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December 28th, 2008 at 08:26 pm

Kind of a poor play on words, but I thought that I'd take some time to take a quick look at the idea of buying a house again.

My thing is that I really, really don't want to pay a whole lot for a house at this time. The idea is to have a "starter home" that meets my needs. Then, maybe some day when I build up enough savings, perhaps then I will afford what I really want.

But first thing's first I say.

Using Zillow, I've narrowed it down to four potential candidates. All of them are cheap condos in the $70k to $80k price range. However, they are near a college campus so they should be able to hold some kind of value.

I then went over to mortgagecalculator.org to get an idea of what I can expect in terms of monthly payments.

Can I just say that, when the total cost of ownership is calculated, it's absolutely frightening? Even on a 70k property, by the time you finish paying, the final cost would be more like 125k! Wow! WOW! I've looked at the numbers before and know what to expect, but it still stuns me every time I see it.

It's also why I THANK MY FAMILY to be able to live rent-free right now. The financial impact of this temporary arrangement is immense, and I do not want to waste it! I'm going to save as much as I can and re-visit my options for increasing my earnings!

10 Responses to “Ex-zillow-rating”

  1. swimgirl Says:

    I have looked at Zillow, for information about selling...

    There is NOTHING, NOTHING in my town in that price range. NOTHING. Maybe add $300,000 to that for a condo. I can't even imagine getting anything for that price.

    It sounds like you've got a good deal going for now.

  2. Broken Arrow Says:

    Yes, the cost of living varies, and I realize my area is actually not all that high. The average home in my area is more like 200k. But even by the standards in my area, these are cheap condos, which are really more like apartments that you can buy. So, I realize that ending up paying about 55k in interest for a place to live is actually quite cheap. Still, this is something that I want to absolutely avoid or at least minimize, any way I can....

  3. swimgirl Says:

    Yep, minimize housing costs. With you on that!

  4. fern Says:

    Yeah, but you are very frugal so that total $125K cost6 assumes you make no prepayments. If you prpaid even an extra $100 a month, i bet your overall cost would be much less. It would be interesting to play around with that calculator and see what difference it makes....

  5. monkeymama Says:

    I know, all I can think is I am jealous of the prices. Not that it helps you. Hehe. Of course I know the boonies around you are FAR cheaper (my sister paid $80k for a NICE, albeit small/modest, house). Her FIL owns a $400k or so MANSION.

    It will make more sense once you have to rent again. For now you are comparing $0 to $125k. Once you are renting, factoring renting for the rest of your life, and buying won't sounds so bad.

  6. Broken Arrow Says:

    Hehe, thanks fern and MM. So yes, that's a very good point about my current perspective, which is that I am comparing paying nothing versus buying, whereas in real life, most people compare renting versus buying.

    Still, the fact that I have to pay essentially 78% extra in compounded interest on anything blows my mind! (Based on a 6.5% loan.) Nooo thank you!

    Of course, as fern pointed out, I am assuming a minimum payment and I don't have to do that either. I can always either pay it down early or invest in a house fund on the side and then pay it down that way.

    But the ideal method is to simply save up enough before buying in the first place. That would allow me to avoid the brunt of the interest payments. That's why I feel so fortunate about being able to do that.

    Hehe. Kind of fun to talk about stuff like this with you guys. Thanks for sharing your thoughts on this so far....

  7. creditcardfree Says:

    Right now rates are lower than 6.5%...so that would make a difference. How much longer do you expect to have free rent?

  8. Broken Arrow Says:

    I really don't know. It's entirely dependent on the personal situation of my family. I could be here for years, and I could be gone tomorrow.

    However, I don't look at this uncertainty with disdain. After all, it's not like I'm losing anything. Quite the contrary.

    But, it's all the more reason why I need to save and invest what I can, while I still can!

  9. Aleta Says:

    It is a great time to buy a home. The only thing I've not liked about condo's in our SO FLa aread is the foreclosured and not enough people to pay the maintenance costs. That may not be so in your area so check around.

    On the other hand, the fact that you are in a college town is a plus. You might want to consider renting out your condo until you are ready to move. Property in college towns is so easily rented out.

    As for the interest, you can one day pay the mortgage more and decrease the amount of interest that you pay.

    The bottom line is that you know that you want to buy a home some day and the interest rates are alot lower now.

  10. Broken Arrow Says:

    Ah, it's so tempting to buy now. Yes, I could rent it out, although it would almost certainly be college kids, and I don't want to deal with a bunch of college kids as tenants. But yes, they would be easy to rent out.

    My sister bought a house (or two) about a year ago. She's in a much better financial situation than I am, and have bought in at a beautiful time. Color me jealous, but her finances made sense. Mine doesn't yet.

    Hopefully the low interest rates and the slump will hold just long enough for me to get in as well. If not, well, that's OK too. We can only do the best we can right?

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