To Buy or Continue to Rent

I say buy...renting is a waste of money- you keep paying and have nothing to show for it-not even a write off. Yeah it a big responsibility--but so is having a baby and you did that-and I bet you don't regret it for one minute! i rented for 3 years out of college then bought a co-op by myself, now I am on my 3rd house. Made 100k on the second house in 2 years! Good luck!

Buy a home only if your going to live in the home for at least 7 years - if you sell too soon its not its not worth it. You waste money and it would be as if you just rented. You can find that information anywhere.

Dont chase interest rates as banks can come in and change them at the last minute - like when you are signing your papers at closing.

Remember you cant control the interest rate - the bank will tease you with say - 5% just because you have 5% does not mean its better then 7% - it could take you 40 years to pay off that mortgage - making you pay more in the end - 40 years?? you say... well when people refinance (and they always do) your 30 years mortgage starts over. So in 3 years you refinance now you have 33 years to pay into your house - do it again in 5 years now you have 37 years to pay your house.. its a horrible cycle. Try and make extra payments on your mortgage. Even if its $10 - the sooner you pay it off the better - and you essentially lower your interest payments. You can find calculators online with what I am talking about.

Dont over buy - calculate 2.5 times your annual income. Not 3 times. So if your making 50K - dont get a house more then 150K - go to high and you may make it difficult for yourself. Dont get an interest only loan, or adjustable rate loan - stick with fixed only.

Dont buy a home with 100% financing - it takes longer to build equity - you have to pay personal mortgage insurance - and costs you more in the end. Try to have that 20% down payment.

You may find a larger home the further away you move from the city. But keep in mind commute - I moved from the Bronx 7 years ago to Orange County NY - but had to leave my job in NYC because the commute was 2 hours each way - its no way of life.

Tax advantages? Well put it this way - yes you can claim all the mortgage interest on your taxes but its like giving $1 to get back .28 cents, does that make sense? Id rather keep that $1.

Expenses: Keep in mind - you have to heat your home yourself - could be oil, propane, electric... - I have oil and a pellet stove - last time we got Oil refilled it cost us about $700 - a friend of mine has propane and pays twice as much. And if you have electric - oh man... and the bigger your house the more it is.

Taxes: Upstate here - I pay school taxes in September and Property taxes in January - most mortgage companies collect that money on your behalf but some dont. I personally collect it myself and collect the interest - most banks dont give that to you. If they underestimate the amount you have to pay it comes out of your pocket. So your mortgage payments can change every years based on that. And you have to make sure they pay the taxes - not paying that will cause you to lose your house.

Home ownership is great when you dont have the mortgage. LOL

Sorry I dont mean to sound down about owning a home, but lets be realistic here - its a lot of responsibility - did I mention plowing the snow, mowing the grass, weeding the grass, picking up poop from a dog you dont have, etc... making sure no one has an accident in your house cause you dont wanna get sued... lol if I had to do it again, Im not to sure I would have purchased a house. I feel stuck, I cant move at the drop of a hat if I wanted to.. home sales are pretty bad now, my house value has dropped a lot. Which happens to everyone, some even owe more on their house than what they can sell it for because they keep tapping into equity, its just as bad as having credit cards.

Cash only I say, next time I buy a house I will do my best not to have a mortgage - plan your best to pay it off as soon as possible.

As long as you have a mortgage you dont own your house. The bank does.

Ask your self these questions:
1. Do you pay your rent on time every month?
2. Is the payment reasonable on the 1 salery?
3. What is the average house cost in the area you want to live in?
4. Are you planning on staying in the area for the next several years.
5. How are the school districts in the area you want to live?

Now if you answered Yes to # 1 and 2 call a realitor and find out the answer to #3

Next talk to your bank and find out what the interest rate is and have them do a morgage estimate for you including any taxes including school and property taxes.
You may find you can buy for the same price as what you rent for but it MUST include ALL taxes!

Finally: if you go the buying direction be VERY clear with your realitor what is the TOP price you will pay and tell them NOT to show you anything over! If they do find a new realitor that will stick to your guide lines!!!

Don't fall into the trap of buying over your heads and loose your home in the long run. Be willing to compromise on some of your "it would be nice to have list" and be patient to find the "must have list items" in your price range!!!!

Happy Hunting!! A.

