The best way to accumulate wealth in the United States is still home ownership, especially if it is your primary residence. This is because when you factor in the tax advantages of home ownership, it is often cheaper than renting. Also, unlike renting, when you own a property, you monthly payment never goes up as rent would over time! When you own a house it is a low risk investment (relatively speaking) and hopefully over time the value of your property will go up!! Historically over the long haul it always has (although nobody can predict the future with 100% accuracy ;)). Your question is a very personal one and only you can decide the answer.
Having said that, here is some food for thought.....
1) If you purchase a condo for $400,000.00 and put 20% down, your monthly mortgage payment would be about $1,575.00 (this is assuming you are a qualified buyer taking a 30 year fixed mortgage with an interest rate of 4.25%). Then you add in your taxes, insurance and monthly maintenance (approx $500.00) which brings your total monthly living expense to $2,075.00. If you purchase a condo for $300,000.00 under the same terms your monthly living expense would be about $1,585.00.
2) Give the breakdown in item "1" above to your/an accountant and ask how much you will save on your annual income taxes by owning this type of condo (I would dare to say that for most people it would be about $300.00 per month but you must check with your accountant!). If you subtract the tax savings you probably find that you are paying less than it would cost you to rent the same condo!
3) In order to qualify for the above mentioned deal at $400,000 with 20% down, you would probably need to be showing an income on your income tax returns of about $65,000.00 assuming you have no other debt (for the $300,000 purchase with 20% down the income needed would be about $47,000.00 assuming you have no other debt). This is also assuming you are a qualified buyer.
4) The most important first step is that you meet with a mortgage banker and get yourself pre-qualified! In order to do this correctly, you must meet with the banker and bring your last two years tax returns and W-2s, last three months bank statements (where you have that $90,000.00), recent pay stubs and allow them to run your credit. At that point the bank will be able to tell you if you are qualified, the rate they can offer you, how much you can borrow and how much the loan will cost you every month.
5) After that you should look at every condo available in your price range and area and see if any of them meet your needs.
If I can be of further assistance, please let me know. Good luck!
Mitchell S. Feldman
Associate Broker/ Director of Sales
Madison Estates & Properties, Inc.
Office: (718) 645-1665/ Cell: (917) 805-0783
1. Meet with a Local Mortgage Banker to get prequalified for mortgage financing. The Mortgage Banker will review all facets of your loan request to answer your questions with regards to the types of loans and maximum loan amounts you could qualify for.
2. Get a referral to a good, local, real estate attorney. Call the attorney, retain the attorney so you have her information handy when you make an offer. Having that information at time of offer helps you demonstrate to the Seller how serious you are, and they will consider your offer with more interest.
3. Line up a Home Inspector. A good home inspector will scare the heck out of you: that's what you pay him for! But you'll concentrate on the fundamentals of the property: roof free of leaks, plumbing, heating and electrical up to code and in good working order. Again, when you make an offer and you have your Home Inspector ready to go, your offer will be considered with much more interest by a Seller because you truly have your "ducks in a row" and your preparation demonstrates your serious attitude about conducting the purchase transaction in a timely manner.
4. Find an experienced Local Realtor who works in your desired shopping area. A serious pro Realtor will refuse to show you homes until you are Prequalified for mortgage financing. Don't take offense! That Realtor doesn't want you to be disappointed and wants you to have a smooth experience as you shop for your new home.
Put together your Team of real estate professionals and shop 'til you drop!
No one here can tell you whether you should continue to rent or buy......no one knows your full financial picture...........so.........do yourself a favor......speak with a mortgage rep and see how you look on paper....then see how comfortable you are with the numbers.........then you can make your decision on how to proceed.
A local agent can show you what your price range looks like..... once you know what your price range is!
To purchase a property or to continue renting is a decision only you are able to make. In regards to market conditions, yes mortgage rates are at an all time low and banks are still lending (dont believe all that you hear on TV), so it may be a good time to purchase a property. But what may be good for one person may not be good for you. If you're interested in getting pre-qualified for a mortgage or interested in finding out more about mortgages, feel free to contact me.
Best of luck!
Sr. Mortgage Specialist
It depends on your income, how much of a mortgage you can qualify for.....and your comfort level and spending habits.
$800 a month won't go very far in covering your mortgage, insurance, taxes and maintenance, if you buy a condo.
So.........the big quesion is...how much more can you comfortably afford to spend each month?
Once you have the answers to the above questions.......then you can see what is available in your price range, and whether you're better off renting or buying at this time.
Good job with the savings, though!
I admire your discipline and money management ability, my advice is to contact the loan officer at your savings bank and request a mortgage pre-approval. With that information in hand, decide on how much living space you require ( 1 or 2 bedrooms). There are other factors to consider, but i'm sure you will know how to proceed when you have all the facts. I am a buyers representative.
Kings Realty Professionals