patrick.net

Sounds like if you had a 30-year loan, it would be cheaper for buying compared to renting. If you want to pay off in 15 years, more power to you. It sounds like your PITI will be in the range of 25% of net income, so it's considerably less of a percentage of gross income, that's good. Do you anticipate a lot of maintenance? If so, you should consider that in your cost of maintenance.

If it makes sense for your financial situation and it's cheaper than rent, why not? If you're planning to stay in the area and not have kids, those are two triggers than can cause you to move, but they're not an issue for you.

The only thing I would wonder is how your ability to pay for the mortgage if one of you lost your job would be, and perhaps how likely you would be to move if one of you lost your job. Based on your current assets, it sounds like it would be okay to ride out as long as you stayed in the current area, but not sure.

Another thought -- would either of you have a significantly longer commute compared to where you live now? That could be tiring and may be a trigger to move again.

Thank you so much for the response.

Since it is a 1944 home, I do expect some maintenance. We live very cheaply and will continue saving monthly. There are several cosmetic things (sunken tub in 1 bathroom, water heater in kitchen) that I would like to change someday, but I am not really sure how much the mandatory maintenance costs will be.

If one of us lost our job, things would be very difficult. I think our jobs are pretty safe, but you never know in this economy.

Commute will now be 1 mile for me and 3 miles for my wife.

Smart remaining childfree, you will save tons of money!

Yes, I have a niece and nephew (5 and 7) in town that I can see whenever I want. So it is like having kids without all the responsibility!

billy269 says

Yes, I have a niece and nephew (5 and 7) in town that I can see whenever I want. So it is like having kids without all the responsibility!

Amen!

From your description it sounds like a good way of handling finances. You are not taking risks with liabilities, at least risk is very minimal, costs of rent is about same as ownership. This seems very prudent. I don't know if it's a lot for that area, you are the best judge there.

So best of luck William.

PasadenaNative says

Smart remaining childfree, you will save tons of money!

To us having a child has been the most fulfilling and rewarding experience in life. It has been one expensive endeavor, and very difficult when we were first parents not getting any sleep. But it was all worth it, some things in life are priceless. :)

EMan says

PasadenaNative says

Smart remaining childfree, you will save tons of money!

To us having a child has been the most fulfilling and rewarding experience in life. It has been one expensive endeavor, and very difficult when we were first parents not getting any sleep. But it was all worth it, some things in life are priceless. :)

Bully for you, but I have zero interest in children. Best reason not to have them!

People get so conservative and uptight when people mention not having kids. Do you not think that others may be different from you? My boyfriend and I don't really like kids, and, we couldn't afford them even if we wanted them! Please, freedom of choice,! They obviously don't make everyone better people or you wouldn't see the number of divorces and child abuse/neglect cases. End of sermon. Thank you.

http://www.cnn.com/2011/LIVING/05/23/do.not.want.children/index.html

"Harvard psychology professor Daniel Gilbert ... looked at several studies and found that children give adults many things, but an "increase in daily happiness is probably not among them."

He says that psychologists have found parents are less happy interacting with their kids than doing activities such as eating, watching television or even exercising.

"It's such a counterintuitive finding, because we have these cultural beliefs that children are the key to happiness and a healthy life, and they're not," said Simon."

Austinhousingbubble says

He says that psychologists have found parents are less happy interacting with their kids than doing MUNDANE activities such as eating, watching television or even exercising.

rofl

/edited-for-accuracy

At that price point, I think you are smart to buy.
Having now lived for 20 years in a 1974 home, I would be afraid of a 1944 home. It will eat maintenance money - maybe not right away. For that reason, a 15 year mortgage is a smart move.

CA is not my area of expertise, but based on the listing you posted I would say that the deal seems reasonable if you are planning on knocking down the house and rebuilding.

Although you say the house is in good condition for the most part, I must say -- please don't take offense -- that it looks like a decrepit shack in the picture posted. However, 0.84 acres of wooded area is a really nice lot. I don't know anything about Quincy, CA but in Boca Raton, FL 0.84 acres would run you at least $200k and would not be surrounded by such natural beauty.

So, I'd consider the house a tear-me-down. You could build a much nicer, larger, and more energy efficient house on the lot. And you would have far fewer maintenance issues. If you decide to do so, the price per sq. ft. really doesn't mean anything. The price per acre is what you should look at and compare with other lots or tear-me-downs.

If this house were in south Florida, I'd be much more incline to tear it down and build a new one on the lot instead of fixing up the existing house. Of course, in south Florida most of the value would be in the land, not the house. I don't know if that's true for Quincy, CA.

It looks like a very beautiful area. My only concern with the land is whether it is close to where the jobs are.

