Michael – don't stop reading!

One response

15 01 2010
Michael (02:43:41) : edit

I can stop reading your blog at this point. A $163k home on ~$40k base annual income?

Sorry. You’re cooked. Whoever’s insuring this loan (the taxpayer) is cooked. Whatever broker/realtor/banker put you in this deal ought to be taken out back and thrown in a pile of hungry red ants.

Have you learned NOTHING from the last 2 to 3 years? Nothing at all?

The fact that you cannot differentiate (or simply don’t wish to do so) between what “rent” constitutes, and how that’s different than a mortgage payment with its accompanying liabilities, tells me that you’ve been SOLD.

You have no savings.

You have no down payment.

You have $30k in debt.

You’re buying a $163k house on a $40k base income.

Put simply, you’re a foreclosure in waiting. You (and the gov’t policies encouraging you) are why this crisis is not anywhere near over, and won’t be over for years.

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3 Responses to Michael – don't stop reading!

  1. I won’t be as harsh as Michael, but I would defintley hold off on the house. My first house was $92,000 on about 35K. Pretty sure I would have struggled and started living on credit if I went much more than that and I didn’t spend friviously either. There are just too many things that can happen with a house, water heater, roof, appliances, taxes etc. Yes the 8K is an enticer but don’t fall for it. I think you will find yourself struggling down the road.

    You will probably find yourself in a life changing event in a few years (marriage) and will be wanting to sell or get something different. Then you will be stuck with very little equity and end up upside down with realtors fees when selling. I could go on, but I strongly suggest getting out of debt first.

    Best of luck to you!

  2. mrmilwaukee says:

    JAL –

    Thanks for your thoughts! The thing I really struggle with is that a 165K mortgage actually seems doable – granted (as both you and Michael pointed out) I’m not as familiar with the peripheral expenses (roof, appliances, water heater). And part of my thought going into this process was actually the “life changing evens” you mention. I feel that marriage, increased earning potential, etc, are items on the converse side of the ‘unknown’ in housing expenses that could actually work in my favor. I would fully expect the first year or two to be tight (and perhaps a downright struggle) … but from a financial point I struggle with the thought that sending my landlord a check for $1200 makes more sense then struggling though a year or two as a homeowner.
    Anyways … I do appreciate your thoughts. Good timing too since I saw this article on Yahoo this morning titled “When Owning Your own Home Doesn’t Pay” – http://finance.yahoo.com/real-estate/article/108679/when-owning-your-own-home-doesnt-pay?mod=realestate-buy
    Another thing that I’ve considered is that the “mortgage calculators” on the websites of the banks I use don’t get me anywhere near the mortgage amount that the lenders I’ve worked with seeming willing to extend me. The discrepancy has given me reason to pause.

  3. mrmilwaukee says:

    Update from your humble Debt March correspondent regarding my housing situation. I’ve abandoned the idea – at least for the next 12 months. I’ve made some great progress with my debt in a very short time and I’ve got a nice big commission check coming next week that will allow me to almost eliminate my last credit card!! And while I’ve continued to look at homes casually (hoping to find the right place at the right price) since Michael’s ENTHUSIASTIC reponse to my post – I’ve got to concede that my current debt ought to take precedence over adding a mortgage to the situation. Perhaps I was blinded by the shiny $8000 tax credit? And while the notion of continuing to rent still doesn’t sit well with me, I’ll rest easier knowing:

    1) I don’t think we’ve hit the bottom as far as housing prices – so there should still be deals to be had a year from now (though rates probably won’t be as low as they have been in recent months)
    2) I’ve met a great girl that’s moving in with me – and since she doesn’t read this blog, I can safely say that one of the big perks of this situation is that I’ll be reducing my rent by half (and of course spending more time with her)
    3) Half rent = more funds for the Debt Snowball!

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