need to buy a home to save money but can't

[Anonymous]

If you're serious about the debt you need to move to a one bedroom off of a metro stop and sell the car. Assume you'll stay until the credit card debt is paid off and you have 12k in an emergency fund.

[Anonymous]

Anonymous wrote:NP here. You're forgetting that eventually the car payment will go away and OP can keep the car for another 8 or 9 years.

You assume OP won't just replace that car with another one once it's paid off. Her rush to have to something bigger/better/more rather than being patient with her situation suggests there's a good chance she will.

[Anonymous]

Anonymous wrote:We are stuck in this lease for one more year. So I guess we won't really be able to get started until then.

My husband and I have both tried for years to get second jobs and it's harder than one would think.

We have one car -- not sure where the idea that we had two came from (sorry for any confusion) and we owe more than we could sell it for but are on an aggressive payment plan to own it in a few years.

We don't see that moving somewhere less expensive would help. Places with inexpensive costs don't pay the salaries we make here (for our fields) so why move and have the same struggle somewhere else?

You all confirmed what I already know: we are stuck.

It is what it is, I guess.

I don't think the salary here directly correlates with the cost of living on a 1:1 ratio. In other words, I think if you moved some place else in VA or down to NC yes you'd be making less but you'd have a significantly lower cost of living so you'd definitely have better cash flow.

[Anonymous]

OP - do you plan on making any changes or just accepting your current financial state which is pretty bad?

[Anonymous]

Anonymous wrote:Yep, that's what we are looking for. A townhome/condo under $350K in MD (Rockville, Gaithersburg, Silver Spring, North Bethesda, and Bethesda).

There's plenty of options out there.

I was looking for similar a couple years ago. First of all - condo fees run around $400 a month so you have to add that in. I never saw a condo or townhouse with utilities included. $350 may be possible in Gaithersburg or Silver Spring. The other areas you mention - I seriously doubt it and I say this having done the same search two years ago when prices were lower.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Yep, that's what we are looking for. A townhome/condo under $350K in MD (Rockville, Gaithersburg, Silver Spring, North Bethesda, and Bethesda).

There's plenty of options out there.

I was looking for similar a couple years ago. First of all - condo fees run around $400 a month so you have to add that in. I never saw a condo or townhouse with utilities included. $350 may be possible in Gaithersburg or Silver Spring. The other areas you mention - I seriously doubt it and I say this having done the same search two years ago when prices were lower.

I agree. I don't think you can purchase a townhome in a decent neighborhood for 350.

[Anonymous]

Anonymous wrote:If it's new. What did you spend so much money on?

OP, you have a lot of misconceptions about home ownership. First, in Montgomery County, you will NOT find any new construction townhomes in your price range. The homes that are available in your price range will be older smaller homes or older homes in more out-of-the-way, less desirable areas. If you want to buy new, you are probably looking closer to $425K+, but more likely $475K+ which will not save you any money over what you are spending now. you would have a mortgage payment of well over $2K per month. If you find an older home that is in your price range, the typical advice is to budget 1-3% of your mortgage amount towards home maintenance. For a $350K house, you should budget $3-8K per year for maintenance. The various issues that can come up: appliances (w/d, stove, oven, d/w, heater/furnace/heat pump, AC, water boiler), plumbing, electrical, outdoor care (even DIY, lawn and or landscaping care can be costly), flooring, roof, weather damage, age related deterioration, pest control. All it takes is 2-3 medium priced fixes to get to $3K and 1-2 big tickets to get over $5K of maintenance in a year. The alternative is to go smaller and purchase a condo. You can probably find a 2 BR condo for $300K, but you'll have to add condo fees on top of your mortgage payment. And if you are not putting down 20%, you are also paying PMI which is also money out of your pocket.

The second misconception you have is that you will be able to sell or refinance in 5 years. The real estate market has been volatile for about 10+ years now and has not been following traditional patterns. You have no idea if your home will retain its value. Even in this area, some regions (especially the lower price neighborhoods that you are looking at), are not holding their values and after several years, you are selling for the same as you purchased it or less. You may be building equity, but if the value of the property declines or even stays level, it may cost you money to sell the home as you pay for seller closing costs, home repairs/improvements to sell, and concessions to the buyers. I have a friend who owned a townhome in the Columbia area for close to 10 years. She had a roommate for about 5 years, but after she lost her roommate, she was bleeding money. She ended up having to cut way back, save for 2 years to be able to afford to bring money to the table to sell. She is now renting a much smaller apartment and happily saving money to get herself back on her financial feet.

