Thursday, March 12, 2009

Slightly more competent than three little pigs

First off, I have really enjoyed Newman’s series “Night Shift,” I encourage you to read it if you have not. The series is now available on the right side link bar along with a few others.

Now the topic at hand; I am attempting to grow up. The biggest thing a man can do in life outside of produce life, is put a solid roof over his head, and this is my goal this year. I currently sit in what I perceive to be a stable job, or at least comparatively to everyone else I converse with, more stable than average in today’s climate. I live in a community I have grown affectionate to, and I am sick and tired of throwing rent money away.

I have received more advice than I know what to do with on this situation. Advice from those who have purchased, and those who have done more research on purchasing than I, yet never have. The simple fact remains however, I know no one who has ever purchased in this violent economic climate.

Two sides to this issue are solid facts I, nor any opposed party can dispute: This is a fantastic time to buy, and I have absolutely no wiggle room financially if I fail somehow. The primary motivation for me to do this is long term benefit. I have in my current life, no real way to build equity and wealth. One way to naturally begin building that is to remove the $1,000 I dump monthly and $12k yearly into rent, and instead invest in a home I can return value on some day, thus building equity. This is the path advised to me by my employers, and this is the path many mentors have recommended for me. But let us break down some positives and negatives…

Pros of buying now:
  1. Save equity versus wasting rent.
  2. Build stronger credit.
  3. $8,000 tax credit on my 2009 return.
  4. Lowest fixed rate mortgages in a decade.
  5. Best buyers’ market in my lifetime.

Cons of buying now:
  1. I have a max of 5% to put down.
  2. No cushion to fall on if I lose my job.
  3. Foreclosure problems > missing rent.
  4. Uncertain about career in 5 to 10 years.
  5. No ability to run back home to Michigan.

So there are five for each. I tend to really like the pros, and do not fear most of the cons. I have a lot of faith in myself though, and always have. Quite honestly, I’ve always gotten by and overcome my hurdles and found a way, and feel I can here as well. I respect the cons though, so I list them and evaluate them. The biggest issue for me is not risk of foreclosure. I will have a total monthly due for my home (including tax) that equals slightly above my rent, keeping in mind my pay ticks up semiannually. My biggest issue is being locked into Baltimore. I love it here, but you never know. I am of the mind that this is one of the best job areas I could be in, with a doable commute to D.C. as well. It is certainly a better situation than Michigan.

I welcome your thoughts as I approach this, I am moving slow and heeding advice from professionals and from my friends. I think the advice I welcome most though, are the words from those who not only see the pros and cons, but also know the mental makeup of the one you affectionately call Fucko.


Slick said...

Ash and I are kind of in the same situation. However I think we've more or less decided on the wait until we have that downpayment thing. It's very hard not to reason for getting that house now because that free $8,000 no strings attached is VERY nice. But I think we still need to do it the "right" way and have enough of a down payment when it comes to our situation. Also I bet Obama and congress will decide to offer even MORE money in the future as the economy gets even worse, which of course will just keep prolonging this depression and hurt us so much more in the long run. STOP SPENDING ALL THIS MONEY WE DON'T HAVE!! (and I don't take sides as far as R and D, Bush did it first. As far as I'm concerned they are ALLLLL crooks! Freakin crooked politicians)

Remember to consider upkeep and having enough money available as a safety net in case something goes wrong. Example, friends of mine here bought a house and less than a month later the well broke and they were stuck trying to pay $4,000 to have it fixed. Just something to remember to consider in your thought process here...