How big a cushion?
As I’m sure you’re all tired of hearing by now, we’re buying a house. OK. So we have to decide between a construction loan and paying cash for the repairs. The construction loan will cost more in a myriad of ways. But if we pay cash, we will have only $10,000 to $20,000 left over…
As I’m sure you’re all tired of hearing by now, we’re buying a house. OK. So we have to decide between a construction loan and paying cash for the repairs. The construction loan will cost more in a myriad of ways. But if we pay cash, we will have only $10,000 to $20,000 left over for emergencies. Vs. we would have $40,000 left over if we paid way more for a loan. (The loan will cost us $&,000 more a year, among other things.) This is an old house, and there will definitely be some emergency repairs. How big a cushion do you think is reasonable?
mopar, a HELOC sounds like the way to go. When we bought 2.5 years ago we simultaneously got a mortgage and a HELOC from the same bank. We needed the HELOC to use as a bridge loan until we sold our old apartment, rather than renovations. I thought it was insane that I could get a home-equity line on an apt I didn’t yet own, but the mortgage broker said “I do this all the time!” Turned out to be true. Good luck with it all.
That’s for sure.
“I would never ever buy anything, be it a house, a car, or even a kangaroo, if all I’d have left afterwards was anything less than $100,000.”
how many people can really say this? that would be nice but realistically, most people buying houses are putting most of their money into it one way or another.
Oops, BushwickBK.
“Every smart investor knows it’s best to be frugal and invest wisely, but our government is trying to encourage reckless spending as a means to “solve” the current economic crisis.” I agree, IronBalls. Bet we run into a huge problem around 2010 or 2011 when the US can’t borrow any more. But even then, ten years later, things should improve, as they did in Russia and Argentina. I understand Sweden had a similar problem and did borrow and it worked out.
Theandrewlee, the house is in the low 400s, has almost all the original details, and needs at least $60,000 of mechanical and structural work, including all new electrical, new windows, new boiler, some plumbing. The electrical system dates from 1900-1910 and is 30 amps with glass fuses.
Just FYI, most two-families in Bushwick are in the 400s at this point (even if the list is more). Most are structurally sound with updated electrical and plumbing but have had all the details removed and you’d probably want to re-do the kitchens and baths. But you wouldn’t have to. See BuswickBK for more details.
The US is in the process of becoming the equivalent of a “sub-prime borrower” nation.
In a sense, it’s hilarious. Every smart investor knows it’s best to be frugal and invest wisely, but our government is trying to encourage reckless spending as a means to “solve” the current economic crisis.
It won’t work. Obama’s plan to dump hundreds of billions (simultaneously ballooning the national deficit) will be sucked up, stolen, and wasted just like every other dollar of government spending.
The housing market is going to continue crashing no matter what, but unfortunately when it eventually hits bottom, the road to recovery will be much more difficult because of the enormous amounts of debt Bush and his new buddy Obama have strapped on us.
I’m not tired of hearing that you’re buying a house.
Do you mind if I ask how much you paid, and what shape the house is in?
Mopar, talk to your bank and make sure you can, but I got one, and I don’t have stellar credit (good, but not stellar) and we did lose equity.
Well as long as you are happy that is what is most important. I just think that prices are going to go down another 60-70 percent. The real estate agents really over did it with their greed.