FHA loan or Retail loan?

Im still not confident we are at rock bottom prices. They said that 2 years ago when i bought and they dropped another 20% here.

Quote from d0min0 : I guess I am so eager to invest in a home because someone told me "your 100k will still be 100k in 5 years if you don't do anything with it".

Technically that's an incorrect statement. If you leave your $100k in the bank even at a good rate, say 1.25%, in 5 years it will actually be worth less due to inflation.

Not only that, but the last 5 years should have taught you that real estate can be a risky investment. Some would argue that we are not at rock bottom prices because of the interest rates. Lower interest rates give you more buying power. If the interest rates rise, prices would have to come down, as less people would be able to afford the same house at a higher interest rate.

If you are just looking to invest your money, why not looking into some low fee indexes or etfs?

Quote from d0min0 : What if I decide to move further down south to San Jose, CA? I see a few for 325k that are decent. If I down 100k, my monthly would be around $1400 including property tax and insurance. If I make 3000 a month, I think I would be able to afford it right? It would be cutting it kind of close but thats why I have another 100k in backup money. I really just don't want to miss this chance of the rock bottom prices. If I don't do this, my money is just going to be sitting idle collecting next to nothing interest. I guess I am so eager to invest in a home because someone told me "your 100k will still be 100k in 5 years if you don't do anything with it".

That is a whole other scenario with a 225k loan amount.
Lots of opinions on whether or not now is a good time to buy.
In every case you need to look at your own personal 'big picture' and whether ths makes sense to you. Everyone's scenario is unique and priorities are different from person to person, so there is no sure fire answer.
Does moving to San Jose make sense for you?
How far a commute to work is it? Are you going to be happy living in that home or are you just doing it as an investment you will be locked into?
If this is primarily seen as what to do with 100k, and depending on yuur nature, what about purchasing a 2 family where you also have some cash flow coming in? This is not for everyone but definitely something to consider (i.e. owning in an area with a strong rental market).

Admittedly I can relate a lot to your desires to purchase and commend you for having the ability for a 100k down payment (and hoping you have other monies for reserves and general maintenance that accompanies home ownership).. Despite currently owning propertiy I bought at the top of a market when looking back over the past 30 years since I purchased my first home, some of the most serious chunks of money I have made was through the Real Estate I owned. In almost every case the key for me was to be prepared to stick with it for periods of time longer than planned, and always have a feasible contingency if your life circumstances change.

-Adam
.

Don't buy a house as an investment.

Quote from Formless : You don't need 24 months of employment to go FHA. You can do it, but you're going to have a tough time. If your income is $40M, that is $3333/mo before taxes. Assuming you go FHA, put 3.5% down and the closing costs are as high as I'd assume they'll be (enough to make a serious hit on your savings), that's only the beginning. Your monthly payment on $396M ($400M after 3.5% down) will be over $2000/mo. That alone puts your Debt-to-Income (DTI) above 60%. This is pretty high, and if you have other debts, it will be way too high. To get a real recommendation, we'd need some more information. What are the taxes on the property you're looking at? Normal costs for homeowners insurance in the area? Flood insurance needed? Fees for whichever bank you're using? Etc.

dude please change those "M" into a "k"

Quote from daniel32 : dude please change those "M" into a "k"

In Standard American English (SAE) measurement, M = thousand and MM = Million.

k is a metric unit of measure and isn't compliant with use for U.S. Dollars. If we were having a discussion in Euros or another form of currency, I would use k.

When you work with a financial institution, be prepared to see numbers in proper units and not our American slang. $3M = $3,000. $3MM = $3,000,000.



On topic, however, at a $325M home, and putting $100M down at closing - you've still got to cover the closing costs. They're going to be substantial. As I said before, even at a $150M purchase, you're going to struggle with a $40M/yr income. If you really want to buy a home and can access $200M, buy the $150M house with cash.

If you're simply trying to invest - don't buy a house. Invest in the usual investments. If you're young, be aggressive. Buy a house because you want to live in it. Once your income improves, you can start to look at an investment house.

Quote from Formless : In Standard American English (SAE) measurement, M = thousand and MM = Million. k is a metric unit of measure and isn't compliant with use for U.S. Dollars. If we were having a discussion in Euros or another form of currency, I would use k. When you work with a financial institution, be prepared to see numbers in proper units and not our American slang. $3M = $3,000. $3MM = $3,000,000.

K
an informal abbreviation for one thousand used in
expressions where the unit is understood, such as "10K
run" (10 kilometers) or "700K disk" (700 kilobytes or
kibibytes). Note that "K" is also the symbol for the
kelvin (see below). Also note that the symbol for the
metric prefix kilo- (1000) is actually k-, not K-.

