Similarly, I would recommend sitting down with a real estate professional to begin to understand the home buying process and set yourself up on a home buying plan. There are some great place in Waltham that are currently available, including some nice 1 bedrooms with similar features as you are describing in your current place.
As Rob said, now is a GREAT time to buy because of low interest rates, low prices and the $8,000 first time home buyer credit which is in the new stimulus package. There is a lot of opportunity out there and now is an exciting time to be in your position.
Waltham is a great little city with many different areas to consider. The Moody Street local is great for first time home buyers and the recent college grad crowd because it is near a lot of restaurants, bars and activity. I would love to discuss the housing oppotunities availbale to you and your girlfriend at your earliest convenience.
All the Best,
The cost to rent is your rent. The cost to buy is more complicated.
- First you have some cash for down payment + closing cost. What would the expected rate of return be if you don't put it in real estate?
- Then you have monthly mortgage + tax + insurance. The true cost of owning is interest part of mortgage + tax + insurance, where you get some of it back from federal tax deductible depending on your tax bracket.
- Maintenance expenses.
- Risk of home value going up or down in a few years
- You get $8000 tax credit, which would lower your risk (break even cost when you sell)
- You loose the flexibility as a renter. You are stuck with the house until you sell it. You may have some opportunity cost - say you could get a better job somewhere else, but it doesn't make sense for you to sell the house and move on. Career change / job relocation is something you must also factor in since you are so young and have so much potential.
- The up-side of home owning is you are not relying on how much your landlord think you should pay. Your rent can go up fast. Your landlord could not renew your lease, then you have to move even if you don't want to. Tax doesn't go up that fast. If you go with a fixed rate mortgage, you'll have much better control on your budgeting and stability.
- The down-side of owning is if you have financial difficulties in the future, you'd be screwed like millions of home owners now. If you rent, you could just move to a cheaper crappier place and move on.
You can do the math for cost of owning roughly, but it only goes so far. Personally I think real estate is a good investment vehicle if you can manage the risk (constant cash flow is necessity for mortgage obligation) because tax law favors real estate investment (tax credit on mortgage interest and tax break on capital gains) over other investments (count as regular income).
Hope my comments help.
When I first shopped for my home, I just went to open houses every Sunday. The effort didn't go wasted, it helped me learn about the market and how brutal home buying is (that good properties priced fairly sell within days) - It is a WAR. I didn't know how to put up an offer to purchase letter. I didn't know I only needed 1 pre-approval as the ticket to make offers (I wanted to know how much I can afford first and went to multiple banks and applied pre-approval multiple times. That ruined my credit score).
I was lucky one of the agents at open houses helped me out by telling me about the government home buying classes. I went to the Allston/Brighton one. It was the best decision I made in the entire home buying process (even better than the decision to pick my home). I gained a lot of confidence in every decision afterward because I knew exactly what I'm dealing with. You can find the class information here. Hope it's not too late:
By the way, nowadays to be qualified for a conventional loan (ie, you are not in the low income bracket), you need at least 10% down. You need 20% down if you don't want to pay extra every month on mortgage insurance. If you are buying a condo, you need 25% down or you will be charged a few thousand dollar in penalty (0.75% on loan amount).
A good agent or mortgage professional should tell you these, but from my experience no one did - I found out from a friend that learned it the painful way. The professional's job is to help you buy, not discourage you from buying. They are busy too, so it's understandable if you can't get all the information from them.
Hope you already bought. It's a good time to buy. If not, good luck. Home shopping is fun. Enjoy it :)
You can certainly find a single family home in Waltham that keeps you under $2,000 a month with tax and insurance. Assuming 10% down, you would be looking in the $350k range.
Waltham taxes are very low compared to the surrounding area because of the taxes paid by the large buildings on Rt. 128 (Waltham is home to at least 4 Fortune 500 companies. Their headquarters pay a good chunk of the property taxes)
Check out the Warrendale area (off Main St. on the Watertown line) and the Forest Street area off of Trapelo near Bentley. Warrendale is less than 10 miles from downtown Boston's financial district and you can be there in less than 30 minutes, much faster with no traffic. There is also a commuter rail over the bridge in Watham center.
