Rent vs Buy in Philadelphia>Question Details

Steve, Other/Just Looking in 19114

im a 24 y/o male construction worker currently with an apt in feasterville, pa im paying 900 a month rent

Asked by Steve, 19114 Mon Jan 26, 2009

plus cable and electric my lease is up in august and i need to make a decision i would love to buy a home in the 19114 or 19154 area code hopefully a fixer upper for under 175000 i could put put 15000 down borrowing from my annuity but i dont really want to do that because id be paying that back as well as a mortgage, i dont want to rent again, im not sure if i would qualify for a mortgage my credit score is 648 if i do mortgage a home i would like my payments to be no more than 800 a month is this possible, what do i need to do first, can anyone help me through this process or give me some advice

Help the community by answering this question:

Answers

13
BEST ANSWER
Steve,
I work with a lot of first time home buyers and enjoiy taking people thru the process of buying their first place. A great mortgage program is a FHA loan. It is a required to have 3.5% down of the purchase price. I see that you are looking in the Morrell Park area. There are great homes for around $150,000 that could use some fixing up since you are in construction. I can refer you to a great mortgage office that works for Metlife home loans.
I work for Long and Foster Real Estate in Doylestown PA but I do show homes in that area of Philadelphia. Since you do live in Bucks County you may want to consider areas in lower bucks. I have been in real estate for 6 years and bought my first home 3.5 years ago. It is great. I rehabbed the entire property and now I am getting ready to sell it and buy another fixer upper.

Feel free to email me at Marciepurcell@yahoo.com or contact me on my cell 215-534-2539.

~ Best Regards,

Marcie Purcell
Long and Foster Real Estate, Inc.
0 votes Thank Flag Link Wed Jan 28, 2009
John,

I don't beleave that I ever said there was going to be a "radical upswing". In fact, I don't believe I said anything was going back up. I fully agree that it will be a while before things do go back up. I agree that there are more ARMs about to be reset. (Note to those that are following these comments - NEVER EVER get an ARM loan unless you are darned sure of the future. ARMs are strictly for very temporary use.)

As for the downturn increasing; this is, as I have said before, dependent on what and where. In Lower Southampton and Bensalem Townships (right where Steve is living) good starter homes have had a steady monthly sale price of around $205K for a whole year. No drops, yet at the same time, no increases.

You are correct about foreclosures being at an all time high. Home sales were at an all time high back when "no doc" loans, 110% loans and "bad credit" loans were popular. This is what made the foreclosures increase. People did a lot of finger pointing when it was everyone's fault. From the government all the way down to the borrower. And I will include real estate agents here who only cared about getting their commission. Me? I have turned people away because they don't have the right numbers. I don't see how these people can sleep knowing they got someone into a home they knew darned well that the home would be back on the market in a few years.

You are also correct that "life happens" and people lose their jobs, spouses or get transfered. But if everyone played the "what if" game, no one would be in a home. And this is probably one of the main reasons that people don't invest in a home. It's also the reason why I insist on a decent downpayment.

Sir, you can have the last word, I am done for today.

God speed.

Terry
2 votes Thank Flag Link Wed Jan 28, 2009
John,

There is a small margin for your lower price/higher interest model. It's greatly dependant on if the prices fall further. If you were to wait until prices begin to rise again, then it would be too late. Assuming that you are correct, please explain when the right time would be. The fall in prices is also very depedant on location. There are quite a few areas which have not been affected as much as others.

Most people tend to stay in their homes for seven years or more. Within that timespan, most homeowners will have an appreciation in the value of their home. But if you are going to buy a home and sell it in a few years, you may just be at a huge loss. Home ownership is a long term and very rewarding commitment and trying to play the stock market tactics with the purchase of a home just is not the way to do things.

If you wish to live in a home, do so. If you wish to purchase a property for income, do so. You may not be able to flip a property as you used to be able to, but you can rent them out or just not get as much of a profit in selling. Volume is more of a key.

