Mortgage Problems for First Year Biglaw?

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dingbat
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Re: Mortgage Problems for First Year Biglaw?

Postby dingbat » Tue Apr 17, 2012 10:18 pm

Don't get me w. I'm all for homeownership. But sometimes renting is better.
Also, don't underestimate the costs (better to budget too much than too little)
Buying a $600k home as a first year associate seems a little steep.
Using that time to save for a down payment and figure out if you'll survive the grind long enough to afford your home is a much better idea (yay lockstep)

Anonymous User
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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Tue Apr 17, 2012 10:19 pm

dingbat wrote:
Anonymous User wrote:OP here. Some are stretching a bit in this thread to make points. 80k for closing costs? 15k for utilities? 18k for repairs? Per year? I own an old house and I have spent 11k total in the four years I've owned it.

Closing costs ate roughly 5% of the purchase price of the home, although it scales down, so $80k would be for a $1.6m+ home (not my estimate. I assume whoever said that included down payment)
I admit flubbing utilities, although my boss spends more than that (he told me his electric is $1k/month)
For repairs, a reasonable estimate is to put away 3% per year(conservative. Your actual costs should be lower). While you don't need it every year, big ticket items (siding, new roof) can cost a lot more, so by putting that much away and saving what you don't use, you'll be ok

$18k was based on an estimated $600k home. How much do you think a new roof would cost? How about a burst pipe, or a blown transformer? I personally haven't had to spend too much either, but I have been quoted for a new roof and I don't look forward to needing to replace that bad boy.


I'm just saying. I have replaced my roof and completely replaced my sewer main and got nowhere near that amount.

And I'm going to be a first year associate. I'm not exactly looking at $1.6M homes. More like 1/4 that.

shoeshine
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Re: Mortgage Problems for First Year Biglaw?

Postby shoeshine » Tue Apr 17, 2012 10:27 pm

OP:

So did you actually get your lender to agree to finance the purchase with less than two years of work history and only one month on the job? Or how did that work out?

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Tue Apr 17, 2012 10:30 pm

shoeshine wrote:OP:

So did you actually get your lender to agree to finance the purchase with less than two years of work history and only one month on the job? Or how did that work out?


They will let me close after the first paycheck. So maybe 1-2 weeks in a hotel, but those are training weeks at the main office in a hotel anyway.

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dingbat
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Re: Mortgage Problems for First Year Biglaw?

Postby dingbat » Tue Apr 17, 2012 10:32 pm

Anonymous User wrote:
dingbat wrote:
Anonymous User wrote:OP here. Some are stretching a bit in this thread to make points. 80k for closing costs? 15k for utilities? 18k for repairs? Per year? I own an old house and I have spent 11k total in the four years I've owned it.

Closing costs ate roughly 5% of the purchase price of the home, although it scales down, so $80k would be for a $1.6m+ home (not my estimate. I assume whoever said that included down payment)
I admit flubbing utilities, although my boss spends more than that (he told me his electric is $1k/month)
For repairs, a reasonable estimate is to put away 3% per year(conservative. Your actual costs should be lower). While you don't need it every year, big ticket items (siding, new roof) can cost a lot more, so by putting that much away and saving what you don't use, you'll be ok

$18k was based on an estimated $600k home. How much do you think a new roof would cost? How about a burst pipe, or a blown transformer? I personally haven't had to spend too much either, but I have been quoted for a new roof and I don't look forward to needing to replace that bad boy.


I'm just saying. I have replaced my roof and completely replaced my sewer main and got nowhere near that amount.

And I'm going to be a first year associate. I'm not exactly looking at $1.6M homes. More like 1/4 that.

1/4*$1.6m=$400k which is reasonable on a $160k salary.
Good luck with the mortgage thingy.

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Wed Apr 18, 2012 8:32 am

Agreed. If just starting out and no money for a down payment, lock step will give you a few years to save a fair amount for a down payment. I dont think any k-jd students should be buying right out of law school; unless they have parents that will give them the down payment money.

Fun thread. My point was, there are good ways to take your tax bill down.

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dingbat
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Re: Mortgage Problems for First Year Biglaw?

Postby dingbat » Wed Apr 18, 2012 8:50 am

Anonymous User wrote:Agreed. If just starting out and no money for a down payment, lock step will give you a few years to save a fair amount for a down payment. I dont think any k-jd students should be buying right out of law school; unless they have parents that will give them the down payment money.

Fun thread. My point was, there are good ways to take your tax bill down.

If you ever make the really big bucks, PM me and I can put you in touch with people who'll get your tax bill down far better than that

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kalvano
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Re: Mortgage Problems for First Year Biglaw?

Postby kalvano » Wed Apr 18, 2012 10:06 am

dingbat wrote:
Anonymous User wrote:OP here. Some are stretching a bit in this thread to make points. 80k for closing costs? 15k for utilities? 18k for repairs? Per year? I own an old house and I have spent 11k total in the four years I've owned it.

