You’re getting engaged leading to marrying your sweetheart and best friend, right?
You’re having a ring made up for a few thousand or a lot more! You are trying to figure out from her tastes and other’s opinions, and after some careful planning, you now will hopefully have some idea as to what she will be happy with. But should it be round, oval, pear, emerald, marquise, etc.
So many decisions and this is just for an engagement ring; wait until you plan for your wedding, oh boy, even greater decisions are to be contemplated.
Eventually, you both will need a place to live.
Do you start in a rental, assuming you do not have a down payment, for the most reasonable abode to purchase, a coop?
Can you borrow from both your parents? Will you need a cosigner or guarantor for the mortgage or the coop board.
Maybe you can buy a condo or even jump to a home; big questions will be what your lifestyle for the next three to five years will be?
Planning to have kids right away, maybe wait 3 years? So many questions and situations to figure out, so you can make the right move on possibly the most expensive decision you will have to make at that time.
How much time will you need before the engagement or marriage to search out where you will live?
Maybe you will live together first; but do you rent or buy? You will need a partnership agreement, if, unfortunately, the marriage doesn’t occur.
Who will buy each other out?
A rental may be the best place to start, but it all depends on your current and future plans.
Renting in many, many markets is now more expensive than owning. Many will find that you are better off being your own landlord and receiving the tax writeoffs, potential future appreciation and safety of not having to move; due to the landlord not renewing your lease, since his kids are coming back and he needs the space.
You will be in more control when you are in an ownership position.
Then a reality check smacks you right in the face and the issue arises, can you come up with the down payment, which can be as little as 3 percent to 20 percent, depending on the area you plan to settle down in.
What is your income, credit scores (over 700-740 will give you the best rate) debt/income ratios.
My son just received a quote from Wells Fargo for 3.375 percent last week, for a potential very large purchase in New York City), so rates may be the lowest for 2016.
Are you both purchasing or just only one will be on the hook for the mortgage? I have seen some couples spend $1,200 up to $5,000 per month on Long Island for a luxury rental.
Some young couples are strapped with large student loans, but also, even some higher earners, many, doctors, lawyers, engineers and accountants who have he income, have not yet accumulated the up front dollars.
There are creative ways to be able to get the money and one must think outside the box.
Depending on how long you have been working, you may borrow from your retirement plan for a primary residence, medical and education without penalty, assuming you have squirreled away enough.
To me renting is such a dead end street; but I also realize many do not know where they will eventually settle down.
A job opportunity could make one move out of state, so a rental is less obligatory than a mortgage.
However, I feel all things being equal, if you are staying in place for three to five years, the tax benefits and potential appreciation in the future, will provide a better situation.
Then, if you have to sell, it will be more advantageous, than looking at all those cancelled checks from a rental over the same period.
Again, this maybe a different scenario depending on what state you are located in. There are programs that are available (I use one) that can show you a rental vs. buy analysis and provide an excellent way to calculate which direction you might want to pursue.
My daughter never rented and immediately bought a coop in Bayside (we never charged her any rent and let her accumulate her down payment).
She stayed home until she was 28, after working for seven years, I then assisted her locating her first coop.
After she got married, we sold her penthouse 1 Bedroom and we found her a home.
However, my son rented for several years in New York City, where the prices were truly insane, but then 4 ½ years ago he bought a Condop (hybrid of a condo and a co-op), only had to put down 10 percent, (paid P.M.I.— private mortgage insurance — due to less than 20 percent down) and then renovated. The bank reappraised the apartment.
The value increased substantially and because of this, he created 20 percent equity in his unit, they took off the P.M.I., which had added $175 per month to his mortgage.
I never lent any money to my kids, they did it on their own.
But some parents will assist their children, which is great; but I believe, if they have excellent income and credit, they can save the money, but they have to be disciplined and create a solid savings plan, and have a goal.
Owning your place is still part of the American Dream and one should strive for it!
Real estate will continue to appreciate, assuming the world economy doesn’t have any great hiccups and China’s economy doesn’t become worse.
There will always be cycles in real rstate as well as all other financial investment sectors.
We all want to buy low and sell high.
However, where there are winners, there will also be losers! Winners usually plan and losers may not do enough.
So, figure it out and do as much questioning, calculating and planning as you can and then make your move, so hopefully you too will be potentially be a winner. I became a winner last week, when my daughter gave birth to my second Grand Child, Charlie.
There is nothing like being a grandparent, nothing!
Philip A. Raices is the owner of Turn Key Real Estate in Great Neck. He can be reached by mail: Phil@TurnKeyRealEstate.Com or to search for property go to: WWW.Li-RealEstate.Com or to phone: (516) 647-4289.
