Would You Do It?

[Italiahaircolor]

Our daily update...

What an incredibly frustrating day. So upsetting.

The home was supposed to have an open house from 1-3 today. We showed up, with my parents, and low and behold the selling agent never showed. We were upset. We called my agent (who had church this morning, ergo was unable to come with us). She rushed over with the key code to let us in...and apparently the selling agent coded the box so that no one could access the property. Three calls to the selling agent went unanswered.

Our agent was upset but she''s working on getting us in. In the meantime we wanted three other couples come to see the condo (unable to get in, either).

Mark wont let me make an offer until we''ve seen the place, but I''m just sick over this waiting game.

 

[VRBeauty]

Date: 11/29/2009 6:44:16 PM
Author: Italiahaircolor

But, for example (and I am using fake numbers to make my point)...this town home is currently listed for 500,000 only one year ago it was listed and sold for 640,000. The owner, who was the sales manager for the builder, went under and the home was lived in for a mere 6 months before being repo''d. Homes in the area, not under foreclosure, are selling for around the 640 mark. Instantly upon moving in, we''d have a grand total of 140k in equity if we didn''t use a down payment (which we are). Do you see the ''smart buy'' here? Considering the house is move in ready, it''s an even better deal. Even if I had to float two mortgages for a year, I''d still be ahead.

I understand that you''re using fake numbers here (and I appreciate why you''re doing so) but the numbers and the ratio do matter. In my area, you wouldn''t be counting that 140k as "instant equity"... because the market hasn''t yet recovered to where it was a year ago and there are no guarantees as to when it will get there. It seems to have stabilized... prices have held steady and even crept up for the past month or two. However, some of that was probably due to people anxious to get in on the new homeowner tax credit. The major employers in my area (government) are still going further in the red, more layoffs are on the way, and many of the people who are finding jobs are taking less pay than they did before.

In other words, assuming that the old economics of homebuying (constantly increasing home prices) may not apply yet.

But of course, there''s an element of risk in any investment decision.

Good luck with yours!

 

[packrat]

If it were JD and myself, and we had the money, we would do it. The things that you mentioned about being closer to places, better schools etc, sound nice to me..regardless of it being a lateral move, if you have the money available, and when you finally get a chance to look at it, if it speaks to you-I''d do it. I do agree tho, that you should put your house on the market, whether you get this other place or not, so you don''t end up in the situation again, liking a house and not having yours sold, or anyone interested in it.

 

[steph72276]

Wow, the fact that you have another mortgage added into the mix scares me even more. But then again, I am very conservative with money and look at the worst case scenario. Just think about worst case....you buy this new property, then your old townhouse doesn''t sell for 2 years. Meanwhile, the first mortgage renters lose their jobs and can''t pay the rent and you can''t find other renters willing to pay as much. Then say Mark loses his job during this process and takes a year or so to find something comparable. Then you have THREE mortgages on ONE salary. Would you be able to make the payments? If so, then maybe it is something you should consider, but I wouldn''t be able to sleep at night being responsible for that many mortgages. It just seems to be the smart thing to stay in your place and save up for what you really want rather than a lateral move and taking on all that debt.

 

[Tacori E-ring]

Remember there are lots of good deals out there right now. This is just one house. If you are REALLY buying it as an investment than don''t get emotional. Also remember that selling your house NOW is a bad move financially. It is kinda a wash IMHO. So be honest with yourselves on why you are moving/buying another place before you have even listed your current condo. You may think your current home is perfect but others may not. You say you can afford it so if you are emotionally invested in this other place than I agree with your DH you need to at least see the inside before you make an offer. Sounds like it may be a multiple offer situation.

 

[NewEnglandLady]

Date: 11/29/2009 6:44:16 PM
Author: Italiahaircolor

Date: 11/29/2009 6:27:59 PM
Author: NewEnglandLady
I think the sheer amount of debt you''d be in by taking out a third mortgage would be too risky. It sounds like you really do like the townhouse, and I also get the sense that you are used to having what you want

, but the bottom line is that being in that much debt is scary. I know that it would only be temporary, but you would still have the first mortgage(that is being rented for then next 2 years). Do you possibly have enough in savings to pay the first mortgage off? Then you could sell your current place and if this townhouse is still on the market, then you could consider purchasing it.


