Mortgage and home flip advice?
So 4 years ago my partner and I bought a townhouse in our big city ($251k - what we could afford at the time for our first home). I do like our little home but our condo fees have sharply rose within the 4 years we've owned ($196, to $214, to $246, and now $305). We can still afford our place but since housing prices have gone down due to current economy they are in a much more affordable range for us then they were 4 years ago. Basically, we are thinking of flipping to a small detached home (something $320k - $330k that with a down payment would be a $300k mortgage which is what our bank mortgage specialist said we were pre-approved for). Another motivator is doing this before our current 5 year mortgage term is up next March.
We have done some upgrades to the townhouse that will help it sell (upgraded kitchen, new flooring, new water tank) but I realize with the market right now it may take a bit of time to sell. We obviously need to sell in order to have a down payment.
After doing some calculations if we were to pursue a home valued at $320k- $330k we found after mortgage payment, utilities, student loans, and additional monthly costs (food, everyday items, gas) we would have roughly an extra $600 a month left over based on what we earn.
I don't know if this is too tight a budget? We could of course have a roommate for the first year or two of the mortgage. The motivator is having a house we will grow old in, and keep for years to come. Does this seem feasible?
- nathaan27Lv 54 weeks ago
That sounds pretty tight. Your mortgage (including taxes and insurance) shouldn't be more than 1/3 of your take-home pay. It's easy to get excited about a new house and find all of the ways to make it work, but if you don't account for Murphy moving in, that's where you can get into trouble. You should be able to afford your home without a roommate, but still plan on having one. Meaning, the roommate can't be a part of the deal. What if you can't find one, what if your roommate stops paying, etc etc. You should also have enough of a down payment to avoid PMI. Finally, do the math and see how much money you save over the life of the loan if you do a 15 year fixed vs a 30 year. It is significant. And always avoid arms.Source(s): Mortgage Free at 40!
- the catLv 44 weeks ago
yes too tight of A budget
your claim you could afford your prior townhouse and the $196.00 Association fees to $305.00 right at added $109.00 and now your hurting? So I say the answer is first $600.00 is not much to live on. What if your transmission goes out or other real problem? Saying more cost effective house is now available is hard to accept since house prices have increased past the stupid price,, close to 2007 ranges
you need a down payment close to $100,000.00 to make this sound like a good idea. While too many people think HOW much is the payment... the real question is is the principal good value and can you pay it off in 15 years? Since you have not paid off the student loans I assume your still just eking by payments not hitting the principal hard. WHY? Yes home you can live in for the rest of your life, pay off all debt say a huge down payment ,, then reconsider your new choice of homes till death ...... sound too harsh,,, well many MANY people loose homes over the same scenario as you present and while they have a myriad of good reasons (excuses) it does not change the fact... have you seen the movie the BIG SHORT? -- age 45 is the turn over point in most peoples lives who go from poor to OK shape... but as many people who get there most over spent with good intentions and life threw them curves -- CASH IN THE BANK IS KING .... there will be another housing crash in 1 to 7 years or so and with cash in the bank your choice is in your hands not some banker . As well remember the condo has much of the daily cost of maintenance in the association fees,,, you will have at about double the cost of the house payment on daily maintenance and repairs... WHOLE other world -- do you own a lawn mower just small example >? edger weed-eater rake shoves sprinkler repair tools etc -- be patient - cash is king so bank cash and wait
- 4 weeks ago
white on white on white, people want a fresh start. maybe use texture to provide light and shadow only they like to use their own colors and art. And hoodie your budget is nothing to complain about. go live with snobs nobody likes those **** headds...
- SteveLv 54 weeks ago
Keep your home until you have completely paid off the given mortgage. Then that will allow you to have more money for improvements but I would suggest that you allow you time to save money for upgrading, WE still have an unstable economy regardless of what CHUMP says. WE have over 228,000 people whom have died from the virus. Even more people may be unemployed if more companies are forced to reduce their staff. WE can't completely reopen our country until CHUMP supporters act responsibly by following the given social distancing guidelines. My advice is to continue paying your current mortgage payment because it is much better to keep paying down that note rather than starting all over again with a new mortgage. In which you would totally erase the progress that you have made with your current mortgage. "Of course" you have been "preapproved" because banks and mortgage companies are in the business of making money even at the expense of others like you. TRUST ME. I have previously worked in the real estate title industry for three decades. Just continue to pay down your current mortgage note. Now is not the time to do drastic things,
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- HAPPY PUPPY!Lv 74 weeks ago
Its perfect 😃 👍🤝 !
- SlumlordLv 74 weeks ago
It seems feasible but tight. I mean one major problem (lost job, injury, whatever) and you could be in foreclosure. Could you do all this but buy a bit cheaper house? However, if you did go this route you'd probably be ok, I mean the fact that the bank is even willing to make the loan means they think you'll be able to pay it off.
One more piece of advice though. It sounds like your current loan has a balloon payment after 5 years (and that date is approaching). Next time, don't get a loan with a balloon payment - get a standard 30 year fixed loan (also, don't get an adjustable interest rate unless you have to). Even if you decide to stay where you are, you might want to refinance that loan into a new 30 year fixed rate loan, ASAP.
- SumDudeLv 74 weeks ago
What can you sell the condo for ?? Selling a home to move is not flipping. Only you can do a realistic budget. We do not know your lifestyle. [But in general a single family house is better than a condo because there are no HOA fees.]
- Anonymous4 weeks ago
Flipping is buying with the intent to resell fairly quickly for a profit. If you live there 4 years, its not flipping. As for how much you can reasonably afford, Ask a mortgage broker the max you can get and then spend 70% of that.
- Anonymous4 weeks ago
"our condo fees have sharply rose within the 4 years we've owned" Owning your own detached home is going to cost more than that to maintain. Part of the reason your condo fees go up is because property taxes go up. Same thing if you buy a house.
"Another motivator is doing this before our current 5 year mortgage term is up next March." I agree that locking in a low mortgage rate for 15 or 30 years is wiser than a 5 year ARM. That doesn't require purchasing a new home, though. You could refi what you already have.
"we are thinking of flipping to a small detached home" You aren't flipping anything. That's not what flipping means. LOL. By the way, have you looked at how much it will cost to sell your condo? Don't forget stamp tax. You may not come away with as much as you think you will.
"We obviously need to sell in order to have a down payment" If you unable to save money while owning the condo, I'm not sure why you think you should buy something that will cost more to own/maintain.
"we would have roughly an extra $600 a month left over based on what we earn" That's not very much. When will the student loans be paid off? How much growth in your income do you expect? Are you investing adequately for retirement? How will you manage if one of you loses a job or becomes injured/ill and can't work for awhile?
One last thing to consider...when you buy a house you do nothing but buy stuff for the first couple years. Yes, you want to take care of your house, but you can't clean the gutters until you spend $300 on a ladder. Yes you want to enjoy the yard, but you need patio furniture. Yes you want to mow the lawn, but you don't have a lawn mower. The list goes on and on.
Yes, I can totally understand why you want to sell the condo and get into a house. But I'm just not sure you can afford it. If you could afford a more expensive lifestyle, you would have been able to build savings living where you are.