Closing costs ate roughly 5% of the purchase price of the home, although it scales down, so $80k would be for a $1.6m+ home (not my estimate. I assume whoever said that included down payment)
I admit flubbing utilities, although my boss spends more than that (he told me his electric is $1k/month)
For repairs, a reasonable estimate is to put away 3% per year(conservative. Your actual costs should be lower). While you don't need it every year, big ticket items (siding, new roof) can cost a lot more, so by putting that much away and saving what you don't use, you'll be ok

$18k was based on an estimated $600k home. How much do you think a new roof would cost? How about a burst pipe, or a blown transformer? I personally haven't had to spend too much either, but I have been quoted for a new roof and I don't look forward to needing to replace that bad boy.



Most of the stuff you listed is what homeowner's insurance is for. Mine just bought me a new roof, and would cover a burst pipe. And a new roof isn't based on the cost of the home but the size. My house is 2200 SF, and the actual cost of a new roof was $13,000. It should last the next 20 years or so, barring any more storms. My house is fairly new, but I would guess I spend less than $600 a year on repairs.

Transformers are a city problem.

To me, the real costs that no one buying a first home accounts for are the monthly costs. My actual mortgage isn't much, but it's doubled by the time you add in taxes, HOA dues, etc.

ToTransferOrNot
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Re: Mortgage Problems for First Year Biglaw?

Postby ToTransferOrNot » Wed Apr 18, 2012 10:09 am

According to the NYT calculator, buying would be better than renting for me... never. Of course, that changes drastically if you change the sliders on rent increases and home appreciation, but I have a feeling that most people using the NYT calculator leave the home appreciation setting on 5%. That is ridiculously optimistic.

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dingbat
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Re: Mortgage Problems for First Year Biglaw?

Postby dingbat » Wed Apr 18, 2012 10:13 am

kalvano wrote:
dingbat wrote:
Anonymous User wrote:OP here. Some are stretching a bit in this thread to make points. 80k for closing costs? 15k for utilities? 18k for repairs? Per year? I own an old house and I have spent 11k total in the four years I've owned it.

Closing costs ate roughly 5% of the purchase price of the home, although it scales down, so $80k would be for a $1.6m+ home (not my estimate. I assume whoever said that included down payment)
I admit flubbing utilities, although my boss spends more than that (he told me his electric is $1k/month)
For repairs, a reasonable estimate is to put away 3% per year(conservative. Your actual costs should be lower). While you don't need it every year, big ticket items (siding, new roof) can cost a lot more, so by putting that much away and saving what you don't use, you'll be ok

$18k was based on an estimated $600k home. How much do you think a new roof would cost? How about a burst pipe, or a blown transformer? I personally haven't had to spend too much either, but I have been quoted for a new roof and I don't look forward to needing to replace that bad boy.



Most of the stuff you listed is what homeowner's insurance is for. Mine just bought me a new roof, and would cover a burst pipe. And a new roof isn't based on the cost of the home but the size. My house is 2200 SF, and the actual cost of a new roof was $13,000. It should last the next 20 years or so, barring any more storms. My house is fairly new, but I would guess I spend less than $600 a year on repairs.

Transformers are a city problem.

To me, the real costs that no one buying a first home accounts for are the monthly costs. My actual mortgage isn't much, but it's doubled by the time you add in taxes, HOA dues, etc.

It depends on why you need a new roof. Regular wear and year is not covered.
Costs are based on the house, not the purchase price; 3% is a rough guideline, not a hard rule. Newer houses are less likely to need repairs, so a lower % would be justified.
My costs have averaged around 1-1.5% so far, but you never know when something big happens.
You're right about monthly costs, my mortgage alone accounts for about 60% of my monthly costs.

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dingbat
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Re: Mortgage Problems for First Year Biglaw?

Postby dingbat » Wed Apr 18, 2012 10:16 am

On a separate note, you should always overestimate your costs. If you spend less, you've got money for other things
If you underestimate, you could have trouble coughing up thè extra dough

transferguy
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Re: Mortgage Problems for First Year Biglaw?

Postby transferguy » Wed Apr 18, 2012 2:43 pm

For those of you planning to buy a home within the next 4-5 years, how are you balancing aggressively paying off loans versus saving for a downpayment? Right now I have almost 200k in debt, but I'm trying to aggressively pay it down by dedicating 4k/month to my student loans. However, this leaves me with very little to save towards a downpayment once you factor in NYC rent and other costs. If I scale it back down to like 2k month, that's a decent chunk that I can start saving for a downpayment, but I just can't decide which is the best option.

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dingbat
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Re: Mortgage Problems for First Year Biglaw?

