Think about this one, especially if you are looking at moving overseas. You aren’t going to take the lawn mower, the snow blower and the ladder with you, and you aren’t going to be able to sell them for anything close to what you paid.
The first time you buy a house, the hardware store will become your bestest ever friend. Toilet snakes, hammers, hedgeclippers. The list goes on and on. Last fall, I decided to count how many different shovels we have.
2 snow shovels for pushing light snow.
2 shovels for scooping/throwing heavier stuff (like wet snow or mulch)
2 digging shovels
1 shovel for removing sod
1 square fronted shovel that my SO swears we need, but I don’t know why.
Now, we’ve been collecting this stuff over the last 13 years, but at least 4 of those we had to buy in our first year of home ownership.
But don’t get too scared by the original outlay for tools and stuff (if you’ll be coming back soon) - most of that stuff you’ll only need to buy once or twice.
The responses thus far have been extremely helpful. Thank you all so much.
I had already made a vow that if I buy, I will only take on a loan that is 70-90% of what I was approved for.
Some of the posts and links provided in this thread reaffirmed some of the worst fears I had about buying all these years, and created some new ones such as, what if I buy a house next to the alcoholic, hoarder parents living in squalor who scream at each other and beat their kids constantly? (This is actually happening to a co-worker of mine right now.)
To answer a question upthread, I plan on picking up and moving overseas in roughly five years.
I was seriously leaning toward buying, but now I’m teetering back toward finding another rental. The absolute main thing keeping me from buying right now is that homes in the Baltimore suburban area in my price range are ugly! And my price range ain’t chump change.
My husband and I bought a house because we wanted to, were planning tostay in the area, and wanted to have a kid. Financially, though, our decision made no sense (you wanted someone to talk you out of it, right?). First, we were living in a small apartment in a borderline neighborhood and moved to a 3 bedroom house in the 'burbs, which we definitely didn’t really “need” when we bought it. The apartment was cheap enough that our property taxes alone now are about 2/3 what our rent was. We’ve also ended up paying for numerous repairs (mostly expected), spending extra time on home and yard maintenance, and spending more money on our commutes.
Now, we like where we live, the schools are excellent (not so where we were!), and we didn’t want to raise a baby in the city, but there is no way we’re financially ahead having bought a house, equity or no. We were just living too far beneath our means in our shitty old apartment for it not to have been a better move financially. The equity just doesn’t make up for what we were able to save back then, when you account for taxes, interest, and the costs of home repairs and maintenance.
/edit: caveat: the money you save only counts if you actually save it. Otherwise you’re better off invisibly building equity. We were saving up for the house, so obviously we were saving the excess cash (or most of it).
The particularly ironic bit is that Mr. Wiffle’s day job is County Commissioner, and he’s a strident property rights Republican. You’d think that would extend to not letting his golden retriever crap in my yard, but I guess not.
Your caveat is actually one of the main reasons why home ownership is a good financial idea for many: its a form of forced savings. Of course people can save exactly as much or more without a mortgage, but in practice many people find it very tough. Hence, while renting is often the cheaper option and allows that extra money to be invested in investments that are arguably better in many ways than real estate, that benefit is often not utilized.
The other side of that coin is that people for psychological reasons appear to be more willing to rent under-budget than to buy under-budget: that is, they often rent a smaller and crappier place than they would take if they are buying (sometimes because they are saving up for buying).
would you be interested in spliting the difference and perhaps go with a condo? you own the paint in, but have the building help with all the rest.
in phila condo prices are amazing right now. i’ve gone from owning a house that needed mega bucks repair, to renting a unit in a condo building, to now looking at buying in the building. living in the building before buying gives you a very good idea of how the building works and how responsive they are to issues and problems.
the condo is in the part of town where houses go from 250k to 1 million. a studio goes for 120k, 1 bedroom 170kish, etc.
depending on the condo building, some units are very easy to rent and very desirable.
If you are absolutely hell bent on moving overseas, don’t buy a house.
The real estate market probably isn’t going to pick up anytime soon, meaning you’d probably not be able to sell it.
Whoever you rent your house to - I don’t care who - is gonna trash it. Take it to the bank.
If you’re kinda pansyassed about moving (as in, finding your dream job or dream SO would keep you in the country) - buy now while the market is saturated with houses
and while you can still get a killer interest rate on your mortgage.
The first was in 1987. It cost me £30,000 ($47,000), plus £500 ($800) in fees.
My job collapsed within a year and I had to sell.
I got £41,000 ($65,000) for it*, paying £820 ($1,300) in fees.
*it was quite a year for house inflation!
I bought my current property 22 years ago for £60,000 ($94,000.)
I’ve spent £11,000 ($17,000) on maintenance.
It’s currently valued at £170,000 ($270,000.)
I’ll take the challenge - the economy hasn’t remotely bottomed out yet, the entire American way of life is collapsing, and barring a paradigm shift in technology or a major war, we’re facing decades of stagnation or further collapse.
If you exclude the bubble in which you were lucky enough to participate, US housing prices have returned ~0.4% annually in real terms since 1890. Like the NASDAQ bubble, it isn’t coming back any time soon.
