Mello Roos is depressing as hell

S

spclagent7_IHB

New member
I am on the verge of purchasing a new home in Irvine. Like many people on this board, I've been waiting a long time for prices to settle. In my mind prices probably still have further to drop.... But they're finally on the cusp of pricing I can live with.



Except for the damn mello roos. My wife and I just had our first baby. The home purchase is obviously a big decision for us, like most young families. Now my wife and I are stuck in Groundhog Day, having the same freaking conversation about mello roos and how it's blowing the total monthly payment way out of our comfort level. With a 1.25 tax rate we could squeak by with the total payment on my income alone. The reality of the 1.9% rate makes us think about selling drugs or rob banks.



Any relatively new homeowners on the board here successfully get over the heartbreak of mello roos and justify it in their minds? I'm starting to drink the Kool Aid that makes me feel good about the school system and amenities. The logic is: Rather than pay for private schools, at least I get great public schools with amenities in a nice community all rolled up in one nice package at a low price.



Is that a crock? Maybe I should go for some magic brownies or the crack pipe?
 
[quote author="spclagent7" date=1231240531]I am on the verge of purchasing a new home in Irvine. Like many people on this board, I've been waiting a long time for prices to settle. In my mind prices probably still have further to drop.... But they're finally on the cusp of pricing I can live with.



Except for the damn mello roos. My wife and I just had our first baby. The home purchase is obviously a big decision for us, like most young families. Now my wife and I are stuck in Groundhog Day, having the same freaking conversation about mello roos and how it's blowing the total monthly payment way out of our comfort level. With a 1.25 tax rate we could squeak by with the total payment on my income alone. The reality of the 1.9% rate makes us think about selling drugs or rob banks.



Any relatively new homeowners on the board here successfully get over the heartbreak of mello roos and justify it in their minds? I'm starting to drink the Kool Aid that makes me feel good about the school system and amenities. The logic is: Rather than pay for private schools, at least I get great public schools with amenities in a nice community all rolled up in one nice package at a low price.



Is that a crock? Maybe I should go for some magic brownies or the crack pipe?</blockquote>


#7, you just need a little bit of extra patience and work on getting everything within the budget. It takes a bit of work. I'm surpised you haven't accounted for any extra and given yourself a buffer?

-bix
 
I wouldn't stretch to buy a house, especially in this economy.



The rent we're paying for our detached SFR in West Park is about 12-14% of our gross income, and even then, it feels a bit excessive, so I don't even know how you feel about stretching yourself to the underwriting guidelines of 28% of your gross income going to paying your mortgage and housing costs.



I know I'll have stress if my housing costs consumes 28% of my income :). At least for me renting a house, I don't have nasty surprises like needing a new roof, fixing a broken water heater or furnace, etc.



Sure, we all like the new car (or house smell), but at what cost? Renting seems like throwing money away, but totally less stressful and makes you gleeful that home prices are dropping through the floor.



Just my 2 cents.
 
I would second the last post. If Mello Roos is stressing you out then chances are you really aren't ready for all of the fun and unexpected costs of owning a home. Anyway, why do you want to buy now when even the most conservative predictions are for at least a 25% drop in the next two years?
 
[quote author="spclagent7" date=1231240531]I am on the verge of purchasing a new home in Irvine. Like many people on this board, I've been waiting a long time for prices to settle. In my mind prices probably still have further to drop.... But they're finally on the cusp of pricing I can live with.



Except for the damn mello roos. My wife and I just had our first baby. The home purchase is obviously a big decision for us, like most young families. Now my wife and I are stuck in Groundhog Day, having the same freaking conversation about mello roos and how it's blowing the total monthly payment way out of our comfort level. With a 1.25 tax rate we could squeak by with the total payment on my income alone. The reality of the 1.9% rate makes us think about selling drugs or rob banks.



Any relatively new homeowners on the board here successfully get over the heartbreak of mello roos and justify it in their minds? I'm starting to drink the Kool Aid that makes me feel good about the school system and amenities. The logic is: Rather than pay for private schools, at least I get great public schools with amenities in a nice community all rolled up in one nice package at a low price.



Is that a crock? Maybe I should go for some magic brownies or the crack pipe?</blockquote>


I think if the 1.9% tax rate is giving you that much grief, you probably shouldn't be purchasing a home as that tends to be less of an issue than your downpayment, monthly mortgage, and HOA, not to mention furnishing and upkeep. Sure, the tax rate is high



Also, your logic is flawed. If you investigated the true use of mello-roos, you may have a different opinion on purchasing a home with an approx 1.9% tax rate. Check the tax bill and you'll see that the majority of your mello roos is for special districts or community facilities districts which were developer initiated. These are bonds used to pay for public infrastructure improvements like sewer, road, and water.