The third misconception is that you can take a weaker mortgage now and refinance in a few years. First, if you are not putting down 20%, in addition to PMI, your first few years (at least 12-18 months, but possibly longer depending on the mortgage), the vast majority of your payments will go towards paying down the huge interest on the property. You will be lucky to get $1000-1200 in equity the first year. In 5 years, if you have not paid to 20%, you will find it very hard to refinance for a reasonable rate. The good interest rates, go towards properties with a low LTE (loan-to-equity) rate. For those will lower LTE, you get higher rates. You may not qualify for a rate that beats your current rate. Also, be very careful if you opt for a cheaper monthly payment by using an ARM. Once the rates adjust, you may have even fewer options. I know people who lost their homes because they took an ARM and when the rate adjusted, they couldn't really afford the new rate, but they had such a low LTE (since they paid very little against equity) that they did not qualify for any rates that would give them a better monthly payment.

Without signficant lifestyle changes that would allow you to save another $10K or so a year, you are not really going to be financially stable enough to own a home anytime in the near future. You either have to move out of Rockville to a cheaper rental (I saw some rentals in Gaithersburg that might work for you), reduce your food, cell, cable budget (or all of them) or find another source of income that you can add directly to savings.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If it's new. What did you spend so much money on?

OP, you have a lot of misconceptions about home ownership. First, in Montgomery County, you will NOT find any new construction townhomes in your price range. The homes that are available in your price range will be older smaller homes or older homes in more out-of-the-way, less desirable areas. If you want to buy new, you are probably looking closer to $425K+, but more likely $475K+ which will not save you any money over what you are spending now. you would have a mortgage payment of well over $2K per month. If you find an older home that is in your price range, the typical advice is to budget 1-3% of your mortgage amount towards home maintenance. For a $350K house, you should budget $3-8K per year for maintenance. The various issues that can come up: appliances (w/d, stove, oven, d/w, heater/furnace/heat pump, AC, water boiler), plumbing, electrical, outdoor care (even DIY, lawn and or landscaping care can be costly), flooring, roof, weather damage, age related deterioration, pest control. All it takes is 2-3 medium priced fixes to get to $3K and 1-2 big tickets to get over $5K of maintenance in a year. The alternative is to go smaller and purchase a condo. You can probably find a 2 BR condo for $300K, but you'll have to add condo fees on top of your mortgage payment. And if you are not putting down 20%, you are also paying PMI which is also money out of your pocket.

The second misconception you have is that you will be able to sell or refinance in 5 years. The real estate market has been volatile for about 10+ years now and has not been following traditional patterns. You have no idea if your home will retain its value. Even in this area, some regions (especially the lower price neighborhoods that you are looking at), are not holding their values and after several years, you are selling for the same as you purchased it or less. You may be building equity, but if the value of the property declines or even stays level, it may cost you money to sell the home as you pay for seller closing costs, home repairs/improvements to sell, and concessions to the buyers. I have a friend who owned a townhome in the Columbia area for close to 10 years. She had a roommate for about 5 years, but after she lost her roommate, she was bleeding money. She ended up having to cut way back, save for 2 years to be able to afford to bring money to the table to sell. She is now renting a much smaller apartment and happily saving money to get herself back on her financial feet.

The third misconception is that you can take a weaker mortgage now and refinance in a few years. First, if you are not putting down 20%, in addition to PMI, your first few years (at least 12-18 months, but possibly longer depending on the mortgage), the vast majority of your payments will go towards paying down the huge interest on the property. You will be lucky to get $1000-1200 in equity the first year. In 5 years, if you have not paid to 20%, you will find it very hard to refinance for a reasonable rate. The good interest rates, go towards properties with a low LTE (loan-to-equity) rate. For those will lower LTE, you get higher rates. You may not qualify for a rate that beats your current rate. Also, be very careful if you opt for a cheaper monthly payment by using an ARM. Once the rates adjust, you may have even fewer options. I know people who lost their homes because they took an ARM and when the rate adjusted, they couldn't really afford the new rate, but they had such a low LTE (since they paid very little against equity) that they did not qualify for any rates that would give them a better monthly payment.

Without signficant lifestyle changes that would allow you to save another $10K or so a year, you are not really going to be financially stable enough to own a home anytime in the near future. You either have to move out of Rockville to a cheaper rental (I saw some rentals in Gaithersburg that might work for you), reduce your food, cell, cable budget (or all of them) or find another source of income that you can add directly to savings.

This is fantastic advice. OP please listen to what he/she is saying. Especially the last paragraph.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If it's new. What did you spend so much money on?

OP, you have a lot of misconceptions about home ownership. First, in Montgomery County, you will NOT find any new construction townhomes in your price range. The homes that are available in your price range will be older smaller homes or older homes in more out-of-the-way, less desirable areas. If you want to buy new, you are probably looking closer to $425K+, but more likely $475K+ which will not save you any money over what you are spending now. you would have a mortgage payment of well over $2K per month. If you find an older home that is in your price range, the typical advice is to budget 1-3% of your mortgage amount towards home maintenance. For a $350K house, you should budget $3-8K per year for maintenance. The various issues that can come up: appliances (w/d, stove, oven, d/w, heater/furnace/heat pump, AC, water boiler), plumbing, electrical, outdoor care (even DIY, lawn and or landscaping care can be costly), flooring, roof, weather damage, age related deterioration, pest control. All it takes is 2-3 medium priced fixes to get to $3K and 1-2 big tickets to get over $5K of maintenance in a year. The alternative is to go smaller and purchase a condo. You can probably find a 2 BR condo for $300K, but you'll have to add condo fees on top of your mortgage payment. And if you are not putting down 20%, you are also paying PMI which is also money out of your pocket.

