Buying a house - scared sh*tless!

[stevoc]

Hey all. Well, the wife and I put an offer on a house that we really like. It may have been more than we wanted to spend, but felt it was an offer we couldn't pass. A friend and fellow co-worker owns a house in a great location here, but moved to Colorado to be near her new grand daughter around Christmas. She had the house for one year (it's only 10 years old) and completely remodeled. Because of the market, she's selling a under value, so we just felt like we couldn't pass it up.

My concern? Money! The mortgage would be 30% of my gross, so based on that I should be good, but it's closer to 41% of my net, which freaks me out.

Anyone have any words of encouragement? Tips? Secrets on how to survive? We're freaking out!!!

[Matt_B]

Yeah, I'd be scared too if I was going to commit that much of my take home pay to a mortgage. Then again, I wouldn't do that because IMHO that would not be fiscally responsible.

Buy the best house you can comfortably afford. The rule of thumb is stick to around 30 - 33% of your take home.

[wetrx95]

Buying a house is a truly mental ordeal. Matt is dead on about 'fiscal responsibility', but when we purchased, we also looked at our personal growth potential over time. Many people might struggle their first couple of years, but with job promotions, etc. they can breathe easier. Also, depending on the rate you get as well as the mortgage type, will probably influence the way you at things. Good luck.

[Jayster]

stevoc,

hey that's covets backwards, you should be intimidated with that prospect. If you are it's because you plan on paying your bills, there are many ways to cut down other expenses(the number 1 for a lot of people, is not eating out so much).

That being said my Pop did a similar thing when I was a young kid, it was tough for a couple of years and he sacrificed some things. I.E. - drove a piece of shit car for 10 years, my step mother drove the same car for 15 years, we didn't eat out or have cable, certainly no internet bill, etc......

If it's something you want to do, you can find ways of making it work. Good luck!!!

[Norton]

The aim of purchasing a better house is to live a better life. If you're going to cut so much from other things that your overall life isn't going to be better, then there is no point. You shouldn't become the slave of the house that you buy.

[DonP]

41% of your net.

Are you at the top of your profession? If you were laid off, could you find a similar paying job fairly easy or would it be hard? Is the house close to large amounts of work, or is it out in the boonies?

In order to keep my pay at the high level it is at, I've had to drive 3 1/2 hours to Cleveland for a year and a half, and 5 1/2 hours to Nashville for the past year and a half.

Something to consider.

[Jason1212]

Those are good questions that have to be answered. We got into our home when I was working a retail job and not making much money. Over 5 years I switched job fields and really increased my income, but we stayed in our house. I was glad I did because when the telecom boom went bust I was able to take a substantial pay cut (over 10g) and still afford the house.

[Rsmacker]

the number 1 for a lot of people, is not eating out so much

Yeah, but his Mrs isn't going to be very pleased with that is she?

[stevoc]

41% of your net.

Are you at the top of your profession? If you were laid off, could you find a similar paying job fairly easy or would it be hard? Is the house close to large amounts of work, or is it out in the boonies?

In order to keep my pay at the high level it is at, I've had to drive 3 1/2 hours to Cleveland for a year and a half, and 5 1/2 hours to Nashville for the past year and a half.

Something to consider.

No, I work for the federal government, and raises have been very steady since I been here. (16+ years) Plenty of room to grow. In the past 2 years, my pay has increased roughly by $11k. Also, no threat of job cuts at this time.

The house is about 10 minutes farther away than I currently live, but I rent an apartment on a university campus right now.

The thing is, the house is in a great, desirable area. The property value out there is slowly increasing. It is estimated that in 24-30 months, the values of the homes there will be close to what they were going for a few years ago. (per the CA Dept of real estate director)

Even if I can survive for only two years, I should be able to turna little profit.

[RacerX]

Where is it?

I recently read an article listing the "Things you need to know" in the OC Register, I'll try to find that for ya. I remember one of 'em was keeping a cash cushion for repairs & another one referred to property taxes.

[ripley156]

Buying a house is a truly mental ordeal. Matt is dead on about 'fiscal responsibility', but when we purchased, we also looked at our personal growth potential over time. Many people might struggle their first couple of years, but with job promotions, etc. they can breathe easier. Also, depending on the rate you get as well as the mortgage type, will probably influence the way you at things. Good luck.

This is GREAT advice!

I bought my first house three years ago. My mortgage was around 35% of my net, which scared the hell out of me too...However, I refinanced once (took $100 off the monthly payment which I still make, but it is nice to know I could stop) and I have gotten 3% raises the past three years which is getting this number down closer to where it was when I was paying rent...

Make a couple payments and it will feel like you have been doing it forever (and you will be!)

It will work out for you! Full-speed ahead!

[RacerX]

I work for the federal government, and raises have been very steady since I been here. In the past 2 years, my pay has increased roughly by $11k.

I have gotten 3% raises the past three years

What recession?

[fordsho90]

Dont forget insurances, property tax, higher utilitys and more of them since you are coming from an apartment. Also are the appliances staying or are you gonna have to purchase your own? Oh and find out if there are any monthly ass. fees. Try to take all of the expenses that you possibly can into account so that there is no hidden suprises a mo. or two later. And the most important thing is that if you dont feel comfortable; dont do it.

[javert]

What's an ass fee? Seriously, it freaked me out too when I bought a house a couple of years ago. Those mortgage payments are bills on a whole different order of magnitude than I was used to. Since then, I got used to it and now I worry about stuff like "I wonder when I have to replace the windows" and "that wooden board looks like it needs some paint soon". Over here it's also like there's no way you are going to buy a house on one income.

[Axewielder]

It's a lot scarier to sell a house than to buy right now. Buyers are holding all the cards!