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A Wedding, a wife, a house oh my!!!

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Old 02-15-2012, 11:08 PM   #16
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Originally Posted by WaldSkins View Post
We both have seperate apartments that cost over $2000 combined. I have been renting for about 6 years and see no point to renting anymore. At this point I have excellent credit as does she so that wouldnt be an issue.

I know that the housing market is not the greatest right now but i figure if im gonna put 2000 towards housing fee's i'd like to see something for my money
That is the point; you won't see anything. Unless you are think of staying in that house for 30 years it will not appreciate fast enough to be worth your wild if you just stay say five years in it.
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Old 02-16-2012, 03:11 PM   #17
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Re: A Wedding, a wife, a house oh my!!!

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So im quickly approaching my wedding date in May and have been looking into buying a house. With the amount of money that we have been putting into the wedding it has pretty much drained most of our savings accounts. I was just wondering if it was better to pay off my fiancees debt or save the money for the house. What looks better to a bank/lender, having no debt or having no savings?

WaldSkins: Let me address your original question first with some sound advice:

1. PAY OFF THE DEBT FIRST! No questions asked. PAY THE DEBT OFF FIRST! As attractive as it might sound to fall into a no down payment situation with a house, and again, I'm in the same boat as you, don't put buying a home in front of paying off the debt.

2. Before you even think of saving for the house, you need to SAVE UP AN EMERGENCY FUND FIRST! Your goal on that is at least 3 to 6 months worth of living expenses. What if you buy a house and both of you lose your jobs? You gotta have an emergency fund. DON'T RELY ON CREDIT CARDS AS AN EMERGENCY FUND!

3. Once #1 and #2 have been satisfied, decide what your intentions are on a house purchase. Do you plan to live there for at least 10 to 15 years? You need to know this before you buy a house. Whatever the answer is, you definitely want to be saving back money to either purchase the house straight out (yes I know that's probably not realistic for most people) or for a down payment NO LOWER THAN 20%. Don't go into a house purchase without knowing what is you're wanting to do or what it is you're actually purchasing.

4. Once you have found the house you want to purchase, it doesn't matter if it's a starter home or if it's one you plan on being in for the rest of your life, you need to budget out your mortgage payments for a 15 YEAR LOAN! Trust me, you'll be paying nearly double for that house if you get sucked up into a 30 year loan. And also, don't budget it on both salaries, budget it for one salary. Most people go out and grab the 30 year loan thinking they can always double up on the payments, but almost nobody ever pays double on their mortgage.

Now, don't listen to people who say investing in real estate is not worth it. It IS worth it, but you HAVE to be smart about it. You can't go in over your head on a purchase. And for the love of everything that is burgundy and gold, don't purchase property in hopes of turning it into rental property UNLESS IT'S PAID IN FULL! That's a bad, bad move that can seriously get you into a bad financial situation.

Now, are there any decent apartments in a decent area to rent that are cheaper than $1000 a month? If so, move there! Even if the apartments are smaller, maybe not as nice, this is just a way for you to free up some money to get you started. If not, then one or both of ya'll might need to think about a second job - at least until the debt has been satisfied. There's nothing wrong in both contributing to the savings for a house, but like I said earlier, the payment for the house should be based on one salary.
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Old 02-16-2012, 03:21 PM   #18
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Re: A Wedding, a wife, a house oh my!!!

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WaldSkins: Let me address your original question first with some sound advice:

1. PAY OFF THE DEBT FIRST! No questions asked. PAY THE DEBT OFF FIRST! As attractive as it might sound to fall into a no down payment situation with a house, and again, I'm in the same boat as you, don't put buying a home in front of paying off the debt.

2. Before you even think of saving for the house, you need to SAVE UP AN EMERGENCY FUND FIRST! Your goal on that is at least 3 to 6 months worth of living expenses. What if you buy a house and both of you lose your jobs? You gotta have an emergency fund. DON'T RELY ON CREDIT CARDS AS AN EMERGENCY FUND!

3. Once #1 and #2 have been satisfied, decide what your intentions are on a house purchase. Do you plan to live there for at least 10 to 15 years? You need to know this before you buy a house. Whatever the answer is, you definitely want to be saving back money to either purchase the house straight out (yes I know that's probably not realistic for most people) or for a down payment NO LOWER THAN 20%. Don't go into a house purchase without knowing what is you're wanting to do or what it is you're actually purchasing.

