Our lease isn't up until the end of July. I spoke with my landlord two days ago about us looking to buy. She said she may be interested in selling the house we are in and putting it on the market in Spring, but wanted to know when/if we found something sooner. Otherwise, I am responsible for helping find a new tenant (advertise, give the application, she processes and decides) and I have to pay $100 for them to rewrite the lease. It wouldn't be a sublet situation. We'd be off the hook ONCE a new tenant signs. The new tenant would only sign until the end of July. And if she decides to rent it out, it would be an Aug to Aug lease. We live just outside a college town, in a newer subdivision, and our rent is high for the area.
Please help me with the pros and cons....
Pros:
*Our target range of a house price would save us $300-$500 a month compared to what we are paying in rent.
*Rates are very low right now.
*Better chance to find a house cheaper? People more motivated to sell over winter?
*We would qualify for a 0 down loan and at max 3 1/2 percent down.
*The house would be OURS!
*Possible tax credit on our taxes for this year (if we close by the end of the year)....I think.
*The college may attract a potential tenant in January for beginning of spring semester. (Very few places have rentals except Aug to Aug. here)
*A shorter lease may attract someone who doesn't want to sign a year lease.
Cons:
*Moving during the holidays....and in possible winter weather
*It may strap us for cash up front...although we already have most of the girls' Christmas purchased.
*What if we don't find a house by the time a person would want to move in by January? What if we can't find a tenant?
*We may have to borrow money from parents if we have to carry the cost of the mortgage and the rent if we do it sooner than later.
We'd be moving during the school year regardless if we bought now or in the spring. Daughter is in K.
We will have a lot more money come March (tax return and my husband's bonus). If we wait, we use our own money. If we do it now, we may have to borrow but pay back in a matter of 3 months.
What would you do??? What part of the puzzle am I missing or not thinking about?
I keep going back and forth. There is no perfect answer. We could be saving money right away and it all works out, OR we have to make both payments from Dec to July.
TIA!
We are pre-approved, and have been looking around the area (same school district) for several months.
We are also getting approved on one income.
We did have the money for a down payment and moving costs until a little thing called a brain tumor came up. So yep, we know anything can happen.
We had also looked at finding a cheap apartment to live in until we were approved and ready, but there are NONE in this school district. Our landlady WILL NOT go month to month with us. She's a shark.
We've purchased before, but never in the fall/winter.
I think we will start looking and if something comes up, we'll make it work. If nothing comes up, we'll at least know what inventory is out there and what we've seen.
And yes, the housing market is definitely picking up here and so will the prices. Thanks again!
Unless you have an eye on a specific house already, I would wait until spring. We bought in November and it seemed that by the end of summer only the crappy houses that no-one else wanted were on the market. I don't think the interest rates are going way up by spring.
Unless you have enough cash to cover the rent AND the new home purchase/mortgage payments, and the moving expenses.... then you wait. You might spend a little more in your rent over the next few months, but you are buying security with it.
The reality is that you have NO IDEA if or when you might find a tenant to replace yourselves, and you COULD be on the hook for the entire rent until the end of July. You think a few hundred of that is too much to waste now? Imagine how you would feel if you had to "waste" the entirety of the rent money until July on top of a mortgage...
I would be weary of buying if you would be strapped for cash now.
Save enough money to have a 6 month cushion that would cover mortgage, utilities, food, etc.. should someone lose their job. Also have enough money set aside for emergencies for the house itself. Like if you get a busted pipe, water leak on the roof, flooding, etc...
You just never know what could happen!
A friend of mine recently purchased a home with her bf and while she was on family leave after a baby, her bf's work cut back on hours, she found out she might lose her job cause they were cutting back hours. She ended up having to borrow money, and cash out her IRA funds, just to get through, and they are still chasing their tails.
You just never know!
Good luck to you!
ETA: my friend did also buy the home based on one income, and she is still struggling.
There are a lot of pros and cons.
Homes are usually cheaper over the winter. In some areas it may vary as much as 10%. To me, it would be, What makes the most cents? ;~))
I think, IF you can find a deal from someone that reall NEEDS to move right away, take it. If your daughter was in her junior or senior year in high school, I'd wait until she graduated. But at the kindergarden stage, she will make new friends easily.
Good luck on your move. (You can always say you got a new home from Santa for Christmas. Remember the final scene from the origonal "Miracle on 34th Street"?)
Good luck to you and yours.
I would wait if I were you.
You need to save up that down payment. Don't underestimate the power of that money. The more you have to put down, the lower your interest rate is going to be. The bank looks at that money down as RESPONSIBILITY. If you are patient and responsible enough to save, they trust you with a bigger and better loan with a lower rate.
