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Published on 11/21/08
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HOUSE HUNTER
ROB SEVIER
Though he’s pretty sure he can’t afford to buy his own place, Sevier, 29, admits it’s been on his mind. “I think the market’s gonna crash,” he says, “and I’d like to buy cheap.” But he’s not interested in your typical new-construction condo, pumped up with stainless-steel appliances and granite countertops. “A bungalow would be ideal,” he says. ”It’s sturdy, they’re usually in residential neighborhoods and they’re not glamorous.” He’d love to find one in Little Village, Garfield Park or Back of the Yards.
But Sevier distrusts Realtors. “There’ll be a Realtor trying to sell something for way over market, saying the neighborhood’s on the way up, and then two houses down the owners will be selling it themselves for significantly cheaper.”
Sevier makes $18,000 a year as an A&R rep for a record label, and while he has no student-loan or credit-card debt, he’s saddled with about $8,000 in medical bills from an unplanned surgery. “I don’t even know what a credit score is,” he adds. While he has a small savings cushion, he has no money for a down payment.
Expert opinions
Chaz Walters
“Believe it or not, Rob may qualify for up to $100,000 through an FHA-insured mortgage with 1 percent down. The big question is his credit score.” But Walters says Sevier won’t find a bungalow in Chicago for less than $100,000 and would have to look beyond city limits for any property at that price.
Gisella Tomasio
“I don’t think on $18,000 a year he’ll qualify for a loan to buy any type of home, but you can build wealth in many other ways. He can pay the minimum amount on his medical bills and start building cash reserves in a high-yield savings account or six-month CD.”
Judge Mathis
“He first and foremost needs to find out his credit score before he can do anything. Once he does that, he will have a better grasp on what he can truly afford. My verdict? Wait another year and try to save up money for a down payment.”
VERDICT:
Alex
Mon, Mar 24, at 10:44am
I'm a Realtor and find myself embarrassed by Chaz's advice. Low income? Buy. Huge debt? Buy. No savings? Buy. Seriously, Chaz, step away from the kool aid.
jswede
Fri, Mar 21, at 12:31pm
hey about telling the whole story Chaz? "With 100% financing he/she could afford a $_____ house. Of course, he/she would also a have to pay huge sums in yearly property taxes, monthly assessments, take on market risk that may bottom out down another 10-15% from here, leaving the buyer in $25-100k of debt should they be forced to sell. Which they likely will have to, because they have no savings. It's all good though, because I got paid a commission." ****ing sick slimeball
jswede
Fri, Mar 21, at 10:45am
Lastly, in case anyone else was still listening to these idiots: Let's look at a 30yr amortizing loan. Which is what most people will get into (after this interest-only debacle anyway): lets say a 30yr 6% loan for $500k. You'll pay $3k monthly. $36k a year. After 5 years, you've paid about $180k. Of that $180, ~85% has been interest. You've paid off only about $30k of the house. Great way to become a home "owner", huh?
jswede
Fri, Mar 21, at 10:37am
and Gisella -- as an advisor -- how about levelling with people? Why not tell them the difference between renting and "buying" (with no/little money down using a mortgage)? It's about as simple as this: when you rent, you pay someone for the use of their property; when you "buy" with a mortgage, you pay some one for the use of their money. You're not an "owner" with no money down. Not even with 20% down. Oh, and also, when you buy you take market risk and pay huge taxes/assessments
jswede
Thu, Mar 20, at 09:09pm
Chaz says: "With 100% financing, he/she could afford a $______ house"
jswede
Thu, Mar 20, at 09:03pm
let's see.... "no money down" is a recommendation - with no disclaimer - just as long as Chaz gets paid. if your subjects take that advice there's a chance each of them will not get out of debt for decades.
jswede
Thu, Mar 20, at 08:59pm
It's nice to see that TimeOut has learned nothing in the last few years. (and that Chaz from the billboards is as big of a slime-ball as I always thought he'd be)
benjamin
Thu, Mar 20, at 12:00pm
Great - ask a real estate agent (who makes something like 5% of the purchase price) if someone should buy or rent - no chance of a bias there!
