I may not be as set on the house project if I didn't do this perfect first.


We could go as far as saying that Daves purchase of his warrantied lemon was illogical. Because even if I lose money, it won't be as much as you did.


After the elections gas prices will rise as they cyclically do. This will make luxury/large engine vehicles harder to sell. If economy goes down a bit which I see happening soon, then people will become more economic, increasing the difficulty of my sale. So it has to be sold before November.

 

Forget trying to time the market or predict the cause and effect of an election on housing or gas prices, or really the effect of high gas prices on S Class sales at all. Buyers of these cars probably aren't going to be deterred by $4 a gallon gas prices, if they ever even got that high.

I think interest rates being low, as they are now, helps both the sale of cars and homes, so if you want to cash out of the Benz now is as good a time as any. In terms of value, it's worth the most anyone would be willing to pay for it. No more and no less.

Before you cut it loose though, you mentioned previously you were renting because you and your wife's credit was poor, and you changed jobs with a reduction in income, all of which will complicate a mortgage approval. Especially post crash when banks are beyond diligent. We just did a refi, both of us have 800 scores, plenty of income per the ratios, twenty years in business blah blah blah, and it was unbelievable the hoops we had to jump through.

Short version, if you haven't yet, I'd first go to a mortgage lender or broker and have them run the numbers, pull credit, see both what amount your income and debt ratios will allow you to borrow, what you'll need down, and how bad a hit your scores take on the interest rate. (Or if you're able to borrow at all at this point.)

It may be painful but I think it's always better to know how bad stuff is up front.

It may not even be worth cashing out the S once you get a handle on the mortgage numbers.

 

Doing your project perfect....now that is funny! And calling my 10 year old brand new condition warrantied 600 a lemon....that's funny too. My car was a 1 owner, $147k when new Southern CA (La Jolla) car driven by a guy in his 70's with a complete service history that I paid $38k for plus the $3300 for the warranty almost 2 years ago with only 24k miles. I'm pretty certain that if you keep your car for at least 3 years, you'll end up spending more than I did....and my car will actually have resale value, is much safer, faster, more stuff than you could ever dream of equipping on an S550, etc etc.

Any way, I'm going to stop harping on you about your illogical choice of buying and fixing your car. It's done and hopefully you'll someday learn your lesson when you take a bath on the resale and repair costs. Honestly, dumping it now and only taking a $7k or so loss would probably be a lot better than what you're going to be up against with repair costs in the next few years...especially having zero warranty coverage. You're going to be screaming like so many others do about dealers or other shops trying to screw you because the costs can seem outrageous. In your case, it might make more sense to buy a 10 year old clean title Lexus with 80k miles as it would likely save you a ton in repair costs. You could probably pick one of those up in the low $20k's...maybe less.

I do agree with you that we are likely looking at a major market correction....perhaps a crash much worse than 2008. I honestly thought it would have happened by now, but the Federal Reserve Bank and all of their corrupt partners around the world have made it nearly impossible to predict exactly when the bubble is going to burst. Too many complicated moving parts involved to predict when. But the later it happens, the worse it's going to be. But no matter what, the richest ****'s in the world are going to get a lot richer because of it, while the rest of us will suffer in a major way. I've been in the mortgage biz for 26 years and I still haven't fully recovered from 2008. I can't imagine what's going to happen when the next bubble explodes.

Predicting the housing market is another thing that you can't do either. Rates are historically low right now and really can't go anywhere but up from here. Once the crash happens, you may be looking at lower home prices, but also higher rates that will offset the lower prices. I remember in high school when mortgage rates were over 18%. Now they're around 3.5%. In 1982, a mortgage payment (principal & interest) on a $100k loan would have been around $1500/mo. These days it's around $450. So you can see how big of an impact the interest rates can be if you need to carry a mortgage. And lastly, elections don't really have any influence on gas prices or most other things. That's a fallacy invented by the media. It's also a fallacy that there are any real differences between the 2 major political parties. They all answer to the exact same people, and it isn't you or I. The election cycle is a smoke and mirrors show to make you think you actually have a choice. You don't.

 

You let us believe that you were buying this car to make it perfect and to keep it forever. What a waste of time and money. I'm sorry but this is the most ridiculous thing I have ever heard. Now your an economist too!



After the elections gas prices will rise as they cyclically do. This will make luxury/large engine vehicles harder to sell. If economy goes down a bit which I see happening soon, then people will become more economic, increasing the difficulty of my sale. So it has to be sold before November.[/QUOTE]

 

I mentioned this many many pages ago, his intentions to quickly/cheaply fix and resale and make quick profit (possibly of an unsuspecting customer) was the #1 intent of this exercise.

 

Carrera, why did you take your kidney colored convertible off as your signature?


My intentions were to keep it. But my Wife wants to get a place we can call our own.

 

Mortgage rates in the early 80s were as high as 18% because the progress of a standard house was 70k. In my area today, the price of a standard house is 300k+. So even if interest rates go up.


