Profile picture for phillywafer

Am I crazy to buy now?

I will be closing on a home in a couple of weeks.  The house is 150,000, 59,000 less than it was six months ago. 

My interest rate is 6 percent and the mortgage will be 1,100 a month.  I already have a roommate to move in with me,

so half of the mortgage will be covered by someone else. But, with the economy making a rapid slid into hell am I crazy

to buy? And, could I back out at this time even if I wanted too?

  • October 07 2008 - US
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (91)

philly- do you have any contingencies left in your contract? If not, be prepared to lose your deposit if you walk, or worse, be sued for specific performance and be forced to close. What are current rents in your area? Much lower than your mortgage payment will be? (disregard your roommates contribution).

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Where are you geographically?

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Bruce Parham

Philly: Do you need somwhere to live? If so, then why not buy a home which provides one of the few tax deductions available. Also, you must consider the "penalty" for non-perforamnce if you back out of the contract. Assuming you put an earnest deposit down on the property, will you get the money back if you don't go through with the deal? Also, consider the amount of time you plan to stay in the property. At some point in time, the market will come back & property values will begin to climb once more. If you feel you are purchasing the property at what you might consider "Below Market Value", buy the home, enjoy the home, & take the interest rate tax write off.... 

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Philly, If you can afford your share of the mortgage payment and plan to stay in your home for at least the next 5 years, I would say you are probably safe.  The only problem I see is that you have a roommate and if she doesn't stick around for as long as you need her to stay this may create a financial hardship for you.  On the other hand is your payment in your new home about the same as what you are paying now?  You also need to take into account the tax benefits and determine if you will come out with some postive cash flow.   I know is scary to buy a house in these times, but it is a great time to buy at low prices and even if prices continue to dip some if you stay in your home over at least the next 5 years and can benefit from the tax write-off while you stay, at the end you should be ok.   I would love to know what you decide to do and why...  many of my buyers are facing the same concerns and I like to keep a pulse on the buyer's view of the current market.   Best of luck to you!

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If you need a roommate to split the hosue payment you probably are not in a good spot to be buying a home. If you are in a declining market I would not buy anything until you see some stability.

  • October 07 2008
  • 2Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for DR. WARBUCKS

I was in your position a few weeks ago, my relator talked me into buying, but the more research you do, the more it looks like a bad idea. 

It was hard to walk away from the low interest rate I had locked in. But I figured if interest rates go up and prices go down, my payment stays the same, but when I sell Im up all the money that the house depreciated (which could very well be substantial) with nothin out of pocket.

No one seems to think privces are going up anytime soon. Everyone says were in a recession. Back in the dotcom bubble recession prices dropped and there weren't even any foreclosures to push them down.

Foreclosues are still high, the bailout isn't helping them, it's not even helping the stocks. It sounds like this season will be a ruff one on the economy all around. And it's the slow season for real estate.

I got an additional house inspection, and used any little thing they found as an excuse to get out of the deal. I had to pay for the inspections and the appraisal, but that was it.

I just don't see any reason not to wait.

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for urge
  • urge
  • 207 contributions

You have to be suicidal to buy in this market. There is a depression approaching and you don't want to be cashless.  That 500k house will be gladly sold to you for 10 pounds of rice if the owners are starving.

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Sir Allan

     If you have 20% or more as down payment, I would strongly urge you not to purchase. If you have less than 20%, you may want to consider buying or the program you want to use to purchase could disappear.

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

As another poster mentioned - read your contract. What are your contingencies?

 

The others are right - if you plan to stay in the home 5 or more years and would be paying close to the same in rent - then it would probably make sense. You will want to make sure that you also have the money to cover a month or two of the whole payment - should the roommate move out and you need to find another.

 

The loan rates are still considered good though and prices are down. Although the market is expected to stay down the next couple years, certain areas and neighborhoods always hold better than others.

 

 

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for plarusa

..You have to be suicidal to buy in this market. There is a depression approaching and you don't want to be cashless..

 

I certainly don't think so. It is perfectly fine to buy a house, now or at any time, as long as you like the house, it is well located, and you can afford the payments. The market is more difficult for sellers, so you can be more selective about what you buy, though you might find the good stuff still up there pricewise. Also, financing might be a problem, from what I hear. Once you do buy the house though, stop worrying about it. Keep making your payments on time, and you will be more than fine in the end.

 

The roomate is a good idea, if you can tolerate sharing the house. Apply the rent toward the principal, so you are done with the payments faster.