Sounds like you spoke to the sales agent who was probably apologetic about the high tax rate, but offered that since you were within the iusd, the 1.9% was going towards a good cause. Do a little homework next time and you'll avoid being a mark.
 
[quote author="spclagent7" date=1231240531]I am on the verge of purchasing a new home in Irvine. Like many people on this board, I've been waiting a long time for prices to settle. In my mind prices probably still have further to drop.... But they're finally on the cusp of pricing I can live with.



Except for the damn mello roos. My wife and I just had our first baby. The home purchase is obviously a big decision for us, like most young families. Now my wife and I are stuck in Groundhog Day, having the same freaking conversation about mello roos and how it's blowing the total monthly payment way out of our comfort level. With a 1.25 tax rate we could squeak by with the total payment on my income alone. The reality of the 1.9% rate makes us think about selling drugs or rob banks.



Any relatively new homeowners on the board here successfully get over the heartbreak of mello roos and justify it in their minds? I'm starting to drink the Kool Aid that makes me feel good about the school system and amenities. The logic is: Rather than pay for private schools, at least I get great public schools with amenities in a nice community all rolled up in one nice package at a low price.



Is that a crock? Maybe I should go for some magic brownies or the crack pipe?</blockquote>


The exorbitant MRs were one of the big reasons we didn't buy in Columbus Grove... I just couldn't stomach paying $7K per year when other older homes had exactly the same schools , parks, etc. or better and paid nowhere near that in MRs.



We decided to focus on lower MR areas, which means buying something no newer than Oak Creek most likely. Some areas built out 10-12 years ago have practically no MRs and at least aren't ancient...
 
[quote author="ipoplaya" date=1231242276][quote author="spclagent7" date=1231240531]I am on the verge of purchasing a new home in Irvine. Like many people on this board, I've been waiting a long time for prices to settle. In my mind prices probably still have further to drop.... But they're finally on the cusp of pricing I can live with.



Except for the damn mello roos. My wife and I just had our first baby. The home purchase is obviously a big decision for us, like most young families. Now my wife and I are stuck in Groundhog Day, having the same freaking conversation about mello roos and how it's blowing the total monthly payment way out of our comfort level. With a 1.25 tax rate we could squeak by with the total payment on my income alone. The reality of the 1.9% rate makes us think about selling drugs or rob banks.



Any relatively new homeowners on the board here successfully get over the heartbreak of mello roos and justify it in their minds? I'm starting to drink the Kool Aid that makes me feel good about the school system and amenities. The logic is: Rather than pay for private schools, at least I get great public schools with amenities in a nice community all rolled up in one nice package at a low price.



Is that a crock? Maybe I should go for some magic brownies or the crack pipe?</blockquote>


The exorbitant MRs were one of the big reasons we didn't buy in Columbus Grove... I just couldn't stomach paying $7K per year when other older homes had exactly the same schools , parks, etc. or better and paid nowhere near that in MRs.



We decided to focus on lower MR areas, which means buying something no newer than Oak Creek most likely. Some areas built out 10-12 years ago have practically no MRs and at least aren't ancient...</blockquote>


But how much are you saving in maintenance fees if you buy new? Might not make up for the MR, but probably is worth a portion of it.
 
I'll see your desire to rob banks and sell drugs and I'll raise you one.... I have actually found myself wishing that I will get into a terribly disfiguring accident so that I could afford the mortgage and mello roos with my settlement. :- I haven't decided what's worth more to me. My right arm or a nice house in Irvine.
 
[quote author="SoCal78" date=1231242901]I'll see your desire to rob banks and sell drugs and I'll raise you one.... I have actually found myself wishing that I will get into a terribly disfiguring accident so that I could afford the mortgage and mello roos with my settlement. :-</blockquote>


Not worth it.



I've seen myself winning the lotterry to afford the mortgage and mello roos.
 
Alright, points well taken, and I stand corrected on the use of mello roos.



As I mentioned, I do agree that prices probably have some room to fall. However, I plan on staying in this home for the long term.



Prices generally have already taken a big percentage hit in the last two years. As I -- nor none of you -- can predict bottom of the market, paired with the fact that rates are again very low, I am taking a serious swing at getting a home that my family can live in. And build equity in over the longer term.



Some of you condescending a-holes on this board need to give the newbie a break and get over yourselves. Gee, I'm sure your stock portfolios are doing super right now as you're on the sidelines waiting for housing to drop another 50%. Good luck holding your breath.
 
