Need Housing Advice

You are most like correct that any 15 year mortgage you can get under 6% is a fantastic rate. But prices should come down in many areas more by years end. Personally I would hold out until the Fall. Spring and summer are peak buying season. Go ahead and get pre-approved, but wait a bit. By Fall, rates may be a bit lower as well as prices. As well, stay with the 15 year, not the 30 mortgage, you can also save money on interest by paying bi monthly:
http://financialplan.abou...

Where, is equally important. If you work in an urban area, try to get as close to work as possible, gas prices are not going down anytime soon, if ever. As well consider job security. How good is yours? It may be better to consider a smaller house then that only one income could support, in the worst case.

Lastly consider agricultural land, if that is possible. An acre garden can produce at lot of food if times get tough, especially if you are willing to can vegetables. It does not appear food prices will be going down anytime soon either. So take these things into consideration.

Personally, I'd get out of an HOA (Home Owners' Association) situation. Here in California, we've taken care of the property tax issue by enacting our much-imitated Prop 13, where the property tax is predictable so that seniors and others aren't taxed out of their homes.

The mortgage payment should be fixed and predictable. However, HOA fees are not limited and if we have runaway inflation, HOA fees will go up rapidly.

Real estate, especially if you have room for a vegetable garden or fruit trees is a great idea. The rule is, don't put yourself into a situation where you are forced to sell. As long as you can afford to wait, you'll make out fine, and better than in any other investment (in my opinion). You can't eat gold, you can't live in stocks.

I expect rates will be going up much more, soon. I gave up selling real estate in 1980 when rates went to 20% and no one was buying or selling real estate. (However, you could live in it just fine.) Inflation is actually on your side and it shouldn't matter what values do around you as long as you can afford to wait for the cycle to come around again.

If you aren't in over your head, and you can rent it out for enough to cover the payment, and taxes and insurance are predictable, the only remaining fear is eminent domain. (I see that others are giving advice based on real estate as an investment with the object of maximizing profit; but that's not the only consideration; renters will be facing climbing costs; owners may not.)

IMissLiberty

I am a realtor, and as such i can tell you this, if you can afford to fine.

but if you are not putting a significant percentage down wait.

also base your mortgage on 15 year amortization, not 30.

it will be a lower priced home, but less of a risk and 15 years goes by fast.
my apologies, typing one handed with sick daughter in arms,,,,,

There's a lot of misinformation here. In summary:

Read Peter Schiff, or read blogs like Calculated Risk:

http://www.youtube.com/wa...

http://www.youtube.com/wa...

I expect the US housing market to have hit the bottom in approx 18 months or so. Maybe a bit further out than that. I'm preparing to purchase a home around that time. For now, I'm investing elsewhere.

that you take your 50K and buy GOLD now! Gold will definately continue to increase in value as the dollar plummets. We all realize that with the national debt soaring and the dollar decreasing in value and so many adjustible rate mortgages coming due, foreclosures are at an all time high... real estate is a risky investment right now and unfortunately I believe things are going to get MUCH worse before they get better :(

If you invest in gold now you will be making money instead of losing it, GUARANTEED! If you do decide to buy that home now go for 100% financing! This will lock in the price of your home, as others have said, even as the dollar loses value. You may even be able to use the interest on the gold to pay your mortgage if times get tough! (by cashing some out) Just keep in mind that as the rate of foreclosed homes increases the value of your property will decrease. (supply & demand) You will be stuck in the property you purchase in most cases for many years to come or stand to lose a substancial amount of money should you choose to sell it.

By investing your money in the gold instead you would not have all of your assets tied up in this property. No matter what the market does from this point you can not lose everything if you have the gold to back it up. Lets say in 10 years hypothetically the economy turns around and the dollar starts to gain again.... you can then cash out your 50K in gold (which may be closer to 90K by then) and put all of that money into paying off what is left of your mortgage, if you choose to. Or in 10 years if the economy is even worse off you still have your "nest egg" of gold that is growing by the day. Then your options are limitless.

Good luck

I'm on the 'net five to ten hours a day, reading. In the past two years I've read hundreds of articles from many sources detailing the long term economic damage our economy (and the world's, for that matter) that has been accruing from Fed policies. More recently, many point to the imprudent (some are alleging criminal) lending practices of some, which jumped significantly beginning in 2001 when interest rates were dropped by the Fed Chairman Greenspan.

Many are now warning that the global financial system is on the brink, for reasons that are too complex to explore here. All those reasons, however, tend to track back to devaluation (inflation/printing too many) of the "dollar" that has been the world's reserve currency since Nixon took us off the gold standard in 1971.

There are many indications that the fall in real estate prices, far from being over, has barely begun. Better to invest in gold bullion in the form of 1 oz. gold coins, such as American Eagles, S. African Krugerrands, Canadian Maple Leafs, Chinese Pandas, etc.

While it's likely that the price of gold will still run up for a while, maybe greatly, don't be distracted by talk about rates of return, buying gold certificates vs the metal itself. The key thing to remember is this: Gold Is Money. Paper "money," or as Dr. Paul refers to it, fiat currency, is just that—paper. In time of economic disaster such as is looming now, you want physical gold because it is a store of value that can be traded around the world 24 hours a day, period.

