Rent or Buy?

Actually my wife just informed me that she just did a re-fi @ 1.25% from washington mutual, and another @ 1.3% from chevy chase. both are interest only option arms, and thats probly what you're looking @ with your credit union.

The only thing about buying right now is it's a seller's market. Sure, interest rates are low, but the prices of homes right now are inflated - there are so many people looking to buy. On the other hand, it sucks paying rent when you never see that money again.

Best of luck.

canthetuna,
I have a question about loans. My wife and I are expecting our second child in July. My wife works in a school so she wants to take at least five months off which would be through next January (summer not included). What I am looking for is a loan that will give us enough cash to get us through January so I can pay all our bills regularly and then when my wife goes back to work we can start paying the loan off then. Is there anything out there that will fit our needs.

A lot of your urgency to buy should depend upon the property values in your area. I live at the beach, so while everything is expensive, the values have almost no chance of dropping. In fact, in two years, my house has been appraised 35% higher than the purchase price.

With almost all mortgage interest being deductable, and a likelihood of your property increasing in value, it's a pretty easy decision to make.

my condo iss worth 50k more than when i got it 6 months ago i believe... fairfax/burke property is insane :/

I don't know where you're located, but my mother does a lot of real estate in N Va and if you're looking up here she knows a lot about the market.

Two words of advice from somone who just spent the last 3 months looking for a home in fairfax.

1. Be prepared to bid over 25k over the asking price.

2. Don't worry about selling your house before you buy your house. Equity is good, but look at it this way, most people can't afford the house they are living in now, and if they want to move out they couldn't afford to live in the same 20 mile radius of there current home...most people.

What ever you buy, plan to stay awhile, if your the averarge person making average $$.

TAFKAS,
Always buy if you can swing it. You will be able to deduct the interest you pay on your mortgage, giving you a bigger tax return each year. You will build up equity on your home which you will retain when you sell your home. And as your home appreciates, you take all the profit.

Here is a table showing what your monthly payments would be if you bought a home. So the monthly payment on a $100,000 mortgage is about $600. Now you'll have a monthly escrow payment in addition to that. Escrow typically covers your homeowner's insurance, real estate taxes, township fees and other crap like that.

$ Borrowed - Mortgage Payment - Escrow - Total Monthly
$100,000 - $600 - $150 - $750
$120,000 - $720 - $200 - $920
$140,000 - $840 - $250 - $1090
$160,000 - $960 - $300 - $1260
$180,000 - $1080 - $350 - $1430

Lenders have all kinds of options for you. You may be able to get 100% financing, meaning you won't need to make any down payment. Or you can put 5% down, or if you can put 20% down you'll get the cheapest rate/PMI expenses. Thing is, in addition to the down payment, you will have to pay "closing costs" on the transaction up front. This means that even if you're making no down payment on the home, you'll have to pay $3000 - $10,000 (depending on the price of your home) in closing costs. There's no getting out of closing costs, at least not to my knowledge.

If you're going to buy, make sure you shop around for a mortgage company with low closing costs, there are a wide range. A lot of the times, smaller mortgage companies have to hit you with bigger closing costs to help cover their expenses. A bigger mortgage firm can offer lower closing costs. I went with Chase, I was pleased with them. Plus with a big company like that, you know they won't sell your mortgage to another bank or something crazy like that. Canthetuna can probably shed more light on mortgage companies since his wife does that stuff.

Two words of advice from somone who just spent the last 3 months looking for a home in fairfax.

1. Be prepared to bid over 25k over the asking price.

2. Don't worry about selling your house before you buy your house. Equity is good, but look at it this way, most people can't afford the house they are living in now, and if they want to move out they couldn't afford to live in the same 20 mile radius of there current home...most people.

What ever you buy, plan to stay awhile, if your the averarge person making average $$.

#1 actually depends a lot on what the initial price is, the condition the house is in, the time of year, etc etc etc... normally sellers here get their price or slightly higher, but not always.

#2 make use of contract contingencies, if you NEED your old house sold before buying a new one you can codify it into the contract... it makes the contract look less appealing to the seller, but if its what you gotta do... (more important is when you sell first to make the salle contingent on getting the new house, or else you could end up without a house and unable to afford to move back into the neighborhood you just left).

TAFKAS,
Always buy if you can swing it. You will be able to deduct the interest you pay on your mortgage, giving you a bigger tax return each year. You will build up equity on your home which you will retain when you sell your home. And as your home appreciates, you take all the profit.

Here is a table showing what your monthly payments would be if you bought a home. So the monthly payment on a $100,000 mortgage is about $600. Now you'll have a monthly escrow payment in addition to that. Escrow typically covers your homeowner's insurance, real estate taxes, township fees and other crap like that.

$ Borrowed - Mortgage Payment - Escrow - Total Monthly
$100,000 - $600 - $150 - $750
$120,000 - $720 - $200 - $920
$140,000 - $840 - $250 - $1090
$160,000 - $960 - $300 - $1260
$180,000 - $1080 - $350 - $1430

Lenders have all kinds of options for you. You may be able to get 100% financing, meaning you won't need to make any down payment. Or you can put 5% down, or if you can put 20% down you'll get the cheapest rate/PMI expenses. Thing is, in addition to the down payment, you will have to pay "closing costs" on the transaction up front. This means that even if you're making no down payment on the home, you'll have to pay $3000 - $10,000 (depending on the price of your home) in closing costs. There's no getting out of closing costs, at least not to my knowledge.

If you're going to buy, make sure you shop around for a mortgage company with low closing costs, there are a wide range. A lot of the times, smaller mortgage companies have to hit you with bigger closing costs to help cover their expenses. A bigger mortgage firm can offer lower closing costs. I went with Chase, I was pleased with them. Plus with a big company like that, you know they won't sell your mortgage to another bank or something crazy like that. Canthetuna can probably shed more light on mortgage companies since his wife does that stuff.

those payment figures are on the money... a fixed rate loan is usually the best bet, since it can never go up and you can always refinance if the fed rate goes down. (and getting a place, i get calls for a 1.25% refinance all the time, problem is its 1.25% for 6 months then jumps to 7-10% and can't be paid off early - ALWAYS ignore those calls, its indian call centers being paid to look for suckers)

sometimes sellers will pay closing costs (not usually in a sellers market though) and the buyer just pays more into the price (this is another thing you can add to the contract but it'd make it less likely to win in a competition)...

those payment figures are on the money... a fixed rate loan is usually the best bet, since it can never go up and you can always refinance if the fed rate goes down. (and getting a place, i get calls for a 1.25% refinance all the time, problem is its 1.25% for 6 months then jumps to 7-10% and can't be paid off early - ALWAYS ignore those calls, its indian call centers being paid to look for suckers)

sometimes sellers will pay closing costs (not usually in a sellers market though) and the buyer just pays more into the price (this is another thing you can add to the contract but it'd make it less likely to win in a competition)...

Agreed. In the mortgage business, if it sounds too good to be true, it ALWAYS is. There are lots of creative ways to finance a home at a very low rate initially. That initial rate is the one mortgage companies will advertise, but the rate will change on you. This type of financing can be good in certain situations, but you really have to make sure you identify the risks. Like if the rate is set to jump up to 10% after 5 years, then the deal may make sense for you if you're CERTAIN that you'll move within 5 years. But if you don't move, and you stay past 5 years, you get crushed with that 10% rate (or you're forced to refinance). I prefer a plain, vanilla, 30-year fixed mortgage. You know exactly what you're going to be paying as long as you own the house. Lots of stuff can happen in life: getting laid off, spouse dying (God forbid), taxes raised, etcetera. I'd rather know what my payment will be.