When we bought this house I discovered that my neighbors both had the same name. Lets call them Bill. It quickly became clear that there was young Bill (40’s) and old Bill (70’s) and that we were stuck between Old Bad Bill and Young Good Bill.
Good Bill likes us because we don’t complain when he works in his garage. Apparently that is so rare that for the first year we were here he used to race my husband to clearing the snow from our driveway. Old Bad Bill is gone now but he hated us because we wouldn’t pay to have his tree that overhangs our driveway cut down. To be fair he hated everyone but that was our first run in with him.
Someday soon I have to tell Good Bill we’ve sold the house to a developer and he’s going to have high end condo’s in the next 5 years. I don’t think he’s going to like us as much then.
Exactly. Don’t even think about at what the bank will give you; they want you to overspend as long as it doesn’t make you so broke you walk away. Instead, figure out how much you want to pay for housing, work backwards to see what your mortgage will be based on the stuff listed above, and then apply for only that amount from the bank. That way you aren’t tempted to go over budget because the bank says you can (remember their motive is making the most money from you). My husband and I did that and I’m incredibly glad we did; it’s just too tempting to go over budget unless you have to go through the hassle of re-applying.
Get yourself to the website bankrate.com and play around with their mortgage calculator. A lot. You can plug in various finance amounts, interest rates, terms, etc. to get a monthly payment .
It also gives you the option to look at an amortization schedule of the loan. Learn how to read one of these. It’ll give you a breakdown of every payment over the life of the loan showing how much of each goes to interest vs. principal. It also shows cumulative interest on the last line so you can look at your $150K 30year fixed loan at 4% and say “WTF!?! $107,000 in interest!?!”
This is great advice; when we bought a couple of years ago, we figured out how much we could afford, then we went to the bank to get pre-approved. I don’t know how much they would have approved us for, because we didn’t even ask.
This is also great advice. At this point, I think anyone who doesn’t take advantage of all the early re-payment options available and lets their mortgage go the full term must really like throwing good money away (assuming they can afford it, of course).
One other thing to consider - things that can go wrong (with a house) often go wrong when the pattern of usage changes. When we moved into our house, the first year we had to replace the central air, the water heater, and the refrigerator. So, if you can, have money set aside for immediate emergencies.
The other side of it is that we are very happy with our house (we got really lucky with our neigbors and neigborhood). While we were paying mortgage, it was probably a little worse than rent. But now that it is paid off, that is all disposable income. Which is really nice. (It took us ~15 years to get clear.)
That has been our experience, too - buy a house, move in, replace some appliances/garage door opener/etc. I’m guessing that when you decide to sell a house, repairs/replacing gets put on hold (which makes sense).
I’m a big fan of home ownership (never been a renter) but not if you’re going to bug out and be trying to sell any time soon. And by soon I mean under 10 years.
I’m ESPECIALLY not fond of quick condo ownership. Why do you think all of those condos in rocking chair’s post are dirt cheap? Because the people that bought them are dying to get rid of them even if they have to take a $50k loss. I have one set of friends who have outgrown their condo but are stuck in it, another set with a beautiful condo that they will take a bath on when they go to sell, and another that have had 2 mortgages for over a year now because they cannot sell the damn thing.
A cheap-ass condo is an amazing investment right now for a single guy who plans on living there for 10 years as a single guy. Anyone else is going to regret it.
I presume you mean a small condo apartment. Our condo townhome is 3 beds/2 baths and is certainly meant to be a family home. (About 2/3 of the houses in our complex have kids.)
It is cheap-ass but that just saves us money for other things (retirement, college, vacations).
I have to agree with the concept of only buying if you are staying 10+ years though.
Saying “cheap-ass” in response to rocking chair suggesting that the OP look at $30k condos that are super cheap because people are desperate to get rid of them. Sorry!
I have never been to such situation before but I have worked for real estate websites for a year already. One of the few topics I have tried discussing is renting versus buying a house. Based on the advantages buying is really a better choice. Being an investment, being able to make any changes with the home yo own and you will be subjected t a much lesser interest rate if in case you decide to loan again if you do have a property of your own. One thing that just made me think that it’s not a good choice at all on your part is your plans of leaving anyway. It is quite hard to sell it or look for somebody to rent it right away. Better think about it before you do come up to a final decision.
There are many considerations that go into the rent vs. buy decision, most of which have already been mentioned in this thread.
I will say that I bought my home 15 years ago, and it was one of the best financial decicions I ever made. I was able to pay off the entire mortgage a few years ago, so now all I owe are property taxes, insurance, and maintainance. No mortgage. Which is far, far less than rent would be for this same size house. And I can live in it the rest of my life, if I want.