(Closed) Buying vs. Renting

posted 7 years ago in Home
  • poll: What should we do?
    Figure out a way to live with family, so we can save as much as possible for the 20% down payment. : (3 votes)
    9 %
    Pay rent while saving for a house- aim for the FHA loan. : (13 votes)
    39 %
    Pay rent while saving for a house- aim for the 20% . : (9 votes)
    27 %
    Live with family-FHA loan. : (6 votes)
    18 %
    Borrow money from family in order to go for the FHA loan ASAP, living with family temporarily. : (1 votes)
    3 %
    Other : (1 votes)
    3 %
  • Post # 3
    Member
    3871 posts
    Honey bee
    • Wedding: November 1999

    Renting might be a good idea if you aren’t ready to buy a home.  Buying a home can be a bad investment, too.  I think it’s okay to rent a home as long as you don’t plan on renting for 10 years or so. We considered buying a home this year but we might be moving, so it wouldn’t be a good idea for us to buy a home now and sell it in a year or so.

    Oh, FHA loans, you only need 3.5% down.  Although, people highly suggest putting as much down as possible.  I would put like 10% down.  It’s the conventional loans that you need 20% down.

    Post # 4
    Member
    955 posts
    Busy bee
    • Wedding: April 2011

    With our FHA loan we only needed 5% I think. We actually pay hundreds less for our mortgage taxes and insurance than we would for rent for a smaller apartment.

    Post # 5
    Member
    2442 posts
    Buzzing bee
    • Wedding: April 2011

    Because of the current housing problems, loans are very difficult to get these days.  I don’t know where you are going to teach but in many states around the country education budget reductions are causing school districts too lay teacher off left and right.  Hundreds of teachers were laid off in my district.  You’re very lucky if you get a teaching job at all in this climate!  If I were you, I’d rent for the first year at a minimum just to see if both of you still have those teaching jobs in a year.  

    Post # 6
    Member
    7587 posts
    Bumble Beekeeper
    • Wedding: December 2010

    Go for the FHA. It’s usually 3.5% down plus closing costs.  I think either way you choose, family or rent, it’s the best option to achieve what you want in a reasonable time frame.

    Post # 7
    Member
    3871 posts
    Honey bee
    • Wedding: November 1999

    Oh, I know in my state there was a program for first time home buyers with an restricted income.  We made too much money to qualify.  My state was giving buyers who qualify up to $40K towards a down payment.  With $40K, I could pay off a third of my home with that. 

    Post # 8
    Member
    52 posts
    Worker bee
    • Wedding: August 2011

    I think it really depends on where you end up moving. In some areas it will be cheaper in the long run to buy than rent. And I just hate throwing away money with rent.

    Post # 9
    Member
    2233 posts
    Buzzing bee
    • Wedding: September 2012

    The best people to ask are a mortgage broker and Realtor. 

    The mortgage broker will tell you where you stand financially so you know how much you should save for and what types of loans you would be eligible for. 

    The Realtor will give you a good idea of the current market in your area and what houses go for around there. 

    If it were me, I would save enough to have a good cushion in the case that I lost my job. If you are both teachers without any guarantee of steady jobs it might be risky to purchase a house and be locked into the mortgage. 

    What do your families think? 

    Post # 11
    Member
    2233 posts
    Buzzing bee
    • Wedding: September 2012

    @rljohnso14: I agree with your father, rent is a waste of money! (but then I’m in real estate so…) If you can stand it, live with your family to save up & to have a better idea of where you stand in a few months in regards to your jobs. 

    Sorry to hear that your experience abroad was traumatic 🙁 Sometimes it tends to be, I have lots of friends who have loved it but just as many who hate teaching abroad. 

    Post # 13
    Member
    2891 posts
    Sugar bee
    • Wedding: July 2013

    I can understand you craving stability. I think most people crave roots. I know I am starting to. 🙂

    Post # 15
    Member
    179 posts
    Blushing bee
    • Wedding: November 2010

    I’m a teacher, too.

    My husband and I are recently in the process of buying our first house… we’re currently waiting for our loan to go through underwriting (after already being pre-approved). It’s a painful, nerve-wracking wait…

    Anyway, we attended a free first time home buyer seminar before we started looking at houses. This helped us get a good idea of what types of loans were out there, and also what we could really afford. Plus, we got some deals on closing costs, etc.

    We have a conventional loan, but we only put down 4%. I think for us, saving up to 20% would have taken us YEARS.. especially since we were paying rent at the same time. We can afford the monthly payments without trouble… but trying to come up with that big chunk of money up front is intimidating.

    With anything less than 20% down, however, you need to pay Private Mortgage Insurance (PMI)… which is basically this useless (to the buyer) insurance that protects the bank should you default. Depending on the price of your house, it can range anywhere from $50-$300 per month. You have to keep paying it until you get 20% equity on your house (so… it could be for 8-10 years).

    I think the thing that Darling Husband and I were so unaware of and that has caused the most stress during this process is the amount of money you have to account for with the bank. You need to show where every penny of your downpayment is coming from, where your money for closing costs are (in my area, this is an additional $5000), and for PMI approval, you need to show that you have an additional two months worth of your full monthly mortgage payment in “reserves” after accounting for down payment/closing costs. This basically added up to $20,000 we had to show the bank we had.

    Also- if you go with borrowing money from family… you need to word it as in they gave you a “gift” of the money. If you’re saying you’re borrowing it, then banks will note it as a “loan”, and therefore, less money you have available each month. Your family would have to sign a gift letter (stating that you don’t have to pay it back), and they may even have to provide a bank statement showing where they have the money. This isn’t to say you can’t have an “under the table” deal with your family that you WILL pay them back… just don’t tell the bank.

    I’m sorry to overload you with so much information. I just happen to be going through all of this right now, and if anyone can learn something from my experience- all the better!

     

    Post # 16
    Hostess
    18643 posts
    Honey Beekeeper
    • Wedding: June 2009

    I would consider renting until you have more in savings.  They are really cutting back on the number of loans that are given to people who don’t have 20%.  Plus, homeownership comes with a lot more expenses than people realize so you probably want to save up for that.

    I really don’t think that renting is wasting money.  You are paying for a place to live either way.  Buying a house isn’t the greatest investment, you might get out what you paid for it but maybe not.  Our house is worth less than we bought it for and we didn’t even buy it during the “bubble”.

    I would also wait until you see if you like the area you are moving to.  We bought a home in 2007 and ended up having to move in 2009 for my husband’s job.  Now we have a home that we don’t live in.

    The topic ‘Buying vs. Renting’ is closed to new replies.

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