I definitely understand how difficult it is to pass up a house you love because you don''t want to put yourself at risk financially. I''m sure that you and your husband will decide what is best for you and I wish you lots of luck! My head is pounding at this moment from analyzing houses all day long--it can be really stressful!

I think it''s important to understand, two mortgages--while scary, wouldn''t be a huge hardship. We have enough flexible income to float the two until our current home sold...and my condo, which is my solo mortgage, is rented out for more than the monthly mortgage payment so it''s a nonissue. I am not in a tight position when it comes to finances which is why we can even entertain this thought. Still, it''s a consideration and we''d be stupid to not pause to consider the implications of this. The only thing that would be effected by supporting our two mortgages would be our ''free money'' ... we''d still be able to save, spend and have reasonable fun...but, no big birthdays anymore!

Am I used to getting my way? Well...sometimes. It''s frustrating for me that you would ''wink'' at that...but the fact is, I work extremely hard and my lifestyle reflects that. IT ISN''T A BAD THING. I''m a healthy mixture of saver/spender. And if I see something I want...I go for it. Our debt to income ratio is extremely low...and that''s because we do make smart choices. I would never jeopardize all we''ve worked for. But, for example (and I am using fake numbers to make my point)...this town home is currently listed for 500,000 only one year ago it was listed and sold for 640,000. The owner, who was the sales manager for the builder, went under and the home was lived in for a mere 6 months before being repo''d. Homes in the area, not under foreclosure, are selling for around the 640 mark. Instantly upon moving in, we''d have a grand total of 140k in equity if we didn''t use a down payment (which we are). Do you see the ''smart buy'' here? Considering the house is move in ready, it''s an even better deal. Even if I had to float two mortgages for a year, I''d still be ahead.

I''m so sorry you took the wink to mean something snide. I didn''t mean it in an insulting way--I meant that you are used to setting a goal and then achieving it, not that you are used to splurging on yourself and going into debt.

I also completely understand that carrying two mortgages (or three temporarily) wouldn''t be so much of a hardship that you couldn''t still live comfortably. I''m just saying that carrying the debt of three mortgages, even if temporarily, is still risky. If it were me, I''d save up each month and pay off that first mortgage before thinking about what to do with the second one. I know you and your hubby work very hard and I think that is fantastic--it''s all the more reason to pay off some of this debt before thinking about temporarily taking on more. Obviously you and your husband know what is best and I''m sure you guys will make a decision you''re very comfortable with.

I do understand why it seems like a smart buy, but I''m in the thicke of house hunting and know that now, more than ever, a house isn''t going for a penny more than it''s worth. If it''s worth more than $500K (just using the same fake figure), then somebody will bid more. If you do bid on it and get it for the list price, I wouldn''t consider anything over that price to be instant equity.

Sorry today was frustrating, btw! I hope the realtor can meet with you tomorrow!

 

[Mara]

Instantly upon moving in, we'd have a grand total of 140k in equity if we didn't use a down payment (which we are). Do you see the 'smart buy' here? Considering the house is move in ready, it's an even better deal. Even if I had to float two mortgages for a year, I'd still be ahead.

__________

Well actually, you wouldn't have anything in equity technically until you sold the property and were holding that $140k in your hand. And even then after realtors fees etc it might only be like $100k.

If you guys floated two mortgages for a year ...using funny money numbers here... but lets say 2k each mortgage, then the actual situation is you guys have paid 24k cash out of pocket for the 2nd mortgage; and you might have 140k in the house but if you haven't sold it, it's not your cash yet.

The house might be a 'great deal'...but it's all just funny money until the house has sold and you may not resell it for a few years as well. I would buy the house if you wanted to live in it now and think it will appreciate over time. But yeah selling right now could be a PITA for sure. That's why we decided to rent ours.

What does your husband think? You mention him not letting *you* make an offer until you've seen it... does he have an opinion either way?

And again this might all be a moot point because even if you guys offer, foreclosures are so iffy. But good luck either way.

 

[miraclesrule]

Boo...my post went into cyberspace....or worse...the wrong thread.

