Good time to buy a house now? Need opinions please!!

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2009-01-30 3:03 PM

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Ocala, Florida
Subject: Good time to buy a house now? Need opinions please!!
Ok, here's the situation.

My wife and i both are dying to move and have been for a couple years.   We both have lived most of our lives here in Florida and we are ready for a major change.   Our plan has been for me to do some travel work and we would look into places that interest us.   However, with the economy in the shape it's in, travel work for RN's are very shaky.   I still plan to look for a travel job this summer, but nothing is guaranteed like it might have been 2 or 3 years ago.

Currently we own our home and have what i would consider a modest mortgage ($900) and have around $90K left on it.   We aren't interested in trying to sell for several reasons....mainly  #1. The economy and #2. It needs quite a bit of remodeling we aren't interested in investing in right now....even if the market was good to sell.

So we both have been thinking about perhaps looking into buying a second home and holding onto our current home as an investment.  Last month we sent our final payment off to credit cards and we are completely debt free.   We have $0 credit card, car payment, loans, etc. we owe (outside our mortgage).   So the $900 mortgage on this home is really not alot for our income.

We both also work in a field where we are pretty secure in our jobs.   I'm a registered nurse and she is a physical therapist assistant.   Even with the economy problems, we both could get decent paying jobs anywhere in the country.

So we were thinking, is now the time to purchase a home?   Could we possibly get a home today at a price and rate we couldn't 5 years ago or maybe 5 years from now?   Our thinking is that we don't want to have an opportunity like this pass us up if it could get us into a dream home we might not be able to get in the future.   Could we afford something now that we might not be able to a few years in the future?

Anyone been in a situation like this or have some personal or professional advice on how we might approach a thought like this?   Should we look further into it or is the buying market not quite as good as we think it might be?

2009-01-30 3:24 PM
in reply to: #1938033

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Subject: RE: Good time to buy a house now? Need opinions please!!
Dave Ramsey would tell you that the Florida market is illogically low [meaning the market correction that has gone on down there is way past where it should have gone and now it's lower than it realistically should be]. He would tell you that now is probably a great time to buy in Florida.

Sounds like you're wanting to leave Florida, though, so I dunno what to tell you. If the economic conditions persist and the government continues to step in like they have been then I think we can expect to see a period of high inflation. If that happens then real estate will become a lucrative place to put your money again because your money in the bank isn't worth a whole lot when fighting against inflation.

All that to say: I dunno. I personally wouldn't buy a second home when I still had a mortgage on my first home. Look on VRBO.com for sweet vacation rentals at affordable prices. Visit a few of those places and see if you'd actually go on vacation enough to warrant a vacation home or if it's just a dream you have that's not very practical with your situation. With a second home you HAVE to make the payments, but when you rent something for a weekend or a week then you just pay for the time that you use it. And you get to go more places

And finally, congratulations on becoming debt free! Welcome to the club.
2009-01-30 3:35 PM
in reply to: #1938033

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Subject: RE: Good time to buy a house now? Need opinions please!!

I bought a second home and kept the other one as a rental property.  It works for me.  I was thinking about doing the same thing but am nervous about moving forward with the economy the way it is; however, like you my job is pretty secure.

You're in a good situation having no debt and with a mortgage that is relatively low (same as mine).  I'd be interested to see what others say about your inquiry about buying a second home and keeping the one as an investment.

 

2009-01-30 3:38 PM
in reply to: #1938033

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Subject: RE: Good time to buy a house now? Need opinions please!!

If you are going to do it I would look in areas where the market corrections have seriously decreased the home prices, like Southern California if you are looking to get more for your money.

One note, mortgage lenders will no longer calculate your debt to income ratio without your current mortgage, even if you say you are going to rent it.  They will only lend if you can support both mortgages with your income.  They got caught one too many times with people saying that, buying a house will a smaller mortgage, and then defaulting on the first home.

2009-01-30 3:57 PM
in reply to: #1938033

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Subject: RE: Good time to buy a house now? Need opinions please!!
Here in Dallas, I was able to get a brand new $260K house for $208K. Houses are not selling. The builders are in a bind to get them sold, so they are practically giving people anything they want to move the house. With the interest rates the way they are, and the builders out of buyers, I'd say its a great time to buy. In the right market of course. Some markets are still artificially inflated, so its not so good to buy there.

Edited by tikicult 2009-01-30 3:58 PM
2009-01-30 4:00 PM
in reply to: #1938145

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Subject: RE: Good time to buy a house now? Need opinions please!!
tikicult - 2009-01-30 3:57 PM

Here in Dallas, I was able to get a brand new $260K house for $208K. Houses are not selling. The builders are in a bind to get them sold, so they are practically giving people anything they want to move the house. With the interest rates the way they are, and the builders out of buyers, I'd say its a great time to buy. In the right market of course. Some markets are still artificially inflated, so its not so good to buy there.

Correction: You got a $208K house for $208K

Sorry, it's just the appraiser in me.