You can go month-to-month on the lease after July and find your house. No worries about being able to get out of it. And then you don't have to worry about the school switch mid-year.
If you haven't already, get a copy of your credit reports. All three bureaus. Who cares if they are free or not...you need to know where youre credit is and what you need to fix. And you may need time to fix it.
Pay off any debts.
Don't apply for any more credit.
And when you're 30 days or so from starting your home search, go get pre-approved through your mortgage lender. I suggest using a local lender...they're usually easier to deal with.
Let me know if you have any questions. We just took possession of our new house and close the loan on Halloween. :-) We had more than 30% down.
Best of luck!
To me, I would say let the house tell you it's time. Start looking. The great thing here is that you are not in a time crunch! We've been through that and it stinks. Secondly, there are a lot more people looking to rent then buy because many people can't buy right now! So that is in your favor. It should not be hard to re-rent the house as long as its decent and in decent shape.
Our neighbors behind us just rented their house that is about 900 sq feet smaller then ours, for $150 a month MORE then our mortgage!
Again, start looking. Take your time, find what you want. Don't miss out on the house of your dreams because it might be cold out. Who cares! Once you're settled in, it won't matter! For us it was about what city to buy because we had to relocate. The house chose for us, and we love it!
If you have to borrow the down payment - DO NOT BUY NOW!! That is NOT the responsible thing to do. You would have to get the people you are borrowing the money from to "gift" it to you.
Go through the process of getting approved NOW. Find out how long you can be "locked in" for and find out how much they will approve you borrow for a mortgage.
Personally? I would do everything on ONE income instead of two - then you will not be getting more than you can afford so if your situation changes - it won't be a huge shock.
Get pre-approved first - then start looking.
What is the housing market like in your area? What are the inventory levels for your target house? Are the prices trending upward, like here in the Chicago area? If so, that might make it in your interest to buy before the prices go back up. We're buying a 2nd rental unit right now, about 10 months before we intended to, because the area we want to invest in is low in inventory for the type of property we are buying.
Can you afford to pay the rent if you aren't able to sublet?
Wait. You're not in a position financially to aford a house.
I truly would start looking and if I found the perfect house I would make an offer. The home industry might pick up after the election. I think everyone is sort of in limbo right now waiting to see what is going to happen.
I do believe that we will see a change this spring in housing costs. Buying now would only be beneficial to you in the long run.
I think that if you start running an ad right now and start boxing things up to store you might be really prepared if someone called and wanted to rent the house right now.
My sister is planning on putting her house up for sale in the spring and she is already boxing items up to fill the garage and when it is full she will rent a large storage room and fill it up with everything she can get her hands on. She is planning on having minimal furniture by Christmas and nothing in the closets except about 8-10 sets of clothing, for instance a couple of short sleeved tops, a couple of turtle necks, a couple of thick warm sweaters that can be worn with either jeans or a skirt if they have a function they need to go to. She has packed away all her extra shoes except a black pair of heels for dress up parties, a pair of sturdy boots, a pair of every day shoes, and her house shoes. She has only 1 heavy winter coat and a lightweight windbreaker that is lined for a rainy cool day.
Her hubby wears button down shirts with a tie and slacks to work each day so he has shirts in a variety of colors, only about 6 though, and his work slacks. He has one suit in a dark color that he can wear if there is a party or a somber occasion. They do leave their clothes towards the front of the storage so that if they need to pull something else out they can.
She has already stripped the borders in the hallways and bathrooms. She is preparing to start painting and getting the house ready to sell.
You could be doing the same thing starting today. Making a list of necessities that you use every day or every other day is essential. You can't pack away the toaster if hubby uses it every morning for his breakfast.
So, I am saying that you need to put an ad in the paper today, give all the information you think is important, that it has X bedrooms and X bathrooms, is about XXX sq feet, and how much the rent is. If they can't afford it they don't need to call.
Then plan on moving at any time someone decides they want the house. You can put almost everything into a storage unit and live in a small apartment if you need to. If you tell the manager you are looking for a house to buy they will often do a month to month lease so they can be free in a couple of months too.
I think that I would do this now instead of next spring. The reasons are that many people need to move at the end of the fall semester, they hate their roommates, are finding similar friends they think they might be able to stand living with, they are thinking about moving already. Seeing an ad in the paper for a place might make them decide to go ahead and do it.
If you find the perfect house and get it then you might have to make an effort to cut spending back until July but I really think the house might rent before then so even if it doesn't rent right now or even at Christmas you won't be paying out that much money for too long.
Go for the new house by the end of the year.
Can you buy the house you're currently renting?
