I don't like DH idea....pls help me !

Parvathi,

Since I have worked in the software industry for more than 7 yrs in India and US, I thought I will give you my inputs.

Since your DH seems to have a lot of experience ( I am assuming 10+ yrs), it will not be too tough for him to find a job in India.

But the chances of getting a good job in a nice company is much higher in metro cities like Bangalore, Chennai, Mumbai etc. Compared to most states in US, these places are much more polluted and crowded. Housing is quite expensive in good residential areas.

Keeping aside all these things and just focusing on your DH's job in India, the work-life balance of a software professional in India is not great. Especially when you are at senior positions, lot of staying back after-office hours will be required and options like working from home, flexible work timings etc are luxuries in India.

Also, remember that most of the software clients are based out of US, Europe etc (not India). This means, folks working in India often have to be flexible to work in the clients timings.

To just give you an example - on an week day, your DH would leave for work at 8am and be back at 9.30pm and would still have work to do from home or calls to attend from home till 11pm.

So,for someone who is used to US work culture and 8am to 5pm work hours, it will take some time to adjust to things in India.All I am saying here is that,when you plan to go to India for good, be mentally prepared for this.

 

First and foremost, buying or selling or renting is a smart choice that should be made by each individual. Just because it works for one, it does not guarantee the same result for another.

Now, following is my personal take on how to make such important decision in one's life.

There are few things apart from the financial calculations to consider before buying a house

(1) Need
(2) Investment?
(3) Preference/Liking/Dream etc,

The first question that should come in everyone's mind is - Why do I need to OWN a house?

(1) Because I want to live a life luxuriously? With a kitchen yard, pool, 4 bedrooms, walkin closets, island kitchen?

OR

(2) I need to make money.

OR

(3) I have a big family. 2 kids, inlaws, renting a big house does not make sense. I want my kids to go to a particular school in this neighborhood.

Also few questions to ask yourself

(1) Location. To your job and if you loose it, is it near a city ?
(2) Resale value.
(3) You might not have kids now. Even if you are planning, your kid will go to school in 5 years time. And the property taxes you are paying is for who? You never know after 5 years if you would be in the same place. But you cannot let go of this "School district value" in a house, since its a good resale value.
(4) Applicanes in your house. Garage door and what not.

Even before you buying, you need to think about "Whom you will be selling it too, what would they prefer in a house, what should I add in this house" etc --This is you are not planning to settle in US and 100% in for selling.

Once you have a clear idea as to what your thoughts and where does it fall, it would help you make a clear decision as to how to APPROACH it.

Now let's go a step further. Take numbers, shall we?

To break even on your house, it means the appreciation value should be 3.56% every year for the next 5 years, right?

Now to lead an american dream, remember in reality you have a 300-700K loan that's hanging above your head. Let alone all the other expenses.
Either you rent the house or rent the money, ;-) that's my way of seeing about renting or owning a US house.

I hear this argument, all this rent is never to return back, isn't that waste. Ok, what about the money you are going to pay for the next 30 years towards the interest? Isn't that also going down the drain? What about the property taxes (even though u would be getting tax break) What about home insurance, HOA, other home expenses?

Put all the above numbers and then add few % to make it profitable. Does it looks fancy? Hell no ;-) What is the guarantee that the economy will be in the upscale and above all you would be having a secure job?

Even a realtor would say, 90% of the houses listed will have some minor repairs that needs to be taken care of ;-)

So, if you are buying your house for 100k today and sold it for 100K tomorrow, you lost around 8% realistically speaking. Agree?

Following examples from my place. (New Jersey)

Just an estimate here. Please don't it literally.

Decent location house (With good school district, less crime prone, less traffic etc but not a great home): 400K
Assuming you are capable of putting a 20% down: 320K
Your mortgage for 30yr fixed rate of 6.5%, your monthly cost would be: 2025
Assuming property tax is around 1.5%, so it's going to be 6000 yearly. thus monthy: 500
Insurance: Monthly: 100
Your utilities, assuming you are in a good house, with good system ;-): 2400, thus monthly:200
HOA - Lets say: 100? (very minimum in my opinion. Here we pay Around $200)
Need to take into consideration other issues now, since you are not renting - Plumbing, pest control, radon proofing - Monthly: 80
You need a new stainless steel fridge, paint your bedroom and what not, now that you own a house, you need to decorate it as well, yeah? lets say u might be spending $10K for 5 years? so monthly:170
Assuming you are in the 30% tax bracket, your monthly benfit wouldbe: 600 approx?
Now comes your principal that builts over 5 years - 20K approx?
Whats the remaining - 300K in your loan?

