Stupid question - how do you afford more than a $200k home?

[alison]

I don't have any advice, but for Chicago, I have NO idea how one could afford a place on a residency income.

Dh wouldn't survive on his income alone, unless he were to rent a studio. There's no way he'd be able to afford a condo (+condo association fees, maintenence).

We decided not to buy (even on two incomes and NO debt) because we still aren't able to afford an area that we like.

I know this doesn't help, but NONE of the single (income) residents in dh's program own.

[Michele]

We're doing an interest only loan right now until I start working...but still it's only saving us a couple hundred a month. We were lucky in that we matched in a place with a low COL.

The appreciation and equity of the last house. Otherwise, I don't know. Do you think you will have about the same rate on your mortgage? That could help a little.

The fact is you can't unless you have income coming in from somewhere else or you live in an area with a very low COL. We bought in 2004 but we were only able to do it with 2 incomes AND help from our families. DH's family provided us with a 20% downpayment and we did an interest only loan for 7 years.

[alison]

You won't need 2 cars in Chicago. You can get around easily with public transportation. We have one and it's so expensive to keep it here in the city. We pay $280 in parking in a garage down the street (from our apt.). And dh pays for garage parking at work too. We calculate it into the rent, which puts us at close to $1400 for a one bedroom.

My building doesn't allow dogs, and most buildings I know of that do allow dogs have a weight limit on them.

If you're bent on 2 cars, big pets, buying a place, Chicago is not an easy city. I'm excited that you like the Chicago, but I'm just trying to give you a realistic picture. If you don't want to hear me bitch and moan, then just tell me to shut up! After all, it's supposed to be an exciting time for you!

Lily, most of the time I have lived in high cost of living areas. As others have noted, the major trick is to have had previous equity and shift that over. If you are a first time home buyer, its tougher.

My biggest suggestion is to wait one year to buy - - even in Chicago or Connecticut there are those under the radar, relatively speaking bargain areas, neighborhoods, or suburbs. But you won't know about them until you get there and explore. There is also the "transitional" neighbhorhood route - - it has been lucrative in the past ten years, my hunch is that it will be alot less lucrative for buyers now unless you are very careful about location.

Also, if your residency is on the shorter end, renting can be a great way to go. I know that there is this "throwing money" away issue people have but I have known quite a few medical folks to end up losing thousands, even tens of thousands of dollars, getting too cute with short-term buying and then not being able to unload their house . . .

[SuzySunshine]

Lily, just don't get yourself into a house that won't allow you to go back to law school. We probably spent more on our house and our cars then we should have, now we're stretched to the point that I have to work at least through '08 when the cars are almost paid off, ideally I would be staying home when the little one arrives.

[alison]

I would LOVE to have a pet, but 1) I'm allergic to cats, which most apts. allow 2) I want to travel without having to pay for a doggie spa, and 3) I don't want one of those silly designer dogs with bows and shit, just so that it meets the weight requirement. 75 lbs of dog is a lot for the city, but you WILL find a place that allows it.

Someone suggested renting for a year. I think that's a good idea. Get a feel for the city and which neighborhood fits you before you buy. I could tell you where I'd want to buy in Chicago, but that's only because I've lived here for 6 years. I wouldn't have known within the first few months of living here.

If you are going to be there for 6 years, I think that renting for the first year is a good idea. You will get a better feel for the area that way and owning for 5 years after that should make it worthwhile. But I know it is hard to find a place that takes dogs.

[DCJenn]

We always have rented first, and we just accepted that a larger part of our income was going to go to housing costs.

As my SIL says, "everyone stretches when buying a house." Don't know if a recommend that strategy to everyone but it's worked so far for us. We are actually pretty glad now that the DC house didn't sell because we think it will appreciate even further. It's in the last "untouched" neighborhhood that doesn't include crack houses.

The key is savings if you're a first time home buyer. Put as much away as humanly possible. (savings is key for all purchases but really important for the first one) The more you have to put down the lower your interest rates. Every single extra bit of income went to that savings account- even things like 13 dollar checks from overpaying a bill.

Jenn

I agree, renting first is the way to go. We moved here 5 months ago and are renting for at least a year, probably two. And during residency we rented--we could not afford to buy. Our rent was about $1200 and we could only really afford that because both of us worked.

[Vishenka69]

I'm really happy we didn't buy 3 years ago. We'd be house poor and the prices have actually come back down to what they were back then, so we wouldn't even make anything on the sale. I can't speak for other places, but in NY almost all programs help with housing by either providing subsidized apartments (pets are almost always allowed) or giving cash. Definitely look into this option as at least a temporary solution. I don't know if you can still get the cash if you buy.

Check out rental options on craigslist and make sure to filter for pet-friendly properties.

Speaking of pet-friendly, it was hard for us to find a place that accepted pets here. I didn't realize that this would be such an issue.