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Thread: To buy a house or rent?

  1. #21
    Platinum Member j.man's Avatar
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    My best advice would be to buy a home only because you want to own a home, which there's absolutely nothing wrong with doing. There are *some* very niche markets where buying instead of renting can actually be a short-term financial benefit such as with rural'ish college towns whose rents tend to be particularly disproportionate to home values, but even then it generally involves some tricky play with weighing a smaller down payment against a PMI and relatively increased monthly payments.

    I've gone between owning and renting. We currently own. It's by far our worst "investment." Non-liquid, ~3.5% interest, closing costs, rarely a positive appreciation:inflation ratio, property taxes, home owner's insurance, maintenance costs (less for us as I do most the work that needs doing-- but still $$$ and time).

    It's a whole lot more complicated than splitting the difference between purchase value and current value. Only reason we did it is because my wife qualifies for physician loans, so we avoided a down payment at the expense of +0.25% interest, which is negligible compared to the returned I get from actually investing what otherwise would have been the down payment. In our case, it did end up objectively cheaper, but we're also fortunate enough to have plenty in savings and assets elsewhere to have no foreseeable need to ever have to rely on selling it quickly.

    Unless you're buying to flip or rent out, I'd never in good conscience encourage someone to buy as a profit or even cost-saving play. And in reality, paying rent isn't "wasting" your money. Generally speaking, unless you're literally putting 0% down (which very few folks will have the option to), actually breaking all the costs down month-to-month breakdown isn't going to turn out much lower, if at all, than if you were paying rent. And while some people do have ****ty landlords and supers, not being responsible for routine repairs and maintenance is its own godsend. And should you ever hit desperate financial times, it's much easier to negotiate an out from your lease with a landlord than it is your mortgage with the bank.

    In short, play to your needs and your ability, not any kind of dogmatic attitudes either way with regard to owning property. It will make sense to when it makes sense to. I think you're playing to your own common sense when you factor in the fact you're a single income household, you've still got burdening student debts, and you've just introduced a baby daughter into the picture. Looking in from a distance, I'd likely rent until either your student debts are lower / paid off or when your daughter's old enough for your partner to start fitting in at least some part-time work. And that would be at the very earliest.

  2. #22
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    When my 1st was born, we were living in a one bedroom 400 square feet apartment and very comfortable with one dog, one cat, one crazy baby, and us. Very happy. While we got our 1st home 2.5 years later, we took the time to save over the years, along with closing costs which can be upwards of 1% of the total sale price.

    Things you have to consider:
    Property Tax
    Septic Tank
    Issues with Heating (Hot Water Tank, Oil Tank)
    Lawn maintenance
    HOA fees if it's a condo or part of the community
    Plumbing
    Furniture

    If you are in the US, and pay less than 20% for a down-payment, you will need mortgage insurance.

    And they are very strict, so you may not get approved for a loan. Do not go by pre-approval amounts. Shop around on zillow for rates and reputation.

    So if you are living hand to mouth after mortgage, it will be a noose around your neck to get a house now. Wait till kid's in school, you've save up, and hubby's back to work.

    So if you have family that wants to give you gifts towards a down payment, they can do $10,000 per tax year. And for all other gifts outside that amount, add asap, so the lender does not look further back into how you got that money. That it's just part of your savings. If you do it right before, they will ask where you go it from which can hurt on if they should approve you or not.

  3. #23
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    All good points to consider in this thread.

    The one part that I think you may want to consider is the evening out of monthly payments with a mortgage loan compared to the ever-rising monthly rent and increases by landlord.

    Any of you who have seen a $500 rent increase knows that stress.

    I do think that consolidating the student load into the mortgage and stretching it out to a 30-year loan will ease the monthly nut some.

    While we cannot predict the future for home valuation, the only time in the last 15 years when it has tanked was during the 2008 recession. But it has come back in spades.

    You will not be pinching pennies forever.