 

[crown1]

this is just my observation of the situation: things happen. some unforseen misfortune could put you and or your husband in the position of having no funds to pay the mortgages. illness, businesses failing, accidents, death or any other calamity that could happen to anyone. these things can put the most thought out plans in jeopardy. i do not know if your rental is residential or business but which ever the lease holders can become financially unable and you just may have to pay the mortgage out of pocket.

that said, risk taking sometimes makes the taker richer for it. sadly, other times it ends in depleting one's wealth. just my 2 pennies. i wish you the best.

 

[Rachel9]

Wow, 2011 isn't far I'd be worried unless that rental is in high demand area. HOA's are known to brake their own rules all the time, no one cares who's leasing or renting...as long as their fees are paid, ie my neighbors [nice people btw] rules don't apply to them lol. Within a year or two this thread won't be so scary, but in the meantime 3 mortages may be a bit much, if you guys have a parter on this, say your parents, that would definitely work out, buyers time. Best of luck

 

[Bia]

Date: 11/28/2009 8:29:31 PM
Author: Tacori E-ring
sell your townhouse before you buy anything. Property is sitting for sometimes years.

ditto.

Things happen. Someone could lose their job, or get sick...circumstances change. Why chance it if you don''t have to?

 

[Italiahaircolor]

Date: 11/29/2009 10:16:36 PM
Author: Mara
Instantly upon moving in, we''d have a grand total of 140k in equity if we didn''t use a down payment (which we are). Do you see the ''smart buy'' here? Considering the house is move in ready, it''s an even better deal. Even if I had to float two mortgages for a year, I''d still be ahead.


__________


Well actually, you wouldn''t have anything in equity technically until you sold the property and were holding that $140k in your hand. And even then after realtors fees etc it might only be like $100k.


If you guys floated two mortgages for a year ...using funny money numbers here... but lets say 2k each mortgage, then the actual situation is you guys have paid 24k cash out of pocket for the 2nd mortgage; and you might have 140k in the house but if you haven''t sold it, it''s not your cash yet.


The house might be a ''great deal''...but it''s all just funny money until the house has sold and you may not resell it for a few years as well. I would buy the house if you wanted to live in it now and think it will appreciate over time. But yeah selling right now could be a PITA for sure. That''s why we decided to rent ours.


What does your husband think? You mention him not letting *you* make an offer until you''ve seen it... does he have an opinion either way?


And again this might all be a moot point because even if you guys offer, foreclosures are so iffy. But good luck either way.

My husband wants me to be happy...he''s extremely easy going and laid back by nature. I am the decision maker, although I do depend on his input on these large purchases, he''d never "tell me no" if this is something I really want. Mark is equally impressed by this home...and he''s excited about the potential golf course, gym, club house and all the other perks of community living. He sees the benefit and he''s all for it as well...just not until we''ve actually seen the home...however, this morning he did call the agent and ask to see ANY other row home in the development to get a feel for the floor plan and then we''ll put in an offer.

As far as the equity...maybe I said that wrong. My current home has (for the sake of the posting) 50k in equity. My DH bought it at the peak of the market and paid full asking. This new home we''re looking at is 140k below "fair market value". So...even if I had to "give my house away"--making just enough for realtor fees, the new buyers closing fees and what not, I''d still be moving into a new home that, brand new, was worth more than mine will be 5 years from now.

The flip side is, my DH and I have been saving to buy a home for a couple of years now. We''re not talking putting our pennies in a jar either. We''ve realized what it would take to get into what we want and we''ve saved hard. We have a comfortable nest egg that we wouldn''t need much of to get into this new home, leaving a nice cushion for ourselves in the interim months that may leave us floating two mortgages.

My condo is in a desirable area right by a college, a 15 minute drive to down town Chicago and a 5 minute walk to Lake Michigan. Being more than a one bedroom, I have never had issue finding tenants. Selling it is never something I''ve entertained before...but if 2011 changes my circumstances, I would happily unload it if need be...but as of right now, I really don''t look at it as "debt" because it''s actually bringing in a healthy income.

 

[Bia]

It sounds like your circumstances are NOT most people's. Most people cannot comfortably afford two mortgages and also have money left over in their nest egg (employed or not). If you really want this house, and feel that hubs is not going to oppose the purchase, then go for it Italia. I think most of us wouldn't take the chance because if we weren't able to sell, we'd be up s***'s creek.