I would say BUY if you are willing to go with the commitment. It is a lot of work and financially if you are not prepared can be overwhelming. For instance what do you consider a lot to pay for rent. We lived in the Bronx up until 3 years ago and now live in Putnam Valley. We looked for a house for an entire year. We wanted just the right one and the price needed to be reasonable.
Buying means, you pay for oil deliveries(depending where you go), well maintenance(if it is not city water), septic cleaning (if it is not city), and any repairs required if you buy a fixer upper. If you have nothing saved it can be extremely costly and could leave you in deep debt.
You and your husband might want to take the time to sit down and discuss what you are looking for, where you want to move and what your budget allows. Then start looking, so you don't jump into the first thing you find and so that if you find something you like you won't risk the chance of getting outbid. We did this and spoke with our mortgage broker who gave us ideas of what our mortgage payment would look like every time we threw a number at her. This was perfect. We have successfully managed to maintain our bills to a level that is reasonable and live comfortably without headaches.

E-mail me if you want to know how we did it.

Hope this helps. Good luck.
D.

Cleavanessa
It's amazing reading your post because your situation mirrors mine. I have decided to stay in my very small apartment because it is affordable. I live on Pelham Parkway across from Jacobi, good neighborhood but I too am dying for more space. I would like to provide my two girls ages 2 and 5 with a backyard, and space to move around in. Sadly we have decided to tuff it out one more year, the economy is really shaky and nothing is promised. Both my husband and I have good salaries however nothing is promised. Here is what I will ask you to consider, if you buy will you be able to pay for child-care, nursery school, etc? If so what are the school systems like in the area that you are buying? I know it seems so far away but before you know it, it will be here. One of the reasons we decided to tuff it was my 5yr old. She currently attends a montessori school for pre-K, the class size is small and it's a great school. If we moved I would have to have had her go to a public school since we can't afford the tuition and a mortgage. I was looking at Carmel which has a great public school system however the class sizes are 22-26 and I don't want my daughter getting lost in a class size that big w/o having a great foundation that her private school could offer for Kindergarten. My 2yr old goes to the same school and she is learning so much. She can identify letters, colors and is trying to actually write the letter L. So in summary I urge you to make your choice based on your daughter's future and her foundation. If you move and have no savings or no extra's and the public school system is not what you want your stuck since you will not be able to afford private school. Is there anyway for you to move to another apartment instead of buying? can you stay for another year maybe p/u another job and save? How secure is your husband's position? what about your P/T position is that secure? You have alot to consider I feel for you and good luck with whatever decision you make.

Buy - renting is a waste of money. Buying is HARD though - a lot of responsibility, but if you are smart about it and buy what you can afford, you will handle it. We bought during the crazy high market (at the NJ Shore)But we found a smaller house in a good neighborhood. We had to settle for something smaller that needed a little more work b/c we wanted a life outsife of our house and didn't want to be drowning in a mortgage, so just buy smart and don't get caught up in what banks tell you can afford. You decide what you can afford and stick to it! We were getting mortgage approvals for more than we can afford for the lifestyle we still wanted.

If you can afford it I'd suggest buying something. The $8000.00 credit is a great incentive and there are a lot of programs out there for first time home buyers. You have to live in the house or condo for 3 yrs in order to get the tax benefits so if you outgrow your purchase you can use the equity in the place to purchase something else.

If you know you can afford something bigger then your apartment then buying is definitely the way to go. You'll need figure in a small fund for repairs incase something breaks like your water heater. Also don't rely on those online morgage calculators. They don't figure everything. Your house payment usually will include property tax, home owners insurance, and at least a small escrow fund. On our morgage the property tax comes out of the escrow account when it's due. Check around with a morgage company first, and make sure you find a good solid one since so many companies are going under these days. They will do a credit check, and give you a pre-approve loan amount. You'll need that when you start contacting realtors about buying. Also, you might be able to get the closing costs figured in with the loan. A good realtor can make it look like it's being paid by the current home owners, but really you are still paying it, just not out of pocket. Good luck!!

Another thing I found out when we bought our house, you may have to pay property tax up front, before you even have anything in your escrow to pay it. Be prepared. It all depends on the last time the current owners paid theirs, and when it was due. It may be split with them as well. Just depends. If there are any questions I can help you with feel free to ask. I am the one who did all the work buying our house. My husband was just there to sign the papers on closing day.

You're going to have to pay out every month in rent anyway. Find a house where your mortgage payment will be roughly the same amount as your rent payment.

We bought our first house almost 8 years ago now. Never regretted it for one moment. All that rent money wasted, going towards someone else's equity!! Now our money is going towards our OWN equity.. and we were able to refinance TWICE.. once to get money for a new vehicle when we needed it, and once to significantly lower our interest rate.