I would not be knocking down the house. It looks much better than all the pictures posted in person (especially from the outside). Here are some more pics:
http://www.realtor.com/realestateandhomes-detail/39877-Highway-70_Quincy_CA_95971_M16003-39022

The floors and attic are insulated and the windows are only about 5 years old. Obviously it will need maintenance, but I think it is built better than many homes are built now. It is all solid wood with no particle board on the main house, the bedroom added on later has paneling which we would be quick to change.

Yes, the inside looks much better than the external picture. Well a 1962 sq.ft. house in good condition on an 0.84 acre lot in a wooded area for $105k seems like an exceptionally good deal.

At about $40k/yr in income, you should have no problem affording the house and lot. You could even budget in some renovations to make the interior more modern: paint the walls, get cabinet face-lift, and put a facade around the fire place, and it will look great. Such changes are inexpensive and can be a do-it-yourself project using stores like Lowes.

Payoff2011 says

I would be afraid of a 1944 home.

billy269 says

The floors and attic are insulated and the windows are only about 5 years old. Obviously it will need maintenance, but I think it is built better than many homes are built now. It is all solid wood with no particle board on the main house

If you live in NY, you may hear about the comparison between pre-war and post-war. I have no idea what it means when something is "during war", as describes this house! :)

Nonetheless, I'm guessing it was better than the clapboard tract houses built in the 50s as fast as possible. It sounds like some work has gone into it too, which is a good thing.

billy269 says

Commute will now be 1 mile for me and 3 miles for my wife.

Awesome commute distance, by the way. That's wonderful.

PasadenaNative says

People get so conservative and uptight when people mention not having kids. Do you not think that others may be different from you? My boyfriend and I don't really like kids, and, we couldn't afford them even if we wanted them! Please, freedom of choice,! They obviously don't make everyone better people or you wouldn't see the number of divorces and child abuse/neglect cases. End of sermon. Thank you.

So you preach now. When your 45 you'll be preaching about the wonders of fertility drugs. ;-)

You seem to like the house ( think some people overlook that fact : the more comfortable you are with its current appearance and structure imo the easier it is to live there and deal with any potential headaches that may arise because its a HOME to you) , you like the area/community , have more discipline then anyone I know when it comes to spending and saving so really don't see what the downside would be here.

Okay, its an older house that may need repairs but that's a gamble with every home to some degree but nothing seems to be in need of immediate repair from what you mentioned. Everyone has to live somewhere and pay some sort of rent or mortgage, meaning your rent is now $800 don't know your area at all but what is the absolute cheapest rent in your area $500-$600 a month...? If so that to me is your basic starting point because wherever you live its gonna cost you that minimum( say $500-$600) and to stay where you are its $800 a month. At 15 years you are paying $750 a month -To me there is very little financial risk in this situation! You are gonna have to pay someone anywhere from hypothetical $500-$600 range which may not even exist just my guess to current $800 rent to live which I am saying is essentially the bare minimum anyone can pay to live in your area so you will own a home and still be in that bare minimum range but also because the house is selling near 100K whats the downside risk on overall value..?? Yeah zero but really not because hard to imagine any house in good shape would ever be worth nothing. It's a 3 bedroom house whats the absolute worst it could sell for....? say 70,000.....while its 30% its still only 30K and dont mean to offend anyone when I say only 30K but the last sale was for 335K and its selling for 230K less now.....everything has some risk to attached to it so if 30K is sort of your worst case risk thats pretty close to no risk these days. So for $750 a month in 15 years regardless of home value ,you own it and no longer pay rent whether you look at it as your paying rent to your current landlord or the bank holding your loan you are paying rent to them for 15 years. So when you are paid off then you would clearly be ahead of the game paying just taxes , insurance an d utilities. I doubt this home at anytime in the near future is worth 335K again but if its worth 200K when its paid off thats a nice appreciation but realistic as well.

For such a small loan 80K would not recommend a 30yr loan but why not a 20 year loan even though the rates prob are closer to the 30yr levels it still saves you a few bucks. You have short commutes as noted and seems like you have it very well thought out. Plus you could always put exactly 20% down rather then 25K and even if you deem it worthwhile tack the closing costs onto your loan , certainly not what everyone would should do but I think paying a little interest for extra money in your pocket can be good for a variety of reasons even if it just financial flexibility. You can always pay extra towards the mortgage and putting 21K rather then 25K down even use that money for repairs you would like to do.

Also believe its a 1962 Home that is 1944 square feet not a home built in 1944. At least that is how a few sites had it listed

Median income is about 46K so home values in that area should be around 129K, if we believe that historically values are about 2.8x median income

It would be prudent to take out a 30 year loan instead so that you can afford your home on one salary if something happens short (lay-off, missing work due to an accident) or long-term (you have children and one parent stays at home, some one gets disabled).

