Michael and Paul,
Buying a house should be looked at more as an investment rather than a
liability. I'm not yet a homeowner. My wife and I are currently living
with my folks in order to help save for one. But I have been doing the
research. There are a lot of benefits to owning a home. Tax breaks is a
good one. Especially if you work out of home, which I'm assuming you do,
you can get an even bigger tax break because you can deduct part of your
mortgage as a business expense. My cousin is a consultant and he does it.
Just know the restrictions which you can get by calling the IRS's help line.
I guess I should say that I'm not a tax attorney. This is just the
knowledge I've gained from doing research. Also, your net worth goes up.
That's what banks usually look at. The difference between paying rent and
paying a mortgage is that your rent money is only benefiting the landlord.
Your mortgage is benefiting you. If you go to different websites (my
favorite being www.homefair.com) you would probably be surprised at what is
affordable. I would suggest a couple of things: A.) Reduce your current
debt as much as possible, if not eliminate it. Compare what you are paying
in interest on loans and credit cards and compare that to what interest that
you could reasonably earn if that money were being invested elsewhere. It's
acutely fairly easy. At some point, you can find an equilibrium where your
maximizing the amount of interest earned, vs. the amount of interest paid.
The goal...earn more interest than you're paying. B.) Determine how much
you think you can afford each month in mortgage and start there. Then you
can determine how long you want your mortgage to be (15 yr, 30 yr. etc.).
As your income increases, which it most inevitably will, those payments get
easier to make and you might be able to remortgage for a shorter term loan
which gets you equity in the house much faster. There is a general equation
for this based on a percentage of your salary, but that equation escapes me.
Let's say it's 30% of your take home (don't quote me on that). That's
usually your starting point. C.) Alter the way you think. Because of the
research that I've done, the way I view money and how we spend it changed.
I think that it's because if you clearly identify your goal, rather than
allow it to linger in the ether or the land of "someday", then it becomes
reachable. We want to save enough to put 10% down which is between 10-20K.
That's a lot. But you won't have to put that much. The more you put down
the better. Lower interst, earn equity faster, lower payments, blah, blah,
blah. Hope his helps.
Respectfully and hopefully not pontificating,
Michael
----- Original Message -----
From: "Michael Dinowitz" <[EMAIL PROTECTED]>
To: "CF-Community" <[EMAIL PROTECTED]>
Sent: Thursday, September 20, 2001 11:46 AM
Subject: Re: Is it a good time to buy a House?
> The market is down, houses are probably going to be cheaper than other
> times and if your solid, some debt wouldn't hurt much. If I had a solid
job
> rather than doing consulting, I'd get a house. If/When Judith gets
pregnant
> again we're definitely going to have to get one.
> Actually, there's a problem with the American psyche. If your not in debt
> then your either rich or doing something wrong. Buy a house, your in debt.
> Buy a car, the same. More than one credit card? There you go. If I wasn't
> such a coward, wasn't burned early on and started to charge for some of
> what I do, I may actually have a house by now. :)
>
> At 12:22 PM 9/20/01, you wrote:
> >2 questions.
> >
> >Is this a good time to buy a house?
> >just got back from the honey moon, now my honey is jonesing for a house.
> >
> >Should i max my self out? [of course not?]
> >if it is a good time to buy, with 2 incomes, should i calculate the
maximum
> >payment for 1 income to be able to support, i case one of looses our job.
> >or should i go low, to be safe?
> >
> >just curious.
> >thanks.
> >
> >-paul
> >
> >
>
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