The seven paths to DC-area home ownership
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Anonymous
| 9. Adjust your expectations, and live in a condo. |
Anonymous
Anonymous
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Oh, my--what a great house! |
Anonymous
Your calculations are confusing me - are you confusing gross and net? Because we make about what OP and spouse do, and after taxes/insurance etc. on our take-home, a mortgage of "only" $2350/month comes pretty damn close to being 33%. Being conservative is really tough in this area, but it is definitely a positive thing and not one to necessarily advise against. |
Anonymous
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OP here again. Thanks for the comments received thus far.
A few points: Part of our frustration is that while we live centrally, I work downtown and my wife works in Fairfax. So we can't really move further east without worsening her commute (which is already terrible on 66). Of course, going west really doesn't help the affordability problem at all. Otherwise, we'd be able to consider Brookland, H St., Takoma, or PG. Additionally, another frustration has been our lack of being able to save due to childcare costs, etc. We have decent savings, retirement, and are beginning to save for college costs. Saving for a down payment on top of that in this environment is intimidating and would take years. In fact, you could argue that houses are appreciating faster than we can save. What's the point of saving, say, $15,000 per year when house values rise $40,000 per year? It's clear that you've missed the boat and that 'path' is no longer viable. Further, I'm not comfortable putting only 3.5% down. I'll be paying PMI forever and I hate paying interest on anything as it is. It's just more money down the drain. |
Anonymous
| 10. VA loans. We found a great house at around $400K, yes it needed some work but good location, good commute. Could not have done it without a VA loan. (no down payment.) |
Anonymous
OP - I think that if you save for a down payment of maybe 5-10% and look in the 400k-ish mortgage range, you can find something in West Springfield/Burke/Fairfax City in your range. It will not be huge and renovated, but there is inventory and that's such a great area to raise kids. Try living as bare bones as possible for a year or two and see what you can come up with. It's true - there is a rental trap in this area that makes it really tough. |
Anonymous
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We are a combo of 4, 6 and 1 (were 4, 6, and 5).
1.1 million dollar house -#4 saved down payment for 7 years in a low-cost of living area pre-kids. Saved roughly $400k while living very frugally. -#6 received additional $100k from parents -bought while making $190K so we were #5 (house poor) but now making $335K (two incomes) so now a bit of #1 ("massive" or larger income). |
Anonymous
we used a VA Loan in 2011, after being told to avoid them like the plague in 2003 (we bought that place with an 80/15/5 conventional). We have great credit scores and decent income, but our down payment to buy up was going to be the profit from the first property. Being able to use the VA Loan allowed us flexibility in case our TH hadn't sold right away and we could put down a small amount at first but then adjust the loan after we got the money from the TH (you don't have to refinance within a sizable grace period - I think it was 3 months?) We had been told the VA inspectors are more strict, but that didn't turn out to be the case. And the people we bought from were thrilled to sell their house to a vet's family. In the end, we wound up selling our TH within 3 days on the market and closing on both properties on the same day. We put 10% down because we were renovating and needed some of the TH profit money to do the immediate repairs we wanted to do. There was one downside - we replaced our roof after a year but were unable to get a home equity loan to do so because the banks were insisting on at least 20% equity. We wound up using Fairfax Credit Union to get a Home Equity Line after waiting out the market a year (property values went up enough to help us) and paying off the 0% credit card just before the promotional period was over. Phew. |
Anonymous
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I'm confused why you would rent for 8 years when we had a nice market bottom in 2008/2009. Why not buy then?
Now you're trying to buy something at the top of the market again. I'd wait. |
Anonymous
OP, we had some savings, but we didn't want to deplete it for a downpayment. So we did a conventional loan with 5 percent down. The PMI on conventional loans (if you have good credit) is not bad at all. It is much higher on an FHA loan. You have to take the long view with a mortgage (given you aren't planning on moving in 2 years). With interest rates as low as they are, it might make sense to buy now and pay $120 a month in PMI as opposed to waiting 5 years when rates might be a couple percentage points higher. But it all depends on finding a house in your budget. In my case, it actually is cheaper to buy than rent the same house. It helps to call a mortgage broker and as them to tell you all of your options regarding low downpayment and different PMI arrangements. If you have good credit, there are more options available. A lot of people assume FHA is the only way to go, but if you have good credit a 5 percent down conventional loan might work out better. The PMI is usually about half what it is for an FHA. Remember, FHA loans were in part designed for people with not as stellar credit. If I were you, I would call a mortgage broker (First Home Mortgage is the one I used, but there are others) and lay out the options. They will be able to give you some approx. breakdowns of what loan amount gives you what payment and PMI on a 5 down conventional. they'll also be able to tell you other PMI options (like paying the PMI upfront). Knowing the monthly payment will really give you a better idea of what your max purchase price is (leave some room for variation in property taxes). And then with that information, search out where there are houses in that price range. And then go to those areas. Don't just judge by what you read on here or what other people (who haven't lived in those places say). Check them out. Go to crime spot/stat maps to really see a breakdown of crime in those areas. You might be surprised and find some workable options. Another important question is how likely are you to stay in your current job for the next 5 - 10 years? and your wife? Because in DC, changing from a job in one section of the city to another section can drastically alter your commute. If you both aren't sure about staying at your current jobs very long, then I would hesitate to buy a house. Best of luck. |
Anonymous
OP, so much of the country is much more affordable, livable, and less stressful than DC. If you can let go of your bias towards living here (intelligent people, great schools, job security), your career experiences here can often open up wonderful job opportunities in other places. One of those places might be one where you can afford a beautiful house, and still save for your children's education and your retirement. |
Anonymous
It all depends on what you call a "good" area. BTW - I am single, purchased on my own, low down payment (5%) in Arlington, 3 br, 2 b, SFH post 2008. My house significant needed updating - windows, heating/AC, kitchen, bath, extensive yard work, etc. I fall into category #8. I purchased in a wonderful South Arlington neighborhood. The house needed certain things to make it 'liveable' and now I am moving through my wish list. Look at the potential of a property, not what is in front of you. You need to adjust your standards. Living close in is going to cost you, no doubt about it. It will either come from your (or your family's) wallet, your home ideals, your comfort level or your sweat equity - the choice is yours. |
Anonymous
Not the OP but they probably were not ready to buy at that time and no one had a crystal ball to tell them the prices were going to go up. We've been searching for a year in a desirable area (great schools, close commute) on a $1 million budget and have been very discouraged. Even at that price point, most homes are a dump or on a busy road. Anything good we saw, we last in bidding wars that escalated $50-100K over list price. We just found a place to rent in that same area for much less than a monthly PITI on a comparable home. In the meantime, we'll continue to save or wait until it feels like we're not making such a major sacrifice/investment on a place that we wouldn't love anyway. |
Anonymous
$419 - South Arlington http://www.realtor.com/realestateandhomes-detail/5016-11Th-St-S_Arlington_VA_22204_M61335-27075?row=11&source=web |