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To buy a house or rent?


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It's been something on my mind for a while now.

 

 

I have spoken to my boyfriend and also family members. Half think that I should, and the other half no. We just have a baby girl in July and now we need to upgrade to a two-bedroom. Rent is already high. So I'm thinking of buying a house/condo/townhouse so at least I'm not just wasting $24000+ a year on rent. The thing is my partner is a stay at home dad (my family is out of state and really no one we can leave our baby with daily) and I work nights about 160-180 hours a month. Buying a house would mean pinching for pennies, living paycheck to paycheck for about the next 9 years (student loans).

 

It's probably doable with about 1500 bucks a month left for personal expenses/food,etc. I'm just afraid of what if my 160 hours become less? Or what if something happens and I can't make the mortgage payments. Right now, I am making a pretty decent income for the last 2 years. I just feel like the financial burdens would be on me, but it might be worth it to own a place.

 

 

Do you guys think it is wise to buy or just rent for now?

If buying I'd probably be paying about $1-1.3K more a month. Once I pay off my student loans, it would be so much easier and my daughter would be 9-10 years old by then.

Unfortunately we can't really move too far either due to family situation.

 

 

Do you guys think it is best to purchase and invest in a owning a property. Or it is more wise to rent?

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Have you spoken to a CPA or financial adviser? A neural party (not banker or realtor) and not an emotional party (friends/family)? That may be the best way to navigate this and set some short term and long term plans. Home ownership is more than just mortgage payments.

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I have spoken to my boyfriend and also family members. Half think that I should, and the other half no. We just have a baby girl in July and now we need to upgrade to a two-bedroom. Buying a house would mean pinching for pennies, living paycheck to paycheck for about the next 9 years (student loans).

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Buy a place that has an extra suite that you can rent out. These are called mortgage helpers. Rents are high, so means you can be competitive and offer a lower price leaving you having NP finding renters. Also you can look at it as a short term investment if you bring in a familiy member to help out. Live in it for 5 years, and sell it before the mortgage needs to be renewed. Take the equity, and place it into a bigger place or use it as a bigger down payment, and repeat till you are mortgage free.

Stay at home dad can start a babysitting business on the side for tax free income.

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Why can't you wait until your child is in school full time? That way your boyfriend can get full time employment and you won't be the sole wage earner and burdened with the full mortgage.

 

That's good advice. When your child is in school, your boyfriend can contribute to the expenses, unless you plan to have more children you can't afford.

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I fully believe in owning a home, be it a house or condo. Investing in a home of your own will pay off down the road. A house goes up in value just by living there, as long as you take care of it. You wont likely lose with real estate.

 

I became mortgage free at age 34 due to hard work and some luck. I like the idea of buying a place where you can rent out a suite be it in the basement or a separate bldg., something to help offset the monthly mortgage. Rent is money down the drain.

 

Talk to a financial advisor, not a friend or relative who will be biased.

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What line of work was your boyfriend in before baby?

Is he a stay at home dad because he was unemployed or did you decide it made more sense for him to stay home?

Before you look at buying, which you are right, you will have the equity should you decide to sell it - is there something he can do job wise. Lots of stay at home moms telecommute to be with baby or have an etsy shop if they had been in an artistic field, etc, or do freelance work to enable them to stay home with baby because they do it while baby is napping, or while their husband is home but they can still take breaks to spend time with him. Or they work weekends or evenings when their husband is home to care for the kids.

 

Can he work using a combination of working when you are at home, and hiring a babysitter once or twice a week? Even if its not full time, it will be easier for him to go back to work when the child is in school and the budget will be more doable. There are many people who live away from families , even if he works one full day and a few evenings and you only really need a sister for a few hours on two days, it could be doable

 

Also, I would put the house only in your name if you are not married, just FYI.

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Another piece of advice is that you can consolidate all your debt into that mortgage, so you can have a doable payment that can also leave room for some savings for emergencies.