Hold on to your gold yourself, or engage the services of a reputable gold trading company to hold your gold in a secure warehouse (you need to look carefully into the details of such an arrangement). Then when the chaos is over, and some new currency becomes the standard, you can sell off your gold as needed to provide yourself liquidity, or simply continue to hold it while you get better advice then as to the best way to proceed.

In my opinion, bottom line now is: Real Estate prices are likely to be going way down yet; preserve your present wealth in gold until the dust settles, and you'll be in a much better position to act.

Go Ron Paul | Go Grassroots

I have long been an advocate of owning your own home, and well located investment property. At this point in history, however, I would strongly discourage you or anyone from taking on a significant amount of new debt for any reason!

I have also been following the actions of the federal reserve for 30 years, and the inflation we are seeing now is progressing exponentially. The dollar it an all time low 2 days ago. Two of the world's largest banks went to Congress earlier this week asking for a bailout, which is a major crisis! The money supply has been increased already by over 40% in the last 2 years, and the consumer price increases as a result of that have not all filtered down yet. Any bailout of the major banks will have to be monetized, as does the cost of the war in Iraq, as does the "economic stimulus" package passed by Bush and the congress, as does the 1 1/4% in discount rate cuts already made by the Fed in January, as well as the next ones very likely to come soon.

My point is that we are in serious danger of a major collapse of the currency, or most likely, runaway inflation. Unless you can find a place as libertyinmo says where you can pay cash, I would not attempt to buy right now. Just my opinion. I would also sell out of the townhouse, and get all of my money into hard assets as soon as possible.

The only way you can come out by taking on a $200,000 mortgage is if the economy continues to deteriorate at the rate it has over the past 20 years. I can't see that happening, considering the way the rate of inflation has increased over even the last 6 months. (or if we did away with the fed and everything got fixed)

Just realize that our economy is at a crossroads, and you will experience the results of your decision, so think about it long and hard before making a decision! You may not be able to undo it easily!

We plan to rent the townhouse we live in now .. we pay a mortgage on it currently and I would definitely want to rent it rather than sell it in this market ...

i guess my thoughts are just so frantic right now ... i think like jumping out of my skin sometimes thinking "Crap there's no time left!!! i gotta buy now now now before the dollar drops any more!" .. but i'm realizing that the market is going to take a little while longer .. and it's silly to be pulling this end of the world card out so often ...

thanks tho guys, i think we'll be buying something in the next couple months .. the area is very nice, the price is low for what you get .. we're very pleased with the things we're seeing

yes, but not as an investment. I don't agree with some on here that you should pay cash and such. We are about to close on a home with 100% 30 year fixed financing. Therefore our payments are fixed even as the dollar declines. We are taking the money we have today, that is actually worth something and buying commodities. We are happy to let the banks give us a place to live for what will be pennies on the dollar.

If you have saved $50,000 find a location where you can pay cash for your house. There are plenty in southwest Missouri, even on acreage.

there are a lot of factors involved with your question.
Where do you live
whats the market like in your area.
areas with big fancy homes are being hit the worst, FL CA Here in MN. I am a real estate agent and work with a lot of short sales. Most of the big banks are hiring more loss midigators, which means they dont think it will get better anytime soon.
If you can get a nice home at a great price and your in a low home price area, go for it. The lower the price the less the will drop, 10% on a 50k home is only 5k, what would you bennifit in taxes?
Congrats at being disiplined with your money and saving 50k.

Fortune Favors the Bold

Here's my opinion on it....

First, what I believe economically...lol.

I think we have a 40%ish shot of a whole lot of badness coming up... several people I trust peg it around the end of the third quarter, 2008. If that happens, I personally would want some land that isn't in a high population zone.. something I could grow stuff on. That also allows you a stock pond.. think fresh fish.. ;)

That being said, if it doesn't all get horrible, you're probably looking for housing prices to bottom around summer of 2009, reasonably. People talk about percentage of value lost as between 20% and 70%, but they never bring up for some reason that the percentage is relative to area... for instance, you will see a much higher percentage drop in Florida as opposed to Oklahoma. So area counts as well.

There are also ALWAYS deals that you can find, if you don't mind a fixer-upper. If you're handy with a hammer, that may well be the route to go anyways.

Upshot of this post... if it were me, I'd wait, get my $$ out of the bank and keep an eye on the market for a steal.. they are out there. But I'd again buy out of town.. get some land you can grow on.

I'll buy a house as soon as we are allowed to own land in this country. Which means never.

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Liberty for Dummies

Housing prices ARE going down, but this is really just a partial deflation of the bubble-induced OVERINFLATED prices.

The current prices are about where they were a year or two ago... the bubble has gone on far longer than that.

When and where the prices will "bottom" no one knows... if they DID know, well, then the bottom would be reached almost ASAP (and it would be followed by a "bounce" as everyone rushed to buy), and after the deflating of the "dead cat" then the recovery could begin.