If you've got the money, and won't be in any type of hole should everything not go as planned, then go for it.

 

[tlh]

If you like the place go for it. Sounds like you won''t be hurting and you''ve got a lot of wiggle room to work with.

Let us know how you like the place!

 

[musey]

Buy it.

That''s the answer you keep hoping for, right?

 

[TravelingGal]

My advice and opinion? No.

But if you don''t like that answer, I will echo musey''s response above.

 

[Porridge]

Would I do it? No.

But go on...you know you wanna

 

[lucyandroger]

In this market there are lots of these "deals" to be found. So is it that you LOVE this place or you just want out of your current place? To me it sounds like you just want to move somewhere and you've convinced yourself that this place is it.

Why not put your current place on the market and then once you're under contract, pick out a home that you are really excited about. There's really no reason to settle for a lateral move in this market, especially since you seem to make a great living and have lots of cash saved up.

 

[zoebartlett]

Italia, it seems as if you really want more people to chime in to say "yes, go for it!" based on your replies to most people''s opinions. I understand that you and your husband are in a great place financially (good for you!), but I just don''t see that this is a great time to do this.

Plus, I haven''t really read anywhere that your husband loves this new place. I know you haven''t seen the inside yet either. What if he doesn''t love it? You said that he wants you to be happy and that you''re the decision maker. Wouldn''t you WANT him to make this decision with you? Personally speaking, I wouldn''t want to buy a new house if my husband didn''t love it just as much as I did. It would be his place too, you know? It just seems to me that if your husband doesn''t put up a fight (not literally a fight but you know what I mean), you''ll go for it. That doesn''t seem like the best way to go about it. Just my my opinion though.

 

[Mara]

+1 on Musey's note re: wanting to say go for it... YES it's a GREAT deal, you should definitely do it.

PS'ers to me are more of a conservative bunch, esp when it comes to CASH. That's why there are so many prosumers here trying to eke out the best diamond for their cash.

Bottom line... FIRST...see the house. Then, if you guys are comfy with 3 mortgages and feel like it's a good decision, make an offer. It's a foreclosure so you may not even get it. All of this is a moot point then anyway except for the brain exercise.

For me..I feel uncomfortable with 2 mortgages, yes we have savings but we'd like it to grow not depend on it or have to deplete it. I would never take on a 3rd right now. But if you are in a positive position where you feel like it absolutely won't affect you negatively, why not.

The other thing for me is that we would not have moved from one townhouse to another. We wanted to move to a house. For me making a lateral move for same sq ftage and still being in a townhouse, just so that it would be 'our' townhouse wouldn't have been worth the hassle of packing and moving. I didn't realize when you said 'row house' it was a townhouse..we don't have row house terminology in CA.

Personally, I would wait, or sell your place now and see what happens. Rent for a month or two if you have to while you guys continue to look together. There are some good deals out there... you might be surprised in the next few months. I would rather wait for my dream if it WAS potentially within reach than settle for a year or two just because.

 

[Hudson_Hawk]

A house (as with all material things in life) is only "worth" what someone is willing to pay for it. So regardless of what the comps in the area are going for, this house is only "worth" what you''re willing to pay for it today. So you''re not automatically recouping the hypothetical $140k.

Also, you mentioned that you were preapproved for a new mortgage; however, aren''t there more stringent rules about mortgages when they''re not your primary or even secondary? And what are the tax implications of carrying more than two mortgages?

My heart aches for you because I know what it feels like to really really want something and for whatever reason it not working out. I wish you the best of luck, your dream home is out there and you and Mark will find it some day

 

[Hudson_Hawk]

Date: 11/29/2009 8:34:10 PM
Author: NewEnglandLady

Date: 11/29/2009 6:44:16 PM

Author: Italiahaircolor

Date: 11/29/2009 6:27:59 PM

Author: NewEnglandLady

I think the sheer amount of debt you''d be in by taking out a third mortgage would be too risky. It sounds like you really do like the townhouse, and I also get the sense that you are used to having what you want

, but the bottom line is that being in that much debt is scary. I know that it would only be temporary, but you would still have the first mortgage(that is being rented for then next 2 years). Do you possibly have enough in savings to pay the first mortgage off? Then you could sell your current place and if this townhouse is still on the market, then you could consider purchasing it.