Roo -- That's exactly a point that the know-it-alls missed. A new home means you don't have to worry about maintenance for awhile.... Although a few homebuilders are about to go under, in which case their warranties will go out and then you do have to worry about maintenance...
 
[quote author="spclagent7" date=1231243594]Alright, points well taken, and I stand corrected on the use of mello roos.



As I mentioned, I do agree that prices probably have some room to fall. However, I plan on staying in this home for the long term.



Prices generally have already taken a big percentage hit in the last two years. As I -- nor none of you -- can predict bottom of the market, paired with the fact that rates are again very low, I am taking a serious swing at getting a home that my family can live in. And build equity in over the longer term.



Some of you condescending a-holes on this board need to give the newbie a break and get over yourselves. Gee, I'm sure your stock portfolios are doing super right now as you're on the sidelines waiting for housing to drop another 50%. Good luck holding your breath.</blockquote>


Seriously, people have been nice with you so far. I can think of a few people who might not be as nice...



Anyway, the point is that if you ask, you ain't ready.



Do you listen to Tom Likus? The guys who call are the one that need help. You know you ain't ready but need someone to tell you. You are smart enough to realize it, but might not control your emotions like you should in a perfect world.



Read the post on the blog about timing does matters and read about the fundamentals valuations and you'll see why you are better off renting.

ll
 
[quote author="spclagent7" date=1231243594]Alright, points well taken, and I stand corrected on the use of mello roos.



As I mentioned, I do agree that prices probably have some room to fall. However, I plan on staying in this home for the long term.



Prices generally have already taken a big percentage hit in the last two years. As I -- nor none of you -- can predict bottom of the market, paired with the fact that rates are again very low, I am taking a serious swing at getting a home that my family can live in. And build equity in over the longer term.



Some of you condescending a-holes on this board need to give the newbie a break and get over yourselves. Gee, I'm sure your stock portfolios are doing super right now as you're on the sidelines waiting for housing to drop another 50%. Good luck holding your breath.</blockquote>


Why the hostility? I really don't think anyone was trying to do anything except give you good advice from their own perspective. I'm glad you feel you are in a position to buy a house and not care about the losses, but please don't begrudge people who are trying their best to give advice that you asked for. After all, there are quite a few people here who are renting, yet in a good position to buy, just like yourself.
 
[quote author="tmare" date=1231243917][quote author="spclagent7" date=1231243594]Alright, points well taken, and I stand corrected on the use of mello roos.



As I mentioned, I do agree that prices probably have some room to fall. However, I plan on staying in this home for the long term.



Prices generally have already taken a big percentage hit in the last two years. As I -- nor none of you -- can predict bottom of the market, paired with the fact that rates are again very low, I am taking a serious swing at getting a home that my family can live in. And build equity in over the longer term.



Some of you condescending a-holes on this board need to give the newbie a break and get over yourselves. Gee, I'm sure your stock portfolios are doing super right now as you're on the sidelines waiting for housing to drop another 50%. Good luck holding your breath.</blockquote>


Why the hostility? I really don't think anyone was trying to do anything except give you good advice from their own perspective. I'm glad you feel you are in a position to buy a house and not care about the losses, but please don't begrudge people who are trying their best to give advice that you asked for. After all, there are quite a few people here who are renting, yet in a good position to buy, just like yourself.</blockquote>


OK, my apologies. I was obviously being a over sensitive and misreading the tone of the posts.
 
Can you pay off a Mello-Roos obligation at any time?



Originally, I thought the MRs were timebound bonds to pay for the constructing of the needed infrastructure. Are they still being timebound? I recall a big stink up in Ventura last year about the homebuilder paying off the MRs for the current phase and leaving the prior phases with MRs to the tune of several thousand a year.



I'm sure it wouldn't meet with any success, but I imagine, if one really wanted to and had a agreeable agent, they could write offers with the requirement that the seller pay off, in full, the MRs at the time of purchase.
 
spclagent7: I'm really sorry if you think I'm one of the a-holes you are referring to(?) My post was sincere and not sarcastic in the least (unfortunately for me.) Just remember that tone does not always translate well on message boards. Well let us know what happens.
 
[quote author="spclagent7" date=1231244359][quote author="tmare" date=1231243917][quote author="spclagent7" date=1231243594]Alright, points well taken, and I stand corrected on the use of mello roos.



As I mentioned, I do agree that prices probably have some room to fall. However, I plan on staying in this home for the long term.