Ive observed the last four elections and each time has prices went down.

 

I see you know absolutely nothing about micro or macro economics and don't have the slightest clue how our political system works. Honestly, I'm not surprised. You are proof of how bad the education system in America has become.

 

A wise and learned response would have been along the lines of, "You have much to learn", or "You are inexperienced at life.". If I heard that I would accept your retort as one from such a person.

 

Yeah, right.

 

Dang, that's discouraging. Our income had not decreased yet. Our credits are rapidly rising. Is 4.5% to high in this market? That's what we would be paying.

 

No that's a solid rate presuming no points. We refi'd from 6 to 4.

 

I am assuming you are free of credit card and other non-essential debt?

4.5% is not "too high" depending on your goals and circumstances.

On a $300k house, w/ 20% down, that's about $1225 a month, plus taxes and insurance. In Excel use: =PMT(0.045/12, 30*12, -300000*0.8)

If you have the $60k (plus closing costs). And you don't mind being unable to easily pick up and move (ie for a great job opportunity that's too far to commute). And if you are confident you can make the payment no matter what happens in the big ugly job market.

But as of today, with 20% down, the going rate is < 3.75 w/ no points (bankrate.com) for purchase. (refi is a whole other ball game these days.) 3.75 is $1125 a month. So the 3/4 % is costing you $100/mo.

 

No credit card debt, only 14k in tuition loan. We can make the payment when the economy tanks.


Though we don't have anywhere near 60k. After we sell the car; including savings, we will only have about 30k.

 

So rather than extend yourself fully on a $300k home, limit your search to stuff in the $150k range. You can come in with your $30k down and avoid MPI. There are ratios in terms of your proposed monthly payment vs income that may also come into play, as well as a separate "back end" ratio for your total debt vs income.

Dave or NYPhoto probably know the current ratios for a conventional mortgage. Alternately, you may be able to come in with a down payment less than 20%, but MPI will get added to the monthly payment. Usually under $150 on a $300k note, and you can cancel it once your LTV (loan to value) exceeds 20%.

 

So that's a 150k house. There's your budget.


IF you do a 5% down with PMI a) your rate will be higher, b) you'll have PMI, c) your principle will be higher.

It MIGHT still make sense, but ONLY if you really expect to be there for at least 5 years... and are WILLING / ABLE to stay 10 - 15 years (if not 30 yr paid off) if housing prices stagnate due to rising interest rates.

$1500 + PMI = $1700 (or more)
in excel =PMT(0.0475/12, 360, -300000*0.95)
PLUS taxes PLUS insurance PLUS PMI (figure a couple hundred a month PMI at least)

 

I need to do more research. Where is a dc small home selling for 150k?


It seems to me that at the moment, the only homes available at that price point at derelictly dilapidated one. We'll be looking to buy something that needs a little work, but I don't want a salvage title.

 

washington dc? I thought you were in oregon?

 

I don't know his market at all. In our area, $150k would buy a decent, older home with a good sized lot in an established neighborhood, or new construction on a postage stamp. $300k here is probably close to the average. Benz's wife has three kids I'm guessing they need some extra bedrooms and baths.

In some areas, $150k gets you a cinder block home with bars on the windows in a crack neighborhood. In that case I'd come in with less than 20% on a higher priced home but plan on staying put as NY says and hoping the equity catches up in a few years.

 

I live in the Portland Oregon metropolitan area, which reaches into Washington state

 

What zip code do you each work in (or intend to work in)?

 

I would not count on a dramatic swing in housing prices any time soon in your market. The Vancouver/Portland market is almost as hot as Seattle right now and while there may be bubbles in other parts of the country, the Pacific NW is not one of them. Jobs are plentiful here and the Portland market typically follows Seattle to a certain degree. If the market crashes your bigger problem will be getting a mortgage based on your down. I would sell your S now for whatever you can get and start saving as much as you can. You may get a little better deal in the winter off buying season as well. Also, no offense but the buyers of your type of car are tough to find because most banks will not loan against a car this old and most of the younger buyers that would want this car cannot pay cash for it. I would list it for 16K and hope for the best.

 

You need to get a very savvy realtor to work with and get pre approved now. Houses in that price point are snapped up almost immediately by investors. Both of my parents were realtors in Clark County for 30 years and retired after the last bust but they would tell you to buy now, do not wait. They own LOTS of homes in Clark County and the rents are going up up up. That means more people are wising up and buying. You will need to be prepared to buy with no contingencies and be OK with a fixer. Unlike a car, a fixer house is great if you can do the work.

 

Yikes! Unless you're hopelessly attached to that area (not sure where the step kids dad lives) I'd keep renting until you can move somewhere less of a sellers market.

 

for 150k I can get you a nice fixer upper 1 br 650 sq ft coop 25 mins outside of nyc. Of course there will also be strict coop approval where they will disect your finances. For 300k I can get you a 2br in the same area.