Home Buying in 22204>Question Details

Jay, Home Buyer in Arlington, VA

Rent vs. buy an inexpensive condo?

Asked by Jay, Arlington, VA Sat Mar 2, 2013

I've lived in NoVa for about a year and really enjoy the area.

As my lease recently expired, I've thought about whether it makes sense to buy an inexpensive condo instead of paying rent. I pay about $1100/month for an OLD one bedroom apartment in South Arlington, and from my calculations it seems like if I can find something under 150K then I would not only pay less per month but would actually own my own property. However, I also don't have a very high income and do not want to put 20% down (though I have excellent credit), so I would have to pay private mortgage insurance, shop around for a suitable lender/mortgage, and my strict price range limits the quality of home/neighborhood my money will buy me.

I'm all new to this, so I'd appreciate others' thoughts.

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Jay, 1200 for a 1 bed in Arlington is a good deal. Sustaining a comparable monthly payment would necessitate moving out of Arlington. There are some attractive buildings in Alexandria, or Annandale, Baileys Crossroads, Seven Corners for example - that might meet your benchmark; if you are willing to move out then you should at least explore options. Focus on the monthly payment, not the sales price - because condo fees vary wildly and can be a real deal breaker, even with an inexpensive property. If you have stable employment, getting on the housing ladder sooner rather than later, makes economic sense - incomes tend to go up whereas fixed mortgage payments stay the same. Owning, when you factor in tax advantages, is generally a good idea, however, not everyone wants the responsibility and hassle of home maintenance. You should eventually buy, but timing is everything.
0 votes Thank Flag Link Sat Mar 2, 2013
I use a great rent vs. buy calculator at: http://www.ginniemae.gov/rent_vs_buy/rent_vs_buy_calc.asp?se…

It does a great job of breaking things down for you. I would almost always say that buying is better than owning (tax incentives, etc...) As long as you have good credit, there are conventional loans and FHA that require just 3-3.5% down and a good agent (hint hint) can negotiate your closing costs. (I work with a fabulous lender I can refer you to.)

Now is a great time to buy as I can't imagine interest rates getting any lower. And who wants to pay someone else's mortgage when they can build their own equity?

Lot's of great suggestions already. Feel free to contact me at jamiedesimone@gmail.com or 703-517-5608 if you have any questions. I'm always happy to help!
0 votes Thank Flag Link Sat Mar 2, 2013
Hi Jay

I suggest you expand your search into nearby Alexandria and Falls Church. Alexandria, in particular, has lower priced condos. This is also the time to talk with lenders while your are making your plans to buy. If you belong to a credit union, check with them first. If not, ask friends and colleagues for referrals to good local lenders. Please let me know if you need lender recommendations. That is a critical first step as you begin this process.
0 votes Thank Flag Link Sat Mar 2, 2013
Your thinking makes a great deal of sense. There is a group who is dedicated to helping people without a high income and good credit get into home ownership. The Virginia Housing Development Authority (vhda.com) has programs for first time home buyers with excellent interest rates. Also, rather than focusing on avoiding PMI, look at the entire package and determine which makes the most sense financially. Let me know if you need additional information, guidance or suggestions.
0 votes Thank Flag Link Sat Mar 2, 2013
Depending on how long you are planning on staying in the area, you should definitely take advantages of the benefits of purchasing a home. You will get a tax write-off on the interest portion of your mortgage, and most likely you will be spending less than if you rented. Email me and I can do a personalized search for you. I am not just a Realtor, I also own two properties in Arlington and I also renovate homes as well. You can reach me at INKrealtor@gmail.com
0 votes Thank Flag Link Sat Mar 2, 2013
Jay,

Currently I see one listing in Arlington County listed under $150K, it is 695 sq feet, and has a $524 a month condo fee. You need to be careful focusing on a low priced unit, because there is normally a reason that a unit is low priced; high condo fee, poorly run association, or aging community assets.

It might make sense for you to consider an FHA loan, though it has higher fees than conventional financing, and increase your price point to a better located/managed condo association.

AJ Heidmann
McEnearney Associates Inc.
Licensed in Virginia
0 votes Thank Flag Link Sat Mar 2, 2013
Thanks for this information. I know I will probably have to look outside of Arlington County (such as Alexandria, Annandale, Falls Church, etc.). I was just poking around on Redfin and saw several properties
Flag Sat Mar 2, 2013
There are not very many condos for $150K in Arlington. Maybe down along Columbia Pike or 7th St S... Search NYT.com for " rent vs buy " / they have interactive calculators.

You can email me at jkozyn@cbmove.com if you want.
0 votes Thank Flag Link Sat Mar 2, 2013
It's a good idea to shop around some of the local credit unions and banks. They sometimes offer 10% down programs with low fees.

Also, don't forget about the condo fees when calculating your monthly payment and comparing to the $1100/mo rent.

Let me know if you have additional question.

Thanks,
Daniel
0 votes Thank Flag Link Sat Mar 2, 2013
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