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Author: Richthofen80 CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 127710  
Subject: Re: How much house? (long) Date: 6/27/2008 1:06 PM
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CPAScott,

Congrats on a great income. I'm also from Mass. (Malden) and I see you're looking at $400K- $500K. I'd recommend looking at $400K in central mass... that buys you a LOT of house out there, and trust me, all you have to say to a buyer is that I don't qualify / can't afford a non-conforming loan. You've got a good buffer but it could easily be wiped out by a departing renter or other emergency. However, why are you carrying all this debt in the first place with such great incomes?

If I were you I'd dump the underperforming condo for a loss, and pay cash on the difference. This will shore up your balance sheet. Trust me, because people all over the country are becoming 'accidental landlords' you could see the pool of tenants for your condo dry up and you could be in trouble. Sell now while its summer, because sales will dry up again in the winter.

As a matter of fact, if right now you have around $4000 extra every month after bills are paid, you should spend the next year paying off all of your debt, because frankly you're doing great and can afford to do so! Think about it: by next year you can get your student loans and auto loans completely paid off with that difference. Once that's done you will have way more wiggle room, and by that time home prices will probably have ticked down 5-7%, probably making all the homes in your desired type fall under conforming loan. If you get all that debt paid off and move the underpeforming condo by the wintertime, you could house shop in Dec-jan, when you're strongest buyers market seasonally occours.

You mentioned having $50K in non-retirement investments... don't be afraid to cash some of that down the road for the full 20% dp. Having one company to worry about is definitely easier for mortgages, and also you're in a stronger position. With all the positive cash flow you have, you can make up that money in no time. Plus the bear market will prolly end in 1-2 years, and keeping that money on the sidelines later this year might def. help.

Good luck, and again, congrats on the successes.
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