Yep, kinda sorta like that.

While you are correct, that leases are often abused by a public that doesn't understand them, that in no way means that leases are worse.

If you are purchasing a car without financing, the advantages of a lease are diminished significantly, or erased. I could argue that leases will have certain non-monetary advantages but they will cost very slightly more. However, we are not talking about a paid in cash situation. We are talking about a financing situation and leases will usually cost less than buying.

Many people think that a lease is paying for the "use" of a car. It is not, it is paying for the value that the leaser (lessee officially) will use. This amount is established by taking the value today minus the estimated value at turn in, this is usually called the residual. For example, a $40,000 with a 65% 3 year residual will have value used of $14,000. The way this helps is because even though lease finance charges are typically slightly higher, you are paying financing charges on $14,000 instead of $40,000. Using a 3% interest rate (because I can do 3% in my head) the first payment on a purchase has $100 of interest in it, while the first payment on a lease has $63 of interest and payments. When all is said and done the less that you can pay the bank in interest charges, the better.

At the end of the lease you can purchase the car by paying the $26,000 if the car is worth more than the residual. If the car is worth less than the residual then you can turn it in. In our example if the person who has a lease decides he likes the car and wants to keep it. Getting an additional 3 years of purchase financing on it. His overall cash outflows will be about $1,500 less than someone who purchased originally.

Personally, I do zero payment leases. I lease cars that cost in the mid to low 40's. I put back $325 per month in a savings account, just as if I was making a $325 car payment, then I find a car I want to lease, the amount I owe is, of course, the price minus the residual, which I pay in full on the spot from the savings.

The insurance that is included with your mortgage isn't homeowner's insurance. It's mortgage insurance. For when you default on the loan. You will still have a couple of hundred of homeowner's insurance to deal with every month as well.

My car note is 0. And has been for 5 years. That is what you get when you buy a car. We still bank the cost of a car note every month in savings though.

Our winter utility bill is in the $250 range, and I live in the much warmer South and the utility buys TVA power. No oil fired boilers sucking up $400 a month. $150 is a pipe dream on an older house unless you do some sweat equity and insulate the heck out of it and switch furnaces.

There is a good chance the OP won't have to pay mortgage insurance (PMI). Lenders generally waive that when the loan is less than 80% of the value of the property.

John, the fun part of life is the journey - not so much the destination.

I feel that you are trying to arrive too soon.

The insurance that is included with your mortgage isn't homeowner's insurance. - The figure he is quoting includes escrow for property tax and homeowners' insurance.

My car note is 0. And has been for 5 years. That is what you get when you buy a car. - Assuming you financed the car, you can get that when you lease a car too. I have bought several cars that I leased first. I just paid a little less than other people who financed a car. If on the other hand you chose to pay cash for a car, then stop doing that.

The same thing holds true for cars as mortgages and any other type of loan. The only costs that matter are those that are in excess of principle repayment. Those are your actual costs. People often to struggle with things that are not equal, but in the end, how you choose to finance a car matters a lot less than the total cash you paid. Leasing before buying removes less cash from your pocket than buying alone. The rest is just people being bad at math.

But bry911, you can't lease a used vehicle. Sometimes it is smarter to buy used.

But bry911, you can't lease a used vehicle. Sometimes it is smarter to buy used. - Yes you can. It is atypical but I have personally done it a couple of times.

Just a comment on the car side -- buying used can be smart. We know folks who buy luxury models used as a matter of course -- never pay for the "new" factor and save a lot of money on cars that are maybe a year or two old. But it can also be a disaster.

I know someone who bought used and a year and many repairs later wanted to get out from under the deal. They were so upside down that they owed about twice what the car was worth. And if you aren't smart, haven't done your homework, have weaker credit, used car dealers can really stick it to you. The interest rates on used cars are higher, there are no manufacturer incentives and the dependability can be questionable even with researching the history of the car (Carfax only reflects what has been reported).

