Question
Should we buy this house? Please help! Need financial advice.?
Hi all, I want to ask Suze Orman this question, but she's not around so i'm asking you. I was wondering if we should buy this house. It's in a good part of the country (Cheshire, CT) known for good schools and not going downhill anytime fast. The house can easily be appraised at $525K even in this bad market. We can buy it for $440K. Here's our financial breakdown: We have $80K in cash (although I would only put 10% down) and have excellent credit. We gross $130K/year. My husband puts 20% into his 401k and I put the max into a Roth IRA per year. After everything we bring home $6400/month. The house will cost $3200/month (PITI included) and our bills can easily be $1500/month. This leaves $1700/mo for gas, food, extras, vacations, EVERYTHING. We will never be able to save again. We will be the working poor. Did I mention we will never save again? BIG problem for me personally. So let me ask you, what would YOU do? We don't like budgets particularly. We're not extravagent but we do want what we want when we want it, you know? We like to invest, save, and live a little. The problem, this house will be all the "living" we're going to do for a while. I should mention that we currently live in this house now (renting - will be sold to us after owner finalizes divorce). It's a great house, and we do like it a lot. It's full of our stuff and the thought of moving again is overwhelming. So, again, what would you do? I'm looking for good financial advice. We're in our mid-30's. Shouldn't we be saving more? This is a big, beautiful house. It's been completely redone and is on 2 acres. $350K doesn't buy anything in Cheshire, maybe a small, beat-up piece of crap. Really, even the ugliest houses are $400K. This is definitely the BEST thing around for the money, DEFINITELY. Also, we already live here. We rent the house that i'm speaking of. We're all moved in and everything. It will be ours to buy when the owner gets a divorce.
1 year ago - 2 answers
Best Answer
Chosen by Asker
With your incomes and the amount of money you have as a down payment, you should be able to qualify for this home fairly easily. Based on the scenario you have given, if you are offered the opportunity to buy it at that price, especially if you can make the purchase and keep the amount of money you have going into your 401k and your Roth IRA, you should not hesitate to buy the home. Your 401k and your Roth IRA is a big part of your savings and it looks as though you have put a lot of thought into your future. Since you already live in the home, it appears to be a very good proposition, especially if the property can appraise at the dollar amount you suggested. It's great that you calculated your payments to include your taxes and insurance. With your income and your down payment, you should do just fine.
Source(s)
MoneyMatters101.com
1 year ago
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Other Answers
Another financial adviser - Dave Ramsey - advises people that when they buy a house - not to spend more than 25% (1/4) of their take home pay on the mortgage and then to only purchase the house on a 15 year fixed. If you can't save..how will you pay for the maintenance on the house? How will you replace the hvac system when it goes out? Will you be able to replace the water heater? What are property taxes on the house? How about home owners insurance. It does not matter what the house will appraise for. If you can't pay for it- who cares. I'd only do it if you can do it on a standard mortgage - fixed rate, 15 or 30 years. None of that hybrid- interest only crap. Also, have you been pre-qualified? You may want to get pre-qualified and make sure you would actually qualify for this mortgage now. Also - have a realtor or two come out and give you an idea of the market value of the house.
by MSAD- 1 year ago