advice for first time home buyer?

[chopstick]

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I was always led to believe that you will save a ton if you are not paying interest for those extra 15 years. If you guys could clear this up I would be greatful.

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Yes, your are correct. See prohornblower's post. The 30 year option means paying $100K more in interest.

[Thremp]

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I was always led to believe that you will save a ton if you are not paying interest for those extra 15 years. If you guys could clear this up I would be greatful.

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Yes, your are correct. See prohornblower's post. The 30 year option means paying $100K more in interest.

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If you don't pay it off earlier, as per what I was explaining. In that case you gain flexibility for a small amount of additional interest.

[johndenver]

Kind of OT, but you should ask some random 30 yr olds at your company how much they make

I work in the defense industry and going from 42 -> 100 in 7 yrs seems pretty unrealistic

You are right that you can expect 4-8% raises, but I wouldn't bet on huge jumps. The defense industry has a bunch of very stable middle class jobs, but you shouldn't expect to ball it out too much.

[RikaKazak]

I'm sorry man, I got through like 1 page of responses and I had to stop reading cause it's tilting me.

I can honestly tell you that you're getting advice from people who are pretending to know more than they actually do.

If you'd like help hit me up on MSN sometime and I can help you out.

For the basics...here's a quick to do list:

Student loan debt isn't that big of a deal, credit card debt can be and can't be. It basically depends on your "debt vs. total avaliable credit"...so if you have only 1 credit card with a $1,000 credit limit, and have a $900 average balance it's worse than having 2 credit cards, each wiht $1,000 credit limits and $450 on each card (hope I explained thatok)

You want 4 trade lines, but 3 trade lines are fine like 99% of the time. A trade line is a student loan, or a credit card. So you have 1 of each, but you need 1 more. I'd just get another credit card. you'll get dinged a little for opening up credit cards, but since you won't be buying for awhile it'll be more beneficial to do it than not to do it if you're buying in 6 months + (basically trying to say if you're buying a house "this" month, don't open a new credit card, it's just stupid)

With your situation it won't be a problem at all getting a loan. It'll just be the terms you decide on. The more you put down, the lower the interest rate, the shorter the time, the lower the rate, adjustable = lower than fixed

blah blah, you get the idea, basically don't stress, you'll get the loan. Just look online for tips on how to make yourself "look better" or ask someone who has done it multiple times or is a mortgage broker.

p.s. never actually use a mortgage broker for your loan...well....I can say 99% of people who used one shouldn't have, but there are circumstances that can make using one smart, but trust me, yours isn't one though.

hope that helps a little, sorry if it doesn't make sense, was 8 tabling while writing it.

[cantsitstillbr]

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I think the most common reasons people buy a home is because they have kids.

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I think the most common reasons people buy a home is because other people do it.

I think the most common justifications people use to support the buy a home decision is because [insert terrible armchair economic reasoning].


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Not to say there can't be good reasons, but the reasoning process itself is almost always done in such a manner as to lend absolutely no actual merit to the conclusion. More often than not it results in an exercise of justifying a decision that has already been made, and is now in need of support.

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Do you feel my reasons are bad? I dont like apartment life. Renting a house would be just as expensive as buying. I have long term plans where I currently live.

[Mr. Now]

Mr. Now says real estate cycles typically move in 10-year swings.

Rising to 1987, then flat for 10 years.

Rising into 2007.

You have plenty of time and as the renter you have the power now. You can negotiate incredible rent deals now, planning for a late 2008- early 2009 entry at the earliest. You might be able to rent very cheaply for many years (well past 2009) as you observe how the drama is unfolding in real estate and the economy. If you held real estate now and bought it over the past 2-3 years, how are you feeling now? Since you cannot sell at a profit, you are renting the place and competing with others in the same boat. Use your leverage as a tenant. You can rent for less than the landlord's expenses. If you cover 90% of his nut he is happy right now. He thinks: Better this clean-looking, nice tenant at 90% of cost than bleeding monthly into the wallet of the insurance company, the bank and local contractors doing maintenance.

