Thursday, February 25, 2010

Living in Narnia and a Question

That's what it feels like around here. Always winter, never Christmas (okay, it was Christmas but that was like 2 months ago and before most of the storms.) We are getting our fourth serious storm this season. FOUR!!!!

Most of it is coming today and tonight, so there's only a few inches right now. I do have to admit that it's pretty. All the dirty, ugly, gray snow is covered so it looks fresh and white and with the snow sticking to the the tree branches and and everything it looks gorgeous! Most of the schools are closed already (hubby's didn't, sad) so I was the only person on the road. No kids waiting at bus stops, no school buses, nobody on the road but me. It was nice and kinda freaky...kinda like Narnia because no one wants to be out and seen by the witch.

I just love how the storms have impeccable timing as to ruin my plans every time. The first time we had tickets to the orchestra in the city. Two feet of snow kept us from going. The second/third time we had an overnight retreat with the organization I volunteer with, followed by a game night with my parents and cousin and her husband. Four feet of snow in under 5 days. And tonight my besties and I made plans to go out to dinner well over a month ago since we haven't seen each other since Christmas. AND I was going to stop off at another friends house who lives close to where we were meeting to see her and her two babies.

If hubby's plans get canceled I think I'm going to try and talk him into watching The Lion, The Witch, and The Wardrobe. :-) Especially since The Office isn't on. The Olympics are great and all, but two weeks is kinda a long time, don't you think? How many times can you watch someone go down a hill on skies? Or skate around the ice? I'm not an Olympic hater, really I'm not.

The up side is that we haven't been spending money. I've been bad at updating my sidebar tracking our no spend days, but they have been accumulating, I'll update at the end of the month.

Now, I need so advice from y'all...

Our realtor contacted us a few days ago to see if we would be interested in trying to take advantage of the $8k credit. After talking with him, he suggested that we talk with a mortgage lender about getting pre-approved and seeing getting her opinion on the situation.
As I've mentioned before, our area is extremely expensive, but we are still hopefully to get a home for around (preferably under) $200k. We really would like to put 20% down, but say we put $1000/month into that fund, we're looking at two years! By then the market will most likely be on it's way back up, and we will need more money because the houses will be more expensive.

Looking on houses online there's a single family home going for $185k right now. 4 bedrooms, 2.5 baths, needs some work, it looks like it hasn't been inhabited for awhile, which is probably why it's so cheap.
Assuming we would get no assistance from the seller if we go with the FHA loan (for first time home buyers) we only need 3.5% down + the closing cost = almost $15k. Which happens to be what we have. The monthly payments (tax, insurance, PMI, etc.) would cost of $1450/month. We currently pay $900 in rent, so that's an increase of $550. But, we were saving $1000 for the house, so we would still have $450 that could be saved. Plus, we'd have the $8k to used toward fixing it up.

Or we could use the $8k as part of the down payment, which would be about 8% down and a monthly payment of $1370.

If we were able to put 20% (we would need about $42-43k) our monthly payments would be $1133. Now, when we reached 20% with the first two examples we could drop the PMI, which would lower the monthly amounts by a little over $100.

So what do you think? Should we start looking with a small down payment but we'll get $8k, or should we wait until we have enough?

This is all if we can find a house at this price. The sample house might have a leaking roof, or foundation issues, or something else big wrong with it, or someone else might snag it, so if we can't find something, then obviously we aren't buying.


Brooke said...

that's a tough call. we were able to find ours at a steal of a price, so the 20% down wasn't a challenge.

i guess my main question to you would be about your savings - how much of a slush fund would you have after putting 3.5% down on the house? if you don't have some to play with - i'd pass on buying right now.

i can promise you a million and ten different things will pop up that'll you'll need to buy or fix or change...

Sara said...

I think unless you REALLY like the house, I would pass on buying it.. Don't buy just for the sake of the $8,000!

The Lost Goat said...

$8K sounds like a lot of money ... but do realize that it is 4% of 200K (4.3% OF 185k). How sure are you that houses are going to go up this much in the next two years? How much will you save over a 30 year mortgage if you are able to put enough down to avoid PMI? Is it worth jumping when you aren't ready for a 4% discount?

Live Simply- Live Well said...

i agree--the 8k sounds like a ton, but dont buy a house for that alone. I totally get the angst and frustration and desire to own a home, but unless this was my dream home and i could not let it go, I would walk away and keep saving.