So , whats the calculation?

Total cost for these 5 years: (3175-600)* 60 = 154K
Total equity outside appreciation :100K
Rent of equivalent apartment. in New Jersey : 1500 per month
5% gain on ur 80K investment-taxes over 5 years = 20K
Total cost for 5 years : 108K
Total investment money at hand : 100K
Lets say, Inflationary increase in rent/utilities even out with similar increase in property tax/maintenance costs.

So buying has -46K differential with renting over 5 years. If the house appreciates at least 3% every year, you will break even, if it appreciates more you will come ahead, if it remains status quo, it's a loss. Based on history, its a 7 year window for house ownership. So, if you were to sell the house at the end of 5 years, add another 5-6% selling costs. In this example it will be around $20-$24k. So if you add the selling cost of $24k to -$46K that is already lost in ownership, the loss will be around -$70k.

Also, read through these:

The New York Times > Log In
Home Maintenance - Annual Home Maintenance
Housing Crash Continues, Bubble Pops

People, I am not (dis)couraging anyone to buy or to rent. In my opinion, people should have a clear idea about buying in both needs vs financial terms.

 

Ohhhkkkk, I did not expect a 85K house, sorry The dynamics in this calculation is completely different. Ofcourse some can buy a house of such price range by paying in full as well. ;-)

Please read my other thread. I am talking about different caliber houses

Also, as I said earlier, it depends on each individual. If you had owned a house for 50K, ofcourse it's the best option than to rent

End of the day, numbers matters not generalization. That's what I was getting at.

 

That's not even enough for a down payment for a house where we live!

 

lol lol lol lol

 

Nandu

Really good and exhaustive explanation and research info.

However lets not deviate the main topic and if someone is interested in discussing this investment/profit/loss why dont we start another thread in the money forum. that way it would benefit all and we can point to that thread in the OPs thread.

Above being said, Everyone has to do lots of research before making major decisions like buying/selling a house. Be it in US / India. Its the major financial decision and I agree with you that what worked for one may not work for another.

 

Vidya, I agree.

 

Looks like the primary reasons that OP wants to move back to India are the following:
1. Her parents are becoming older and she wants to be closer to them
2. She wants to raise her daughter in India.

She feels that buying a house here will further tie them down to settling in the US. Either of you is going to have to convince the other. I do not see any way around it.

 

Hi parwathi,

u have got quite a few replies. just thought i will give you my opinion too.
buying a house does not necessarily mean that you are tied down to the city/country provided you have the capacity to pay it off before you leave.
depending on ur/DH /combined salaries check out how long repayment will take you.
nandhu has given a fantastic reply on home buying/mortgage . go through it and explain it to ur DH too.
ask him why he wants a house : is it because he thinks he will be done with monthly rents? if yes then you need to show him nandhu's reply. or better still explain it to him.

considering that u and ur DH have been here for quite sometime now(10 yrs or so) don't u think it will b difficult to start back in india?
like srividya has said,maid etc cost a alot in india too. i was living in india till 6 months back. and we have all facilities in metros(banalore ,mumbai etc) which are comparable to facilities here(dishwasher,Acs etc....). the difference being there both spouses will have to work hard for the money. and its long working hours in india. not like here in US . ppl do not get back from work until say 8pm(minimum) or so,its a tuff life.
and no doubt,many will prefer living in india (settling) but we need to weigh our preferences.
think of ur situation/priorities, decide and then talk to ur DH too.
all the best.

JMO.

 

My two cents is that a house makes sense only if you are planning to live in the country indefinitely. If you plan to leave in 10 yrs or so, its better to rent as there is no guarantee you can sell your house quickly. Many houses have been sitting on the market for several years and the owners are liable for maintenance and property taxes. Over the past 40 years, houses in the US have not been a profitable investment, so don't look to make money here. There might have been some lucky people who bought and sold at the right time and made a profit, but these same people moved on to a bigger house and are now stuck in it. I have not seen even one person who has enjoyed the profit made from selling a house.