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Continue renting or buy my first home?

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  • Continue renting or buy my first home?

    Good morning all! I am seeking advice on what to do in the current climate of low mortgage rates.
    I am married, working as a 1099 since about 7 months ago having previously worked in an employed position for about 7 years.
    We have been renting since and the cost has steadily gone up, now up to 1700/month for a less than spectacular house considering we live in a decent area in Missouri.
    We have seriously started considering whether to buy a house given how low the rates are currently, and I have 50-80k available for down payment. From casual browsing on different sites, houses between 270-400k would translate to a mortgage that is around or a little more than our current rent. The issue is that we could end up moving to a different state in another 1-3 years (we would obviously want to put the house up for rent at that time). With this in mind, what do you recommend, what kind of loans should we look for (we will be first time buyers), down payment amount, are there any tax implications or loan penalties if we end up moving and putting it up for rent in a few years?
    Apologies if I seem all over the place but I really would appreciate any thoughts or insights. Thanks

  • #2
    Originally posted by owenjay74 View Post
    The issue is that we could end up moving to a different state in another 1-3 years (we would obviously want to put the house up for rent at that time).
    sounds like renting is your plan......

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    • #3
      1-3 year is too short of a time period to buy a house IMO. People always underestimate how much it costs to own a house which include:

      Property tax
      Home insurance
      Cost of selling a home (6% real estate commission in most areas, maybe 3% if you sell it yourself)
      Origination cost of a loan (1% plus additional fees), mortgage interest which is no longer deductible for most taxpayers
      Home maintenance- this is highly variable and unpredictable. It could range from sewer line break/septic going bad, need to replace roof, foundation issues, roof leak, etc

      If you want to buy a home for enjoyment/life style/family reasons that's fine. Buying it to "save" on rent is not. The value of home ownership has been grossly oversold IMO.

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      • #4
        1-3 years --- rent

        Comment


        • #5
          If you buy, in general you should plan to stay for a minimum of 7 years in my mind. If you really want to buy, 5 years would be an absolute minimum.

          If you buy with the plan to move away and then rent, being an absentee landlord for a single family home rental is generally not a good way to make your net worth grow. There is too much maintenance cost, too much hassle in maintaining real estate long distance, and too much risk of a bad tenant both financially not paying the rent and in terms of risk of damage to your property.

          In your shoes, I would continue to rent. If you change your mind and decide to live there long term, then buying could be a good plan.

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          • #6
            I agree with others...rent over a 3 year timeframe. Though, if you really don’t like your current house nothing wrong with renting a different one.

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            • #7
              Renting is great, gives you flexibility to move easily, and no fees involved. Don't fall into the whole "renting is throwing money away" mentality.

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              • #8
                “We have been renting since and the cost has steadily gone up, now up to 1700/month for a less than spectacular house considering we live in a decent area in Missouri.”
                Aren’t you glad you didn’t buy it?
                Rent, even a different one.

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                • #9
                  If you're looking to own something to rent later, you should do the house hacking thing of buying a duplex and living in one half of it. Depending on which area of MO, SFH may not get the same yield, and the turnover could be high.

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