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[quote=Anonymous][quote=Anonymous][quote=Anonymous]If it's new. What did you spend so much money on?[/quote]

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.[/quote]

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.[/quote]

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