First Home Purchase Questions

Brettster · #1 07-11-2007, 09:43 PM

This is basically a should I buy post. I'm 22 and just got a good job in DC making 70k a year. I have 2 months before my lease ends in my apt and would like to buy a 3bd townhouse and attempt to rent out 2 rooms. I'll be looking to buy in MD as its cheaper there. My question is, I have 1-2 months to find a place, buy it, and move. I have about zero experience and knowledge buying and do NOT want to rush this. Is 2 months time adequate to educated myself, find a good deal/solid home or should I sign another year lease and do research during that time and become more settled in my new job. I just started the job this week but shed a tear each month I write a rent check. I guess this is a personal decision but I feel dumb going either direction.

JJSCOTT2 · #2 07-11-2007, 10:18 PM

Prices in the DC area are terrible. Affordability in MD is limited to pretty much PG/Montgomery. I'm gonna assume you're white, thereby ruling out PG county. Reasonable prices you're probly going to have to go as far out as Rockville or so, in which case, have fun on your commute.

But that's not your question. I'd say for a first time home buyer this really isn't something you want to force to happen within a couple of months. Take another year, get to know the area better, save up some more money, and most importantly be learning about mortgages and stuff in that time.

rapidacid · #3 07-11-2007, 11:27 PM

2 months isn't enough time for all that you're asking ... figure out which places need rentals the most ... you're jumping into a *lot* of stuff for your first time home ownership ( ie. being a landlord as well ) ... you've got a lot to research

Also, unless you've got quite a bit of cash under your mattress, I think you're going to be in for a bit of a shock for what a 70K salary is gonna get you in the DC area

Cubswin · #4 07-12-2007, 12:11 AM

I think starting a group house makes more financial sense then buying in the DC market right now. Two of us started one in Falls Church, VA and it has worked out quite well. Four bedroom house, we rent out the basement for $1000 and another small BR upstairs for $600 inclusive of utilities. We have had no problem filling vacancies at these prices and we could probably actually raise prices without a problem. Bascially we are on the hook for $600 between two of us plus utilities. Crunching the numbers, I think I come out way ahead this way versus buying.

JJSCOTT2 · #5 07-12-2007, 12:19 AM

[ QUOTE ]
I think starting a group house makes more financial sense then buying in the DC market right now. Two of us started one in Falls Church, VA and it has worked out quite well. Four bedroom house, we rent out the basement for $1000 and another small BR upstairs for $600 inclusive of utilities. We have had no problem filling vacancies at these prices and we could probably actually raise prices without a problem. Bascially we are on the hook for $600 between two of us plus utilities. Crunching the numbers, I think I come out way ahead this way versus buying.

[/ QUOTE ]

Couldn't you buy and do this as well though? Or is your point that a mortgage in FC would put you on the line for well more money each month? Still might not be a bad idea though since you'd build equity in the process.

Cubswin · #6 07-12-2007, 01:31 AM

Assessed value of this house is 700k, monthly rent is $2200. If I invest the $140k that would be required for a 20% downpayment over 30 years and then save an amount equal to the difference between a hypothetical mortage and my actual rent (taking into consideration property taxes, maintenance costs, income tax savings and rental income), I come out way ahead by renting.

maxtower · #7 07-12-2007, 03:41 AM

Two months is not enough time. It will take about 1 month for closing, so that only gives you a month to find a place. You should really try to get a month-to-month lease and start your home search. The less pressure you put on yourself to buy, the better price you'll get.
As others have indicated, buying in the DC area might not be the best idea right now if property values are inflated.

turnipmonster · #8 07-12-2007, 10:38 AM

get a month to month lease and shop around more, 2 months is not enough time. also do more research and read more about mortgages if you think of renting as "throwing away money". buying is like any other investment, it's definitely not always better to buy.

mindflayer · #9 07-12-2007, 12:05 PM

I think learning technical info on mortgages,mortgage options,interet rates, closing costs etc. can be done in a week.
What you should take your time at is getting to know, is the location and its subtlties. That info is not in a book somewhere. Also after you know where to buy, it will take some time to actaully find the right property.

AceLuby · #10 07-12-2007, 12:42 PM

I'm going through this right now. Here are some things you should consider (and I would recommend talking to a banker if you're serious).

For a loan you usually need:

A job for 2+ yrs in the same field
A decent credit score (at least in the 600's)
Not a lot of current debt (car payment, student loans, etc.)
A downpayment helps out A LOT

If you can get pre-approved for a loan (it took me 2 days), you have the ability to bid on a place if you like it. It's all about finding a place at that point.

In your area, it's probably a good idea to wait and consider some of your options (such as renting a townhome as opposed to buying it). There's a pretty big thread about some of the pro's and cons in BBV4L.