To buy or not to buy.....

**maat55** · 05-25-2008, 08:27 AM

As a rule, your payment should not exceed 28% of your take home pay. Never buy based on possible future income. You should wait and save up as much money as possible and when you have the higher income, then buy based on the 28% rule.

Your home is only a feel good investment, so do not put everything you have only into your home. You should be able to invest at least 10% of your income. That's where your true wealth will come from.

**AmbitiousSaver** · 05-25-2008, 09:25 AM

I would suggest waiting too... my DH alone takes home what you do and our mortgage is about what you would pay. But I work too and couldn't imagine being able to live on his pay alone... considering you also have to get a new car soon, waiting probably is the best option.

Also, have you accounted for closing costs? Property taxes? Etc?

We have a $388K mortgage at 5.5% fixed and with P&I, taxes, insurance... we pay $2585/mo... $2151 or so is P&I... and that doesn't include what we would have to pay in PMI if we didn't have a VA loan (the VA program allows you to not have to pay PMI)

**humandraydel** · 05-25-2008, 11:35 AM

Originally posted by AmbitiousSaver View Post

We have a $388K mortgage at 5.5% fixed and with PITI, taxes, insurance... we pay $2585/mo... $2151 or so is PITI... and that doesn't include what we would have to pay in PMI if we didn't have a VA loan (the VA program allows you to not have to pay PMI)

For the record, PITI stands for Principal, Interest, Taxes, Insurance....

**AmbitiousSaver** · 05-25-2008, 11:39 AM

Ack, sorry about that. I went ahead and fixed it

**Ima saver** · 05-25-2008, 01:17 PM

I certainly don't think you can afford a condo. Where are your bills for food, electric, gasoline, etc??

**disneysteve** · 05-25-2008, 02:35 PM

You only have $14,300 in savings? Forget the 403b. That money is for retirement and nothing else. You don't raid your future to pay for your present.

You can't afford a $369,000 condo. You've got nothing for a downpayment which should ideally be 20% and certainly at least 10%.

Although not part of your question...

$110/month for a MAID and you live in a studio apartment?!? What's that about?
And $120/month for the barber? Either buy an electric clipper for $20 or $30 bucks and cut your own or go to Hair Cuttery for $15/cut.

Cut out those two expenses and that frees up $115/month that you can start setting aside for a downpayment in the future. Add in what you'll save by never again leasing a car. In August, buy a decent used car for $5,000 cash (from your money market). Add the $399/month to your savings. Keep cutting costs and you'll have a downpayment soon enough, especially if your income does rise.

**sounderella** · 05-25-2008, 03:41 PM

You have a maid?? Wish I had a maid....anyways if I were you, I wouldn't buy the condo. Especially from what I understand, you cannot finance 100% for condos. Besides being a good idea, you're gonna have to have that down payment to even get a loan period.

**tripods68** · 05-25-2008, 04:17 PM

It seems your biting more than you can chew. I would wait perhaps take on a rental property for now since its cheaper and perhaps take on a roommate for additional cost-savings until your financial situation improved.

**docstudent** · 05-26-2008, 09:08 AM

Thanks for the feedback...

I thought it would be possible to get a condo due to the slight decline in the southern California region. My agent said, the condo might go for about $340G, I am willing to make sacrifices for a year or two. I have a really low overhead, now that I am complete with school. I do not have any credit card debt and I can pick up a night class at the university level to bring in additional funds. What about deferring my student loan in June, and using that money for the house note? But, do you think it is wise to pay 2G for rent? I have looked and that is the best rate in the area I live in? About my monthly income, I took a new position, and I recently found out that the position was going to be cut next year, that's why I estimated about $3,800 a month, but that is on the very, very low end, (worst case scenario). Yes, I can out the maid, I used the service because I was busy completing my thesis, and I had very little time for cleaning. I can cut dinning out, clothes, and entertainment---I enjoyed myself while in graduate, and I and willing to do what it takes to get the condo...I am not certain if I will be able to find something in that price range---

**scfr** · 05-26-2008, 09:36 AM

Originally posted by docstudent View Post

I am thinking about a 0% down option, is that a good idea?

No. Save until you have enough to put a bare minimum of 10% down (and 20% or more would be very much better) and then reconsider.

There will always be great places available. If you pass on this condo it will not be your last opportunity to buy a nice place.

**DebbieL** · 05-26-2008, 09:41 AM

It will probably be the worst financial mistake of your life if you do this right now. You are not thinking with your head. Keep your heart out of this decision for now. You CAN'T afford it. Period. I would stay where you are and pay the $1,400, or look for something cheaper. If $1,400 is the best rate, then stay put! It is a LOT less than what your mortgage payments would be. Save the difference, and one day you will be able to afford a home. You're not there yet.

PS - Real estate still has a ways to fall in California. You will likely get the place cheaper in a few years, and have a much better financial situation for yourself. It's win-win for you to wait for now.

**MonkeyMama** · 05-26-2008, 10:29 AM

Originally posted by DebbieL View Post

It will probably be the worst financial mistake of your life if you do this right now. You are not thinking with your head. Keep your heart out of this decision for now. You CAN'T afford it. Period. I would stay where you are and pay the $1,400, or look for something cheaper. If $1,400 is the best rate, then stay put! It is a LOT less than what your mortgage payments would be. Save the difference, and one day you will be able to afford a home. You're not there yet.

PS - Real estate still has a ways to fall in California. You will likely get the place cheaper in a few years, and have a much better financial situation for yourself. It's win-win for you to wait for now.

Agreed.

Not sure what the rush is. If your income will go up so much, stay put and save the difference until you have 20% down. If you have the commitment it would only be a few years to 20% down, and then maybe you will be better off than renting. But for now, renting seems a much better deal than a mortgage over $300k.

If you are willing to make sacrifices I would stay in a small place and save save save. That's the best you can do for yourself.

Getting into that type of mortgage right now would be pretty dangerous ground. I too am from Cali and have seen a lot of people do a lot of stupid things.

**disneysteve** · 05-26-2008, 11:17 AM

Originally posted by docstudent View Post

do you think it is wise to pay 2G for rent?

Why do you need to spend $2,000? You said the rent on your place is going up to $1,400. If your goal is cutting your costs and building a downpayment fund, it makes a lot more sense to stay where you are rather than spend an extra $600/month just to have a bigger place. Far better to put that $600/month into savings. In 2 years, that will be $15,000 roughly that can go toward a downpayment.

So no, I don't think it is wise to pay 2K for rent. I think it is wise to stay where you are and pay $1,400, cut frivolous spending like the maid and the barber and sock away money so that you can buy that condo in a couple of years.

**maat55** · 05-26-2008, 04:27 PM

You should finish your school, get on a tighter budget and save as much money as possible for a couple of years, then rethink what you want to do when you have a higher paying job. If I were going to move, I would move to a cheaper apartment.

To buy or not to buy.....