The second misconception you have is that you will be able to sell or refinance in 5 years. The real estate market has been volatile for about 10+ years now and has not been following traditional patterns. You have no idea if your home will retain its value. Even in this area, some regions (especially the lower price neighborhoods that you are looking at), are not holding their values and after several years, you are selling for the same as you purchased it or less. You may be building equity, but if the value of the property declines or even stays level, it may cost you money to sell the home as you pay for seller closing costs, home repairs/improvements to sell, and concessions to the buyers. I have a friend who owned a townhome in the Columbia area for close to 10 years. She had a roommate for about 5 years, but after she lost her roommate, she was bleeding money. She ended up having to cut way back, save for 2 years to be able to afford to bring money to the table to sell. She is now renting a much smaller apartment and happily saving money to get herself back on her financial feet.

The third misconception is that you can take a weaker mortgage now and refinance in a few years. First, if you are not putting down 20%, in addition to PMI, your first few years (at least 12-18 months, but possibly longer depending on the mortgage), the vast majority of your payments will go towards paying down the huge interest on the property. You will be lucky to get $1000-1200 in equity the first year. In 5 years, if you have not paid to 20%, you will find it very hard to refinance for a reasonable rate. The good interest rates, go towards properties with a low LTE (loan-to-equity) rate. For those will lower LTE, you get higher rates. You may not qualify for a rate that beats your current rate. Also, be very careful if you opt for a cheaper monthly payment by using an ARM. Once the rates adjust, you may have even fewer options. I know people who lost their homes because they took an ARM and when the rate adjusted, they couldn't really afford the new rate, but they had such a low LTE (since they paid very little against equity) that they did not qualify for any rates that would give them a better monthly payment.

Without signficant lifestyle changes that would allow you to save another $10K or so a year, you are not really going to be financially stable enough to own a home anytime in the near future. You either have to move out of Rockville to a cheaper rental (I saw some rentals in Gaithersburg that might work for you), reduce your food, cell, cable budget (or all of them) or find another source of income that you can add directly to savings.

Great advice!!! From my own experience.... I'm starting over now ... From buying a house without putting money down... Having a poor interest rate... And eventually short sale.., which equal to loosing money... We should have waited... We bought in the height of the market... And in an area that did not grow... For 2 working parents.

[Anonymous]

Anonymous wrote:

Anonymous wrote:NP here. You're forgetting that eventually the car payment will go away and OP can keep the car for another 8 or 9 years.

You assume OP won't just replace that car with another one once it's paid off. Her rush to have to something bigger/better/more rather than being patient with her situation suggests there's a good chance she will.

Because you clearly know a person from a few posts on an anonymous board.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yep, that's what we are looking for. A townhome/condo under $350K in MD (Rockville, Gaithersburg, Silver Spring, North Bethesda, and Bethesda).

There's plenty of options out there.

I was looking for similar a couple years ago. First of all - condo fees run around $400 a month so you have to add that in. I never saw a condo or townhouse with utilities included. $350 may be possible in Gaithersburg or Silver Spring. The other areas you mention - I seriously doubt it and I say this having done the same search two years ago when prices were lower.

I agree. I don't think you can purchase a townhome in a decent neighborhood for 350.

I disagree. A peek at Redfin says differently. And many of them include some utilities.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Yep, that's what we are looking for. A townhome/condo under $350K in MD (Rockville, Gaithersburg, Silver Spring, North Bethesda, and Bethesda).

There's plenty of options out there.

I was looking for similar a couple years ago. First of all - condo fees run around $400 a month so you have to add that in. I never saw a condo or townhouse with utilities included. $350 may be possible in Gaithersburg or Silver Spring. The other areas you mention - I seriously doubt it and I say this having done the same search two years ago when prices were lower.

I agree. I don't think you can purchase a townhome in a decent neighborhood for 350.

I disagree. A peek at Redfin says differently. And many of them include some utilities.

Where?

[Anonymous]

Anonymous wrote:I would simply continue to rent and not worry about it. Wait till prices drop.

LOL. You're funny. (OP, prices aren't going to drop...)

[Anonymous]

I say buy! Don't let this board tell you what to do.

[Anonymous]

Anonymous wrote:I say buy! Don't let this board tell you what to do.

Buy with an extremely high interest rate and get into a home the OP can't even afford to maintain? I don't see how and why someone who can't pay down their credit card debt could afford home ownership and all that comes with it.