Postby dingbat » Wed Apr 18, 2012 4:58 pm

transferguy wrote:For those of you planning to buy a home within the next 4-5 years, how are you balancing aggressively paying off loans versus saving for a downpayment? Right now I have almost 200k in debt, but I'm trying to aggressively pay it down by dedicating 4k/month to my student loans. However, this leaves me with very little to save towards a downpayment once you factor in NYC rent and other costs. If I scale it back down to like 2k month, that's a decent chunk that I can start saving for a downpayment, but I just can't decide which is the best option.

I'd pay off debt mostly. Set your loan on thirty year repayment but overpay. Then, when you're almost ready to buy a house, minimize your student loan payments and put the rest into saving up for a down payment. Shouldn't take more than a year (and probably a log less if you still got biglaw) to get a downpayment together

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Wed Apr 18, 2012 6:01 pm

Whoever said to get a mortgage and have kids to reduce taxes is spot on. We have a combined income a little over $120k, and our federal tax bill this year was $3500. The reason is that we have three kids and we hit virtually every deduction imaginable -- mortgage, student loan, hefty HSA contributions, unreimbursed business expenses, state taxes, charitable deductions, pre-income health insurance premiums, 401k, you name it.

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kalvano
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Re: Mortgage Problems for First Year Biglaw?

Postby kalvano » Wed Apr 18, 2012 6:13 pm

Anonymous User wrote:Whoever said to get a mortgage and have kids to reduce taxes is spot on. We have a combined income a little over $120k, and our federal tax bill this year was $3500. The reason is that we have three kids and we hit virtually every deduction imaginable -- mortgage, student loan, hefty HSA contributions, unreimbursed business expenses, state taxes, charitable deductions, pre-income health insurance premiums, 401k, you name it.



Right, because a cost of a quarter-million dollars per yard ape over the course of their lives until they turn 18 is well worth saving a few bucks in taxes.

gulcregret
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Re: Mortgage Problems for First Year Biglaw?

Postby gulcregret » Wed Apr 18, 2012 7:12 pm

kalvano wrote:
Anonymous User wrote:Whoever said to get a mortgage and have kids to reduce taxes is spot on. We have a combined income a little over $120k, and our federal tax bill this year was $3500. The reason is that we have three kids and we hit virtually every deduction imaginable -- mortgage, student loan, hefty HSA contributions, unreimbursed business expenses, state taxes, charitable deductions, pre-income health insurance premiums, 401k, you name it.



Right, because a cost of a quarter-million dollars per yard ape over the course of their lives until they turn 18 is well worth saving a few bucks in taxes.


Except for food and clothes, you can pretty much write off everything that kids cost. The savings keep giving back until they are like 26 (if still in college).

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dingbat
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Re: Mortgage Problems for First Year Biglaw?

Postby dingbat » Wed Apr 18, 2012 7:37 pm

Anonymous User wrote:Whoever said to get a mortgage and have kids to reduce taxes is spot on. We have a combined income a little over $120k, and our federal tax bill this year was $3500. The reason is that we have three kids and we hit virtually every deduction imaginable -- mortgage, student loan, hefty HSA contributions, unreimbursed business expenses, state taxes, charitable deductions, pre-income health insurance premiums, 401k, you name it.
i was about to say that ore-income insurance premiums are not deductible but then I realized that you probably mean it's deducted off the start, not as non-reimbursed medical expenses.
I agree, because of kids, mortgage, insurance, my taxable income is 1/3 of my gross
Any tax deduction should be factored into the cost of buying a house, but it should not be your reason for buying.

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dingbat
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Re: Mortgage Problems for First Year Biglaw?

Postby dingbat » Wed Apr 18, 2012 7:39 pm

gulcregret wrote:
kalvano wrote:
Anonymous User wrote:Whoever said to get a mortgage and have kids to reduce taxes is spot on. We have a combined income a little over $120k, and our federal tax bill this year was $3500. The reason is that we have three kids and we hit virtually every deduction imaginable -- mortgage, student loan, hefty HSA contributions, unreimbursed business expenses, state taxes, charitable deductions, pre-income health insurance premiums, 401k, you name it.



Right, because a cost of a quarter-million dollars per yard ape over the course of their lives until they turn 18 is well worth saving a few bucks in taxes.


Except for food and clothes, you can pretty much write off everything that kids cost. The savings keep giving back until they are like 26 (if still in college).

I could comment on the difference between a tax deduction and a tax credit, but I'm going to assume you're all aware of the difference (if not, use google, it's important to understand)

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Re: Mortgage Problems for First Year Biglaw?

Postby Anonymous User » Wed Apr 18, 2012 11:55 pm

Right, because a cost of a quarter-million dollars per yard ape over the course of their lives until they turn 18 is well worth saving a few bucks in taxes.


Well, sometimes they come out when you weren't exactly planning on them to. And sometimes, you just expect one, but more than that show up. (The last bit was our problem.)




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