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My apartment building has been forclosed on and is now bank owned. They are selling the apartments for what seems like pennies in comparison to their original sale price (upper 300Ks). I think it is too good a deal to pass up, but I know nothing about purchasing a property or the costs involved in regards to closing costs, insurance, mortgage rates, etc…so I don’t know if I can afford it. here is what I know:

I make $ 33K/yr before taxes, plus another $ 2-$ 3K in freelance work.
I have a very good credit score (but not excellent).
Price of apartment: $ 130K
The city is helping qualified buyers with a $ 50k loan that is 100% forgivable over time (which means I won’t have to pay it off as long as I don’t sell it for 20 years). This means I only have to borrow about $ 80K from the bank, so my mortgage payment should be based on this loan amount.
Finally, homeowner’s association costs are about $ 300/month.

My question is: What can I expect my monthly payment to be for mortgage, insurance, taxes and HOA fees combined?

Should I do this???
P.S. The building itself is only 2 yrs old and in excellent condition. I’ve been living there for 1 1/2 years with no problems. Again, the mortgage loan itself would be for about $ 80K. Oh, and they are throwing in tile throughout the apartment included in the purchase price, so I feel like it’s a really good deal I just want to know how much I should expect to pay per month…

4 Thoughts on Can I afford to purchase an apartment?
  1. Reply
    Ryan M
    July 5, 2011 at 3:52 pm

    $ 130k loan = about $ 900-$ 1,000 per month for mortgage
    Insurance: No way to know
    Taxes: No way to know…based on the rates of your jurisdiction
    HOA: Again, no way to know. Those vary anywhere from a few hundred per year, to over $ 400 per month.

  2. Reply
    Laeluu
    July 5, 2011 at 4:31 pm

    Honestly, I think the real question isn’t if you should or shouldn’t, but what you want to do. Do you want to live there the rest of your life? Would you be content with all that? Because if you want to do it, you can always rent rooms out or cut down on a few things to make the money work–it’s just a question of if you’re ready or not to make a permanent move.

  3. Reply
    GEEGEE
    July 5, 2011 at 4:41 pm

    I’d be very cautious. 20 years is a long time and if you want to move or need to move and needing to rent the apt out in order to avoid repaying the 50K loan could be a mess. Another thing to consider is assessments. If the building is foreclosing, maintenance could have been neglected and expensive things like the roof, or termites, the furnace or boiler, could be on the verge of implosion. Apartment owners need to chip in to pay for these big ticket items, and they can be thousands of dollars.

  4. Reply
    David H
    July 5, 2011 at 5:30 pm

    You need a place to live so just stay where you are.

    You need to do your homework as to what the cost of living there is versus renting. Purchase price, taxes, interest, maintenance, etc. Go to dinkytown.net and play with the calculators. The best you can hope for is to live somewhere for free for the time being when you sell it. Age of the building, what do the HOA fees cover, does a board have to be created to monitor the building. MAke sure the city has this information for you and you understgand what you are getting into. Can you get a house cheaper ?

    This idea of selling for a profit is a bunch of crap for the reason stated above. You should be able to rent it and still hold on to it for the 20 years. Check the local building codes and see if these can be listed as condos.

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