase a home? The wife and I just got married and really would love to own our own place. I am interested in buying a ranch style property with about 1/2-1 acre lot. Its not huge but I plan to grow as much food as possible and possibly raise a couple of hens. I am renting a house right now and have about 30-40k for a down, what would you guys do?

 

[angelatc]

I'd look for a foreclosure that you can pay cash for. House = good. Mortgage = bad.

 

[tod evans]

They're not making any more dirt...

FRN's however.....

 

[MRoCkEd]

Here's a basic buy vs. rent calculator to start with: http://www.nytimes.com/interactive/business/buy-rent-calculator.html

 

[Zippyjuan]

If you can afford it and plan to stay in it for several years (and it sounds like yes to both questions) and find a place you like and can afford, go for it. Remember to include property taxes and maintainance costs in estimating if you can afford it. Prices are low and interest rates on mortgages have started to rise a bit lately.

What I did on my place- took a 30 year mortgage (though I could have afforded a 15 but it would have been tight). That gave me flexability in case any financial difficulties came up (which they did) and pay extra towards principal when I could. Rate on 30 year will be lower. Mine will be paid off in less than 15 years (by the end of this year).

Good luck with it! (lending standards are very tough right now- the more you can put down- at least 20%- the better as well as having a solid credit rating- it is tougher than when I made my purchase).

(Hopefully this will not turn into an LVT thread where you get accused of stealing from society by buying land. )

 

[cbc58]

Where are you located? That makes a big difference.

 

[Elwar]

I'd look for a foreclosure that you can pay cash for. House = good. Mortgage = bad.

That old way of thinking may not be as solid these days.

 

[Edmunster]

Where are you located? That makes a big difference.

Southern California, Riverside County

 

[Elwar]

Consider this: Obama will be re-elected. The housing market will continue to drop. Obama supports government money for people hurting based on a poor housing market.

So you have one group of people who will buy homes on credit, the price of their home will go down. They can either default on their home or get some sort of bailout. They end up with what they started with.

Then you have the people who pay for the house with cash and have no mortgage. The price of their home will go down. When they sell, they are out the amount that the value went down. They end up with a lot less than they started.

I bought my house for $300k. I put down $100k. My house is now worth $200k. I wish I had put down as little as possible.

 

[Carehn]

Southern California, Riverside County

NOOOOOOOOOOOOO

 

[anaconda]

I'd look for a foreclosure that you can pay cash for. House = good. Mortgage = bad.

If high inflation occurs: low fixed rate mortgage = good (as long as one is gainfully employed). Mortgage is paid down with increasingly worthless dollars.

 

[presence]

Never sign an ARM.

 

[anaconda]

My girlfriend (located in CA) just bought four foreclosures over the past year or so, each with nothing down and for cheap. She has a property manger rent them out and has positive cash flow on each. They are each very modest homes in MS, GA, and TN. All under $100K. She has great credit and no bills, but a very modest job. She was able to take advantage of the housing melt down and Fannie Mae lending rules. This is a much smaller scale version of what Romney has proposed (and Goldman Sachs is venturing into as we speak) to clear the foreclosure market and get people back into these empty homes. Maybe the OP might consider the real estate market as an investor for a few years, and continue to rent amidst this economic uncertainty? Southern CA is high on the list of places to not be if the SHTF. On the other hand, hasn't the Riverside County area already taken a huge devaluation in their real estate market? If so, it may be a timely entry point? Personally, I would be nervous about having to make a sizable mortgage payment in this economic environment. My girlfriend, on the other hand, could lose her job and her renters will continue to cover her mortgage payments. And, if one of her renters loses his/her job, she simply replaces them with another renter.

 

[Steven Douglas]

My prediction and advice:

1) Wait. Keep letting prices drop, the bottom is still lower, and by no means finished. The foreclosure home ownership destruction machine is far from finished doing its nasty work from the last bubble implosion.

2) Look for news articles that read that the Fed will no longer pay banks to park funds. Figure out a way to get alerts to the effect, because that is your signal that QE is finally going to leave banks and enter into the larger economy. That's when both price inflation and the interest rates required to fight it will begin a very rapid ascent, as Bernanke gets his finger stuck in the economic dyke. Get a LONG TERM LOW FIXED RATE INTEREST rate loan while you still can, as you should buy anything you can get your hands on, that can afford to make payments on. The expensive credit and currency debasement effect tide that follows is what will cause the business cycle and housing bubble to start all over again.

3) Then, as inflation takes hold and your income adjusts as the market equilibrates, such that your payments seem relatively low to you, pretend that you still have large payments, and sink the value difference into physical precious metals. That is ONLY to give you the ability to pay off or service your loan in the event of economic catastrophe, which can still come at any time, like a full scale deflationary depression, however short-lived.

 

[ninepointfive]

usda rural home loan means no money down. Don't take the bad advice about paying the whole house with cash.

