MsElui

I think you will be fine. You are coming into this with eyes wide open and listening to and taking on board the advice offered. Lots of the wallies we see on this board only want to hear good things as they dont want their rosy image of the golden land shattered. You are already a GC, wife is USC, you have a career with great propsects - You will be fine Im sure.

nadnad

thank you- its still better to know all the hidden truth and be prepared for it. dont want to be a doctor with a huge debt etc after finishing my residency.
thanks all for sharing there thoughts and the advice.

Tracym

Interest only morgtages are a bad idea imo. You're not paying off any of the loan, and if (heaven forbid!) prices go down, you can't even sell the place without coming up with cash.

Dumb me misread the digits on your savings. You should be fine imo.

I have seen some projections that say house prices will go down further. Maybe I'm wrong, but I would very seriously research that before I bought a house in this market.

Yes, in a few years, you could probably buy a second house and rent the first one out - there are not the restrictions on renting, like the UK. If it's yours, you can rent it out if you like. However, being a landlord (especially from a different city/state) is quite a pain.

If you are buying, often, folks are advised to not tie up that much of their capital in a house - especially since mortgage interest is deductible. If you don't have to put that much down, I would think you'd be better off putting more of it in an interest-bearing account somewhere. Keeps your options open - you can get at the money if you need to, plus you'd have it for a down payment on a second house, if that should become necessary.

I'd still suggest renting, at least short term (6 months even?) to know your way around the area, before purchasing.

Longy

Interest only is not a bad thing to do in the OP's case where they will be earning more money in a few years time - it will cut down on costs now and when it balloons they will be earning more money.

Prices are unlikely to be going down much more then they are now. They are talking about putting down $100,000 as well on a $200,000 house - no matter how doom and gloom you are, the prices are not going to drop by 50% further.

I was only saying an example anyway - they can do a repayment and it would only work out at about $100 more then what I quoted over 30 years.

MsElui

That sounds like good advice to me. pay enough of the deposit to get the best rate and then save the rest. can always use it to drop the mortgage further down the line if required -or as tracey says a second home etc.

Longy

Although I definitely think its a good idea to have an emergency fund - at least 3 months wages somewhere, I am still not sure its is a great idea to hold money back from a deposit to save as I haven't found an interest rate that makes it worthwhile unless you have a very low mortgage rate. I see that Emigrant is down to 3.6% APR, and this still has to be taxed. I think my money market account gives me higher then this, but still not enough that would justify holding money back.

I guess it comes down to whether you prefer having smaller monthly payments or a larger backup fund I guess.

ugacrew

If you are aware of the current home loan crisis it is due to interest only loans coming into maturity where people are either in foreclosure or being forced to sell because the payments were a lot higher than expected. Your best bet would be to get a fixed mortgage and in the future if the interest rate should fall, refinance. The security in knowing what your mortgage payments will be 5, 10, even 30 years from now is much better than trying to go in cheap. Trust Tracym and me who are homeowners.

Longy

As I said I was just quoting an example for the OP to show how cheap it could be - I was implying fixed rate interest only, sorry if that wasn't clear. In a few years time they are likely to be earning a lot more money and when it balloons in 10 years time to be a repayment they should be able to cope with the extra $200. This amount would be clear from the start so you would know what you were paying.

But I believe the bulk of the mortgage crisis is due to people getting ARM's

chicagojlo

Concerning your car insurance, nationality or GC status has no bearing on the cost of your car insurance, the cost is calculated from your credit score, your driving history (in the US), the type of car and your zipcode. If one of you has a better chance with this (if your wife lived in the US already and has credit/driving history for example) then you can have that person as the main policy holder.

danfan

Definitely check the insurance coverage. If you do find that it doesn't cover the whole family, Pennsylvania has CHIP - you'd have to be here 6 months to qualify but on your low salary, your child would be covered for all medical and dental bills. Even if you are just above the threshold for free coverage (around $34k for a 3-person family), you could get it for $30-40 a month.
http://www.chipcoverspakids.com/

ugacrew

Okay. That makes MUCH more sense now. We got the terminology out the way. I agree then.

To the OP. Stay away from ARM Loans like the plague. Run away from them. Also if the mortgage company says you can afford X amount of dollars, don't try to fit that figure. Shop for a home that is a bit under that quoted figure. Just be sure that your mortgage and home expenses don't exceed 38% of your annual income. That way you'll be able to live comfortably.

I'd definitely lease your first year so you can get the lay of the land. You want to know what school districts are good, where the crime is low, areas with good home owners associations, and a place with a good reputation and growth. Plus you'll never know if you'll really like Pittsburgh. You may not. You'd be in a much better position to move after your residency to any hospital nationwide. Perhaps a city that doesn't get so much snow.

BritGuyTN

I have to disagree with most of this post, and just because you are a homeowner this does not qualify you to talk about mortgage financing with any particular authority

the mortgage mess is due to crappy adjustable rate mortgages, NOT interest only mortgages (I have no idea where you got this from), please note I said 'crappy', many adjustable rate mortgages are completely reasonable, for example if they adjust in 3/5/7 year time frames

bear in mind that virtually ALL mortgages in the UK are adjustable rate and people don't get into the mess they have in the USA

the problem has occurred with stupid/ignorant/greedy/poor people biting off more than they can chew or dishonest mortgage sales people selling mortgages to people who had no business owning a house in the first place

MOST interest only mortgages are interest only for an initial term like 10 years then they revert to fully-amortized

As Longy points out, if their income is expected to be higher in a few years time then an interest-only or ARM or an interest-only ARM (SHOCK HORROR) mortgage could be perfect.

when I moved here my wife was making a fairly mediocre salary but was in law school. Since it was her desire to buy rather than rent we were splitting the mortgage payment 50/50 and a 30-year fixed rate would have made things a lot more expensive; so we got a 3 year ARM at 4.25% and saved a LOT of interest

We then refinanced into a 7 year interest-only ARM at 6.25% (with cash out to buy some land) at the end of the 3 years

BUT

Our mortgage is still only $245k total. I would NOT recommend doing this if you want to spend half a mil.....

BritGuyTN

Terrible advice

Good advice

ugacrew

My terms were mixed up if you read my later post.

Xebedee

Yup.