Home Buying in 11743>Question Details

Sompur, Home Buyer in nassau county area

First time home buyers problems:My wife and I have a combined income of $140K

Asked by Sompur, nassau county area Fri Apr 25, 2008

combined income of $140K savings (20K)... as we make it a point to maximize our 401-k every year.
We are thinking of buying our first home now.... hopefully in a safe/desirable area in Long Island, NY (somewhere along the border of Nassau & suffolk counties.
I went thru numerous mortgage calculators (we are very conservative people and do not want to sign ourselves up for huge monthly mortgage payments) and it looks like I cannot afford a house that is more than $280K!!!!
Now, if I go look at houses in such a price range (I was looking in Farmingdale,syosset etc for 2Br/3Br with atleast 1.5 Bath)... there are really not many choices, It looks like real estate is still WAAYYYY Overpriced. Either that Or our education ( my Engineering Master's degree plus my wife is studying to become a pedeatrician) is just a waste. When will real estate prices come down to levels where 1st time buyers can get in ?? Wat is the current trend?, Are there still downward pressure on the prices?

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John the Bruce’s answer
An engineer and a doctor making a combined $140K a year cannot afford a house in a given market. This is the textbook definition of a market being in a state of disequilibrium.

Sompur – I recommend that you take a serious look at your spending. I don’t know what your outlays are, but you need to start accumulating cash. Cash will be king as this market continues to unwind – and you’ll see that these days you really need to have 20% down.

Also – as you can see the prices do not reflect reality. Don’t worry – the blood is in the streets in LI and the Zombie hoards are on the march. Start saving AGGRESIVELY and enjoy the show.
3 votes Thank Flag Link Fri Apr 25, 2008
Haha Sompur, I know exactly what you are going through. My gf and I make about $160K combined and all the vultures tell us that we can afford $450-$500k home but if you actually work that out, you'll live in a great home but you'll be eating lettuce sandwiches for dinner. The market is silly. For the last several years people with no money or credit were running around with overinflated mortgage letters driving prices up while all the speculators in the city were pumping investment money in these fly-by-night mortgage companies. Now that fell apart and those speculators moved to oil and food commodities (we all have to live, drive, and eat). So now only the hardy mortgage companies survive and the people who had mortgages for $450k wouldn't even get approved for $200k today. For that reason, expect all the prices to drop. Expect the short sales and the foreclosures to pile up. Wait it out, use trulia to find former prices and thry to buy from people who have lived in their house befor the bubble because they don't need to fetch enough money as all the idiots who bought houses they couldn't afford in the last few years. Low ball everyone. If a house id 399, offer 350. If they don't accept, walk away, go to another house. Pay the price you think the house is worth. Right now we are at 2004,/2005 prices, wait until they go to 2001 or 2002 prices. Good luck!
2 votes Thank Flag Link Thu Jun 19, 2008
You are doing the correct thing in trying to save for the 20% down Throwing away $200-300 an month on PMI ( 2400-3600 a year) is a mistake alot of people make (That could be your summer vacation or home upgrade every year). Alot of people did it during the boom, and most of them are now in foreclosure. If you look at most of the experts they are calling for a fall of anywhere from 10-20 % in the next twelve months on LI. Money magazine ( who is usually a pretty good at this) predicts a drop of 14.4% in Nassau/Suffolk through May 2009, and not hitting bottom until the second quarter of 2010. Good Luck.
2 votes Thank Flag Link Fri May 16, 2008
It sounds like you & your wife are very competent individuals. Home prices are declining. There are many "great deals," to be had. You have to do your homework. A mortgage calcultor on the computer really is not enough. You should understand that FHA limits were increased. Also Banks are getting tighter with their loan approvals and borrowers' eligibility. This is great news for great loan candidates. As with anything elsemake use of a professional for their knowledge not their car. Hire a Realtor to guide you & help you make the best decision on your home purchase, an informed one. I am a strong advocate for Buyer Agency. If you are not aware of what a buyers agent can do for you you definately should find out.
1 vote Thank Flag Link Tue Jun 24, 2008
Based on the lis pendens reports that we receive, waiting is going to provide you with more house for the buck over the next year or so- opinion.
Web Reference: http://optionsrealty.com
1 vote Thank Flag Link Fri Jun 13, 2008
Your numbers still do not add up. There really is no further answer here until you can provide more information - with that income you definitely can afford a home for more than 280k. Definitely - again WITH THAT INCOME. No question - it's about your personal debts and credit that is missing in this equation. OR you're simply doing the math wrong.