Terry

Quite a blog we're starting.
1 vote Thank Flag Link Wed Jan 28, 2009
John The Bruce,

You kidding, right? Everyone knows that you "buy low, sell high". Yet it seems that this philosophy is out the window when it comes to purchasing a home. People couldn't wait to buy a home when they were over valued.

Now, when the prices are at or very near bottom, no one wants to touch a house. Now, when interest rates are at its lowest in decades, no one wants to buy a home. The government is willing to "give" you $7500 off the bottom line of your taxes to first time home buyers. Sure you need to pay it back, but it's an interest free loan.

Should you buy a home without 20% down? I don't think so. Yet people have bought homes with 0% down for years, which is just one of the MANY reasons why we are in this mess in the first place.

Decent credit, plenty of down payment, there is no reason NOT to buy a home. Unless you lose your job, of course. But we are no where near the problems we had during good ol Jimmy Carter.

Terrence Charest, e-Pro®
REALTOR®
Century 21 Associates
905 Easton Road
Willow Grove, PA 19090
Cell (Preferred): 267.614.1494
Office: 215.659.5250
Fax: 215.659.5550
tcharest@HomesForFreedom.com
“Century 21 is the number one franchise site on the Internet”
1 vote Thank Flag Link Wed Jan 28, 2009
Steve,

Take a deep breath.

You have a very risky job in this economy. Home building has dried up, commercial building has stalled and residential renovation crashed with the credit market.

Do you really want to get married to a house right now? Renting during a housing downturn is a no brainer. Buying now will guarantee you a negative return on investment for several years to come.

You're young. Take advantage of compound interest. Save the difference between your rent and a monthly mortgage payment and plow it into a high-yield savings account or CD. You'll come out much further ahead versus buying a house.

Good luck,
-John
1 vote Thank Flag Link Tue Jan 27, 2009
Good Afternoon Steve,

I have read and re-read some of the comments/answers to you and I truly believe that everyone knows what is going on in the country at the moment, and parts of the world for that matter, I am originally from England and I have just returned from there in December and it is no better than it is here.

However, I think we need to take a step back and listen to what you are saying. You are obviously a grown up, with an idea of what you want out of life, and you want to be a home owner, which I applaud!

I am sure you have done your home work and know what it takes to make owning real estate work. If we all waited for the "perfect" time for "everything" no-one would want to buy a home, go to college, start a family, get married, move in together, change jobs and whatever else we do in life.
Do we all want to be the proverbial Ostrich and keep our head in the sand until it just happens to be the right time!!!? I think not, so to you Steve for starting to think for your self, my first answer yesterday still applies, good luck to you my fellow!
0 votes Thank Flag Link Wed Jan 28, 2009
Terry,

To address your other point as to when would be a good time to buy. This whole thing about buying now lest you miss the radical upswing in prices that’s bound to be just around the bend is hogwash. This is just another flavor of the “buy now before you get priced out forever” mantra that was bandied about during the 2000-2005 mania. Both arguments are non-starters.

Prospective buyers need not worry about missing the boat on the “recovery” side. If the last real estate downturn is an indicator, prices will bounce along the bottom for more than 10 years prior to any meaningful upturn materializing. Any upturn will be U-shaped, not V-shaped. And any future recovery will be so slow moving that even a monkey could time it.

The slope of the housing downturn is increasing. Inventory is increasing. The “Pros” keep calling bottoms and the market just accelerates right through them. Prices are cratering. Buying now or calling the bottom is laughable for several easy to see reasons:

• Per U.S. Census Bureau there are over 2.3 million vacant homes - right now. In absolute and percentage terms, that’s an all time high.

• The number and rate of foreclosures is increasing. I don’t think we’ve seen any improvement in year-on-year foreclosures at any time during this 3 year downturn.

• A large swath of ARMs (option adjustables) have not experienced even their first adjustment yet. I.e. the party is just getting started, friends. Negative feedback at it’s best.

Until this (increasing) slack can be taken up, there’s no point in discussing a bottom. We won’t be there until these vacancies and foreclosures work their way through the system. Try 2010 or 2011…maybe. With the government involved, the pain will be more protracted.