    Here's a thought, your stay-at-home dad can do what stay-at-home moms have done forever. Have some kind of home-based gig, employment, or moneymaking activity.

    OR work weekends while you do kid duties.

  4. #24
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    Originally Posted by jimthzz
    All good points to consider in this thread.

    The one part that I think you may want to consider is the evening out of monthly payments with a mortgage loan compared to the ever-rising monthly rent and increases by landlord.

    Any of you who have seen a $500 rent increase knows that stress.

    I do think that consolidating the student load into the mortgage and stretching it out to a 30-year loan will ease the monthly nut some.

    While we cannot predict the future for home valuation, the only time in the last 15 years when it has tanked was during the 2008 recession. But it has come back in spades.

    You will not be pinching pennies forever.

    Here's a thought, your stay-at-home dad can do what stay-at-home moms have done forever. Have some kind of home-based gig, employment, or moneymaking activity.

    OR work weekends while you do kid duties.
    That is a benefit -- to have a fixed payment. I have been there with the whopper of an increase. When i left one of my apartments - before i was actually gone (gave my notice but still had 25 days left) to pursue an out of state job, i received another offer to stay, and instead of being happy that i was staying, the landlord told me it would be $400 more per month because that is what it would be advertised at to the next person. I ended up taking the job out of state because i could not find another place to live in the area right away and would have nowhere to go with a dog for a few weeks. if it had just been me, i could have grabbed a cheap hotel or something until i found something.

    If your boyfriend is handy and has no problem unclogging a drain, but if he is like my cousin and is used to the landlord coming in to change a lightbulb, thats a prob. Not that YOU can't be handy, but if you are not home.....

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  6. #25
    Platinum Member Cherylyn's Avatar
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    I suggest leasing a house. Then you will know what it entails while keeping in mind, you will be responsible as a homeowner for upkeep, maintenance, repairs, costly property taxes and higher everything every month such as lease payment, higher utility bills and the like. See if this is your cup of tea or not.

    If a house is not for you, at least you're not saddled beyond a year of remaining in the house as a legal commitment.

    If you don't mind a financial tightrope given your circumstances (unemployed boyfriend, risk of working less than 160 hours, working for a baby and unemployed boyfriend's survival, pinching pennies, living paycheck to paycheck, student loan debts and these types of financial burdens), then try leasing a house to give you some options short term.

  7. #26
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    Originally Posted by Cherylyn
    I suggest leasing a house. Then you will know what it entails while keeping in mind, you will be responsible as a homeowner for upkeep, maintenance, repairs, costly property taxes and higher everything every month such as lease payment, higher utility bills and the like. See if this is your cup of tea or not.

    If a house is not for you, at least you're not saddled beyond a year of remaining in the house as a legal commitment.

    If you don't mind a financial tightrope given your circumstances (unemployed boyfriend, risk of working less than 160 hours, working for a baby and unemployed boyfriend's survival, pinching pennies, living paycheck to paycheck, student loan debts and these types of financial burdens), then try leasing a house to give you some options short term.
    That's a good idea - to get a taste for it.
    But i would hesitate to call him unemployed if they both consciously chose for him to be the parent to stay home for a few months. We wouldn't fault if the mother stayed home with the baby for the first year if they had no family, daycare was astronomical and they decided they could do it even if it was tight, to give the child the benefit of a parent at home. regular Daycares are the pits for babies with all the germy kids. He should do something, even if its gig work either on her day off, or half of the evenings that she is home (leaving the other evenings to actually see eachother) . If he is doing the grocery shopping, doing the picking up, etc, so she doesn't have to and can just come home after work, then that's something but it is awfully precarious if they are not married