We are in the middle of what looks like the biggest meltdown of paper assets ever. Consider getting keen about this. This is a unique and dicey time-- with alot of opportunity if you see clearly. Useful links appear below.

You are entering the economy as a player for the first time. Before this, you have nothing to worry about since you have nothing. Now you are building up. You might want to get smart about real estate cycles, and safe places to store your savings until you act. You might want to take this time to learn everything about the target market you are aiming at. You might want to look at dozens of homes and make 25%-off offers to practice the process. 99% of the time it comes back with no counter offer. 1% of the time you find a weak seller. Either way you win.

Mr. Now says you might want to relax and take advantage of the time you have to decide. Play your cards right, and you can find an incredible rent, save tons of money over the next 2-4 years, make a return on that, and pay down debt, and make a magnificently timed lowball offer on exactly the right house at exactly the right moment.

In real estate, timing is everything. Those who got in in 1997 and sold in 2005-2007 are very happy now. The transactions costs are prohibitive and the instrument is not liquid. For these reasons, you must hold for years. That means you must time your purchase to the cycle.

The larger picture includes a possible once-in-a-lifetime credit derivative explosion. This is the situation you are entering. This is a big deal. It is complicated and you might want to get smart about this. The Sinclair web site (below) has excellent content on these topics.

See also:

http://en.wikipedia.org/wiki/Credit_derivative

http://en.wikipedia.org/wiki/Credit_default_swap

http://en.wikipedia.org/wiki/Collate...ebt_obligation

Sinclair's Analysis of Now
(....note the date, Sept 2006)

www.jsmineset.com
.
.

[spex x]

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
I think the most common reasons people buy a home is because they have kids.

[/ QUOTE ]

I think the most common reasons people buy a home is because other people do it.

I think the most common justifications people use to support the buy a home decision is because [insert terrible armchair economic reasoning].


--

Not to say there can't be good reasons, but the reasoning process itself is almost always done in such a manner as to lend absolutely no actual merit to the conclusion. More often than not it results in an exercise of justifying a decision that has already been made, and is now in need of support.

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Do you feel my reasons are bad? I dont like apartment life. Renting a house would be just as expensive as buying. I have long term plans where I currently live.

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Your reasons are fine. Look, you and your wife can afford to buy a house and you obviously feel that owning your home would improve your quality of life. That is good enough of a reason to buy the house. You can have the things that you want in life, everything is not always about dollars and cents.

I do not agree with the posters that suggest that RE market timing is a good idea, such as Mr. Now (with all due respect to him, of course). He is correct that RE moves in cycles. But right now IS the downs cycle. We DO NOT KNOW WHAT WILL HAPPEN OVER THE NEXT TWO YEARS. I've expressed this idea many times on this board already. If you are ready to buy, buy now, it is a buyer's market now, take advantage.

Basically, IMO, if you want a house and you plan to stay in that house for the next 5 years, buy the house. You don't have to justify your reasons to anyone. Wanting the house is, IMO, good enough of a reason.

[jively]

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Do you feel my reasons are bad? I dont like apartment life. Renting a house would be just as expensive as buying. I have long term plans where I currently live.

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Buy the house. Owning has other benefits over renting: You get the pride of ownership. You can put money into customizing anything you want. You get tax benefits. You have the potential of capital appreciation.

-Tom

[Thremp]

Mr. Now,

I'd love to hear your predictions for the housing market in the Tennessee Valley. Considering the entire beginning of your post is wrong.

[maxtower]

I think the key to this whole discussion is the location of the OP. He is in Alabama. Prices there haven't gone crazy like other parts of the country. He shouldn't really worry about market timing, since its likely that Huntsville isn't in much of a bubble. Please keep that in mind when responding to his post.