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

plarusa: "It is perfectly fine to buy a house, now or at any time,"

 

  • October 07 2008
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

''The roomate is a good idea, if you can tolerate sharing the house. Apply the rent toward the principal, so you are done with the payments faster.'

 

Plarusa please clean the smegma from your eyes man! Did you not read? He posted the room mate will be covering 1/2 the mortgage. He can't go it all alone for 30. How the hell is he going to pay it down faster?

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If he qualified for the loan alone, then the lender will make sure that he can make the payment and the taxes alone, its just whether he actually feels comfortable with that and if he has job stability. 

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for space_acer

Spleng!  LOL ! poetry at its best! 

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Rooski2u

"Plarusa please clean the smegma from your eyes man! Did you not read? He posted the room mate will be covering 1/2 the mortgage. He can't go it all alone for 30."

 

Hmmm.........nowhere did the OP state he couldn't swing it alone.  He just mentioned he will have a paying room mate.  I'm pretty certain he didn't use the room mate as a co-borrower, so he could qualify.  You should read more carefully before launching an attack.

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

The decision "To buy or not to buy" is weighed heavily upon by your time frame.  Do you intend to stay in your house long-term?  If so, take advantage of the low home price and interest rate.  Ride out the recession and sell in the next boom.

 

As to whether or not you can back out, that's a question for your broker...you did use a broker, didn't you?

  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

'You should read more carefully before launching an attack.'

Obtaining a loan is one thing but being able to carry the note and expenses that come with owning a home is another. But you would not know that being that you just purchased your home. In a still depreciating market prematurely I may add. How is that working out for you Mr Riverside?
  • October 07 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Rooski2u

"How is that working out for you Mr Riverside?"

 

So far, so good.  Based on what's been selling nearby, the value (compared to purchase price) seems to be holding well, and we've never been happier as "non renters".  Not that it matters, but our Zestmate has been increasing for the past few days.  I take Zestimates with a grain of salt, but it's still fun to watch.  We finally installed a new front lawn, so we no longer look like the neighborhood foreclosure :-)  At this point, If you asked me if I would do it again, I'd say "yes".

 

On a side note, I recently received the new property tax bill.  I expected the amount would be based on the purchase price of 260k, but they have it assessed at 392k.  I called the assessor's office to inquire, and the gal told me it take about 6 months after a sale for the new assessment to correct (we closed in june).  She said the assessment is based on the 2007 tax year with the last sale price being 458k, and it was reassessed at 392k because of the prop 8 "decline in value" adjustment.  It seems the county certainly is not being realistic on these adjustments, and they are being flooded with calls.  It took me forever to get through.

 

Anyways, I still got a beer with your name on it, over here!

  • October 08 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for phillywafer

Hey, thanks for the many responses. I'm actually able to afford the mortgage by myself. My best friend actually asked to move in with me because I will be living so close to the center city area and she was tired of commuting.  The house is in great condition and big enough for at least three people. I had planned on using her portion of the mortgage to just horde and save but I see that it was suggested that I apply it towards the principal.   I plan on being in the house for at least ten years. Hopefully, this will be more than enough time for the housing market to recover.

  • October 08 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Rooski2u

Philly,

 

It sounds like you've got a good grip on everything, and openminded about the market.  I'm curious as to how your mortgage payment compares to the cost of a similar rental, in your area.

  • October 08 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Ok, well I'm going to go with a wild guess here and assume you are close to center city Philadelphia. Where are you? University City? Fishtown? Germantown? Strawberry Mansion? etc...Some of the Philly neighborhoods are pretty much as low as they can or will go (I bought my house in West Philly for 40k & it is habitable); some still have room to drop.

  • October 08 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Good for you for jumping in.  I am still moving people into homes and they are excited about the interest rates they are getting and the lower cost of the home.  Markets rebound and those that are planning on staying put for a few years should be taking advantage of this market, not running from it.  We will never recover if we use blanket statements about how bad it is and how everyone should run away and hide for a few years.  With the glut of foreclosures, a lot of people are going to be able to get their dream home for a great price that will not require risky lending to allow them to do it!

  • October 08 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for phillywafer

Rooski2u, the rent in this area runs from 600 to 2500  depending on the size and condition of the house. Rehabs in this area are generally renting for about 1,600. My home is a rehab but my mortgage will be 1,100. I'm glad you asked that questions because put in that context I realize I am coming out ahead by buying. Thanks!

  • October 08 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

It's really easy to come out a winner if you are referencing market rents in Philly. It is one of the few markets in the country where it is much more sensible to buy than rent across nearly the whole city.