You can still pay it off on a 15 year or shorter schedule so your cash flow is better in the future.

PasadenaNative says

My boyfriend and I don't really like kids

Eww, icky poo, children!

Hi Billy, think hard. Imagine you are 40-45 years.
1. You sunk your extra income and first time buyer enthusiam into a fixer.
2. Newer homes are so much easier.
3. Can you rent it out easily, ie. Is the house close to a base or college or vacation attraction.
4. Is it wiser to buy a home that doesn't require yoir extra income to be more livable? Could you buy a second property for investment rather than use your extra income on fixing up the old one?
5. Be smart not romantic, you may get bored of that one and want a back door plan.

I have done the fixer and spent the dough and realized i should taken the extra money to invest in another. Lived it and learned. Bathrooms and kitchens cost$$$

E-man says

SF ace says

+1 about having kids, it's one of those things that a price tag is inapproproate measurement.

+2. I'd rather have more kids than more money. ;)

Success isn't by chance, but by choice.

E-man, people like you are why I am optimistic about the future of the USA. Immigrants continue to provide us with dynamic breeding stock so we will not go into demographic decline like Japan, or Europe.
Of course it will not be such a white USA, which is probably why we have Tea Party backlash against the demographic shift. Too bad those people are too bigoted to realize that a demographic shift is way better than a demographic decline.

APOCALYPSEFUCK is Tony Manero says

It's never been a better time to squat in an abandoned, foreclosed McMansion and hoard cash.

you mean gold, not cash, right?

I have a statement and three questions:

statement: NEVER fall in love with the house! It will hurt your ability to negotiate objectively.

Question- 1 I know the area...so I would especially be concerned about Forest fires, soil erosion issues from heavy rain after the numerous fires they have in these mountainous areas. Have you made plans for disaster scenarios up here? Fire flood insurance will be higher---if you can get it?

Question-2 Look at this comp...ready to move in. Built in 2008, it may cost more, but doubtful you will have mechanical, plumbing, electrical issues for many years. http://www.zillow.com/homedetails/37-Sierra-Park-Rd-Quincy-CA-95971/2128807918_zpid/#{scid=hdp-site-map-bubble-address}

Suggestion- SAVE the vigorish of a REAL-A-TOR. Use ZIP Realty, or Redfin or similar, if you MUST have one...and you may qualify for 3% cash back. NOT MANY JOBS UP THERE... GIVES YOU control...fewer qualified buyers. PS - you will have a possible big heating bill.

I have a statement and three questions:

statement: NEVER fall in love with the house! It will hurt your ability to negotiate objectively.

Question- 1 I know the area...so I would especially be concerned about Forest fires, soil erosion issues from heavy rain after the numerous fires they have in these mountainous areas. Have you made plans for disaster scenarios up here? Fire flood insurance will be higher---if you can get it?

Question-2 Look at this comp...ready to move in. Built in 2008, it may cost more, but doubtful you will have mechanical, plumbing, electrical issues for many years. http://www.zillow.com/homedetails/37-Sierra-Park-Rd-Quincy-CA-95971/2128807918_zpid/#{scid=hdp-site-map-bubble-address}

Suggestion- SAVE the vigorish of a REAL-A-TOR. Use ZIP Realty, or Redfin or similar, if you MUST have one...and you may qualify for 3% cash back. NOT MANY JOBS UP THERE... GIVES YOU control...fewer qualified buyers. PS - you will have a possible big heating bill.

Good Luck!

only the dumb and poor pop out mistake they cant afford, you both are only take home little over 3333 month net that is not enough to pop out a kid. One of you loose ur job or get sick and your saving is gone , now we as tax payer have to support you. Like i say before only the dumb and poor pop out mistake and let some1 else support it. I see lot of those dumb idiot with 3 or 4 or more kids and i think to myself, im supporting those idiot mistake, do they know what a condom is?
Dont be like them time will be harder as it go by, your job is not a life time job like ur mom and dad got before, you know most of ur friend and family living month to month there, i buy that house and wear a condom.

billy269 says

Septic is somewhat worrisome: 15 years old and is a pump/shallow mound leach field.

Septic can be very expensive. Did you get the septic system tested and did it pass? If so, you should still probably get some estimates of what the probability is that you would need to replace the entire system in 5/10 years, etc., and what that might cost you. If it didn't pass, or there were tangible issues, are you going to ask for them to be repaired or you to be credited estimated repair costs back at closing?

We sold our 30+ year old home in NJ a couple of years ago and lucked out - only needed to have the distribution box replaced ~ under $3K. Most other homes in the neighborhood that sold in the last bunch of years needed entirely new systems, which ran somewhere in the range of $20K-$30K.

Sounds like you found a great home! Great price, well below the bubble era, and you've got room to house a kid should you change your mind and choose to have one.

