Should I rent or buy a home?

Question

I am starting a new job on Monday. I have considered buying a condo for 279900 and even am trying to get preapproved. It would be nice to invest right now and earn equity. But I have no down, my payments will be high and I will have barely enough to make ends meet bills wise, and unsure of the stability of the job I will be starting but hope to be there for a long time considering the pay and benefits are excellent. On the other hand I have though abou renting. It would give me more flexibility with payments, more time to save, and pay extra bills, but the downfall is I will not be building equity, and I know renting is wasting money. But I can afford that, and I calculated that I would lose 40k in 5 years but be able to save 100k in 5 years for a down. What do you think would be a better route for me? I don't want to struggle, but I know he housing market is for the buyer, but then again I am not fully prepared at this time even if in the back of my mind I want a place of my own?

Answer 1

From what you are saying, it would be smarter for you to rent for a year or two. You do not have to wait for five years, but put away as much as possible for the year or two.

If you invest wisely in the stock market you can make your money grow faster and use that as your down payment.

While you are starting a new job you would do best not to buy a place. As you mentioned, your budget would be quite tight, but a down payment will reduce that stress and a year or two of raises will help too.

Take care,
Troy

Answer 2

Here is food for thought

If you rent, you are paying someone else's mortgage and you will have nothing afterwards. If you buy, you are building equity in the property and the value of your property will always appreciate.

Second thought. When buying, do NOT go by your gross income, but only your actual take home income.....

Your payment for the mortgage, homehowner's insurance and property taxes combined should be no more than 59% of that take home pay. leaving you with the ability to put food on the table and pay your other bills.

Most financial institutions use your gross income and give you a faulty picture of what you can afford. Don't be caught off guard. ALso, look into historic property tax increases.....Some areas the property taxes are out of control and a 50-60% hike is not unheard of.

Answer 3

I tend to agree with Temper's answer. Use the year to improve your credit score. That will save you money on your mortgage. And if this new job, which you've not even started yet, does not pan out, you will have far more flexibility than you would as an owner.

Have you considered renting with an option to buy? That might be a very good choice for you. Try to be sure you know what the sales price will be if and when you do buy, and how much of your rent payments will go toward the sales price.

Answer 4

Plan ,take a year save for ever possible scenario ,if in a year you have the down payment ,legalities monies and dint get any new credit cards or new car in that time ,use your credit wisely in that year (keep it below 50% and pay on time all these things prepare you .
Best of Luck
took me 5 years to get into a comfortable position ,if you don't have a good down-payment the money you think you will be saving by owning now will be gone in interest

Answer 5

.. good question, i'm in exactly the same position. i think about the money that i could start earning in equity, but then again i would be completely cash-strapped, and for me that would be an asphyxiating feeling, so instead --right now i rather save as much as i can so that when that time comes i'll have a bit of a down payment (and money to accomodate for other necessities), so perhaps if you wait you could be in a better financial position to make that purchase, best of luck

Answer 6

None of the circumstances you mention preclude buying ayour home, with the possible exception of having a totally new job - that could make adequate financing difficult to obtain.

Owning is better than renting!!!

100% mortgage loan financing is often available for first time home buyers. Downpayment grants can easily be obtained from various governmental units. HUD ( www.hud.gov ) for example has many useful downpayment assistance programs, notably the American Dream Downpayment Initiative. Browse to this webpage for more info:
http://www.first-time-home-buying.net/down-payment-grants.html

Where do you live? A first home that costs $280K is a bit unusual. Perhaps you could start with a lower-priced home and avoid having "barely enough to make ends meet." Being house-poor is no fun at all.

Don't be concerned about not being "fully prepared at this time" for homeownership. It's not difficult and the rewards are immense - both financial and personal. The feeling known as the pride of ownership by itself is "worth the price of admission." I have never yet met anyone who is buying their first home who is anywhere near completely knowledgeable about what they are getting into.

There is a lot of information about home buying available online. Unfortunately, much of it tries to make home buying + owning seem much more difficult than it actually is. A helpful and easy to understand site is:
http://www.first-time-home-buying.net

Best of luck to you.

Answer 7

Not sure I agree with you guys. There are many loan products that will allow for lower payments. You could go with and interest only arm, or a pay option arm. Maybe you could get a roommate? Rarely are homeowners really prepared when they buy. There are an array of 100% programs available. Email me for more details. [e-mail]

Best Regards,

Answer 8

Renting a waste? How so? You're paying for a roof over your head. I'd be hard-pressed to buy a house, but I have a tendancy to move about a bit. You buy, you pay maintenance, lawncare, pest control, taxes, everything. You rent, that's someone else's problem. Re-read your fourth sentence...I think that will answer your question, too.

Answer 9

as a substitute of searching for somebody to purchase your abode, why do not you be the landlady and lease out the rooms to individual renters. That way it is undemanding to shop a room and seem after the abode. this is much less complicated to interrupt the lease to a pair of room renters than somebody to lease or purchase the finished abode and sub-enable to you. or you could positioned out a hire like for 2 - 5 years hire out your finished abode then you definately bypass lease a room someplace. or you could refinance the abode at a greater fee-effective interest value and use the money to pay off your present day loan. the hot loan you could develop the repayment of the loan to a protracted term era and positioned across down your month-to-month loan charge. i think of you come across those thoughts potential than have somebody purchase over your house then lease it out to you which of them interior the tip you may lose your house if the hot proprietor pick to kick you out, and dont forget you nonetheless have your dad who needs and could combat for his proportion of the advertising value of the abode

Answer 10

wait the house prices are crashing now.

http://www.breakingbubble.com/index.htm