The rest of what you said is good though, because that's going on in a lot of new construction developments. There's a lag time between new construction starts and when they are completed, and in the mean time the market can do all kinds of crazy things. Sometimes it works out for the builder, most often it works out for the buyer.


2009-01-30 4:42 PM
in reply to: #1938105

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Subject: RE: Good time to buy a house now? Need opinions please!!
SGriepsma - 2009-01-30 4:38 PM

If you are going to do it I would look in areas where the market corrections have seriously decreased the home prices, like Southern California if you are looking to get more for your money.

One note, mortgage lenders will no longer calculate your debt to income ratio without your current mortgage, even if you say you are going to rent it.  They will only lend if you can support both mortgages with your income.  They got caught one too many times with people saying that, buying a house will a smaller mortgage, and then defaulting on the first home.

And I think they only use 80% of rental income as income.  Anyone know why?

2009-01-30 4:46 PM
in reply to: #1938225

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Subject: RE: Good time to buy a house now? Need opinions please!!
carrie1 - 2009-01-30 4:42 PM

SGriepsma - 2009-01-30 4:38 PM

If you are going to do it I would look in areas where the market corrections have seriously decreased the home prices, like Southern California if you are looking to get more for your money.

One note, mortgage lenders will no longer calculate your debt to income ratio without your current mortgage, even if you say you are going to rent it.  They will only lend if you can support both mortgages with your income.  They got caught one too many times with people saying that, buying a house will a smaller mortgage, and then defaulting on the first home.

And I think they only use 80% of rental income as income.  Anyone know why?



Maintenance and taxes?
2009-01-30 4:58 PM
in reply to: #1938033

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2009-01-30 5:05 PM
in reply to: #1938225

Extreme Veteran
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5001001001002525
Northbridge, Massachusetts
Subject: RE: Good time to buy a house now? Need opinions please!!
carrie1 - 2009-01-30 2:42 PM
SGriepsma - 2009-01-30 4:38 PM

If you are going to do it I would look in areas where the market corrections have seriously decreased the home prices, like Southern California if you are looking to get more for your money.

One note, mortgage lenders will no longer calculate your debt to income ratio without your current mortgage, even if you say you are going to rent it.  They will only lend if you can support both mortgages with your income.  They got caught one too many times with people saying that, buying a house will a smaller mortgage, and then defaulting on the first home.

 

And I think they only use 80% of rental income as income.  Anyone know why?

Actually, they will not use the rent as income at all, you must be able to fully support both mortgages assuming no rental income.

2009-01-30 5:22 PM
in reply to: #1938248

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Subject: RE: Good time to buy a house now? Need opinions please!!
SGriepsma - 2009-01-30 6:05 PM
carrie1 - 2009-01-30 2:42 PM
SGriepsma - 2009-01-30 4:38 PM

If you are going to do it I would look in areas where the market corrections have seriously decreased the home prices, like Southern California if you are looking to get more for your money.

One note, mortgage lenders will no longer calculate your debt to income ratio without your current mortgage, even if you say you are going to rent it.  They will only lend if you can support both mortgages with your income.  They got caught one too many times with people saying that, buying a house will a smaller mortgage, and then defaulting on the first home.

 

 

And I think they only use 80% of rental income as income.  Anyone know why?

Actually, they will not use the rent as income at all, you must be able to fully support both mortgages assuming no rental income.

Is it possible that the rules are different in different areas?  I only ask this because there is no way a bank would have given me a second mortgage with both totaling over 400k with my salary.  They had to factor in the rental income and they certainly made me prove that the one unit was rented.



2009-01-30 5:43 PM
in reply to: #1938264

Extreme Veteran
861
5001001001002525
Northbridge, Massachusetts
Subject: RE: Good time to buy a house now? Need opinions please!!
carrie1 - 2009-01-30 3:22 PM
SGriepsma - 2009-01-30 6:05 PM
carrie1 - 2009-01-30 2:42 PM
SGriepsma - 2009-01-30 4:38 PM

If you are going to do it I would look in areas where the market corrections have seriously decreased the home prices, like Southern California if you are looking to get more for your money.

One note, mortgage lenders will no longer calculate your debt to income ratio without your current mortgage, even if you say you are going to rent it.  They will only lend if you can support both mortgages with your income.  They got caught one too many times with people saying that, buying a house will a smaller mortgage, and then defaulting on the first home.

 

 

And I think they only use 80% of rental income as income.  Anyone know why?

Actually, they will not use the rent as income at all, you must be able to fully support both mortgages assuming no rental income.

Is it possible that the rules are different in different areas?  I only ask this because there is no way a bank would have given me a second mortgage with both totaling over 400k with my salary.  They had to factor in the rental income and they certainly made me prove that the one unit was rented.

It probably does vary by region.  Given that I am in So Cal where the housing bubble burst with a very loud bang, they are probably tighter on this issue, but they also did not change that policy until sometime mid 2008 when they finally caught on to what people were doing to them.

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