Buying a home and going to grad. school!

Asked by Nicole A, 91730 Fri Jul 13, 2007

I'm 23 and will be going to be going back to graduate school in the fall with a full load of classes. My husband and I are ready to purchase a home now, and are fearful of rising prices and rates in the 2 years it will take to graduate. But my biggest worry is not working enough to support a $2,000 per month mortgage. Any real world advice out there?

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7
Chris Tesch, Agent, College Station, TX
Fri Jul 13, 2007
Dear Nicole,

One of the first questions I would ask is how much you would be paying in rent? Is there a sizable difference between the cost of rent and the cost of the mortgage? If not it might be a nonissue.

Secondly, is the market you are considering buying in increasing or decreasing in price? If it is declining then purchasing would probably be a bad idea.

Thirdly, will you be living in the area for at least 2-3 years, and optimally 4? If not, there is a chance that you will not be able to come out even on your sale.

It is extremely important to talk to a local agent in the area you are considering purchasing to get the answers to some of these questions.

Here at Texas A&M I've served many, many grad students and gotten very good results for them. There are some that I discourage from purchasing because I believe they will lose money.

Good luck!

Chris Tesch
RE/MAX Bryan-College Station
526 University Drive East
STE 101B
College Station, TX 77840
http://www.ChrisTesch.com
Chris@ChrisTesch.com
(979)574-1084
Web Reference:  http://www.ChrisTesch.com
2 votes
Diane Wheatl…, Agent, Upland, CA
Wed Mar 19, 2008
Well I don't have a crystal ball or anything like that but I do have one advantage in helping you make your decision. I also live and work in Rancho Cucamonga/Alta Loma. I would not be fearful of rising home prices for at least the next year or two. It is an excellent time to buy. Pricing is dipping as we speak and there are some phenomenal opportunities on the market. And, the nice thing is you don't have to hurry up and grab one before it is sold because we have so many available! (sorry sellers!)

Depending upon your likes and dislikes the two of you could find a very nice home for under $350,000 and if you would consider a condo then you are looking at under $300,000. Depending upon the loan program you choose your monthly payment could meet your needs. If you are going to sell your home in two years after you graduate then you may want to use a different strategy in your financing to keep your payment down.

Be aware of the mello roos tax neighborhoods in Rancho Cucamonga. Some are moderate and some are outrageous. Just as you should be sure to check out the amount of the association fees for local condo developments or planned unit developments. Try to put at least 20% down on your purchase to avoid PMI insurance (a fee in additional to the principal and interest portion of your payment). Conserve your cash and ask the seller to pay your closing costs up to a capped amount. And, thank goodness for the recent change in the FHA loan limits!! You are able to quality for a FHA loan now, something we haven't been able to offer buyers in many years! You can really work some great deals right now with the tremendous influx of homes available and especially those homes that have been on the market awhile. Those sellers are itching to see an offer! Good luck.

Hope that helped a little. http://www.moveupproperties.com
1 vote
Joan Patters…, Agent, Rancho Cucamonga, CA
Mon May 26, 2008
Hi Nicole,
Great answer Diane :)
As always!
I agree with everything Diane said. I don't think home prices will rise for a long time. They are still dropping as we speak. Actually, if you check out the rent prices for Rancho Cucamonga, you are lucky to find a two bedroom apartment for 1500-1800, so why not put your hard earned money down onto a condo to start? But, like Diane said, beware of the HOA fees. Some of them are very high. Make sure you know how much it is and what it covers. Some of them cover water and trash and the pool and spa, while others only cover the common areas. Some are as low as 99, and as high as 400. That can add a lot to a payment. So, if you are concerned, you could look into a small house which would work as well. There are many nice ones available right now. Please don't feel like you have to buy something right now, but remember it is a tax write off and you can start building equity. Let me know if I can help in any way! You can search the MLS for free at my web site at http://www.calljoan4homes.com
Thanks,
Joan Patterson, B.A., A.S.P., G.R.I., Realtor
Keller Williams Realty
8250 White Oak Avenue, Ste 102
Rancho Cucamonga, CA 91730
951-204-1864
0 votes
Michelle Car…, Agent, Coppertino, AL
Fri Jul 13, 2007
Ask agents in your area what they expect prices to do in the next 2 years for the properties you're considering. For example, in my area of West San Jose, we'd expect prices to soften a bit in '08 IFit follows the usual 10-year trend. You need to calculate the "fear factor" cost for you; if you're too anxious about the bills, it may not help your educational venture. Also, if you need to work more and extend your education over 3 years instead of 2, what financial impact does that have? Just figure out exactely which option are you more worried about.
0 votes
Bruce Lynn, Agent, Coppell, TX
Fri Jul 13, 2007
Will you move when you finish school? Will your income change drastically? If those 2 questions are yes then wait. If they are no, then buy now. There's no reason you can't work full time and go to school full time. Lots of people do it and I always made the best grades when I was crazy busy like that. If you buy, can you take in another grad student for 2 years to help pay the bills?
Web Reference:  http://www.teamlynn.com
0 votes
Rebecca Cham…, , Palos Verdes Estates, CA
Fri Jul 13, 2007
See what the tax breaks would be from having the allowed write offs of interest and other home buying costs vs. the cost of not owning a home and paying rent. Sometimes people realize they are paying income taxes in a similar amount. Have your tax person do a comparison for you, the cost of not buying and the cost of buying. You definitely don't want to be in over your head, but if you have the numbers in front of you, you'll be better able to make a good decision for you and your husband. Good luck!
0 votes
Nancy Kenlon, Agent, Orchard Park, NY
Fri Jul 13, 2007
Hi Nicole,

If the prices in your area are still steadily increasing and you are fearful that you will be priced out of the market by the time you have completed school here are a few things that may help. One, talk to a local experienced Realtor in your area to get a real grip on the percentage your area is increasing in price. Two, if you feel that the prices are increasing at a rate that exceeds your future buying ability, perhaps you can look at either an investment property (multi-family) that would have a tenant help you pay your mortgage until you graduate and then you can purchase your "goal" home. Or you can look into financing that would allow your payments to be lower during the first years of your mortgage and then increase later as your income would do once you've graduated. Hope this helps!
Web Reference:  http://www.wnyhomesales.com
0 votes
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