4. Once you have found the house you want to purchase, it doesn't matter if it's a starter home or if it's one you plan on being in for the rest of your life, you need to budget out your mortgage payments for a 15 YEAR LOAN! Trust me, you'll be paying nearly double for that house if you get sucked up into a 30 year loan. And also, don't budget it on both salaries, budget it for one salary. Most people go out and grab the 30 year loan thinking they can always double up on the payments, but almost nobody ever pays double on their mortgage.

Now, don't listen to people who say investing in real estate is not worth it. It IS worth it, but you HAVE to be smart about it. You can't go in over your head on a purchase. And for the love of everything that is burgundy and gold, don't purchase property in hopes of turning it into rental property UNLESS IT'S PAID IN FULL! That's a bad, bad move that can seriously get you into a bad financial situation.

Now, are there any decent apartments in a decent area to rent that are cheaper than $1000 a month? If so, move there! Even if the apartments are smaller, maybe not as nice, this is just a way for you to free up some money to get you started. If not, then one or both of ya'll might need to think about a second job - at least until the debt has been satisfied. There's nothing wrong in both contributing to the savings for a house, but like I said earlier, the payment for the house should be based on one salary.
Not necessarily true all depends on your cash flow. As long as you can float the mortgage when no one is there you can pull it off.
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Old 02-16-2012, 03:33 PM   #19
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Re: A Wedding, a wife, a house oh my!!!

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I purchased a home in the peak of the market in 2006 and we will still make money on our home. Buying now in a down market is the best time to buy because thing can only go up.

You hope but nothing in the last 5 years has made me to believe that.
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Old 02-16-2012, 03:50 PM   #20
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Re: A Wedding, a wife, a house oh my!!!

Really it all boils down to risk and how much of it you are comfortable with.

Money, religion and politics are all things folks have huge varying opinions on so what you need to do is ask yourself how much are you willing to risk to in order to fill your needs.

I know folks that live in a two bedroom rancher but have the money to upgrade to something larger but are afraid of the risk involved, to me that is not living.

Then I know plenty more folks that live in houses they can't afford and they can't do anything because they are house poor, to me that is not living also.

So you just basically need to find your comfort level in the risk you are willing to take. No one here can make that decision for you.
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Old 02-16-2012, 03:57 PM   #21
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Re: A Wedding, a wife, a house oh my!!!

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Originally Posted by mredskins View Post
Not necessarily true all depends on your cash flow. As long as you can float the mortgage when no one is there you can pull it off.
Repeat, it is a BAD, BAD move.
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Old 02-16-2012, 04:04 PM   #22
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Re: A Wedding, a wife, a house oh my!!!

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Repeat, it is a BAD, BAD move.

In your mind I have done it now counting the condo I bought in college for over 15 years, made great money on that place, over the entire time. I have two other small investment like that. I have had years where I have lost some money on them due to repairs or low occupancy but in the whole scope of the investment I have made positive dollars.

It is just a risk you personally are not willing to take that doesn't make it a bad idea or bad investment. There are many variables that come into play.

I much rather have those dollars wrapped in them then the current stock market.

I would not recommend it to everyone but I have the cash flow right now to make it a low risk investment.
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Old 02-16-2012, 04:37 PM   #23
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Re: A Wedding, a wife, a house oh my!!!

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So now its a good idea?LOL
I know my advice original was for someone just starting out. If I had no investments and was just getting married I would not take that risk of buying a home and/or getting rental properties.

I think we are not seeing eye to eye where money can be made in the real estate market. you seem to beleive you can buy something then have it appreciate and make money. I don't see that as a good risk since the housing market is frozen or worst melting. My investments were ones I made because I moved kept the property and rented them out, all before purchased before 2005.

In hindsight there was a good amount of risk and most likely still is but I am willing to take it has panned out well so far for me.

To be clear I would not add anymore properties right now that would be too risk in my opinion for me. someone else may have a better cash flow and it be lower risk for them.
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Old 02-16-2012, 05:02 PM   #24
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Re: A Wedding, a wife, a house oh my!!!

Pay off debt first. If the interest is not tax deductible, then you want it gone before you buy a house. So unless it's a student loan, pay off the debt.

Then save up an emergency fund. Sock away enough to cover 6 months of your basic expenses: rent, food, utilities.

Then save up to buy a house, never dipping into the emergency fund. I don't think you need 20% down, that's impractical for a lot of people. The long term appreciation on the price of the home will outpace the cost of personal mortgage insurance.

Just keep your monthly mortgage payment (including taxes & insurance) less than 33% of your net monthly income. Any more than 33% and you'll start to feel the pinch.
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Old 02-16-2012, 05:08 PM   #25
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Re: A Wedding, a wife, a house oh my!!!

