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, Wed, 12 May 2004 10:39:24
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and related statistical problems ?
1. Don't know much about properties in NH but general real estate prices have gone up at any desirable location, mostly due to historical low mortgage rates. In popular areas in the northeast with good schools, you get high asking prices for starter homes (as in the 200 to 300K range). I would imagine the 500K homes are just ok. As many have posted, you can probably borrow up to about 30% of your gross (before tax) household income. However, if you do, you are really stretching your finances. Also, don't forget about college cost for your son in about five years, unless you get some tuition benefits if you work for an academic institution. Do an estimate on you monthly cash flows. Remember, when you own a house, you have to do maintainence (as in owning a Saab :-) and pay all kinds of fees (sewage, garbage fees if any) to the town as well as bigger monthly utility bills (heating/cooling, water), little things do add up. In addition you may want to get termite or carpenter ant inspection and contracts as well. Also, don't forget additional insurance on your house and content. You end up putting most of your income into the house. However, most of the early house payments go into paying the interest and you are not really getting any equity. You are almost like renting from your bank but with some tax benefits toward your "rent".
2. I had a 5-year balloon payment mortgage on our house many years ago. The rate at the time was a whopping 9.5% (close to 10% effective annual rate) for 5-year. When interest rate gradually came down in later years, we didn't re-finance but ended up paying off the balloon payment at the end of 5-years. No, we aren't rich but we just have a relatively inexpensive home in a rich neighborhood :-).
Mortgage rate isn't going any lower for sure. So a teaser rate at less than 5% is good but only if you cannot afford a longer term fixed-rate mortgage. With the 5-yr mortgage, if the price of home goes down after five years, you may end up paying a balloon payment that is worth more than the market price of your home. If you refinance five years from now, the rate probably will be higher than the current 15 or 30-yr fixed rate.
Are you working for an academic institution or a company? Is there any deal they can give you, such as a better long-term mortgage rate or subsidy ? You may consider renting a house from someone who is on sabbatical and that would give you some time to know the area better.
Best wishes in your move and get a couple of Saabs when the dust settles :-).
posted by 12.42.232...
, Wed, 12 May 2004 10:39:24, Thu, 13 May 2004 17:53:18
, Wed, 12 May 2004 17:31:37
, Thu, 13 May 2004 06:52:18, Sat, 15 May 2004 11:08:07
, Wed, 12 May 2004 12:20:23, Wed, 12 May 2004 13:15:31, Wed, 12 May 2004 13:52:22, Wed, 12 May 2004 15:16:41, Wed, 12 May 2004 13:05:47, Wed, 12 May 2004 12:53:33
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