Should we buy a home or continue to rent for a year or two?

Question

Okay, I know that buying a home is a great idea. But I have some questions concerning it. Here is my scenerio: My husband and I live in the Houston, Texas area. Our lease is up in a month and a half. We really want to move at that time into a place that has at least two bedrooms and a garage (apartment or house). We really want to buy a home BUT, at this time we can't afford the home we want. Our annual income is approximately 50,000.00, and our fixed monthly expenses before rent are approximately 1081.00. I have a lot of bad credit, including outstanding and charged off debt. My husband has fairly good credit, probably in the high 600s.
What I want to know is: Is it even worth trying to get a home? If so should we try to buy new or used? And, if we buy one and we want to sell it in a few years is that really a good idea? Also, we aren't exactly in the positiong to do major repairs on a house, will that effect us? People keep saying to buy a house, are they right?

Answer 1

Your first home doesn't need to be your dream home. You can move up later.

Timing the housing market is very difficult. Buy when you can and enjoy all of the benefits of home ownership.

Answer 2

My suggestion would be find a builder w/a large amount of homes for sale, buy a new construction home for as cheap as possible (usually the same price as a older home). You wont have much in the way of repairs,
Dont worry about the 5% down issue, if you have it keep it in the bank for worste case scenario.
Also, dont worry about a dream home just get something that is easy to sell in the future, get as many sq/ft as you can.
High 600's is plenty good enough for a loan, find a mortgage broker you trust and that is upfront on all the issues and you will be happy.
Dont get a 30 yr fixed loan, Go w/a 5-7yr fixed rate arm product, there is a very high likelyhood that you will sell/refinance prior to 5-7 yrs so why pay for a 30yr?
Remember you will have Tax advantages in owning a house that if you factor in make owning a house only slightly more expensive then renting.
If you get a cheap house now, when you are ready to buy you could turn this one into your first investment property!

If you buy into the idea of not buying because its a buyers market right now you will miss out. Just think if nobody ever bought in the early 90's. I say look around, find a desperate person who must sell and get a home in good shape for as cheap as possible.

Remember my advice on the 30yr fixed thing... I've been there and done that and really wish I would have just saved the money!!!! I've also gotten 2yr adjustables where its only fixed for 2yrs and I DO regret that because that is way to short of a time but 5-7 will do you good.

Answer 3

My wife and I were in the same situation back in August. We ended up buying because we had some bad experiences renting in the past. The home we were renting is what we were given the opportunity to buy. We love the house, location and neighbors and we do not have a plan to move anytime soon. In your case, since you do not have 20% to put down, you will have to pay PMI insurance. The price varies on the price of the home. In our case, the house was $155K and the PMI is $150. PMI drops off after a few years or when the house reaches 20% equity. Note, we also live in PA. In your case, given the current market, would you think you'd be able to break even or make a profit prior to moving in 2-3 years? If yes, the I'd say go for it, if not, then no. If you are a first time home buyer, you can do a fannie mae 100 loan. This covers 100% of the mortgage. Since your company would pay closing, you'd have really no cash out. Then you could use that cash to do any improvements OR you can always put it down to drive the overall principal down.

Answer 4

2

Answer 5

I would invest time to discover what your options really are by first calling at least 3 loan officers for quotes on loan packages that may work for you current financial situation. Second, if you are comfortable with a loan officer, I suggest you interview 3 realtors and select one you're comfortable with and take a look at some homes that might fit your needs now. As most have already told you, you may not get everything now, but real estate appreciates and you could always move up later.

Every step in this process gives you a good foundation for making a decision. Skip a step and you only have part of the information.

Buying real estate may provide additional tax benefits. Renting offers you no financial benefits.

Good Luck!

Answer 6

Owning a home costs a lot of money, more than just the mortgage. You have to be financially ready, and if you buy you should try to get a conventional fixed rate mortgage, not the adjustable rate mortgage that will make the house seem so affordable. ARMs give you lower payments, but when interest rates go up so does your payment, and it goes up faster and higher than you can imagine. Rates are going up, so now I think you need to buy with a fixed rate mortgage while the rates are low. Nobody knows where the housing marked is going, but it does not seem to be going up much in the forseeable future in most areas of the country. I would consider waiting a while, prices are probably going down, and your ability to pay would be going up.

Answer 7

I know a lot of people say you should buy, since with renting you don't build up equity.
The problem with buying is you aren't just getting a house payment instead of a rent payment. You are responsible for all repairs, property taxes, homeowners insurance, even extra utility bills that (generally) landlords pay-like a water bill.
It's just my opinion, but if money tends to be tight, and you don't have resources you can tap in case of a major home repair bill, I think for the time being you are better off renting.
Good luck!

Answer 8

You can get 100% financing with a 600 score if he is the primary wage earner. You can do this without having to payoff old debt and you can go upto 55% on the debt to income ratio. Additionally you can have your R.E.Agent negotiate that the seller pay up to 6% towards your closing costs which means little to no money out of your pocket. I am also in Houston, by the way.

Answer 9

I'd definately keep renting for the time being.

We're starting into a real estate crash now and property values are dropping fast in many parts of the country.

Track the prices in you area and wait for prices to bottom out.

Also if bird flu crosses over to spread to humans there will be a lot less people needing houses and prices should plummet.

Also many of the baby boomers are retiring soon and will be dumping their big houses to finance their retirement.

Answer 10

it is a buyers market at the moment, not likely to last more than 6 - 9 months. If you really want a home this is the time to strike. Buy what you can afford. Can always trade up later.