Buying a house

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airahcaz
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Buying a house

Post by airahcaz »

Although no one can really predict interest rates, we feel a bit of pressure to buy sooner than later, as of course if they increase rapidly then we'd afford less house.

How much emphasis should we put on buying a house this year versus next?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
Professor Emeritus
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Re: Buying a house

Post by Professor Emeritus »

The price of houses varies inversely with interest rates. The demand for houses depends on the overall economy. These two factors work together
http://www.economist.com/blogs/buttonwo ... rest-rates
Grt2bOutdoors
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Re: Buying a house

Post by Grt2bOutdoors »

airahcaz wrote:Although no one can really predict interest rates, we feel a bit of pressure to buy sooner than later, as of course if they increase rapidly then we'd afford less house.

How much emphasis should we put on buying a house this year versus next?
None - you buy the house when YOU (emphasis on the "YOU")are ready, not when the markets dictate. Rising rates does not equate to rising house prices.
Look at your signature - #3 ripped off from EmergDoc - "impulse is you enemy". Get it?
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Watty
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Re: Buying a house

Post by Watty »

How much emphasis should we put on buying a house this year versus next?

I you are in an expensive area you need to be very careful since anything could cause the market for half a million dollar starter houses to look a bit insane.

Regardless of what you expect interest rates to do then in the rest of the country the way that I would approach it if you are really going to buy next year would be to start looking now but to only buy this year if you find a house that is either at a fantastic price or an unusually nice house. As it gets to be closer to next year then you could be less selective.
Topic Author
airahcaz
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Re: Buying a house

Post by airahcaz »

Well, I think we need to move. Here's the deal. Three kids. Public schools are inadequate in our county. Thus, two kids are in private school now and the third will be going in two years.

Private school is $1000 a month each (rounded up for simplicity)
Three kids will be north of $30K annually for private school.

Taxes in our area are $14-$18K
Taxes in a county with good public school district are $20-$25K

No brainer to move, and try to move before the third starts school right?
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
conlius
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Re: Buying a house

Post by conlius »

This year and next will be pretty good years to finance a house with little down payment. Rates super low...so low that your after-tax interest rate looks very sexy compared to long term inflation - inflation goes up, mortgage stays the same. Plus, the market is still has a lot of low cost deals floating around. However, like the poster above said, rising interest rates should pull down the housing market a little. It's either put less down now with a lower interest rate or put more down later with a higher interest rate. Work out the numbers and include tax credit on the interest rate, projected inflation and the difference between your down payment now versus later (25k down now with 3.5/4.5% versus 75k in down in 2-3 years with 5/6/7/etc). Might not be much different...
wilked
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Re: Buying a house

Post by wilked »

airahcaz wrote:Well, I think we need to move. Here's the deal. Three kids. Public schools are inadequate in our county. Thus, two kids are in private school now and the third will be going in two years.

Private school is $1000 a month each (rounded up for simplicity)
Three kids will be north of $30K annually for private school.

Taxes in our area are $14-$18K
Taxes in a county with good public school district are $20-$25K

No brainer to move, and try to move before the third starts school right?
I am curious why you haven't moved yet if it is a no-brainer? Guessing there is more to the story...
Topic Author
airahcaz
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Re: Buying a house

Post by airahcaz »

wilked wrote:
airahcaz wrote:Well, I think we need to move. Here's the deal. Three kids. Public schools are inadequate in our county. Thus, two kids are in private school now and the third will be going in two years.

Private school is $1000 a month each (rounded up for simplicity)
Three kids will be north of $30K annually for private school.

Taxes in our area are $14-$18K
Taxes in a county with good public school district are $20-$25K

No brainer to move, and try to move before the third starts school right?
I am curious why you haven't moved yet if it is a no-brainer? Guessing there is more to the story...
It is not a trivial excercise to buy a future home, selecting one of many neighborhoods, to spend the next twenty years, especially when I personally have never been a suburbanite.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
wilked
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Re: Buying a house

Post by wilked »

airahcaz wrote:
wilked wrote:
airahcaz wrote:Well, I think we need to move. Here's the deal. Three kids. Public schools are inadequate in our county. Thus, two kids are in private school now and the third will be going in two years.

Private school is $1000 a month each (rounded up for simplicity)
Three kids will be north of $30K annually for private school.

Taxes in our area are $14-$18K
Taxes in a county with good public school district are $20-$25K

No brainer to move, and try to move before the third starts school right?
I am curious why you haven't moved yet if it is a no-brainer? Guessing there is more to the story...
It is not a trivial excercise to buy a future home, selecting one of many neighborhoods, to spend the next twenty years, especially when I personally have never been a suburbanite.
Gotcha. It is a lot of work, we are going through home scouting now.

As others said, always best to buy when you are ready as opposed to trying to time the market. It is an easy google to find quotes like this
09 April 2010 at 8:01 am
Rates are near zero for government lending which is what dictates the prime rate. The only place rates can go is UP UP UP!
rates were about 5% then, 4 years ago.

Take your time, find a city, narrow to neighborhoods, walk those neighborhoods after work, on a weekend, talk to neighbors, etc etc. If you are buying for 20 years timing and rates will become a secondary matter to getting the right house in the right location. Good luck
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HardKnocker
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Re: Buying a house

Post by HardKnocker »

If it is not too personal a question, what state are you in?
“Gold gets dug out of the ground, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility.”--Warren Buffett
Topic Author
airahcaz
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Re: Buying a house

Post by airahcaz »

HardKnocker wrote:If it is not too personal a question, what state are you in?
NJ
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
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HardKnocker
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Re: Buying a house

Post by HardKnocker »

airahcaz wrote:
HardKnocker wrote:If it is not too personal a question, what state are you in?
NJ
I had a feeling...

Me too. :sharebeer
“Gold gets dug out of the ground, then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility.”--Warren Buffett
wilked
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Re: Buying a house

Post by wilked »

airahcaz wrote:
HardKnocker wrote:If it is not too personal a question, what state are you in?
NJ
I am not sure what part you are looking in, but I know there are lots of good-value homes out just northwest of Newark. My friends just bought in Waldwick and got a great place
Topic Author
airahcaz
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Re: Buying a house

Post by airahcaz »

wilked wrote:
airahcaz wrote:
HardKnocker wrote:If it is not too personal a question, what state are you in?
NJ
I am not sure what part you are looking in, but I know there are lots of good-value homes out just northwest of Newark. My friends just bought in Waldwick and got a great place
NJ is a whole other topic :) Will PM you.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
JBuff
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Re: Buying a house

Post by JBuff »

I'm looking in NJ as well - and actually after lurking for quite a while I joined here to ask a few questions regarding our house hunt...

Good luck :)
PlayingLife
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Re: Buying a house

Post by PlayingLife »

Another fellow New Jersian here! See my recent posts on 401K loan....that's our plan to buy in the HCOL area. I feel we are in a position to responsibly buy and handle the loan while avoiding the common risks; however, if we buy this year, great, if we buy next, okay. Right now it looks to me like all the homes in the counties we're looking in (northern NJ) are definitely over priced due to the time of year, but our budget should definitely allow us to find something. Unfortunately the only houses I've loved have been near power loans or on double yellows :? So the search goes on....

Good luck! Feel free to PM if you want to talk housing in Jersey!
Topic Author
airahcaz
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Re: Buying a house

Post by airahcaz »

We bought in Sept 2014 :)
1) Invest you must 2) Time is your friend 3) Impulse is your enemy 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course. (Plagiarized, but worth stealing)
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