Looking at Houses. Got Some Questions.

[OrlandoEastwood]

Yeah, we've been looking at lower end properties for sale that are in the lower hundreds of thousand dollars. We're planning on moving back as soon as we can, but we have to wait until my studio kicks it off. So, probably not until another year and a half.

[jlafrenz]

Originally Posted by OrlandoEastwood

Yeah, we've been looking at lower end properties for sale that are in the lower hundreds of thousand dollars. We're planning on moving back as soon as we can, but we have to wait until my studio kicks it off. So, probably not until another year and a half.

A lot can change in that amount of time, but it can't hurt to look at some properties to get an idea what you like, can afford, and get educated. This is one decision you really don't want to rush.

[mikejet]

Originally Posted by jlafrenz

A lot can change in that amount of time, but it can't hurt to look at some properties to get an idea what you like, can afford, and get educated. This is one decision you really don't want to rush.

Prices will stay flat for about 5 years or so then begin to rise slowly depending on the area. Don't expect house prices to rise anytime soon and interest rates shouldn't rise for at least another year.

[jlafrenz]

Originally Posted by mikejet

Prices will stay flat for about 5 years or so then begin to rise slowly depending on the area. Don't expect house prices to rise anytime soon and interest rates shouldn't rise for at least another year.

Interest rates may stay relatively close to what they are now, but even a small change in an percentage can add up on a large scale and over time. In fact, what ever rate you get quoted today, I wouldn't expect to get that same rate. Rates change daily and you are never guaranteed a rate until you lock it in. There needs to be a lot of things in place before you lock in a rate. Not saying things are going to change drastically, but they will change and have an impact.

[jbig31]

[QUOTE=Beta Man;3042387]That's great advice......

We put down 25% + the closing costs, etc..... so 25% directly went to the sales price of the house........ we had to eat a lot of grilled cheese etc.... but it's worth it, rather than putting the 5% or whatever minimum is required.......

And if you do buy..... make sure you know what your monthly payments are going to be...... INCLUDING taxes...... because our taxes are outrageous, so it makes a huge difference. (then you have utilities etc. etc.)

bottom line, DO NOT BUY WHAT YOU CAN'T AFFORD...... having a more modest home and being able to go out to dinner, vacation, shop, etc.. is a much happier existence than being house poor, and living hand-to-mouth.[/QUOTE]

Great advice Beta.

We have a 15 year mortgage on our house in a nice quiet modest neighborhood that we really love. By the time that I'm 47, this house will be OURS-PAID IN FULL! Knowing what you can actually afford and staying within those boundaries makes all the difference in the world in being able to enjoy our lives and have some "fun" too.

[Bear28]

Just echoing alot of the other advice, which is to buy what you can afford.

Make sure you do a budget before buying, put down all estimated monthly expenses. Include Car/House Ins, Property tax, Gas, Electricity, Cable, Phone, Misc, Savings, etc. Then compare that to what your net income is per month.

Also you should have savings left over after your downpayment in case something happens where you don't have any income coming in.

One final thing is that if you do get a mortgage for say 4% over 5years, just remember that 5yrs from now that rate could easily be 8%. So it might be good to see just how that would change your monthly payments and determine if you could afford that as well.

Good luck!!

Thanks

[crxvtec]

What part of the big island?? I lived there in the 90's and my sis and her fam live in waikoloa right now. I was there last month and that place has kinda grown alot. It still is pricier than the rest of the country but nothing like 10 years ago. There are alot of great deals on the big island right now for property. Hell, maybe you could rent to my sister and fam.

As far as mortgage, get a fixed rate. We got an interest only and that was a lesson learned. If you can afford, a 15 year would be great if you can afford. Next time we buy, that is what we are getting.

[OrlandoEastwood]

I'm mainly looking all over the island for something, kinda staying away from the Volcano park. Mainly because I don't want what happened to that beach happen to my house, lol. I went there for Christmas of 2006 after I had moved back to O'ahu. I lived in Hilo for about a year, from Aug. '08 to May '09, before I had moved back to Ohio. And I'm just waiting until my studio can take off before moving back. So, I probably won't be back on the islands until late 2011 to early 2012.