M [1]
informal abbreviation for million in expressions where
the base unit is understood, as in "500M hard drive"
(500 megabytes or mebibytes). In chemistry, M is the
symbol for "molar" (see below).

M [2]
the Roman numeral 1000, sometimes used in symbols to
indicate a thousand, as in Mcf, a traditional symbol
for 1000 cubic feet. Given the widespread use of M to
mean one million, this older use of M to mean 1000 is
very confusing and should be scrapped.

http://www.unc.edu/~rowlett/units/

Quote from d0min0 : What if I decide to move further down south to San Jose, CA? I see a few for 325k that are decent. If I down 100k, my monthly would be around $1400 including property tax and insurance. If I make 3000 a month, I think I would be able to afford it right? It would be cutting it kind of close but thats why I have another 100k in backup money. I really just don't want to miss this chance of the rock bottom prices. If I don't do this, my money is just going to be sitting idle collecting next to nothing interest. I guess I am so eager to invest in a home because someone told me "your 100k will still be 100k in 5 years if you don't do anything with it".

That would be an old way of thinking. Nationally over the last 5 years, the value of a house has not appreciated, it's depreciated. Now house prices should appreciate, but it's not likely you are going to expect the boom people had previously. Making this kind of big decision for just an investment seems like the wrong way to go about it. Your $100k can be put to other uses (that are much more liquid) rather than just sitting in a savings account, if you just want to earn a better rate of return.

Quote from nizzy1115 : K an informal abbreviation for one thousand used in expressions where the unit is understood, such as "10K run" (10 kilometers) or "700K disk" (700 kilobytes or kibibytes). Note that "K" is also the symbol for the kelvin (see below). Also note that the symbol for the metric prefix kilo- (1000) is actually k-, not K-. M [1] informal abbreviation for million in expressions where the base unit is understood, as in "500M hard drive" (500 megabytes or mebibytes). In chemistry, M is the symbol for "molar" (see below). M [2] the Roman numeral 1000, sometimes used in symbols to indicate a thousand, as in Mcf, a traditional symbol for 1000 cubic feet. Given the widespread use of M to mean one million, this older use of M to mean 1000 is very confusing and should be scrapped. http://www.unc.edu/~rowlett/units/

While I agree with Dr. Rowlett's opinion that is should be scrapped (and that we should adopt the metric system formally), he is wrong in the context of finance. I respect his background and bredth of experience beyond my own, but his statement doesn't meet reality today.

I work for a large financial institution and interact with dozens of other large, medium, and small financial institutions daily. The proper way of stating $3,000 is $3M - The literal translation is based on multiplication with M, the Roman Numeral for 1,000, and not a simple abbreviation for thousand.

$3M = $3 * 1,000 = $3,000

We do not use k. We use American English units only for professional reasons only. While most of our customers will never have to deal with these abbreviations, internally k is unacceptable. A customer almost never receives paperwork with monetary amounts abreviated. If they have $50M, the paperwork will say $50,000.00. If there is an abbreviated amount, it will tell you in a key that all amounts are in thousands and use no abbreviation units.


While I agree that we should use our colloquial measurement system as our formal replacement, it still isn't proper. When I provide advice, I try to do it properly and in a standard format. Until the US officially changes to the Metric system and the finance industry standards change, I will continue to use standard units.

I can communicate with anyone using the k and don't typically try to correct them. As I said, I'm fine with it - I simply won't use it myself when referencing a USD amount.

Quote from d0min0 : What if I decide to move further down south to San Jose, CA? I see a few for 325k that are decent. If I down 100k, my monthly would be around $1400 including property tax and insurance. If I make 3000 a month, I think I would be able to afford it right? It would be cutting it kind of close but thats why I have another 100k in backup money. I really just don't want to miss this chance of the rock bottom prices. If I don't do this, my money is just going to be sitting idle collecting next to nothing interest. I guess I am so eager to invest in a home because someone told me "your 100k will still be 100k in 5 years if you don't do anything with it".

OP i'm a little confused, you stated you make $40k/year, but here it looks like you TAKE HOME $3,000 per month. At $40k/year I would think you take home considerably less.

What do you actually take home each month after 401k, taxes, etc?

Investing in a home now isn't a surefire win, like other's have stated I bought when interest rates and prices "bottomed-out" and my house has decreased in value ~20%, so if you bought now it might still decrease in value.

If you just want to invest, have you looked other routes? I'm overall happy with "Lazy" Vanguard Mutual Fund Portfolio's I'm in...