 

The only reason i would not consolidate the student loans into the mortgage as payoff rules may change over the years - the student loan may be able to be refinanced with different rules, qualify for partial forgiveness, etc.

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Also, I would put the house only in your name if you are not married, just FYI.

That's what lawyers and prenups are for. If they live in Canada, they are already considered as married (common law) and the same laws apply like married couples.

Hell she can even be on the hook for alimony right now if they separated.

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In your situation, it's better to rent.

 

I'd only buy a house if both of you could increase income substantially whether married or not.

 

I've been in situations where the mortgage took such a big bite out of my monthly income that I had to scrimp elsewhere every month. I rode out the storm and nowadays, it's not a problem. My husband and I no longer live paycheck to paycheck which is a tremendous, priceless relief. We paid off our house and own it free and clear but it was a struggle to finally arrive at this point in our marriage.

 

For you, it's more wise to rent. Never purchase property if you're stretched thin. Make sure income whether yours, his or both of your incomes combined are ample. Home ownership is expensive with property taxes, repairs and maintenance which cost a lot of time and money. If you and your boyfriend are not skilled and handy, then many times you have to call in the reinforcements aka professional contractors for house upkeep. It is not for everyone.

 

Also, your daughter is just a baby now and you don't know which school you want her enrolled in, which neighborhood is desirable or what job situations and location will be in the future. Renting gives you more options should you decide to uproot and move.

 

Plus you have student loan debts. Pay off your debts first otherwise you'll have to work like a dog to support your boyfriend AND daughter AND have student loan debts hanging over your head. It would be an extra miserable situation IMHO.

 

Don't pinch pennies. It's NOT fun. Be smart.

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Purchasing a home requires money up front such as a sizeable down payment and if you don't have it, then your monthly mortgage payment and interests will be high. Also, it takes YEARS before you can recoup let alone sell to make a profit of any sort.

 

The economy is cyclical and there will be downturns in the housing market. During a bad economy, we actually lost money on our house, had to weather the storm and remain patient before we were able to move up 4x and eventually pay off our final mortgage on our 4th real estate property.

 

If you decide to purchase a home, I agree with others regarding the advisement of a financial attorney, financial advisor and a prenup.

 

In the meantime, you are the sole breadwinner and I wouldn't impulsively buy a house now. Renting is better in your situation.

 

After you're more settled, your daughter's enrolled in school (perhaps interim), after your boyfriend gets a job to provide dual income and after you pay off your student loan debts and save for a sizeable down payment so your monthly mortgage won't be too high, then buy a house. Do things in logical order financially speaking. I think that would be wise. Crunch the numbers and go from there.

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Purchasing a home requires money up front such as a sizeable down payment and if you don't have it, then your monthly mortgage payment and interests will be high. Also, it takes YEARS before you can recoup let alone sell to make a profit of any sort.

 

The economy is cyclical and there will be downturns in the housing market. During a bad economy, we actually lost money on our house, had to weather the storm and remain patient before we were able to move up 4x and eventually pay off our final mortgage on our 4th real estate property.

 

If you decide to purchase a home, I agree with others regarding the advisement of a financial attorney, financial advisor and a prenup.

 

In the meantime, you are the sole breadwinner and I wouldn't impulsively buy a house now. Renting is better in your situation.

 

After you're more settled, your daughter's enrolled in school (perhaps interim), after your boyfriend gets a job to provide dual income and after you pay off your student loan debts and save for a sizeable down payment so your monthly mortgage won't be too high, then buy a house. Do things in logical order financially speaking. I think that would be wise. Crunch the numbers and go from there.