[DJ Manyak]

Originally Posted by OrlandoEastwood

I'm mainly looking all over the island for something, kinda staying away from the Volcano park. Mainly because I don't want what happened to that beach happen to my house, lol. I went there for Christmas of 2006 after I had moved back to O'ahu. I lived in Hilo for about a year, from Aug. '08 to May '09, before I had moved back to Ohio. And I'm just waiting until my studio can take off before moving back. So, I probably won't be back on the islands until late 2011 to early 2012.

you can get some really nice homes in California right now

[crxvtec]

i would think the Hilo side would be alot cheaper than the Kona side. I pretty muched stayed on the kona side. I did go to school in Honoka'a.

[OrlandoEastwood]

Originally Posted by computergeek

you can get some really nice homes in California right now

Hawaii is both home to me and my fiancee and we miss it. She's born there and comparing where I've been all of my life, it ties between Hawaii and Ohio. Even though I spent less than a year on the Big Island, I liked the calmness compared to the six years I spent in O'ahu. My fiancee and I are planning on kids here in the next couple of years and we both agreed that we want to go back to islands. I got to do what I do best and that's make movies, so as soon as I make enough for us, we'll be making our way back there.

[jono_0101]

Originally Posted by MaCruz

And don't use your 401K for down payment!!!

i would definitely not recommend that unless you have no other option, retirement planning is a LOT easier the sooner you start, and if you take that money out and have to pay it back over time, its just a lot less time you have to let that money grow, AND less you have to live with until you finish paying that loan back to yourself, dont mean to call you out, but thats the line of business im in, so felt compelled to make that point

im just starting to look for a house too, i had started about a year ago, but had to stop looking because of personal issues, glad to be back in the market for a house though, its definitely a good time to buy

[MaCruz]

Originally Posted by jono_0101

i would definitely not recommend that unless you have no other option, retirement planning is a LOT easier the sooner you start, and if you take that money out and have to pay it back over time, its just a lot less time you have to let that money grow, AND less you have to live with until you finish paying that loan back to yourself, dont mean to call you out, but thats the line of business im in, so felt compelled to make that point

im just starting to look for a house too, i had started about a year ago, but had to stop looking because of personal issues, glad to be back in the market for a house though, its definitely a good time to buy

On a side note.. You might not even use your retirement money down the road anyway.

I have a good amount in there, and I have 0 intentions to actually withdraw from my account. It's all about save save, and save!

[Grumpz]

I'm going to offer you a solid piece of advice.

Assuming you lock into a fixed mortage, I suggest you look what the typical interest rate is for whatever term you're interested in.

For example, I've owned for 14 yrs. The last 2 yrs are anomolies due to the world economy, but prior to that, a 5 yr term was between 6-7%, in Canada. So in my case, even though I just locked into a 5 yr term @ 3.69, I've set my payment as if the rate was 5% That way, in 5 yrs, if rates are typical, my payment will go up based on a 1% increase.

For now, the 1.31% extra I'm paying for the next 5 yrs, will go to principal and knock down the amortization.

So in your case, what I'm saying is, find out the how far todays rates are off of what is typical, and bump your payment closer to that rate. That way you can handle and increase in payment if necessary, as you're already almost there.

[toef]

Originally Posted by MaCruz

On a side note.. You might not even use your retirement money down the road anyway.

I have a good amount in there, and I have 0 intentions to actually withdraw from my account. It's all about save save, and save!

Ricshoe gave a nice calculation of the cost of using your retirement money, but I think inflation has to be considered.

Sure borrowing the $10k out of it today might cost you $100k by the time you retire... but $100k in 40 years is nowhere close to 100k today, so it's a bit of a deceiving argument.

It's hard to come up with exact numbers, but using one online tool, $10k in 1968 dollars had the same purchasing power as over $600k in 2008 dollars.

The concept of compound interest is a powerful one, but I think some people often ignore the crippling reality of inflation. It's easy to think of investing a relatively small amount today, and watching it snowball into a supposed fortune in the future... but in future dollars it's not really worth as much as it seems.

As long as inflation continues (and there's no reason to think it won't, since it's very important) far enough into the future, homeless people will be millionaires. Obviously not in our lifetimes, but I'm sure you get the point.