With any major purchase -- anything so big you have to finance it (not counting using a zero interest period you know you can pay off before you get slammed, but they could be a trap for someone like the OP), you really have to do your homework -- do the leg work and shop around, do some research and do the math -- and plan for a few hiccups. Pretty much the same this we're saying about a home......

My fiancé have not started working her new job yet but I was looking to see what everyone thought will be our projected income as she was making $38,000 prior and was bringing home about 2,300 a month after benefits so since she is salaried and soon to be making 46,000 a year I am Curious in seeing what her range may be in your opinions

Why are people still responding to this guy? His story keeps changing and he keeps asking the same questions over and over--not understanding or accepting any of the wise counsel he has received.

If you want to know her projected income there are literally 1000's of online calculators available that will account for taxes, etc.

Go talk to a local bank and then come back and post. Two recent job changes and two low incomes in a high COL area mean that most of this is a pipedream to keep him from being bored. I wonder if there really is a girlfriend? Or is that simply a case of transferrance from those two session of therapy two years ago.

Cool story bro .

Well, John, I wasn't going to comment on this thread hoping you would realize that at this moment a house would not be a wise move for you. You haven't so here goes. At one of my previous jobs the manager hired a young man that sounds just like you. He has ADHD. It was hard for him to learn new things and retain the information. He lived at home with his folks. He was hyper and didn't always take his meds. We would find his pills scattered on the break room floor. We would try and keep him on track at work and cover for him but it didn't really do any good. Eventually he was let go, it didn't work out. He has had more jobs in the last few years after being fired. Either he didn't like it or was fired. He is still living with his parents, working at a part time job, but how long that will last is anyone's guess. John you seem to be all over the place and don't want to be realistic about what is in front of you. You don't want to hear the majority of posts that say No to purchasing a house right now. There is always another scenario that you put forth to counteract what they have to say. It's just my lay-man's reading on your post and dealings with a co-worker with ADHD, but I don't think you are ready to make such a huge financial purchase until you get yourself in a better mental and medical way. That is just my take on it. Please drop this for the time being. I wish you well in your strive to get healthy. NancyLouise

Hi Nancy thank you for your feedback. If the gift money isn't the full 200k then we will wait and continue to save. I'm not sure how frequent an opportunity like owning a home with a 1400 a month mortgage happens around here in a really good low crime area near our parents. It's really a good scenario I feel. If my fiancée makes anywhere close to 3,000 that will help us as will my second job. There's a 65k government job she applied for in her field so there are def opportunities out there for her to go deep in her career.

So the future looks bright. Get your ducks in order, get your credit in line, have stable employment (at least one of you for crying out loud) and then think about buying a house. The more you say, the less I believe you should buy now. And I wasn't thinking you should buy now to begin with.

I don't know what interest rates you are using to come up with your hypothetical payments and I haven't looked at any mortgage calculators -- that's your homework, but if you should find someone willing to give you a loan, your interest rate is not likely to be the ones you see advertised. Those are the best possible rates. Even with a large down payment, I'd be surprised if you could get the best rates.

I still call BS on this story. Every post contradicts previous ones. Seems like someone just craves attention.

If your dad really buys and sells houses, why is he not buying one and you buying it from him? If stuff doesn't add up; it is usually not true.

Both you and the gf appear to be jumping from job to job to job.

Wish in one hand and (you know what) in the other hand; see which one fills up first.

What a waste of time.

Gardener, your suggested points and thoughts on my fiancée and I are completely off base. She is in the same field and has been for years whereas my field has always also been health care whether it's for people or animals. My father doesn't buy and sell houses. He owns real estate in NYC and sells it for profit. Thinking of flipping. Investing then selling to make a profit. So again you are completely off base.

Las, the interest rate when I called up and gave them our numbers was 3.75. We have always projected at 4.5 or 5 percent so no worries there.

So....do you still have your job, John? Is your workplace under a bridge by chance?? LOL

As of now yes I still have a job.

Good one, stolenidentity. :)

Your dad flips houses and is not selling one to you?

