(no subject)

[yakk0dotorg]

Today Teresa and I spent the day driving all over Shelby County looking at apartments. I've realized during the last premarital counseling session on Saturday that my desire for a house isn't realistic considering the time we're going to be in Memphis after we're married (2 years probably) and you really have to have a house for about 5 years to break even when you sell it. We looked from midtown, to Germantown, to out further east off Hwy 64. I really like the ones out east, but I'm concerned about the commute. We're going back out this weekend to look at some that were closed today, and then go over the ones we like. My lease is up at the end of April, so it's not like we'll be getting anything immediately. It feels good to be on top of things.
Tomorrow school starts back. I'm taking 9 hours, Business Statistics and Database Management on Tues. and Thurs. and Application Programming on Monday and Wednesdays. Which means I'm going to miss the Memphis/UTK game. It's all good though. I'm looking forward to the classes now and the light at the end of the tunnel is getting brighter. =)

Comments

[aardwolf.livejournal.com]

You don't have to have a house for 2 years to "break even". Assuming it's in a decent neighborhood, all a house does is appreciate. In the past 2.5 years, I've accumulated $20,000 in equity that I can use towards the down payment on a new house one day.

[yakk0dotorg]

But in the two years we would be living in an apartment, we'd be able to get completely out of debt and would qualify for the best rates at the time we're ready to buy. Right now my credit is messing us up and we only qualify for an 8 or 9 percent mortgage.

[aardwolf.livejournal.com]

My house has accumulated 11% value in 2.5 years. In that time, I've spent 5.85% a year in interest. Raw numbers wise, I've spent like $22,020 in total cash and I'll get back around $15,000 of that. As a pure investment, it doesn't make sense... but the big difference here is that I'm living here. In an apartment that costs you $600/month for 24 months, you've just thrown $16,800 down the crapper.

In an apartment, you lose 100% of what you're putting into it. In a house (with a 30-year loan), you'll end up getting back a decent chunk. Even if the house doesn't increase in value (but doesn't depreciate), you'll still get back around $100 a month.

So, to recap. In my situation, I "lost" $7,000 of what I paid. This technically means I only paid $233 a month for a place to stay (since I got the rest back.) Getting a similar sized apartment (at ~ $700/month) would have "lost" $21000 in the same time period.

[azngal324.livejournal.com]

They problem is, you have a 5.85% a year interest. We've talked to a loan agent and I've looked around, and at best we'd get 6.25%.

I also realize that what we spend on an apartment is money we will never get back. However, unless we can put down 20% to buy a house, we'll have to pay "penalties" in the form of mortgage insurance. Since we're going to be spending all of our money on the wedding, we'd be hard pressed to save another $20,000 for a down payment. On top of that, the first payments are really only paying the closing costs.

On top of everything, you bought a brand new house. We don't want to move too far out because worst case scenario, we'll be done with school in a year and have to either sell or rent. It would be easier to rent if we lived close to UM/UT. That means, we'll probably move into a house that is at least 15 years old. Even if we got a great interest rate, we can't really guarantee that we wouldn't put in a big chunk of money fixing the place up.

I've calculated the numbers also. If we bought an $80,000 house versus renting at $800 a month, after 2 years, we would've only saved $2,000. Assuming that the house actually increases in value, if we sell after 2 years, we'd only be breaking even. Again though, that is assuming that the house is in immaculate shape and we would have no repairs to do on the house. With school, Jeremy's school, my dissertation work, our new marriage, and the impending having to find a post-doc in another city, a house is something that we don't need.

[aardwolf.livejournal.com]

Well, I was just looking at it as a business man would. If you had two choices... one of which made you break even and one which lost you $19,200 over two years (the apartment), you would pick breaking even 10 times out of 10.

[aardwolf.livejournal.com]

By the way, the difference in 5.85% and 6.25% in interest is $20.62 a month.

[yakk0dotorg]

There's also maintience to consider. Right now I don't want to have to deal with everything that would go with something like a pipe burst, or an A/C problem. With an apartment, that stuff is covered. So it's not like we're not getting any value for our money.

[yakk0dotorg]

we're most likely not going to get a rate that low. Best case is closer to 8% interest.

[aardwolf.livejournal.com]

Ok... that does make more of a difference. That's $116 extra in interest every month (and $116 less in principal, but you get the point.)

Anyway, I just wanted to make sure you guys considered all the options. It sounds like you have done some research...

[yakk0dotorg]

yeah, as much as I'd like to get a house, it's really not in our best interest until my credit's cleaner and we're ready to be settled for a while.

[tnjade.livejournal.com]

IF you do decide that you guys want a house, I can give you the name of my realtor (who helped me find a mortgage specialist who THEN helped me find a good rate). :)

[yakk0dotorg]

thanks, but we've already gone through that with a realtor that also works at my mom's school. The mortgage guy told us that my credit would prevent us from getting a good rate.

[tnjade.livejournal.com]

Gotcha gotcha...Sorry to hear about your credit, but it's good that you've been getting it under control. :)

[yakk0dotorg]

thanks, after we're married the debt is going to get knocked out pretty quickly. Not paying duplicate bills helps the situation a lot.

[tnjade.livejournal.com]

Heck yeah!