  8. #27
    Platinum Member Cherylyn's Avatar
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    Originally Posted by abitbroken
    That's a good idea - to get a taste for it.
    But i would hesitate to call him unemployed if they both consciously chose for him to be the parent to stay home for a few months. We wouldn't fault if the mother stayed home with the baby for the first year if they had no family, daycare was astronomical and they decided they could do it even if it was tight, to give the child the benefit of a parent at home. regular Daycares are the pits for babies with all the germy kids. He should do something, even if its gig work either on her day off, or half of the evenings that she is home (leaving the other evenings to actually see eachother) . If he is doing the grocery shopping, doing the picking up, etc, so she doesn't have to and can just come home after work, then that's something but it is awfully precarious if they are not married
    Thanks, abitbroken. With all due respect, when I referred to "unemployment," I referred to lack of income contribution towards monthly household expenses which is a strain on an already tight budget. Then you factor in student loan debts on top of that, lease payments or monthly mortgage, risk of less than 160 hours which means less monthly income, pinching pennies and living paycheck to paycheck, it is living hand-to-mouth. I know because I lived it growing up. Quality of life continues to plummet.

    All I'm saying is to the OP (Beautiful-Love), don't make the financial strain worse than it already is IMHO. Remain pragmatic no matter how harsh the economic reality is to survive month to month. It's not fun squeaking by.

  9. #28
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    Originally Posted by Cherylyn
    Thanks, abitbroken. With all due respect, when I referred to "unemployment," I referred to lack of income contribution towards monthly household expenses which is a strain on an already tight budget. Then you factor in student loan debts on top of that, lease payments or monthly mortgage, risk of less than 160 hours which means less monthly income, pinching pennies and living paycheck to paycheck, it is living hand-to-mouth. I know because I lived it growing up. Quality of life continues to plummet.

    All I'm saying is to the OP (Beautiful-Love), don't make the financial strain worse than it already is IMHO. Remain pragmatic no matter how harsh the economic reality is to survive month to month. It's not fun squeaking by.
    Ok -= for me "unemployed" is different than "stay at home mom/dad".

    I actually grew up with only one parent working, too, but my parents didn't have college debt. They had one car, we wore handmedowns and we were happy. We had one car, one tv, etc. They got a second car when i was in 3rd grade. Dad worked 2 jobs (one midnights full time, one day not quite full time) when i was born until i was 3 and then he found a good job and he just worked one. Mom started working on weekends after the youngest child was born and then worked saturdays (dad was home) and one night a week and a day when we were all in school.

  10. #29
    Platinum Member Cherylyn's Avatar
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    Originally Posted by abitbroken
    Ok -= for me "unemployed" is different than "stay at home mom/dad".

    I actually grew up with only one parent working, too, but my parents didn't have college debt. They had one car, we wore handmedowns and we were happy. We had one car, one tv, etc. They got a second car when i was in 3rd grade. Dad worked 2 jobs (one midnights full time, one day not quite full time) when i was born until i was 3 and then he found a good job and he just worked one. Mom started working on weekends after the youngest child was born and then worked saturdays (dad was home) and one night a week and a day when we were all in school.
    You are unusual. Both of my parents worked and my mother worked all her life. My husband and I work plus raised a family together. We live in a house which requires combined incomes in order to sustain a comfortable standard of living in a great, fairly affluent suburban neighborhood.

    I'm sure many parents can survive on one income but in desirable, very safe neighborhoods, real estate is expensive. It's really hard to survive and then if you add mounting debts such as mortgage AND student loan debts, this is simply drowning in debts and paying enormous interest plus compounding interest. Then for the OP, there's risk of less than 160 work hours, no partner / boyfriend / spouse to supplement her income, pinching pennies and living paycheck to paycheck is a sweaty nail biting life. Who in their right mind wants to live like that?

  11. #30
    Platinum Member Snny's Avatar
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    Less down payment, the bigger the monthly mortgage plus interest. Usually families in particular prefer to live in a desirable area which isn't cheap.
    Not in my case because I qualified for a federal rural loan. Low interest rate and reasonable monthly payments. In fact I ended up walking out of settlement with money because it was a home I was renting. There are homes out there with good mortgage deals.

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