Thing is, even if you know your neighbors before you move in there’s no guarantee they’ll be around in 1, 2, 5, 10 years. It’s a total crap shoot. The neighbors to the right of me are a retired couple. Excellent neighbors but who knows when their health exprires or they decide to downsize. They house on the left has already had a couple owners. First ones decided to put up a basketball hoop a few months after we moved in. It became the summer location for 20-25 kids to hang out at all summer at all hours.
They moved eventually and now we have a family from the Dominican Republic living there. A lady, her two brothers, and her two kids all live there. Super nice people except they use their garage as the living room for the two brothers complete with TV and stereo that plays latino music non-stop. It’s not loud enough to complain about but it’s always present if you want to sit outside or have your windows open.
This is exactly what my parents have done. The house is their retirement plan.
For us, buying made sense for mainly location and amenity reasons. In my neck of the woods, rentals are typically apartments and when you can find a house or townhouse they are either very over priced or just nasty.
We took the middle road. We live in a condo townhouse. We don’t deal with anything from our walls out (windows, doors, siding, roof, lawn are all part of the fees). Our mortgage+condo fees+insurance+taxes is less than we were paying for a 2 bedroom apartment.
However, we are planning on staying in the home ‘forever.’ (Barring anything unforseen, of course.) I just look at it as paying rent that someday will stop.
If I were planning on moving in the next few years, there is no way I would be buying. Even just the closing costs would make it not worth the return.
I blasted through the responses so forgive me if this was covered. You are not throwing away money on rent unless somehow you know how to live without a home. Housing is a necessity, you need it to survive, so then you can choose what fits your needs most.
I have owned two homes now I am back to renting as I hit the ‘life reset’ button, but I am sure I will own again. Judging by your goal set I would continue to rent. The ability to GO when you feel like it has a value of it’s own.
And speaking as a person who got his ass handed to him in the housing bust, I would not believe anything is guaranteed or reasonable right now.
Wow. I wish I could have read that before I bought in August!
I mean, I still would have since I was financially and mentally ready but I wish I’d have been emotionally prepared for the things you listed. I have an equal share of kind and generous neighbors to equal part pissy. The latter group is incredibly entitled. The entitled people tend to be elderly and working or lower-middle. You’d think they’d appreciate the fact that I’m very quiet, keep the outside clean and presentable (in some cases better than they do) and grateful that I’m increasing their own home values by changing the socioeconomic status of the neighborhood but instead they’re just pissy that parking is tighter and they don’t have a section of public property to call their own (that they have a right to a particular parking space in back of their house).
I too was unprepared for Dealing With Neighbors, since I’d always rented before and my parents live so far out in the boonies that their neighbors are irrelevant. Getting “helpful” gardening tips from the old lady next door was fine at first, until she started constantly insisting that we should only plant decorative plants(we grow vegetables, she has a chinese tea garden setup) so much that I started avoiding her entirely. Then she started asking my husband why I was so unfriendly. The other neighbors were overjoyed to see fellow churchgoers and Republicans moving into the neighborhood (it’s a very Democrat-heavy neighborhood in a mixed county, and we had a “Republicans for Voldemort” bumper sticker and a Linux Shark on the car at the time), and I was trying too hard not to fall down laughing to set her straight. Also, their teenager had a drum set and threw cigarette butts on our lawn. The neighbors across the street were normal but had parties all the frigging time.
In the four years since then, Old Lady has gotten the message, the Republican Evangelists sold their house to a nice family, and the partiers seem to have cut back. So, these things can resolve, but sometimes they don’t, and I was unprepared for the fact that our suburban neighbors have been more intrusive than our city ones were despite being less crowded together.
Exactly this. Do yourself a favor, and do the math to figure out how much of your first mortgage payment is interest. And remember, paying that interest is just as much ‘throwing money out the window’ as paying rent. But you’re still paying some principal, so you’re coming out ahead, right? Well, until you take out the property taxes, painting, plumbers bills, new roof (you are already budgeting for a new roof, arent’ you? Even the best roof is a 30 year or so lifespan), etc.
And then there’s this:
Quoted for Truth, as they say.
Finally, one comment on
I really think you should ignore what you’re approved for. Look at how many foreclosures there are right now and then ask yourself if you think lenders are particularly good at figuring out what people can really afford …
My advice is to look at exactly two numbers:
How much can I afford to pay monthly for mortgage, taxes, utilities, homeowners insurance, condo fees (if applicable) and at least a couple hundred for maintenance and repairs (maybe less in a condo)? That’s easily reversed into a total purchase price (depending on the mortgage rate).
How much have I saved for a downpayment? If you don’t have 20% down, it’s going to be much tougher to get a good rate (and you’ll probably also have to pay mortgage insurance, which is really throwing $ out the window).
But again, if you’re finishing a degree, which often leads to a new job, and are still young and free enough that you’re toying with moving overseas, I suspect that buying runs a pretty big risk of paying lots of transaction fees for only a couple years of owning a home.