That said, I don't have an opinion as to whether you should buy now or wait. If you do decide that now is the time to buy, here is some more advice. When my wife and I were engaged 3we looked at several homes and put down several offers that either did not get accepted or fell through before closing. Now, each time we drive past one of those homes we are happy that we did not buy them as they are all two small for our family of four. If you and your girlfriend do plan to get married and have kids, think 3-5 years into the future when you look at homes. Don't look for that condo that would be great for your current lifestyle, or for that two bedroom that you might be able to expand on if you have two kids. Life moves fast, think ahead.
Check out territoryre.com for homes in the area. Also take a look at Watertown as it is a great commuter city also. Higher taxes though.
You're right! Now is a great time to consider buying your first home...the $8k (that you don't have to repay) doesn't hurt either!
I agree with the previous statements about talking with a mortgage broker. Getting preapproved is a great first step. I think you're very reasonable with a $2k/mo budget, depending upon what amenities you'd be looking for in a home.
I have an excellent mortgage broker that I work with, and we work together to make the process seamless for you. You can also visit my website http://www.nikkidevaux.com where you can do a full MLS search (you don't have to enter your contact info) and I have some great mortgage calculators as well.
In the meantime, feel free to email me with questions. My email is firstname.lastname@example.org and my cell is 617-276-5247. I would be happy to set up a time to meet with you and your girlfriend for a no commitment required consultation. I also inform all my first time home buyers about the benefit of using a "buyers agent". I'm an Accredited Buyer Representative, which means that I focus on getting my buyers the best deal and making sure their best interests are always represented. It's also important to note that you don't pay for my services. I am paid a percentage of the seller's commission, so there's no reason why buyers shouldn't have a professional on their side.
Look forward to talking to you soon!
Lots to consider, now that you're "out on your own," huh? Nobody can tell you what is the best thing for you and your girlfriend. To rent or buy is entirely a personal decision, but I do hear that question all the time.
As I was in the same situation back in the early 90's...similar market too....I always like to share my own personal experience with first-time homebuyers.
My "then" fiance and I were saving for a lavish wedding. To us, homeownership was out of the question...we just had to have the blowout wedding of the decade, and all our hard-earned pennies were going towards that! Furthermore, we had meager wages, just getting out of college ourselves (sound familiar?) We could never afford to buy a house.....or so we thought.....
Then my soon-to-be father-in-law, who had made some very wise investments in his day, offered out this advice:
"Why don't we take advantage of the low home prices, take our "nuptial savings" and use them as a downpayment on a home....Then use the house as collateral and take a loan out to finance the wedding?"
And that's what we did. We bought low, had a BOMB of a wedding, lived in that house long enough for the market to turn around, and sold the house for more than double what we paid for it! And we actually ended up getting a great big refund that first year after we bought our house too because we were able to adjust our income with the closing costs, interest, and real estate taxes paid.
We have since bought two more houses, each a little big bigger, and in better towns.....ALWAYS IN A DESIRABLE LOCATION, LOCATION, LOCATION...You get the picture.
So, to rent or to buy...that's a personal decision and only you and your girlfriend know what is right for you! Hope this helps!
Now is a great time to buy, especially with the initiative in the new stimulus package that gives an $8,000 credit to first time home buyers.
If you are unsure of your price range, my best advice to you would be to get pre-approved for a mortgage.
This way, you know what you can and can't afford in your home search!
Let me know if you have any other questions!
To answer the emotional side of your question, now is a GREAT time to be buying. The housing market is strongly in a buyer's favor and interest rates are at or near historic lows.
To answer the practical side of the question, a loan pre-approval should answer both your questions about rent vs. own, and about availability of credit to you both.
If I can be of further help, don't hesitate to let me know. Mortgage Master is headquartered in Walpole and we are happy to be of service.