I think he is an investor in property, not a flipper. I think he buys property, holds it, and then sells it higher. maybe commercial? At any rate, he should know about financing and expenses and be giving advice. Perhaps he advised against it and that's why John wants people here to say its ok. Or dad just wants him out of his house!

I'm not going to repeat the advice others have given you, but my own experience: back in the early-mid eighties when I got my first permanent job (hmmm -- I'm still working there!) I wanted out of my parent's home and they wanted me, out too. I loved them to pieces and they loved me back -- but expectations change (on both sides) especially in my case when I'd been away to college and then came back home for the Job Hunt.

SO as soon as I could, after six months of full employment, I found a budget condo and moved. It left a lot to be desired, but the payments were equivalent to most car payments back then. (My parents did buy my first car, but I've purchased all my cars since that one.) At any rate, I was able to squirrel enough money away by NOT having a hellish mortgage, and I did get a little equity, too. This meant I was able to put down about 40% on my current house (not real fancy but it has privacy and it is a decent neighborhood, even though the kitchen and the steep driveway are not ideal), when I was ready for that. I got a 15 year mortgage and paid that one off in 13 years. This is helped me save for the dream house I am building now.

$300 a month for two phones?

I have one of the lower end phone plans available to me in my area with the lowest data usage (for internet) available. It is $150 a month. I could get one for less but I wouldn't have internet at all. The two of us pay almost $300 a month for very simple plans. (We are each on our own). This is not out of the ordinary in my location. I don't think I know anybody with a phone plan under $100 a month that has a cell phone. Maybe my 91 year old dad who has a no internet plan and extremely limited text or pay-for-text.

Part of the problem with these sorts of threads (and I agree that home ownership is not the best route for the OP at this juncture) is that people start picking apart every expenditure whether or not it may be typical for the area the individual lives in.

Sure some of you probably were able to put down 50% on a house, and buy your car in cash ( I did both, actually, but we all know that is extremely atypical) and have a $39 a month cell phone bill and pay $15 a month in utilities. Whatever. The entry level for a house in my neighborhood, which is not a fancy neighborhood is now $500,000+. It costs $300 a month to park your car in a garage or secured outdoor lot. You can buy a parking spot condo for $50,000 to $100,000 and then pay a monthly carrying cost. Until a couple years ago, car insurance would have doubled my monthly car "payment".

Not everyone lives in a LCOLA. And a lot of the people who live in HCOLA don't make as much as they would in a LCOLA, or at least not significantly more. I sure don't.

I know this is getting off topic, but the cost of John's phone bill is relevant only to the extent that it comes out of his salary. Whether or not you think $150 is extravagant for a monthly bill, isn't relevant. That may be what it is.

Except, it shouldn't be. HCOLA or not, phone plans are national plans. Find one that is less expensive. I pay $70/month in HCOLA for 2 cell phones with data and text. (Keep looking, and don't pay for your phone through your provider).

There are ways to optimize. John hasn't found them yet, because he's never had to. His main expenses are fully paid, so only has to pay for the "little things", which he's been able to have at an extravagant cost (or at least not a level commensurate with his pay scale).

Part of living on your own, and not having it all paid for, is to learn what is necessary, what is a want, and what can be reduced or cut back. I don't think he's had the benefit of that step.

Except, it shouldn't be.

It shouldn't? Why not? Because yours isn't?

You have two phones for $70. Congratulations. I don't want to get into an argument about why my phone plan is so stupidly expensive, I agree. But I have the most common carrier in my area, the most reliable carrier, and the one with the best customer service as rated by independent sources. A number of decent carriers in my area will no longer sell plans to people who've bought a phone on Amazon. My usage pattern in unusual. I don't want to stand on my porch to get better reception or to get my initial connection to the internet like some of my friends do in my house.

These sorts of arguments get circular. They remind me of the sometimes bizarre and non-productive discussions I used to have with my mother when I first moved to this area (Where she had been born but left 50 years earlier)

"You know, ____ is a nicer neighborhood. I think it would be great if you got a nice condo or little house in ____, instead of your neighborhood."