 

If she were in the position to buy the worst house in a good neighborhood (definitely liveable but outdated kitchen, that half bath should really be a full... ) with good schools, I would say go for it if she had the time to fix it up and then flip it. Or if she was really, really savvy and bought a place that needed little but was a foreclosure - i have had that experience where i was able to sell it the next year for 20K more - it needed paint, little picky fixes like replacing a broken baseboard, updating the light fixtures to make it fresh (i would have done this anyway had i stayed there for years). I did not intend to sell it that soon but that's what happened. So i paid off the mortgage in full and after closing costs and moving costs I had $16k in my pocket. But with an infant, its probably not the time to do that.

 

I think buying makes sense also if she is willing to move to a lower cost area.

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If she were in the position to buy the worst house in a good neighborhood (definitely liveable but outdated kitchen, that half bath should really be a full... ) with good schools, I would say go for it if she had the time to fix it up and then flip it. Or if she was really, really savvy and bought a place that needed little but was a foreclosure - i have had that experience where i was able to sell it the next year for 20K more - it needed paint, little picky fixes like replacing a broken baseboard, updating the light fixtures to make it fresh (i would have done this anyway had i stayed there for years). I did not intend to sell it that soon but that's what happened. So i paid off the mortgage in full and after closing costs and moving costs I had $16k in my pocket. But with an infant, its probably not the time to do that.

 

I think buying makes sense also if she is willing to move to a lower cost area.

 

With all due respect, abitbroken, I agree to disagree.

 

Pinching pennies, living paycheck to paycheck for the next 9 years due to student loan debts, risk working less than 160 hours as the sole breadwinner mother of a baby with risk defaulting on the mortgage loan (also risk for foreclosure and / or bankruptcy), all financial burdens on the OP, Beautiful-Love and no option to move farther out due to her family situation are all scenarios not conducive to purchasing a house at this time.

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Purchasing a home requires money up front such as a sizeable down payment and if you don't have it, then your monthly mortgage payment and interests will be high.

Not entirely true. This all depends on the area you buy a home in, what kind of job field you are in (public service, medical staff, and educators get cuts), the loans that are available for it, and your income to qualify for such loans that DO NOT require a down payment. I bought a home on the beach without putting any down payment on it.

 

Now what WILL cost money is paying for inspections. You’re looking at least $1K for a good home inspector.

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Not entirely true. This all depends on the area you buy a home in, what kind of job field you are in (public service, medical staff, and educators get cuts), the loans that are available for it, and your income to qualify for such loans that DO NOT require a down payment. I bought a home on the beach without putting any down payment on it.

 

Now what WILL cost money is paying for inspections. You’re looking at least $1K for a good home inspector.

 

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. It doesn't make economic sense for OP, Beautiful-Love to buy a house while stretched thin. Living on beans and tap water while pinching pennies, living paycheck to paycheck with student loan debts, the risk of working less than 160 hours as sole breadwinner mother with a baby, unemployed boyfriend, risk defaulting on the mortgage loan (risk for foreclosure / bankruptcy) and not having the option to move farther due to family situations is a recipe for financial disaster.

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Or, go ahead and buy a house under your current economic circumstances and find out for yourself. Then you'll know and understand how hard it is to survive with limited income. You are the one who has to work like a dog since your boyfriend is unemployed and then your extreme stress will cause fights in your relationship. On top of that, you're a young mother with a baby. Therefore, you will become harsh and tense.

 

Think about the quality of your life now verses later with pinching pennies, living paycheck to paycheck with the risk of less than 160 hours. It is not a happy scenario. Remain practical and realistic. There is a difference between wishing and crunching numbers. A harsh reality check is what it is.

 

Err on the side of caution.

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Is upgrading this year an absolute necessity?

One more year in the one bedroom gives you time to plan and save without the pressure. You are working nights right now anyways, so a pull out couch on the living room would do if the idea is to transition your daughter to her own room? She won't remember anyways, it's just a little less space for a year while you plan and save?

 

I'm more conservative financially , but I wouldn't personally feel comfortable buying a home without a cushion and a back up plan.

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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.

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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.

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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.

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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.

 

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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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.

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