Prices generally have already taken a big percentage hit in the last two years. As I -- nor none of you -- can predict bottom of the market, paired with the fact that rates are again very low, I am taking a serious swing at getting a home that my family can live in. And build equity in over the longer term.



Some of you condescending a-holes on this board need to give the newbie a break and get over yourselves. Gee, I'm sure your stock portfolios are doing super right now as you're on the sidelines waiting for housing to drop another 50%. Good luck holding your breath.</blockquote>


Why the hostility? I really don't think anyone was trying to do anything except give you good advice from their own perspective. I'm glad you feel you are in a position to buy a house and not care about the losses, but please don't begrudge people who are trying their best to give advice that you asked for. After all, there are quite a few people here who are renting, yet in a good position to buy, just like yourself.</blockquote>


I'm all for perspectives and advice. I'm thankful for the advice. As I said, I stand corrected on a few points as well. However, no need to be condescending or a prick when giving the viewpoint. Especially on my first post.</blockquote>


I'm sorry, I just can't see where anyone was being "a prick" as you call it.
 
OK, I apologize. Obviously I was being oversensitive. I was misreading the tones of the posts. Again, I apologize. This is my first thread on the board here. I was hoping for a more low key intro
 
[quote author="spclagent7" date=1231244359][quote author="tmare" date=1231243917][quote author="spclagent7" date=1231243594]Alright, points well taken, and I stand corrected on the use of mello roos.



As I mentioned, I do agree that prices probably have some room to fall. However, I plan on staying in this home for the long term.



Prices generally have already taken a big percentage hit in the last two years. As I -- nor none of you -- can predict bottom of the market, paired with the fact that rates are again very low, I am taking a serious swing at getting a home that my family can live in. And build equity in over the longer term.



Some of you condescending a-holes on this board need to give the newbie a break and get over yourselves. Gee, I'm sure your stock portfolios are doing super right now as you're on the sidelines waiting for housing to drop another 50%. Good luck holding your breath.</blockquote>


Why the hostility? I really don't think anyone was trying to do anything except give you good advice from their own perspective. I'm glad you feel you are in a position to buy a house and not care about the losses, but please don't begrudge people who are trying their best to give advice that you asked for. After all, there are quite a few people here who are renting, yet in a good position to buy, just like yourself.</blockquote>


OK, my apologies. I was obviously being a over sensitive and misreading the tone of the posts.</blockquote>


You are simply trying to convince yourself that buying a home is the right thing to do. You tell yourself that you will live in it "long-term" and build equity. You already mentioned that you are stretching your income and that you think prices are going further down. So why not go with your own reasoning.



Overall, I'm with you. Each time I look at homes and notice Dues 1 and Dues 2 etc...I automatically close the browser and move on. I'm not paying 200-400 dollars for someone to mow my lawn...

Also, keep in mind that owning a home is a luxury not a need. If you can rent for less, do it and invest your money in assets that have a better chance of appreciation. Or save the cash and buy the house outright. That is what I'm planning to do, or atleast put down 80-90%. Buying a home for 500K and 30 years later actually spending around 1.5M for it via interest is absurd.
 
[quote author="recovering_homeowner" date=1231240900]I wouldn't stretch to buy a house, especially in this economy.



The rent we're paying for our detached SFR in West Park is about 12-14% of our gross income, and even then, it feels a bit excessive, so I don't even know how you feel about stretching yourself to the underwriting guidelines of 28% of your gross income going to paying your mortgage and housing costs.



I know I'll have stress if my housing costs consumes 28% of my income :). At least for me renting a house, I don't have nasty surprises like needing a new roof, fixing a broken water heater or furnace, etc.



Sure, we all like the new car (or house smell), but at what cost? Renting seems like throwing money away, but totally less stressful and makes you gleeful that home prices are dropping through the floor.



Just my 2 cents.</blockquote>


You pay 12-14% on rent, but you are also probably putting money aside for a future downpayment. Once you own a home, you don't need to do this anymore. Also, with tax savings, 28% is probably equivalent to low 20% on rent.



Anyhow, I'm in a similar situation and it does feel like a lot of money on rent every month. But as others have pointed out, it feels good to know how much I saved over the last couple years by not buying at the wrong time.



I used to think people 10 years older than me where the lucky ones. Perfect timing for putting money aside in the 90's with huge return on interest for future downpayment followed by a rapid home appreciation. For some it really paid off, but those are few and far between. For the most part, they got caught in some bubble and their return over 10+ years is nothing to be jealous of. I now think I'm lucky to be where I'm at because I start in a relatively more sound environment with the best to come, not behind me.
 
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