I definitely understand how difficult it is to pass up a house you love because you don''t want to put yourself at risk financially. I''m sure that you and your husband will decide what is best for you and I wish you lots of luck! My head is pounding at this moment from analyzing houses all day long--it can be really stressful!

I think it''s important to understand, two mortgages--while scary, wouldn''t be a huge hardship. We have enough flexible income to float the two until our current home sold...and my condo, which is my solo mortgage, is rented out for more than the monthly mortgage payment so it''s a nonissue. I am not in a tight position when it comes to finances which is why we can even entertain this thought. Still, it''s a consideration and we''d be stupid to not pause to consider the implications of this. The only thing that would be effected by supporting our two mortgages would be our ''free money'' ... we''d still be able to save, spend and have reasonable fun...but, no big birthdays anymore!


Am I used to getting my way? Well...sometimes. It''s frustrating for me that you would ''wink'' at that...but the fact is, I work extremely hard and my lifestyle reflects that. IT ISN''T A BAD THING. I''m a healthy mixture of saver/spender. And if I see something I want...I go for it. Our debt to income ratio is extremely low...and that''s because we do make smart choices. I would never jeopardize all we''ve worked for. But, for example (and I am using fake numbers to make my point)...this town home is currently listed for 500,000 only one year ago it was listed and sold for 640,000. The owner, who was the sales manager for the builder, went under and the home was lived in for a mere 6 months before being repo''d. Homes in the area, not under foreclosure, are selling for around the 640 mark. Instantly upon moving in, we''d have a grand total of 140k in equity if we didn''t use a down payment (which we are). Do you see the ''smart buy'' here? Considering the house is move in ready, it''s an even better deal. Even if I had to float two mortgages for a year, I''d still be ahead.

I''m so sorry you took the wink to mean something snide. I didn''t mean it in an insulting way--I meant that you are used to setting a goal and then achieving it, not that you are used to splurging on yourself and going into debt.


I also completely understand that carrying two mortgages (or three temporarily) wouldn''t be so much of a hardship that you couldn''t still live comfortably. I''m just saying that carrying the debt of three mortgages, even if temporarily, is still risky. If it were me, I''d save up each month and pay off that first mortgage before thinking about what to do with the second one. I know you and your hubby work very hard and I think that is fantastic--it''s all the more reason to pay off some of this debt before thinking about temporarily taking on more. Obviously you and your husband know what is best and I''m sure you guys will make a decision you''re very comfortable with.


I do understand why it seems like a smart buy, but I''m in the thicke of house hunting and know that now, more than ever, a house isn''t going for a penny more than it''s worth. If it''s worth more than $500K (just using the same fake figure), then somebody will bid more. If you do bid on it and get it for the list price, I wouldn''t consider anything over that price to be instant equity.


Sorry today was frustrating, btw! I hope the realtor can meet with you tomorrow!

And for the record, NEL is one of the most financially saavy and sound people I know, don''t discount her advice because it''s not necessarily what you want to hear. I''d take lessons from her over Suzy Ormand any day.

 

[Hudson_Hawk]

Any my vote is yes, buy it if you feel that strongly about it and are truly comfortable with your financial situation (now and what ''could'' happen in the future).

 

[NewEnglandLady]

HH, I''m not going to threadjack, but I just want to tell you that you''re too darned sweet. Trust me, I''m not financially savvy (and had the student loan debt to prove it), I''ve just listened to too many financial shows and heard of many people in a similar situation that got into trouble--great income, multiple mortgages, something bad happens and it quickly becomes too much to handle. The income isn''t guaranteed, but the debt is.

Italianhaircolor, hopefully today is going more smoothly than yesterday.

 

[Hudson_Hawk]

Still, you''re local and I know you. I''d take you and your DH as financial counselors over Suze any day.

 

[decodelighted]

As RisingSun''s sig goes ... "When in doubt ... don''t!" I haven''t heard a single compelling reason to jump at this "deal". And most of the reasons you *have* laid out seem to be a smokescreen for your self-admitted main motivations: "cure boredom" and "potential bargain". In my experience that''s how TERRIBLE fashion mistakes happen and I''d guess the same catastrophe could be in store for home-purchasing decisions.