  • October 08 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Hate
  • Hate
  • 300 contributions

ANYONE is crazy to buy right now. Houses are still way overpriced. Stop buying and let them slide back to 1980 prices.

  • October 08 2008
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

In watching The Dave Ramsey show the other night, he mentioned that this is the best time to purchase a home in the last 24 years - the caller that called in was 24 years old.  If ones goal is a 5 year plan this is a great opportunity for a buyer - there are many houses to choose from, a great opportunity to negotiate not only a great deal, but repairs prior to settlement as well.  Obviously, there are a lot of opinions out there, but the ones advising against it I am not sure what they are basing their opinions on other than what they hear on the news.  The fact of the matter is is through home ownership is one of the best ways to accumlate wealth over the years.

 

Your situation is ideal as you have a very affordable mortgage payment and someone to help you pay the mortgage as well !  That is beautiful.  Congrats on your strategy.  I think 3 to 5 years from now, those potential buyers that were too scared to buy will regret their decision.

 

For more helpful hints, visit our website and blog below:

 

[content removed by moderator for being self promotional]

  • November 02 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for klarek the realist

"In watching The Dave Ramsey show the other night, he mentioned that this is the best time to purchase a home in the last 24 years - the caller that called in was 24 years old. "

 

He's wrong.  This is one of the worst times.  There has never been a time in the last 24 years that it was GUARANTEED that what you are buying will continue to lose value.  That is just really horrible and inaccurate information, and terrible propaganda.  Then again, I heard this same bullcrap a year ago, two years ago, three years ago, etc.

 

It's ALWAYS the best time to buy!!!

  • November 02 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for klarek the realist

"I am still moving people into homes and they are excited about the interest rates they are getting and the lower cost of the home. "

 

Laura, I'm trying to sell my car right now.  KBB is $20k.  I think what I'm going to do is double that for the asking price to $40k, then reduce it by 30% to $24k.  Then people will get really excited about this deal!   It's not a deal if it's overpriced to begin with.  Either you know this and are lying or you're incompetent.

 

"Markets rebound and those that are planning on staying put for a few years should be taking advantage of this market, not running from it."

 

In other words, whatever you purchase is a risky investment.  Right?  And be honest, what will staying in it a few years do?  The market won't rebound during that time.  And they won't have paid off the mortgage balance any.  That would take about a decade.  So instead of "running from the market", what's the harm of sitting it out?  Every rent check I give to my landlord, I feel like I've probably earned about 10x that back in reduced purchase price when I decide to dive in. 

 

"We will never recover if we use blanket statements about how bad it is and how everyone should run away and hide for a few years."

Statements don't move the market one way or the other.  If they could, then you and your pompoms could just cheer it all back up to the bubble's peak.  And who says we need to "recover"?  What is wrong with houses finally being affordable after all these years?

  • November 02 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

If your buy v. rent property calculations are greatly in your favor (which does happen often in Philly, but it is not the case in most markets.....well, except detroit - but you need a bulletproof vest there), then buying is a relatively safe bet.

 

ALWAYS be cautious about taking blanket statements as advice. Whether its "best time to purchase a home in 24 years" of "this is one of the worst times". What is good for you may be different than what is good for a majority. Your situation and preferences combined with market conditions, economic conditions, political climate and the specific property will determine what is right (or wrong) for you.

  • November 02 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Tiffany said it well.  If ones time frame is 3 or 5 years or greater, than all this talk about the best or the worst itme is irrelevant.  What is also important is ones quality of life and personal goals.  The other option would be to pay rent for 5 years and have no equity built, no tax deductions, no $7,500 first time homebuyer credit and perhaps quality of life much less in a smaller apartment somewhere ?

 

I have personally purchased several investment properties in Philadelphia in the last year which were teriffic opportunties.  Properties are now rented out and am generating positve cash flow each month.  

 

Now homeownership is not for everyone such as the case with klarek the realist.  If one truly believes the sky is falling and home ownership is the worst investment in the world, than by all means, invest somewhere else and wait until the "time is right".  Unfortunately, by that time, prices will probably already will be going higher, there will be less properties to choose from, sellers will be less likely to do repairs and so forth. 

 

Another important note is obviously know the local market.  Our Philadelphia market is much different than Florida, California, Nevada, Arizona and the like...

 

[content removed by moderator for being self promotional]

  • November 02 2008
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

  1. 1
  2. 2
  3. 3
  4. 4