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Pay off debt first. If the interest is not tax deductible, then you want it gone before you buy a house. So unless it's a student loan, pay off the debt.

Then save up an emergency fund. Sock away enough to cover 6 months of your basic expenses: rent, food, utilities.

Then save up to buy a house, never dipping into the emergency fund. I don't think you need 20% down, that's impractical for a lot of people. The long term appreciation on the price of the home will outpace the cost of personal mortgage insurance.

Just keep your monthly mortgage payment (including taxes & insurance) less than 33% of your net monthly income. Any more than 33% and you'll start to feel the pinch.
To add to that, make sure that you still have room to save some money after you make your mortgage payments. With having a house, you never know when something is going to happen that will require you to put up some money to fix it.
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Old 02-16-2012, 11:27 PM   #26
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Re: A Wedding, a wife, a house oh my!!!

All this talk about renting out a house or not seems overlook whether WaldSkins and his wife wants to be a landlord and/or landlady and deal with tenants, and there are plenty of tenants who are "pesky". Well, there are property management companies, but there are potential principal/agent issues with them too.
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Old 02-17-2012, 08:13 AM   #27
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Re: A Wedding, a wife, a house oh my!!!

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All this talk about renting out a house or not seems overlook whether WaldSkins and his wife wants to be a landlord and/or landlady and deal with tenants, and there are plenty of tenants who are "pesky". Well, there are property management companies, but there are potential principal/agent issues with them too.
Dingus. The choice is whether he should buy a house or continue renting. Not whether he should rent out a house he owns.

Reading is fundamental.
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Old 02-17-2012, 08:25 AM   #28
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Re: A Wedding, a wife, a house oh my!!!

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Dingus. The choice is whether he should buy a house or continue renting. Not whether he should rent out a house he owns.

Reading is fundamental.

I think he got confused becasue the number of side bars going on. Which I caused most of them, sorry.

As far as answering the OP's question S10 has some great advice and a couple of others. Though I am very comfortable with my finances I took a lot of risk holding on to properties and what not early on when I was first starting out. I would not recommend it to everyone.

With that said I can't emphasized enough you have to decide what a comfortable risk level is for you when planing your finances. I build cost models everyday for my customer and everyone of my models has different levels of risk and confidence in them. All the models are then presented to the decision maker and they decide what level of risk they are comfortable with. You can easily do the same with your personal finances.
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Old 02-17-2012, 09:07 AM   #29
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Re: A Wedding, a wife, a house oh my!!!

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In your mind I have done it now counting the condo I bought in college for over 15 years, made great money on that place, over the entire time. I have two other small investment like that. I have had years where I have lost some money on them due to repairs or low occupancy but in the whole scope of the investment I have made positive dollars.

It is just a risk you personally are not willing to take that doesn't make it a bad idea or bad investment. There are many variables that come into play.

I much rather have those dollars wrapped in them then the current stock market.

I would not recommend it to everyone but I have the cash flow right now to make it a low risk investment.
It just happens to work out because you have been LUCKY so far. And you have still lost money on this venture, and could still lose money. Have you ever thought about what would happen if you got sick or injured and couldn't work? Or if you just flat out lost your job? How would you be able to maintain two rental properties and the current place you live in? I bet you're paying on all of that property, aren't you? Like I said before, it's different if the property is bought and paid for, but if it's not, you're taking a very insane chance at losing your butt.

I'm giving WaldSkins the best advice that he needs to hear. Schneed10 has pretty much echoed what I posted earlier. There is absolutely no risk in WaldSkins buying a home if he follows what I've said.
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Old 02-17-2012, 09:10 AM   #30
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Re: A Wedding, a wife, a house oh my!!!

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I think he got confused becasue the number of side bars going on. Which I caused most of them, sorry.

As far as answering the OP's question S10 has some great advice and a couple of others. Though I am very comfortable with my finances I took a lot of risk holding on to properties and what not early on when I was first starting out. I would not recommend it to everyone.

With that said I can't emphasized enough you have to decide what a comfortable risk level is for you when planing your finances. I build cost models everyday for my customer and everyone of my models has different levels of risk and confidence in them. All the models are then presented to the decision maker and they decide what level of risk they are comfortable with. You can easily do the same with your personal finances.
I feel more comfortable knowing that you admit what you're doing is not going to work for everyone. Sorry if my tone seems harsh, I am truly happy that it's working out for you, but it is a huge chance you're taking.
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