You will sleep very peacefully at night knowing that you've made a solid investment and that you're no longer working for the landlord.

(And I do hope you're walking to work every day with a commute of just 1 mile! The Google map makes it look like you're in the middle of the forest, but the other photo looks like you're right on the road.)

This will be a dream/nightmare moneypit.

Thanks for posting about your situation. I'm in a similar situation (in Michigan) and not sure if I should keep renting either.

To me, it seems that if you are unsure about your job prospects or house needs within the next 7 years, you should keep renting. So if you're confident about both those things, it doesn't seem like you have a whole lot to lose by buying.

It is a very bad thing to make micro financial decisions. Especially now, in 2011. No one can tell you if buying this house is a good thing to do or not when they do not know your whole financial picture. In today’s worldwide interlocked financial system, considering only what is happening in your local area is a huge mistake. As of now, US wide unemployment is 22%, inflation stands around 10%. By the end of next year inflation will have grown to about 15% and exponentially increasing.

If the Federal Reserve engages in QE3 (98% chance that they will; QE3 = third round of printing money), we will have 50% inflation in 2013. That means that food prices will rise so high causing social unrest. Here is a question: what should we all be doing right now: buying homes or stocking up on food? It would be much smarter to move in with family so that you may use available funds to stock up on food enough to last a full year, firearms to protect your family (tough to do in CA, but much easier to do in many other states), exchange your remains US dollars into gold and silver coins.

If what I have just mentioned seems out of your field of understanding, then there is a huge gap between your understanding of financial matters and mine. One more thing, when inflation hits 50%, interests rates have to rise as well, which means that fewer people will qualify for home loans and therefore fewer buyers and prices of homes will dropped even further. If you buy this house, chances are extremely high you will never recuperate your money.

For sure, it seems like a good decision when comparing buying and renting, but a very bad decision when we are facing the real danger of hyperinflation in the US within 3 years. Time is of the essence. By the way, who are your financial advisers? Do you have any? Who gives you or where do you go to get financial advice? A blog such as this is the wrong place for asking financial advice.

Here is good advice: go see a licensed financial advisor especially one who knows what QE1 and QE2 mean. One who knows what the Federal Reserve is. One who trembles at what is going on right now in Greece and Ireland and Italy. It is far better to pay $400 for an hour of real financial consultation than “free” advice on this blog which results in your "losing" multiple thousands.

I was just passing by.

Darryl....I just fired five financial advisors....when I caught them lying or being optimistic about the economy. I know very little, but have been increasing my nest egg by NOT putting it into securities. Gold baby is what people need ...until we get tired of playing with play money made by banksters.

I have looked at more properties in your area and have experience rehabbing houses. I would not buy the house you are evaluating, Too many unknowns.

Here is the most important question you should ask:

When you are looking for a house to buy, ALWAYS think about how sellable it would be if you were FORCED to sell because of some unknown future emergency. Don't dwell on "what" emergency could be...life is a series of good and bad events. Prepare for the worst....it is always on the horizon. If you owned and listed TODAY....with the equity YOU have in it TODAY.... How fast would it sell and for how much IN THIS "CRAPPY" market? How about next winter when the snow falls...and sales are in the toilet....and possibly the house has lost market value. I see this all the time. Whatever you do...most young motivated buyers want new or almost new....they are NOT frugal ....so are looking at not sweat equity...but new and move in condition. New sells faster than old...in most markets except bubbles.

ITS AN OLD HOUSE.....with nails in it older than you. Do you realize how high construction costs are when you are in a remote area? I bet you see lots of modulars or mobiles in that area. Stick built costs are higher in remote areas.

Dude that's a sweet house.

$55/sqft. You can't build for that. And you get the acre for free.

dan007 says

only the dumb and poor pop out mistake they cant afford, you both are only take home little over 3333 month net that is not enough to pop out a kid. One of you loose ur job or get sick and your saving is gone , now we as tax payer have to support you. Like i say before only the dumb and poor pop out mistake and let some1 else support it. I see lot of those dumb idiot with 3 or 4 or more kids and i think to myself, im supporting those idiot mistake, do they know what a condom is?

Dont be like them time will be harder as it go by, your job is not a life time job like ur mom and dad got before, you know most of ur friend and family living month to month there, i buy that house and wear a condom.

What a troll.

Don't listen to people like this. It sounds like you're financially responsible, have a nice savings built up, and are buying a modest home.

I think you'll be OK buying that house. I also hate kids.

Have you considered a low fixed 30 year mortgage with no prepayment penalty? This will allow you to make extra payments against the principal and allow you some "slack" during a difficult financial time.

zzyzzx says

I think you'll be OK buying that house. I also hate kids.

Ok lonely old fart in a few decades.