Also - prices have come down - but it's the INTEREST RATES that are SO GOOD for first-time home buyers (or any buyer for that matter). Don't solely analyze the price. "Saving" $30,000 in price could COST you 120k in interest payments over the loan if rates go up (which they very well could) in the future.
Web Reference: http://www.tommcgiveron.com
1 vote Thank Flag Link Sat May 17, 2008
Sompur - you make $140,000 annually combined and the house you can afford is $280,000? Something doesn't add up. Do you have a lot of debt? Bad credit? Did you consult a professional mortgage consultant - recommended.
In terms of real estate being "way over priced" - prices have dropped more than 15% over the past 22 months in general. Additionally INTEREST RATES are LOW. Do not think that "saving more money" to put more of a down payment is the answer and stop there. I'm not saying jump in and buy - what I am saying is consult a professional Real Estate Agent (me) and a mortgage consultant. You need information. Holding off indefinitely may very well cost you in higher interest rates - so waiting to buy a home 10 months from now for $30,000 less is great BUT paying 7% interest on the loan could cost you over $100,000 during your loan term. 401k's are great - but real estate - buying it - overall is a great investment for one gigantic reason - you totally OWN it. You don't own the companies in a mutual fund. People are losing their shirts in the stock market and think nothing of it. It's crazy. Think of the Enron employees - I mean, they lost everything. The real estate market right now is great for buyers right now. If you have steady jobs, good income and money to put down - FHA loans are simply fantastic.
Your numbers don't add up with regard to your combined income - unless again you have 100's of thousands of dollars in debt and bad credit.
Web Reference: http://www.tommcgiveron.com
1 vote Thank Flag Link Fri May 9, 2008
Thanks everyone for your answers.
After some research over the past few days, we have decided to wait to buy our first home...mostly because we want to accumulate 20% (we are shooting for 25%) downpayment. Hopefully while we save up/stregnthen our credit score, the current mortgage mess will sort itself out and sanity (in terms of home prices) will return. It is sad that we as a society have to come to think of a home as one of THE main tool to make money off of :-(
As I said earlier, we are conservative folks and do not believe in ARMs or Interest-only loans or any other new type of loan other than the traditional 15-yr or 20-yr mortgage. We would also like to buy a home with minimum brokering..
Talk to you all in1.5 years from now.... hopefully sooner if the home prices reflect realism earlier.
Thank you once again and good luck to all those in the real estate buisness.
1 vote Thank Flag Link Tue Apr 29, 2008
You make lots of money, but the Federal government was subsidizing the mortgage, real estate professional, and wall street industries by throwing money at people to buy houses. You are almost making as much as "the rich" who are supposed to be paying their fair share of taxes, yet a reasonable calculation shows that you can not afford these inflated prices. The answer is, you need to wait. The housing market crash has not really started yet, once people who bought in the last 1 to 5 years begin learning that their outstanding mortgage balances dwarf the market value (i.e. they have negative equity), and they see better houses than what they own going for less than they owe, the real bulk of defaults will hit the market. Then, housing will become cheap. It is better to rent for now, or buy a REO directly from a bank, or at a foreclosure auction. Don't jump in now, trying to catch a falling knife.
0 votes Thank Flag Link Fri Aug 7, 2009
I am a Mortgage Banker and a participating lender for SONYMA.This is a 1st time home buyer program offered by NYS.It offers below market interest rates, requires a 3% downpayment minimum.
Also offered is a Closing Cost Assistance Loan of up to 5% of the loan amount.
The max purchase price is $ 550,000.00. There are income limits for New Yorks different counties.
For further information feel free to contact me.
Ron Contrelli
Continental Home Loans Inc
175 Pinelawn Rd Suite 400
Melville New York 11747
( 631 ) 390 -6185
0 votes Thank Flag Link Tue Jun 24, 2008
Hello Home Buyer in Nassau,
If you take the 140K you make per year - break down to monthly - that is $11,600 per month. FHA will allow 41% of your monthly income to go toward housing and monthly debt. That figure is $4756. From the $4756 subtract all revolving/interest debt. What is left is what is allowed for housing. Let's say since you are conservative you have $1500 monthly in revolving/credit debt - that leaves $3256 for housing. Not sure what the tax base or insurance base is for your area - worst case lets say property taxes are 3 t% of the sales price - 4200 yearly and insurance is 1500 yearly - 5700 yearly divided by 12 = 475 monthly - subtracted from the $3256 - 2781 for PI = $463K for house - based on 6% interest rate for 30 years.
If you can take this example and plug in the correct numbers - you will get an idea of qualification.
Now has never been a better time to buy. Check with you accountant about how much more money this will put into your pocket every year. Hope this helps.
Web Reference: http://www.sheiladjones.com
0 votes Thank Flag Link Fri Jun 13, 2008
Real estate prices are still trending down. Both Chase and Credit Suisse predict that prices will fall another 10% in the next year. However, remember that if mortgages rates go up even 1%, it will offset a fall of about 10% in prices. With high oil prices and inflation looming, interest rates are predicted to go up in the next year.

