Realistic Savings

[bubbleepink]

HI Everyone,

My DF and I are looking at buying a house next summer (we have our down payment ready, we are working on our emergency fund now. We have a pre-approval of $300,000.00 but we would like to stay in the 270-290 region when we are ready. Realistically speaking in the area that we would want to be buying this would have to be an older home at this price.

I want to incorporate "fake" payments into our current budget. Things like taxes, hydro, maintenance etc. I was wondering how other savers/homeowners accomplish this task.

Off the top of my head (without having done research) I was thinking about taking a percentage of the $300,000.00 broken down into monthly amounts.

3% for maintenance - $9000.00/yr - 750.00/mt
2% taxes - $6000.00/yr - 500.00/mt
1% hydro - $3000.00/yr - 250.00/mt

Do these percentages sound okay? What am I forgetting? I know there is probably a lot.

Also, since we are saving for Emergency Funds - how much should we have in our bucket?

I think that's all.

Thanks!
BP

[mizbear]

bubble- I would research what is typical for the area you are looking in. For instance, where I live, the taxes are a bit high- but the we also have water, gas, electric, sewer, and trash to consider- unless you go outside city limits- which will also lower your home cost and taxes. A maintenance fund is always good if you can afford it so you can feasibly avoid putting maintenance or repairs on credit, finance or out of the EF.

Could you put the money away in a short term, interest bearing account- or in the same account that your EF will go into so that it will accrue interest, jut making notes which it is for? So many banks now charge penalties for withdrawling. But if you are giving yourself a year, you should be okay- my bank has a 6 month early withdrawl penalty.

Usually the rule of thumb for EFs is 6 months. That is enough to live off of for 6 months- but I think some of the others can give you a better idea.

I will tell you this- when buying a house read the reports carefully and trust your gut. My ex and I bought a money pit and he still can't sell it. We've been divorced for 7 years.

[dancinmama]

I agree with miz bear. Someone in your area can give you an idea of what utility rates are as well as taxes and other expenses.

I also agree that when buying an older home you need to be VERY careful. Our first home was an older home (built in '68 and bought in '85). It was a well-built home, but "stuff" only lasts for so long. If you are going to buy an older home, try to find one that has already had the most expensive work redone (roof for example) or one that you can get soooo cheap, that you will have the money to redo the way you want.

[blackcard]

We looked for a good while before buying a new home. The reasons we passed on an older home, and bought a new one, waas that we had found: Wood rot, termite damage, cracked slabs, worn out plumbing, electrical not up to code, poor insulation, old furnaces, old A/C units, bad ducting, old hot water heaters, ill-fitting windows, warped wood, crooked chimneys etc etc.

Hope you are lucky in your quest. I would put as much into a home repair fund as possible if you are going to be buying old. My parents have poured tons of money into a 30 year old home over the past 2 years. (At least 25K)

[txracer81]

Be very careful when thinking about buying a new house. Research the builder...a lot. DF purchased a new house in 2007, since then the builder has gone bankrupt and there is now no warranty with the house. The house now also has MAJOR settling/potential serious foundation issues. Plus his neighborhood had very inflated prices to begin with. Now we are stuck in a house worth $20,000 less than what he paid for it...plus we could have to shell out another $20,000 to fix the foundation.

We will NEVER buy another new house again.

[blackcard]

txracer81 OMG! That is exactly why we went to buy new. To avoid those problems. Maybe the best advise for buying a new home is to buy from a long standing reputiable financially solvent builder.

[blackcard]

Just to let you know, we did buy from a custom home builder, who was closing out his 2 to 3 year old inventory. We had all the inspections done even though it was new. Not one problem so far.

[mizbear]

Actually those are both good points about new and old homes- my DGM is having to have her home renovated because it needs so much work (they moved in the year after I was born), but there are a lot of new builders folding in this housing market. Older established builders know how to slow down production or take on refurb projects - buying homes that are for sale and reworking them and reselling them in a slow market.

I think the place I had that my ex is still trying to sell will fall down before he gets to sell it- it leans to one side.

[mizbear]

Around where I live, a 3 BR home is running an average of about $250,000 easy. That's why I am living in a sardine can.

If you find a 3BR in this area for less than $200,000 it probably needs extensive repairs and it's definitely not in town (something that with gas prices is becoming a necessity for many people).

[mizbear]

patstab- That s why I am still renting. I do not wish to have that size (nor can I afford) the mortgage on homes in this area. Foreclosures are skyrocketing around here. My cousin and his wife were able to find a "handyman special" and it still cost almost $180K! But he has to live within so many minutes of work so they are willing to try and turn it into an investment.
One home here has foreclosed 4 times in 18 months and another has foreclosed 3 times in the same amount of time. One home just foreclosed with less than $25,000 left on it.

[Deleted]

Jun 14, 2011 18:21:38 GMT -5 @patstab said:

I don't understand why all of you buy such expensive houses. There are moderately priced around here and I see them all over the US that are not $300k. Unless you are making a ton of money you are setting yourself up for high taxes, utilities, and maintenance that is going to eat you up in your life. Haven't you ever heard of moderation.

because that's what they cost where wew live and we have no desire to move to a different area. I just sold my 2200 sq ft, 1 car garage townhouse for $290,000. Just because you can buy a 5000 sq ft house for $100K where you live, doesn't mean it's true everywhere.

[mizbear]

singlemominmd- You must not live too far from me!!!

[Deleted]

Jun 19, 2011 20:18:14 GMT -5 mizbear said:

singlemominmd- You must not live too far from me!!!

I'm pretty much equidistant from baltimore, DC, and annapolis...anne arundel county...where are you?

[mizbear]

Talbot. Spent most of my life here, other than about 18 months in Queen Anne's and a short hop across the bridge when I was really little.

[❤ mollymouser ❤]

Jun 14, 2011 18:21:38 GMT -5 @patstab said:

I don't understand why all of you buy such expensive houses. There are moderately priced around here and I see them all over the US that are not $300k. Unless you are making a ton of money you are setting yourself up for high taxes, utilities, and maintenance that is going to eat you up in your life. Haven't you ever heard of moderation.

Real estate prices (and property taxes) vary greatly from area to area, and sometimes even within a state, or a city, there can be HUGE differences. Some states are just more expensive than others ... and some neighborhoods are just scarier/more dangerous than many people would want to live in.

As to moving to other states, sometimes that just isn't feasible based on family and career considerations.

All that being said, there is something to be said for not buying more house than is needed, or which can be reasonably paid for.

[bubbleepink]

Hey everyone!

I am sorry I have been MIA. DF and I were driving home for the summer. Most of you know we were working in Alberta as teachers but we are from the Toronto area. To touch on a few comments.

We are not stuck on a new home or an older home, we are really still in the looking phase. We THINK that a house that needs a bit of work would be okay since my family is handy (brother and father work in construction). In Toronto you cannot find a house for under 250,000.00 period, at least I haven't found one. We are looking at houses in the area surrounding Toronto as well with hopes that we can get more house for our money.

We have already moved to find jobs but we want to be near our families when we start our own family in a few years. As a sidebar the town closest to where we work (80km away from our jobs) has a worse housing market then Toronto with 1000 sqfoot homes starting at $300,000.00. Right now we rent and we ive steps away from the school. There is no owning potencial where we live (on a native reserve).

But thank you to everyone for your advice! We are going to start our saving this month!