 

[Zippyjuan]

If inflation takes off, interest rates will rise sharply as well- including mortgages- which will increase your costs of borrowing. Meanwhile, if you bought sooner, you are that much closer to the day you have it paid off- and have today's low rates locked in (sounding like an infomercial! ).

This summer, prices in the area seemed to be bouncing along the bottom- up a bit, one month (like June) and down a bit. Probably near a bottom but you will never know until after the fact and they move up. If it works now, go for it. I am gist down da road a bit in lil ole San Diego.

Chart of prices for you for Riverside County:

The median asking price for homes in Riverside peaked in April 2006 at $461,100 and is now $196,650 (42.6%) lower. From a low of $217,080 in March 2009, the median asking price in Riverside has increased by $47,370 (21.8%).

http://www.deptofnumbers.com/asking-prices/california/riverside/

Inventories:

 

[anaconda]

My prediction and advice:

1) Wait. Keep letting prices drop, the bottom is still lower, and by no means finished. The foreclosure home ownership destruction machine is far from finished doing its nasty work from the last bubble implosion.

2) Look for news articles that read that the Fed will no longer pay banks to park funds. Figure out a way to get alerts to the effect, because that is your signal that QE is finally going to leave banks and enter into the larger economy. That's when both price inflation and the interest rates required to fight it will begin a very rapid ascent, as Bernanke gets his finger stuck in the economic dyke. Get a LONG TERM LOW FIXED RATE INTEREST rate loan while you still can, as you should buy anything you can get your hands on, that can afford to make payments on. The expensive credit and currency debasement effect tide that follows is what will cause the business cycle and housing bubble to start all over again.

3) Then, as inflation takes hold and your income adjusts as the market equilibrates, such that your payments seem relatively low to you, pretend that you still have large payments, and sink the value difference into physical precious metals. That is ONLY to give you the ability to pay off or service your loan in the event of economic catastrophe, which can still come at any time, like a full scale deflationary depression, however short-lived.

Sounds like great advice. But I think, as you have alluded to, there is, and will be, some guess work as to the optimal market entry point. A little more devaluation missed out on may pale in comparison to missing out on a low interest rate. The nominal value of your property will skyrocket with very high inflation.

 

[Edmunster]

Thanks for all the advice even though some of it is conflicting. While I wish i could move away from this area it is very hard. Job/business, ALL family, Wife's family, Great friends, & for what I am into (Concerts, offroad racing, snowboarding, boat/waverunner) quite possbily the best place to live. I might wait just a tad and see if prices keep dropping. But as soon as I see interests rates start rising I might have to take advantage of that. Any other advice is much welcomed..

 

[Zippyjuan]

Where else can you ski and surf in the same day?

http://www.washingtonpost.com/blogs...10c0c58-e72b-11e1-a3d2-2a05679928ef_blog.html

Posted at 10:00 AM ET, 08/16/2012 TheWashingtonPost
Mortgage rates rise for third week

By Kathy Orton
Mortgage rates continued their upward climb this week, according to the latest data released Thursday by Freddie Mac.

The 30-year fixed-rate average rose to 3.62 percent, up from 3.59 percent a week ago. Since falling below 3.5 percent for the first time late last month, the rate has increased steadily the past three weeks. It was 4.15 percent for the same week a year ago.

The 15-year fixed-rate average remained below 3 percent for the 12th consecutive week, but it too went up. It grew to 2.88 percent from 2.84 percent a week ago, but was down from 3.36 percent a year ago.

The hybrid adjustable-rate mortgages also remained below 3 percent this week. The one-year ARM averaged 2.69 percent, up from 2.65 percent a week ago but down from 2.86 percent a year ago.

The five-year ARM averaged 2.76 percent, down from 2.77 a week ago. It was 3.08 percent a year ago.

“The latest economic indicators point toward low inflation but gradually stronger economic activity which placed further upward pressure on long-term Treasury yields and, in turn, fixed mortgage rates,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a statement. “For example, inflation remains in check with 12-month growth in the core consumer price index falling for a second month to 2.1 percent in July. At the same time, industrial production rose 0.6 percent in July compared to a 0.1 percent increase in June and retail sales jumped 0.8 percent in July from a 0.7 percent decline in June.”

As mortgage rates have risen, mortgage applications have fallen. The Mortgage Bankers Association reported Wednesday that applications for mortgages fell 4.5 percent from the previous week as both the Purchase Index and Refinance Index declined. The Purchase Index was down 2 percent, while the Refinance Index was down 5 percent.

The refinance share of mortgage applications continued at its robust pace, accounting for about 81 percent of total applications.

 

[presence]

Don't buy unless you can come up with 3 good $10,000 reasons why you'll be able to sell it for more than you bought it for.

$30-40k down might get you an $80k home in the country on an acre with 5 years of owner financing. Find something you like and make an offer for half now, half over 5 years at 0. If you pay the asking price and meet someone w/ multiple properties, or who is selling off a "mother in law" cottage, selling the farmhouse but keeping the acreage, or inherited property, etc. you have a good chance to broker a cash deal with quaint terms.