August 29, 2009

House Financials

An addendum to my house huntng update - the financial end of things. My life has been on a 20 year financial slide. Starting with a foolhardy house purchase in 1989 (near the peak of another housing bubble, this has been my second) - the combination of an adjustable mortage, a separation / divorce, and falling real estate prices that made it impossible to sell or refinance slowly dragged me under, financially. When I finally did sell the place (2001 or thereabouts) I walked out with enough money to pay off the mortgage. 12 years and all that money paid out and I ended up losing about 30K on the place. Nice.

Since then I have been living with Zippy, and winding my way through some major life changes. But the past few years I have seen a bottoming out. I've got health insurance and a relatively healthy HSA. I've been socking away the max IRA contribution each year. I've been more or less on an upward slope in terms of financial health.

So this is a great time to get back into the real estate game - prices are low, mortgage rates as well, and there is an $8K tax credit for first time buyers (I qualify it's been well over 3 years). I can tap a bit of my IRA for the downpayment. And the mortgage payment + taxes will be quite a bit less than what I pay for my office rent and my rent to Zippy.

There are some tax ramifications - I'm pushing my office rent (fully deductible on schedule C) back onto my home (home office deduction, quite a bit less) but picking up the deduction for real estate taxes and mortgage costs. All in all I think it will be a win.

And though I am looking at a condo as simply a better alternative financially to paying rent, it would be nice if real estate does rebound a bit over the next few years.....

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