Sure, but a condo or house in _____ costs $5X and in this neighborhood the same thing costs $3X.

That's ridiculous, I would never pay $5X for a house in a million years. And $3X is too much for a house in the neighborhood you live in.

But that's what it costs.

And that's ridiculous, nobody pays that.

-----

Why did you get rid of your car? You owned it free and clear?

Because it would cost XXX in car insurance here because I am under 35 and that's 4x what I was paying in insurance, and it would cost $100 a month for me to park it in a secure but outdoor space.

That's ridiculous, park on the street, you can get one of those resident stickers and that's free.

But the car would get broken into on the street.

That's why you should live in ____ instead of where you live. And if you need to park it in a garage, do that.

Well that would cost X and that's why I am not doing it.

Well no one should have to pay that. I am sure people don't. And it's very inconvenient to not have a car.

-------

You should get a cleaning lady to come in once a week.

I don't want to spend over $100 for someone to come in for four hours a week to do a quick cleaning of the kitchen and bathroom and a once over.

That's ridiculous I pay mine $9 an hour and she does everything I can't do and it takes her a lot longer than 4 hours.

Well here it's more like $25 an hour and you have to straighten up first for them to clean.

Well you should get someone like I have.

Mother, what you have would be called a Maid here, and I would have to pay her a lot more than what you are paying for her to do what yours does.

Surely people don't.

And On and On the Circle would go.

Agree, pal. Related, but not rebutting your point: I found out that it helps to reevaluate your car insurance, phone plan, etc. every couple of years. For example, I was p**** when I found out that the car insurance I had paid for about a decade was substantially lower when I used the online comparison shopping for new contracts (by 30%). They matched it when I asked. My phone company now offers a 25.00 monthly discount because I asked when the 2-year contract was up because "they know I have other options."

My phone plan, Verizon is expensive, I can get better cheaper plans, but I live in an area with very poor cell coverage, for that reason I stick with Verizon. The price doesn't mean anythings if you can't get service. Believe me, I know when friends on other plans come over, they get no bars.

I have Verizon for that very reason. Just tried to point out that it's possible to negotiate better deals with pretty much any company. But this is veering off the topic.

But isn't this better than the REAL topic?

I think John Tunners has left the building. Or the cat has its paw on his typing hand (with a nod to bry911.) And now I hope I can stop gawking at this topic like a rubbernecker at a gapers' block.

John- i don't know where this thread has gone but i just wanted to jump in and say do not under any circumstances purchase a co-op. My husband and I finally sold ours in a pretty good neighborhood in Brooklyn but it was a huge pain. The board can reject your buyer- which the board did in our case for no reason- they were normal people with healthy financials and you know what? the board need not legally provide a reason for the rejection. It took us many months to get another buyer. Stay away. If you ever need to sell you may have issues. Plus you never know what happens with maintenance fees. Ours hit 1k for a 2 bed 1 bath in Brooklyn. Add that to the mortgage and it's a rip off.

Somebody had a bad day and totally missed the point of my post; also, I suspect you make more than nearly minimum wage and are in a position to make choices about your phone carrier and still have money in the bank on a weekly basis.

He hasn't learned how to prioritize needs, wants, and negotiate. That is all. I regularly evaluate needs, wants, research options, etc. I was with a national brand with a good rate. I re-evaluated recently and am still "with" that national brand without paying the brand fees (like generic v brand name pharmaceuticals). It saved us a fair amount of money (same coverage) and I got texting which I didn't have before. (okay, yay me, since you turned this into something about me, which again wasn't my point.)

He seems to like to research. These are things he can start researching...long before having a HUGE debt to his name.

He is in a position that most first time home buyers dream of. He has a 50% down payment, and 50% of the remaining principal in savings.

Huge debt? He would be buying at historically low interest rates in a highly desirable location. The house will appreciate and their salaries will rise.

Some here sound like he's buying a boat or fancy sports car. as he doesn't have to move right away I'd suggest he get himself a buyers broker and start bargain hunting...

