Axiom Home Page Forums General Discussion The Water Cooler Totally OT: financial advisor

Peter makes excellent points.

Interest rates are quite low right now, and, short of a 1929-style event, it is highly unlikely that values will drop any time soon - banks, consumers and county auditors have far too much at stake in keeping home values stable.

One other thing not yet mentioned is that home mortgage interest is the last great American income tax deduction. By reducing your taxable income by the amount of your interest payments, you effectively reduce the net out-of-pocket cost significantly, especially during the initial years.

Finally, the amount of property taxes and utilities you pay as a homeowner varies WILDLY - even within small geographic areas - due to not only the intuitive things like levies, bond issues, and park districts but also utility rates controlled by mutual companies, cities or other private or government entities. My sewer tax is ~$100/mo for no particular reason except that my city can raise that rate to increase revenue under the public's radar and without statutory interference.

>>> My sewer tax is ~$100/mo for no particular reason except that my city can raise that rate to increase revenue under the public's radar and without statutory interference. <<<

That's wild Tom, and I though we we're nailed pretty hard with a state mandated 'Windstorm' insurance for those living on the barrier islands here in Florida. Fortunately our local government hasn't gone hog wild with outlandish taxation ... yet.

Peter;

Leesburg has good deals at homes, but, unfortunately I have to stay closer to DC, as my wife works downtown and has to commute every day. Hard to find anything worth considering around here. Now I will be looking in Lorton area, and possibly Burke, but not further away from DC. My question is: would we be able to find a nice TH with monthly payments less than 2K??

I may be wrong, but it seems to me that things even out. When interest rates are low, housing prices tend to be hght. When interest rates are high, housing prices tend to be more reasonable. However, this is just a limited experience after buying two houses in 3 years.

thyname, depends on how much you can put down. Since mine is a first home and I only started saving about 2 years ago, I wasn't able to put down 10%.

Rumor has it that Leesburg will get a metro station within 2 years. My company apparently dropped a load of earmarked cash on the Transit Authority to 'encourage' them to make it happen. When it happens, it should raise property values. I'm crossing my fingers.

Not sure about your area, but I was able to buy my first home this past September with nothing down and the buyer picking up the closing costs. It's possible in Nashville, anyway.

Spend a little time talking to a realtor in the area and see what options are available to you. My situation was similar to yours in that I cared less about the overall price of the home and I was more concerned about a specific monthly figure I had in mind. The market may have fizzled a little bit, but I imagine there are still plenty of ways to get you into a home.

A fizzling market is a good thing for a buyer - at least in the short term. Houses are staying on the market longer, inventory is up, there's less competition, and many sellers have already found their next homes. All these factors put the cards squarely into the buyer's hand.

"Fizzle" probably wasn't the right word. Over the course of the summer I gradually watched rates climb and I didn't end up with quite the same percentage on the good faith estimate that was written in May compared to when I closed in September. All the same, rates are still better than they'll be this time next year (or maybe for some time to come). All of your other points are right on target.

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Not sure about your area, but I was able to buy my first home this past September with nothing down and the buyer picking up the closing costs. It's possible in Nashville, anyway.

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That is a pretty sweet deal. I had the same deal with the mortgage company in Brentwood, TN.

When I lived in Ohio, I remember being able to do the same thing. However, I think your income and credit score plays a huge role on what type of mortgage you are able to get. I don't think I would have gotten the loan if my credit score was in the 500s and I made half as much.

Obviously that should have read, "the seller picked up the closing costs." Oops. Y'all knew what I meant.

And your comments about income & credit scores are on the mark. My salary doesn't suck, but it IS pretty modest. One thing I did focus on was spending several years building my credit score up to a pretty respectable level. I ended up with an 1150 square foot 3bdrm/2bath house a little north of Nashville. For a single guy, that's plenty. And for my first house, it was all I could ask for.