So, the best time to buy is now if you find a house that you like. Arm yourself with a good buyer's broker and go shopping.
0 votes Thank Flag Link Fri Jun 13, 2008
Hi Sompur, please provide me with your email address and I will send you a list of properties that may interest you.


0 votes Thank Flag Link Fri Jun 13, 2008
How you doing, if you are looking to buy house this is your best time, As you heard feds already stop cutting rates and interest rates will be going higher which they already did, You can buy house with low down payment of 3% with a fha program, i am not trying to be pushy but there are programs out there which can really help you out.
0 votes Thank Flag Link Fri Jun 13, 2008
My wife and I just bought a house and have a similar combined income... We max out out our 401Ks and Roth IRAs. Very important. However, we were able to accumulate a 25-30% (no PMI) down payment on a 600K house. Basically, we rented a small apartment, ate at home, minimized purchases, etc. Also, create a spreadsheet of all your expenses (car leases/payments, car gas, school loans, cell phones, train passes, etc.) and then add estimates for possible expenses when owning a house (taxes, heating, electric, cable).

When saving, you must save for your down payment, closing costs, possible points to lower your rate, and cash left over. Personally, I would suggest at least 20K. Having cash left over is very important when buying your house. For instance, lawn tools, etc.
0 votes Thank Flag Link Thu May 8, 2008
Hello. I'm helping my mother in selling her home, Manorville. As far as what you have said, you and your spouse struggling with calculations, maybe you should open your options to look for a property that is both your home and an income. Maybe a large discounted place or a two-family property. If you had a tenant---a suplimental income for you, that could put you financially ahead without having to wait on stocking up enough dough to buy the lowest cost bargain and survive until the economy turns around. Right now if your renting? Renting is already eating away at your money!!!
You pay it and what? You don't see anything build in return, right?
My mother's first place was a large home. My father converted the attic to an apartment, legally. The rent on the upstairs flat paid for my parent's mortgage. Smart basic move. This allowed them to build up and enjoy an extra income source without the extra sweat. When my Mom moved in, she had one kid. She ended up with six. The tenant was a blessing and also a cost that could be adjusted with unexpected increases like when economy costs rose. We moved to Long Island for need of a larger place--cause we as a family grew--and better educational options. Owning your own home is more than the cost of a mortgage, it's an investment, especially on Long Island, that can really help your future broaden.
Don't despair! Paying on a mortgage is sure wiser than tossing your money away on rent. Paying on a mortgage is you, land owner, investing in the future. And homes on Long Island are at great prices. BUT, land here never stays low priced for very long. While you are calculating and waiting, also consider...When home sale prices do start to rise, it is not by tenderly small increments. Good luck to you. Wish my mother and I the same.
0 votes Thank Flag Link Wed Apr 30, 2008
Sompur, Your education is NOT a waste. Frankly, many aspiring LI homeowners would love to have your prospects.

In terms of trends, prices here are still correcting. For example, the median selling price of a Long Island home dropped to $409k from $445k a year earlier--and some industry experts expect a further fall off. However, local markets do not act in unison; while some are down and will dip further, others are actually up.

Q: Are you using a buyer's agent to guide you? If not, why not?

GerryV (vazquezgerry@yahoo.com)
0 votes Thank Flag Link Sun Apr 27, 2008
There are other approaches that you have not gravitated towards. The current market solution will not necessarily adopt to your income to debt formula. There are other long term solutions how to achieve the same end using less then traditional methods.

If you check my profile, it will shed light upon my mission. Get in touch with me, if you care to.

0 votes Thank Flag Link Sat Apr 26, 2008
Its hard to tell when prices will move. The truth is we really dont know untill we are well past them. You can find a nice house you just have to look in the right places.Dont just window shop homes, go into them look around, so many homes dont look like much from the street but are great on the inside. As far as Mortages go you really need to sit down with some one who can go over what you can and cant afford!
0 votes Thank Flag Link Fri Apr 25, 2008
First things first- Get your wife on track with her career, numero uno. Then get the equity thing going in a solid community.
0 votes Thank Flag Link Fri Apr 25, 2008
Hi there, please speak with a bank and see how much loan you can handle and them go shopping.

call me at 917-497-0729 and I can reffer you to some mortgage brokers

0 votes Thank Flag Link Fri Apr 25, 2008
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