The PROBLEM in all of this is, of course, the Fed. Are they REALLY inflating to the point of "hyperinflating"? Or (as Gary North suggests) they are inflating the short term, but attempting to DEFLATE the total money supply.

If they end up hyper-inflating (which IMHO they WILL do eventually, but it may be another "round" or two and a few months or years away) then holding an asset and even a large debt will be beneficial as it can be paid in future hyperinflated (aka substantially devalued) dollars.

But if it takes a while (which it might), then in the meantime (and especially if they "deflate") then you can easily get "hung" with the current debt and liabilities in today's dollars (which is what is happening to so many people right now... substantial housing was bought on sheer speculation the past few years that it would CONTINUE to go up in dollar price).

And then you must remember that (other than during speculative bubbles or in a growing population demographic with restricted housing growth) a house is NOT really a "performing asset" -- if demographics in a region are "stable" then at best a house is a "stable" asset -- and more realistically on average a deteriorating asset (because of Property Taxes, and standard maintenance and upkeep, heating, repairs, etc).

(Hence the historical "beauty" of gold as a "commodity" investment -- it does NOT rust or deteriorate, and has inherent value that stays fairly constant over time -- ignoring the ups and downs of marginal "commodity-cornering" or currency-manipulation activities).

Housing speculation needs to be thought of as gambling -- because that is exactly what it is -- one day you may be up thousands of dollars, the next you might be deep in debt, but unless you are "lucky" AND you choose to "exit" the game at exactly the right time... well good luck.

Long and short of it is that you should buy your house as buying your HOME... not for sheer speculative purposes alone. And do NOT over-extend yourself beyond a reasonable ability to pay. Large homes with higher valuations do NOT always go up in value more than smaller homes do (you need to factor in location, heating and maintenance costs, etc -- consider that what a McMansion will cost to heat, or how much more that "complex" roof-line will cost to re-shingle, etc.) -- IMHO you should buy what you need NOW and possibly what you expect to need within a short term timespan. KISS is a good principle in everything.

(BTW as a reference, I bought a smallish home back in late 2000, at a price that I felt then was only *slightly* more than I felt it was worth. Maintenance and heating costs have not been bad -- and while I put an abnormally large down-payment down (25%) I have also paid off the thirty year loan as a dramtically increased pace -- but without really straining to do so, I am now sitting at virtually year 28 of that 30 year loan, but having paid those 28 years worth off in less than 7 years. Oh, and the house is probably "valued" in terms of dollars at nearly twice what I paid -- which I frankly do NOT believe it is worth, and expect that the REAL value is maybe a 50% premium in dollars over what I paid -- basically matching in dollars what I have paid in interest and property taxes, meaning I have technically had "free" or "low cost" housing for the past several years)

short and sweet

The housing market is still going down, and when it start to go up it will be very slow. You will have time to see the bottom, and then maybe have to pay 5% more than bottom. Economist are still saying it could drop another 25-30%, and the end of the worlders say 75%. Relax. Keep saving, take advantage of a refi if it will better your cash flow. Dont sell your town house, rent it.

A wise old man, who I should have listened to once told me; When you think you are in a position to buy your first home, buy a duplex. live in one and rent the other. In 4-5 years, sell it. Then buy a 4 plex, live in one and rent the others. If you continue to upgrade for 20 years, you will now beable to retire and live where you want.

After going broke twice before he was 40, he rethought what he had always done wrong (live like a rock star, buy depreciative items). At age 60 he had a 56 unit apartment building, and now lived debt free in huge house on the lake. Hmmmm, I should have listened.

At the time, I said there was know way in hell I would live in apartments. Well now I am 38, going BK, and would love to be living in an apartment building I owned, especially now that renters are on the rise.

There are many variables to buying a house, such as property taxes, maintainence costs, and other issues that need to be explored. If you do buy, be sure to get a fixed, non adjustable rate, so that the payments will not go up with inflation. However if you decide against buying and continue to rent, be sure that you get a long term contract with the landlord, so that your rent doesn't go up. One thing to always remember, eventhough you buy a house, you really never own it, since the government can always take it away by taxing you beyond your means.

I would like to offer some info that may or may not help in your adventure.
I recently watched a show on that guy from "RIch Dad, Poor Dad" along with a couple of other fellows. Their thing was to invest in gold and silver, and that the real estate market should be watched carefully. If you find something way below market ( I have seen people short selling in my area too) then it would be worth while buying.
I also check this website for Government forclosures. Hope it helps in some way.

http://www.govsales.gov/h...

But I am currently looking to put my money into my second rental property outside of my main residence. In my area the prices have dropped to just about where they were before the big real estate boom.

The number of new homes being built has dramatically decreased and the older homes in my town are beginning to sell again. This shows me that there is a slight curve in the real estate market.

I would just be sure to do your research and use local resources:

Each county by state usually has an property appraiser site where you can view the tax records of what homes sold for and view homes in the nearby areas.

Try googling: "county" + "state" + property appraiser -- to see if you have a local site.