DIYbanter - View Single Post - Overextending ourselves on our first home?

Banty

In article . com,
says...

Wow... a thread 16 messages long in a matter of hours! I really
appreciate everyone's input.

First of all, a few things have to happen before the house is even an
option. The seller has to come down and meet us in price. We are
optimistic that this may happen, but not positive. Second, the house
has to prove to have no underlying problems. I know the roof and
electrical are new, but I cannot say the same about septic,
foundation, etc. If any one of those things turn up as sub-par and
the seller has no interest in fixing it or give us cash back for the
issue, the house is also a no go.

In the event, however, that everything checks up OK, we have a tough
decision to make. The things working in our favor a
1) the tax benefits -- they are not guaranteed forever but we would be
looking at about $500-$600 per month more than we see in our current
paychecks
2) our salaries will go up nominally over the next few years -- I can
say this with a very high degree of (but not absolute) certainty. We
are at 100k combined right now, which is on the low end for the area
(so is a 400k home price). I am confident this number is closer to
110k or more within 18 months. The misses is just finishing up her
masters and will undoubtedly see a sizable increase (she's relatively
underpaid now), and I've gotten to the late stages of interviews where
they would have offered 10k more than I'm currently making. If I
pursued a job change more aggressively, we might not even be having
this conversation. With that being said, if the numbers "work" now,
they will certainly work with an extra $1000/month income
3) it is a house we know we can live in for 10+ years. If we weren't
in love with the place, we probably would go about $50-$75k cheaper
for a house we could live in comfortably and sell within five years.
This one is a keeper, and that's the only reason we'd be willing to
sacrifice.
4) value will only go up -- 2 acres, 2000 square feet in fairfield
county. If we take good care of it, and we found making payments to
be tough, we can sell the house for profit within a few years. I can
almost guarantee that we cannot lose money in this house.
5) the wedding will give us at least the 2 month cash cushion we'd
like to have. Obviously we'd feel more comfortable with six, but our
goal would be to work towards that while still paying the enormous
mortgage payment

I really do thank everyone for your feedback. As you know, we are
young (and probably naive). We've never owned a home & we've never
gone through the ups and downs of the real estate market, a furnace
breaking down, etc, etc. To me, the question isn't "can we afford
it". The question is "do we want to make this kind of lifestyle
change (no matter how temporary it is)".

Needless to say, I'll keep everyone posted. if one of the
dealbreakers mentioned above happens, its a non-issue.

Thanks again!
Dave

OK, it's a risk, but...

Two things:

1. Think carefully about whyever your credit rating is low at the moment, and
how it may relate to your situation. (

2. Make damn sure to have an *independant* inspector (not one connected to any
real estate agent, even yours) give the place a good look over. Make it a
condition of the sale. Pay particular attention to the money-sinkers like
foundation and drainage, septic, age and condition of plumbing and any damage
related to that. See if you can find out why this is such a deal. Be prepared
to walk away.

I have what we call our "ten thousand dollar sidewalk" which is the concrete
skirt which finishes off a foundation repair. There are some great vacations
buried down there. I could adsorb the cost fairly well as I went for a modest
house compared to my income, but that's the kind of thing that can sink you as a
first-time buyer.

Cheers,
Banty