Ultimately you can convince yourself otherwise though. Even though the very fact you''re posting here means it ISN''T an "obvious" call on your part. Sometimes itches pass & one is glad they didn''t buy a super fantastical itch scratcher (on credit).

 

[merrijoy]

Here is my opinion. From what you say you have plenty of money - ie able to float 2 mortgages and put money into savings and from what I read the ability to have a $100000 (I would seriously love to get some financial advice from you!)

So why would you make a lateral move? You have enough to cover a mortgage on a property double what yours is. If i remember correctly you place for numbers is worth $500000. And you have $50000 of equity in it and you bought it at the height of the market......so you have that for the down plus all you have saved which I am sure is way more than $100000. So why not just buy a place for double what your place is worth now? Surely you can get a deal because let''s face it, in this market million dollar homes are not flying off the shelves - lots of inventory.

One question I do have though. You said you bought at the height of the market and still have equity? Did place by you sink in value at all? I really thought home sunk in value during the last few years in most markets.

 

[Haven]

I wouldn''t do it, but I''m super conservative with money.

DH and I own our home and we have a condo in the city that we rent out but we still have a mortgage on that condo. Even though we have a great renter who pays far more than the mortgage and HOA fees, I cannot wait to sell that condo this summer. I really dislike owing people money, even if someone else (the renter) is paying the monthly payment on it. Our next investment will be something we can pay for outright.

 

[Italiahaircolor]

Today was very productive...

We met with a mortgage broker who laid to rest most of my fears of carrying two mortgages. The two combined mortgages would still totally less than 36% of our monthly income. Because we don''t carry CC debt and even with two home notes (considering my rented condo a moot point) we could manage to save each month, our broker shared that we''d be in a safe zone moving forward. That doesn''t mean we want to do this...we''re still fairly conservative when it comes to our money (believe it or not) and but it was some what soothing to us to know that running our finances we''d fall within the black.

On the other hand, our home is slated to go on the market Friday. I scrapped further home improvement plans (my dry bar) and I''m working towards getting the finishing touches done like carpet cleaning and touch up paint finished.

As far as the row home is concerned...it''s nothing but a heart ache. Seriously. The selling agent is a total scumbag. She isn''t returning calls to our agent. We drove by this evening and the lock box was changed. However, interestingly enough, our mortgage broker called the listing agent to find out if the association had been turned over to the homeowners yet or not...and the agent answered! But when we told our agent 5 minutes later, and she tried to called...NOTHING. Lights were on in the condo, but it was empty. We''re very frusterated and disappointed, our agent told us that these actions go against the MLS rules of conduct and that since the home is "active" the listing agent potentially facing a fine from everyone who scheduled a showing and been unable to access the property. I hope so.

We noticed another (similar model) home for sale and we may try to get in to see the lay out. But we want to see real home more than anything.

 

[Italiahaircolor]

Date: 11/30/2009 3:48:38 PM
Author: merrijoy
Here is my opinion. From what you say you have plenty of money - ie able to float 2 mortgages and put money into savings and from what I read the ability to have a $100000 (I would seriously love to get some financial advice from you!)

So why would you make a lateral move? You have enough to cover a mortgage on a property double what yours is. If i remember correctly you place for numbers is worth $500000. And you have $50000 of equity in it and you bought it at the height of the market......so you have that for the down plus all you have saved which I am sure is way more than $100000. So why not just buy a place for double what your place is worth now? Surely you can get a deal because let''s face it, in this market million dollar homes are not flying off the shelves - lots of inventory.

One question I do have though. You said you bought at the height of the market and still have equity? Did place by you sink in value at all? I really thought home sunk in value during the last few years in most markets.

Most homes did sink in value...but some were less effected than others. Two years ago, homes in our area did get foreclosed on...while others didn''t. We''ve lost some, but my DH has owned this home for 6 years and put down a healthy down payment. We werent caught in the mortgage game. Our equity comes from some appreciation due to upgrades and the fact that DH had money down.

And as far why we''re interested in this house...well, yes we could afford more. But if we''ve found a home we like, a home we''d be comfortable in...why would I spend more to get the same result?