Archive for April, 2009:
Our first steps of buying a house
We’re considering buying a house this year … what?!
Y’all might think I’m really crazy for even thinking this, but you know how last week I mentioned that we were looking into moving into a different place ? And how I wasn’t sure about getting a starter house or a ‘one-and-done’ ?
Well, after running some numbers and scouting around our favorite part of Pittsburgh, we are now considering buying a house this year.
What. In. The. World. ?!
The $8,000 tax credit has a big role in spurring this idea. Since the government is handing out this money, it really might be to our advantage to taking it. We would be in a house much sooner and be better off in our finances that much sooner.
Also, mortgage interest rates are extremely low right now. We have excellent credit scores and we expect to qualify for a low interest rate.
It’s looking like we’d be able to get a pretty decent house in a nice area for $80,000. There are a variety of houses for sale in the $60k to $100k range. Property taxes and wage taxes are pretty high (I think). We’re talking millage rates of 29 to 40 depending on the area. That’s $2,900 to $4,000 per year on a house assessed at $100k! In our current municipality, we’re paying a 1% gross wage tax for the local schools. In the places we’re looking, it would be 1 to 3%. Spendy spendy.
The house would probably be ok as a 10-15 year house if we wanted it to be, but we might treat it as a starter house and live there for 3-5.
So yeah, I dunno if we’ll do it or not, but financially it could be a great thing for us. Our next step is to meet with a lender to get an idea of what they’d approve us for and to get a handle on what to expect from closing costs and upfront fees.
I’m crunching numbers on things like a mortgage, property taxes, homeowners insurance, PMI (I don’t think we can swing a 20 % down payment without tapping all of our savings and I don’t want to do that…but maybe we can avoid PMI in other ways), water/sewer, gas/electric, trash, maintenance, and all other new-to-us costs.
We wouldn’t want our total housing costs to be all that much more than we’re paying now. We’d like to have plenty of wiggle room for saving money at the end of the month, you know?
We’ll just have to see where this road takes us. At the very least, I do think we’ll be moving to our new desired area this year, whether that’s to rent or to buy, we haven’t yet decided.
Any other renters thinking about buying a house this year?
We’re thinking about moving
Our apartment lease is up for renewal on June 3. We have been informed that our rent will increase $20/month to $790 per month. Ugh. It went up $20/month last year as well. That’s an extra $240 per year.
I tried to haggle on the rent, as my pal Karen was able to for her rent, but it didn’t work.
When we chose this apartment, a lot of it was blind luck. We weren’t at all familiar with Pittsburgh and had to make our selection based on countless hours of internet research and one quick weekend of driving around, looking at apartments, and talking to the locals (including the police).
This was the absolute best choice we could have made at the time.
We think it might be time to move to a different apartment or perhaps a rental house in the city.
We’d like to find a two bedroom, 1-1.5 bath place with a dishwasher and a washer/dryer. I spend at least $30/month on laundry right now. If we had our own W/D, we’d probably pay the same amount in electricity, but at least I wouldn’t have to deal with quarters anymore.
Because we’re a one-car household and do not want to buy a second vehicle, it’s important that our new place is close to a bus line or the light rail system. Shane takes the bus to work every day and we want to make sure he won’t have more than a 30-minute or so commute.
How much will it cost to move?
I called the moving company that brought us to Pittsburgh (they’re here in town) for a ballpark estimate of what it would cost to move my superheavy Price is Right bed. There is no way that a bunch of amateurs could safely move this thing, so hiring people who know what they’re doing (and are insured) is a must.
It would be $115/hour with a minimum of four hours, regardless of the amount of stuff they’d move. So, it would be in our best interest to have them move all of our big stuff and as many boxes as they can do in four hours. I think we could get the whole place moved in about that time.
So, it would be a minimum of $460 plus tax and other fees to hire a company to help us move. We can swing that.
How much might we be able to save?
We’re hoping to find a suitable place for around $600 to $650 or so per month. At $600/month, we’d save $2,280 per year when you factor in our new rent increase, assuming our utilities and associated expenses remain the same. At $650/month, we’d save $1,680 per year.
Even if our new place increases by $20 or so per year, it would take several years for the price to reach what we’re paying now. By that point, we’d hopefully be in a house anyway.
If we can stay put in the next place for three years, including the cost of moving, we’re looking at a minimum of $4,000 saved — and that’s assuming a $650/month rent and factoring in an annual $20/month increase.
That’s no chump change. $4k would be a good 10 to 13 percent of our down payment for a $150k – $200k house.
Sure, moving is a hassle. I hope that I don’t have to move too many more times in my life. But the prospect of a better place to live and extra money to save is just too good to ignore.
Renters, what would it take for you to move? How often do you stay in one place? Pittsburghers, any tips on areas I should check out?
