- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
buying vs investing
Posted on 3/3/11 at 3:01 pm
Posted on 3/3/11 at 3:01 pm
Me and my gf are considering purchasing a home. I am trying to decide if investing in a home or upping IRA contributions is in my best interest.
We have found a house in a good neighborhood for about 200k with pool and nice yard. We currently rent a nice size house for $ 750/month within walking distance to work (big plus for me). We can afford the note, however I feel we lack enough liquid cash. We can pay the closing costs but have little available cash left over (maybe 1 month emergency fund). No downpayment except the 3.5% need for FHA loan. I only plan on being in the country for another 8 years.
The house is a foreclosed house (2461 sq ft) that is signifigantly undervalued per sq ft ($ 85 vs neghboorhood going for $ 106 to 141)and seems to only need minor repairs.
Is purchasing a home a good idea, or am I better off renting and putting more money in an IRA? Most of my cash is tied up in investments.
Me and my GF have been fighting and stressing over this decison and I want third party input.
thanks
We have found a house in a good neighborhood for about 200k with pool and nice yard. We currently rent a nice size house for $ 750/month within walking distance to work (big plus for me). We can afford the note, however I feel we lack enough liquid cash. We can pay the closing costs but have little available cash left over (maybe 1 month emergency fund). No downpayment except the 3.5% need for FHA loan. I only plan on being in the country for another 8 years.
The house is a foreclosed house (2461 sq ft) that is signifigantly undervalued per sq ft ($ 85 vs neghboorhood going for $ 106 to 141)and seems to only need minor repairs.
Is purchasing a home a good idea, or am I better off renting and putting more money in an IRA? Most of my cash is tied up in investments.
Me and my GF have been fighting and stressing over this decison and I want third party input.
thanks
10
Posted on 3/3/11 at 3:03 pm to 800lbgorilla
tough call, i'd lean to renting.
Posted on 3/3/11 at 3:05 pm to Chad504boy
quote:
tough call, i'd lean to renting.
reasons being?
Posted on 3/3/11 at 3:07 pm to 800lbgorilla
If you are getting a great deal on the house, I would buy it. Real Estate is a pretty good investment right now in my market.
Posted on 3/3/11 at 3:07 pm to 800lbgorilla
quote:
reasons being?
well, 750 a month is 9k a year. You would be paying minimum half that a year for taxes and insurance costs alone. Much less responsibility of house maintenance and other owning issues. There could be some money to be made but you would be paying a lot of interest on that loan in 8 years plus you're taking on a huge fricking headache.
Posted on 3/3/11 at 3:10 pm to Chad504boy
on top of it seems you might be a little thin on cash if you do as well. I rather have more cash available if I was in a position to do so given your type of situation.
Posted on 3/3/11 at 3:13 pm to 800lbgorilla
where is the house located
Posted on 3/3/11 at 3:15 pm to 800lbgorilla
Pros - if it actually is a good deal (i.e. doesn't need much improvement, etc.), then depending on where you are, getting cheap govt money to buy it could possibly be a good investment.
Cons - at 5.5% interest, I calculate just your monthly P and I at about $1100, so that is an increase of more than 30% over your current situation (or looked at differently, a big decrease in your cash flow).
FHA loans are more expensive than conforming loans, so it's somewhat debateable that the interest rate is even favorable.
Taxes, insurance and maintenance will be AT LEAST another $300/month.
I don't know your full fact pattern, but sounds like you don't have much cash. This doesn't seem like a very good idea at present.
Cons - at 5.5% interest, I calculate just your monthly P and I at about $1100, so that is an increase of more than 30% over your current situation (or looked at differently, a big decrease in your cash flow).
FHA loans are more expensive than conforming loans, so it's somewhat debateable that the interest rate is even favorable.
Taxes, insurance and maintenance will be AT LEAST another $300/month.
I don't know your full fact pattern, but sounds like you don't have much cash. This doesn't seem like a very good idea at present.
Posted on 3/3/11 at 3:20 pm to Tiger JJ
Then whatever you gain on the house, you fricking taxed on it anyways.
Posted on 3/3/11 at 3:22 pm to 800lbgorilla
quote:
Me and my gf
Are you and her co-signing? This can be a little tricky.
quote:
We currently rent a nice size house for $ 750/month
This amount could nearly double w/ only 3.5% down. Considering property taxes, home insurance, and possible PMI (can't remember exactly how that is figured w/ FHA) Also your utilities are probably going up, especially since the home has a pool.
I guess the question is: do you have enough extra cash flow to support over $750 in extra monthly expenses, while still having a decent amount left over to meet your saving goals?
Posted on 3/3/11 at 3:34 pm to Chad504boy
quote:
Then whatever you gain on the house, you fricking taxed on it anyways.
He said he is staying over 2 years, so he won't be taxed on the money he makes from the house.
Posted on 3/3/11 at 3:50 pm to Tiger JJ
quote:
Cons - at 5.5% interest, I calculate just your monthly P and I at about $1100, so that is an increase of more than 30% over your current situation (or looked at differently, a big decrease in your cash flow).
Don't have the papers in front of me but it's 5% interest (credit score is very good) and with PMI and homeowners ins the total ends up around 1400/month which we can do but we cut out vacations and dining etc.
Posted on 3/3/11 at 3:59 pm to 800lbgorilla
GF is not cosigning and I could probobly meet bills by myself but things would be tight
Posted on 3/3/11 at 4:20 pm to 800lbgorilla
If you can afford it alone, then I say go for it.
Posted on 3/3/11 at 4:23 pm to TigerDeBaiter
My AGI is about 74k/year no student loans, debts, car payments etc.
Posted on 3/3/11 at 4:31 pm to 800lbgorilla
quote:
Me and my gf are considering purchasing a home. I
Don't do it brah.
Posted on 3/3/11 at 4:35 pm to TigerDeBaiter
quote:
If you can afford it alone, then I say go for it.
Why? Why should he double his monthly housing expense?
Posted on 3/3/11 at 5:06 pm to Tiger JJ
Don't do it, had a buddy that did this and she ended up leaving not long after they moved in. Don't do something like this unless you can afford it on your own without her income, until you get married.
Posted on 3/3/11 at 5:36 pm to 800lbgorilla
Don't do it. You are going to put yourself in a huge cash flow bind and have 6-figure debt to pay off. Focus on maxing out your IRA instead.
Posted on 3/3/11 at 6:20 pm to 800lbgorilla
quote:
Me and my gf are considering purchasing a home
Don't do this until you are married. If you break up you will be seeing each other in court, and that means attorneys' fees just to sell the place. I know someone who went through this, it was almost like a mini-divorce.
Put it in an IRA. Better yet, a Roth - that way at least if you need to get the cash back you can do so without any hassle.
Page 1 of 2
Back to top
Follow TigerDroppings for LSU Football News