Good luck,
-John
0 votes Thank Flag Link Wed Jan 28, 2009
Terry,

If you plan on buying and staying for 7-10 years, you’ll most likely be fine. As long as you don’t get transferred, lose your job, get divorced or wind up in a situation that forces you to sell for some other reason.

I think the idea that buying now for the sake of getting a low interest rate has pretty much been thoroughly debunked.

Example 1: A $320k loan at 10.5% (10.5%!!!) still has a lower monthly payment than a $480k loan at 6.5%.

Example 2: A $480k loan at 8.5% still has a lower monthly payment than a $640k loan at 5.75%.

Reference the thread below, please.

Good luck,
-John
0 votes Thank Flag Link Wed Jan 28, 2009
I have used the starting point of a $100K loan with 5% for 30 yrs for this. Yet I am sure that there is an actual formula for figuring this out. Anyway, in order just to break even, there would need to be a 2.6% reduction in the loan amount for every 1/4% increase in the rate. Just to break even on the monthly payments for the principal and interest.

Terry
0 votes Thank Flag Link Wed Jan 28, 2009
Terry,

You're basing your arguments on 4 different false premises.

1) Prices are at a "bottom."

People here and elsewhere have been calling a bottom for the past 3 years. Guess what. We're still not there yet. Inventories are continuing to increase. When you see 12 to 18 months of declining inventory numbers then maybe we'll be there. Until then, it's wishful thinking, friend.

The short of it is that this downturn is accelerating downwards…not approaching a bottom.


2) Interest rates make the purchase.

So false I don't know where to start. I’ve written extensively about this particular fallacy on numerous occasions. The short point of it is this: it’s almost always better to pay a lower price at a higher interest rate than it is to purchase at a high price with a low interest rate.


3) “The government is willing to "give" you $7500 off the bottom line of your taxes to first time home buyers.”

Again, Terry, patently false. It’s an interest free loan that you pay back to Uncle Sugar over several years. It’s not a tax credit.


4) Being a construction worker is a safe job, employment/income-wise.

Pick up a newspaper, Terry. You won’t have to read further than the 2nd page for this point to be proven absolutely incorrect.

Good luck,
-John
0 votes Thank Flag Link Wed Jan 28, 2009
Oh, and as for Steve having a "risky" job. I think that's a total bunch of bunk. Homes being built - down. People fixing up their homes - up. It's all a matter of symantics.
0 votes Thank Flag Link Wed Jan 28, 2009
Steve,

Contact a local mortgage broker, bank or credit union to get preapproved for a loan. After that happens, get in touch with a local Realtor who can represent you and your needs. Realtor, 99% of the time, will be paid from the seller's side. Getting an agent to work for you will rid the need of calling a bunch of different agents looking at different properties.

Please give me a call or email me if you need assistance.

Terrence Charest, e-Pro®
REALTOR®
Century 21 Associates
905 Easton Road
Willow Grove, PA 19090
Cell (Preferred): 267.614.1494
Office: 215.659.5250
Fax: 215.659.5550
tcharest@HomesForFreedom.com
“Century 21 is the number one franchise site on the Internet”
0 votes Thank Flag Link Mon Jan 26, 2009
Good Evening Steve,

First of all Steve it is great to know you want to be a Home Owner!
The best advise I can give you is to speak to a Real Estate Proffessional in your area, they can then advise you about the whole process of buying a home. Contact an Accredited Buyers Representative, you can find one in your area at http://www.rebac.org the agents with this designation have taken additional classes geared towards buyers and buyers needs.

If you cannot find anyone, please give me a call or email me and I will put you in touch with a Buyers Rep!

Good luck!
0 votes Thank Flag Link Mon Jan 26, 2009
Search Advice
Ask our community a question
Email me when…

Learn more

Copyright © 2014 Trulia, Inc. All rights reserved.   |  
Have a question? Visit our Help Center to find the answer