Buying is SO worth it.

If you can do it and afford it buy now. There has not been a better time to buy in recent years - however do not do it if you can't - it is not worth it. Talk to a financial analyst about your situation so you can choose wisely.

The #1 thing to remember is not to buy a house that is out of your range or overpriced. Know how much you can afford/month then subtract $200 from that amount, that will be the morgage you can comfortably sustain. Why subtract $200, so you can put it in the bank and save it incase the bread winner gets laid off. Also, don't think about a $299,000 home if the bread winner is only making $50,000. Be frugal.

Yes,owning is better than renting no matter what the TV anchors say. You have more freedom to do what you want with the house. You don't have to worry about waiting for the landlord to call a plumber. You can have pets. You can have a garden. You're not throwing money away to someone else for them to put in their bank... Need I say more.

I'll add too, buying is better then renting. If I were you though I would base what you can afford on the one income you have now. If you decide to stop working again or if you have to take alot of time off at least you will know you can afford your mortgage. Your'e on Long Island right?(Riverdale?) You may want to consider moving off LI and towards upstate. The difference in what you can get for your money is amazing. Good luck..

Hi Cleavanessa
This is my take on buying vs renting. These are the two questions we were told to ask ourselves when we decided to buy.
Can you afford not to buy?
Where is your rent going?
We decided that our rent was going to the person who owned the house therefore we got absolutely nothing from it.
The money in saving was getting a whopping 1.5 or so interest.
If we in bought our house the rent money would be going into the equity of the house and it could be sold, and we would get that money back.
The tax deduction for the interest has always been a bonus, and now the incentive package is another bonus. The question is: are you going to be in your new house for about 5 years or not? We thought we were. We were only in 2nd house 3 years but accrued more than we ever would have at the time with the money in a savings account.
God bless you as you make this exciting and fun decision.
K. == SAHM married 38 years === adult children 37,33, and twins 18

It's funny you should ask this because we own now and I ask myself every day was it better to rent. Granted we bought 5 years ago at the top of the market a small starter house 2 bdr 1 bth in Carmel NY for about $280,000 and our taxes and mortgage come out to $2,600 a month. Back then we were only paying $1500 a month for rent for 2 bdr 2 bth in the apt. So we almost doubled our payments and still have to pay for oil, propaine for stove and hot water, repairs, septic service every 2 years, etc etc. So definately buying is more money. I now am home with my 7 month old and we are down to one salary and OMG are we feeling it. Thank god we never spent that wedding money because we can't afford this house on one salary at all! It's nice to have a house with a yard but again I am in a small 1100 sq ft starter and I feel paying through the nose. Our annual taxes our about $8,000 and go up every year. You budget this mortgage and say ok I can swing this but life changes and taxes go up and sadly for all of us who bought high the market dropped. I know know is a GREAT time to buy but I feel you on the one salary and a baby and these diapers and formula are so expensive. And daycare is shockingly expensive as well. Full time up here is over $1,000 a month. Wow you think before baby if I wanted to buy a fancy car for $1,000 a month I would be crazy but magicaly we are suppose to afford daycare- it's crazy! So I wonder all the time with the desperate housing market if the rentals have gotten cheaper and if that would have been the way to go. When you get a $500 oil bill due in 3 wks you start to think so! I would buy if the mortgage works out to be close to what you pay for rent right now or maybe a little higher. Because the mortgage isn't the only increase you'll have so the bottom line is the whole picture. We jumped up too high from rent to mortgage, I feel, and now with the baby we are struggling. You wait all your life to have a child and a better financial situation would make life happier in general. Sorry for the depressing post, I'm really not that sad just a sore subject I guess...lol. But loving my beautiful baby girl!!! Ok and hubby too... :o)

Buying a house right now is perfect IF you have:

1. A steady income source
2. Good credit
3. A down payment. For a conventional loan you'll need 5-10% down, but some banks will ask for 20% down which really is best to avoid PMI.

Do not forget to research the market, be realistic about what you can afford, get pre-qualfied, educate yourself, and understand what your insurance costs will be.

Good luck! I wish you much success in this venture!

Cleavanessa,
Only buy if it is a real deal - research! A lot! I'm not sure if Riverdale means you are in Upstate NY or not - email offlist. I'll give you a name to beware of for house builders.

Quality house, low price, good neighborhood, low taxes. Essentials, or it isn't worth it (as well as low % on mortgage!)

Good luck!
M.