"The house will appreciate and their salaries will rise." Hm, well, there are exceptions, like not too long ago.

For people who ae not in upper income segments, salaries and wages have not been keeping up with inflation. Very easy for many to find themselves in a negative relative income situation. Buying freezes the P&I, but taxes, insurance and other costs of living continue to rise. You have to be able to cover all those too.

kirkhall,

The circular arguments thing wasn't just about your comment, sorry. And I never really got around to any sort of cogent point because I was involved in story-telling.

My point is, while I agree that it would not be a good decision to buy a house for the OP at this time, I don't think that everything the OP says and every decision he has made is automatically a terrible decision, and that seems to be what happened. Every move is being dissected and analyzed.

I find that when someone says I "should" or "shouldn't" have done a particular thing, just because that someone has had a different experience, it rubs me the wrong way, particularly when I have made the decision based upon a reasonable decision making process. I am fiscally conservative. I am a poor consumer, I don't spend and I don't have strong brand preferences. I don't have an expensive phone carrier because I feel like wasting the money, I have it because it is the carrier that works best for me. It might still be the best carrier for me even if I had a lower income.

Most people don't, or shouldn't live their lives looking for "exceptions" or the negative "what ifs:. If they get approved for the loan those far more educated and experienced in evaluating finances will have made the decision.

The cost of living will rise whether they pay rent or pay a mortgage....

The cost of living will rise whether they pay rent or pay a mortgage....

And rents may go up too while the P&I is fixed, but it is generally easier and less expensive to end a lease than to sell a home. But you can also get kicked out of a lease -- and there goes the whole rent or buy thing again. No need to rehash all that, but they are things you need to think about before signing a 15-20-30 year note.

"If they get approved for the loan those far more educated and experienced in evaluating finances will have made the decision."

The problem with those far more educated and experienced... is that the risks to them are spread out and will likely have little impact on their day to day lives. The person who locks themselves into a loan (or situation) that they cannot handle, is likely to suffer much more. I agree that a 50% down payment is wonderful and if you were talking about somebody who knew what they wanted out of life and had demonstrated the means of getting it, the risk would be lessened. However, somebody who is still in the midst of trying to figure things out and whose income potential is limited, even a 50% down payment is not optimal.

The people far more educated and experienced are only looking at whether the lender can expect to get paid -- or be made whole if not. Their concern is not the buyer's interest in the property. That is something that has been pointed out repeatedly in different ways.

"If they get approved for the loan those far more educated and experienced in evaluating finances will have made the decision."

Just that they don't have to live with the consequences of their decision.

Sorry, my opinion is that if YOU apply for a loan, YOU need to do your due diligence and make a responsible decision.

Yeah, I know a few people who really shouldn't have gotten loans, who were approved.

I think the Op has thought it through. They might be house poor for awhile, or maybe they have to walk away at some point. They'll probably survive. If it's something they both want, I'd say go for it.

If I was in the OP's shoes I'd be throwing out lowball offers on anything that was acceptable. I'd probably be putting in an offer on this 2 family tomorrow...

http://www.zillow.com/homes/for_sale/Glen-Cove-NY/31154112_zpid/31755_rid/40.892299,-73.596254,40.856409,-73.650671_rect/13_zm/

Go get it John, you can do it.

"If they get approved for the loan those far more educated and experienced in evaluating finances will have made the decision."

I take it you haven't met many mortgage brokers?

LoL.

Let's not start the discussion on above average intelligence :)

One could argue, in fact I will, that one of the problems with mortgage decisions is that there is no intelligence in them. There is a bureaucracy to mortgage decisions that has removed individual evaluation by bankers who are familiar with the area and applicants, and replaced with a one-size-fits-all formula, which arguably doesn't fit anyone.

This is compounded by the fact that the OP is putting so much money down that it essentially eliminates any risk of loss by the bank. Banks that will not approve applicants for a $1,500 payment with 10% down, regularly will approve the same applicant for a $1,500 payment with 65% down. The difference is risk of loss to the bank.