RODSCALIP5 said:
Im confused with this tax stuff, ho wmuch tax do you pay a month?
Rod,
In California you property tax works out to 1.25% of the purchase price of the house. Figure if you buy a $300,000 house you'll be paying $3750 a year in property tax. You can either have this paid through an escrow account with your mortgage, adding $312.50 to you monthly mortgage payment or if you pay it directly to the state yourself it's due in November and June fi I remember correctly, but you have to make sure su budget for it otherwise you'll but SOL. Personally I do mine directly to the state, but that's just so that I can move around which year I pay it in depending on what i need to do for taxes that year.
If you are only planing on staying for a few years and not able to do much of a down payment I would probably suggest that you stay out of the housing market right now. Especially in San Diego I will take a strong bet that prices will stagnate and possible drop in the next year or two. If you plan on staying for a long time, ie; 5-10 years then this is not as much of a problem, but if not and you don't have too much equity then you will end upside down when you want to sell.
You have to remember that along with the purchase adn selling price of the house there are also the escrow company, realtor and mortgage fees.
Just for an example my wife and I just sold our investment condo for $268,000 that we paid $221,000 for back in January. You'd expect that we ended up with $47,000 in profit from this but the actual check I deposited in the bank was for $25,600 after paying $10,000 in realtor fees, and that was good as it was only 3.75% split to both agents, escrow fees totally about $1200 and $9000 in taxes to the state. Then add to this the $2000 we spent on fixing up the place, and this is doing almost all the work ourselves, and paying four month worth of mortgage. All told after all taxes and fees we'll still end up with about $15,000 depending on how much of this I can make disapear before tax time.
This still seems like a good deal but take in to account that we had the money available to buy the place and rehab it and also had the time and skill to do it ourselves. It also helps that I grew up witha broker for a mother so I also know the cycles pretty well. We always buy our home in winter as that is when most people do not want to move so they are not really looking and prices usually go down and we sold in spring when most people are ready to move and prices go up. Also we bought a place that needed a little work and had been on the market for 6 months, almost unheard of in our area. We've worked on enough houses to know what it would take to fix it up to 'jem' like condition and flip it. We sold the same place in 2 weeks with a 20 day escrow that hadn't sold in 6 months just 4 months earlier.
If you are buying in to a new tract take in to account that you will need to have a lot of work done right after you move in. Most new house tracts only come with the front yard landscaped, if that, and the HOA requires you to have your front landscaping done with in 3 months of moving in and the back done with in the first year. And this can cost $5000 to $50,000 depending on what you like. This doesn't even figure the cost of all the new furniture you will want to buy because you don't have enough to fill the place. Then there are still the added utility costs of gas, water, electricity, phone, internet, cable/satellite TV, insurance and trash. Plus your HOA fees which in newer tracts can be $100-300 per month. Also you will either need to take the time to take care of your lawn and plants or pay a gardener to do it.
If you are just starting out and don't have much money I would seriously suggest waiting, living in a tiny cheap apartment so that you can save up the money for a good down payment on a place of at the least moving in to a condo or townhouse where you do not have to pay for some of these costs and someone else takes care of the outside. It may not be as nice but it may be something you can better afford.
If after you look at all the costs and fees you can still afford a house then by all means go ahead a buy a house they are a great investment and you have pride of ownership but just don't expect to make money on it for the next few years, you have to be willing to live in it for at least 5 years and possibly 10 years. I always recommend buying a nice small house in a good neighborhood as it is less likely to go down in price even when other areas do. And if you can find the time and have the skills to work on it then buy something that needs some TLC as it will build you some great equity. We manage $104,000 increase on our first house, $47,000 on the condo and have approximately $180,000 increase on our current house which puts us with $265,000 in equity in it.
I think I'll stop now as I didn't really mean to write a book, but this is something I am passionate about. If you have any questions that I didn't answer ask away.
. I can afford to pay up to $2000, but my credit is garbage(all my fault). Hey lara, did you use the VA Loan??
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