Post # 1
With our wedding next year in May, and us itching to move out of our small apartment, I’m unsure of what to do.
Unfortunately (or maybe not?) rent is getting jacked up from $800 to $950 a month, starting July of next year. So, with that looming over us, we want to get out and get our own place where mortgage will be cheaper than us renting. <br /> Only trouble is, is that FI is the only one working fulltime, and I will be graduating next year March from college. My mom told me I have to wait to move out until I’m at a job for 3 months in order to help raise our options for houses. But with FI alone, he can get a $220, 000 house. We don’t want anything fancy at all since were just beginners at the house idea, but we know for sure we don’t want to stay around the apartment when rent is almost a grand. 🙁 If I can’t get a job asap either that’ll slow down the timeline too..
Any suggestions of what to do?
Post # 2
Haruyou: Well, you definitely need to sit down with FI (whose the other decision maker in this process, not your mom…), and weight your options based upon the current situation…what can we comfortably afford with his salary?! Since, he is the only one working at the moment (knowing that if/when you find a job, it can be used toward savings, etc!).
You may even want to meet with a financial planner to boot, based upon the same circumstances, whom will help you work thru all your expenses, with your income, and what you could safely afford IF you purchased a home now (vs. what a bank will pretty much blindly tell you you can afford). If the amount is ‘good’, meaning you can find a suitable home in that price range, in the area you see yourself living long-term, then I always lean to ‘buying is best’ rather than ‘wasting’ money on rent! If it is not, or would not put you in a spot you are a) comfortable affording, or b) not going to be able to find a house, then rent until you two have a better budget/income to work with!!
At the end of the day, no one should nor wants to be ‘house poor’, not should a couple determine their living situation about what MAY happen, because well, it may never happen. You could struggle to find a job, or whatever!
That does not mean the situation will not change, but certainly one year’s lease may be the better financial decision, and it is only temporary at that point. Good luck!
Post # 3
Haruyou: My husband and I purchased a home while planning a wedding and it’s totally feasible, you just have to plan and budget. I don’t work, so purchasing a home on a single income shouldn’t be a problem for you, provided there are decent homes within your price range. I would recommend sitting down with your FI and figuring out how much you could reasonably afford. Best of luck!
Post # 4
OUgal0004: Sorry, just about the mom thing, I wasn’t clear. She just highly suggested I wait, due to it opening more doors (literally, ha) is all. I understand her point, but I want to get outta here!<br />And yes thank you for all your information! We may go meet with a planner, just to see what’s up. <br />True, I could not get a job in my field asap, but I’d make sure to get a job somewhere so it’s not like I’d be sitting on FI coattails haha. <br />And yes you’re right it may be a better option to just deal with it and pay the $950 for a bit longer to work up more savings… <br />Lots to do, then! 🙂 Thank you!!
Post # 5
housebee: Thank you! Yes, we’ve sat down together already to see whats in our town and what we’d like.
Post # 6
Run the numbers carefully. Be sure to include all of the transaction costs associated with home buying and the extra costs of home ownership. This should take into account how long you plan to stay in your first house, etc.
Check out this article to get some ideas about how to run this calculation for yourself: http://www.getrichslowly.org/blog/2011/04/22/ask-the-readers-should-we-rent-or-should-we-buy/
This will help you get a sense of whether home ownership is the right option for you. It’s not as simple as if morgage<rent then buy.
Post # 7
How sure are you that you can get a job in your town (or within driving distance) once you graduate. If the job outlook for your field is good, it isn’t a big deal, but if it is a bit sketchy, I would wait. You would hate to graduate and not be employable because you can’t move due to just buying a house.
Post # 8
- Wedding: November 2013 - St. Augustine Beach, FL
Haruyou: Nothing wrong with renting so long as you can save money to buy later. If $220K will buy you a decent house in a neighborhood you actually want to live in for the next 5-7 years then go for it. But I will also recommend not buying at the top of your budget because owning a home comes with extra expenses and repairs costs that you will also need to factor in.
Post # 9
I’ll echo what a few others have said. It can be done, my DH and I just bought a house a couple months before our wedding but the costs were definitely higher than we anticipated. Fortunately we had the money to cover it and our budget is in good shape. Sit down and carefully go over all of the costs that will be included in buying – inspections, down payments, points, closing costs, etc – and make sure you’re really in a good place to buy right now. Renting for another year won’t be the end of the world if it means you’ll have a better financial picture by then! Either way, good luck!!
Post # 10
If rents aren’t being raised until July of next year, why not stay until then. By then you will be married, graduated, and hopefully a job. But if you’re in a rush now and your FI can afford a decent house on his own and doesnt need your income, I don’t see a problem with moving now. The only reason to wait for your income would be if you needed it to pay the mortgage, otherwise it’s jsut icing on the cake later to save more for other things. Even if it is a tight and a stuggle for a little until you find a job, as long as ends are meeting, I’d probably go for it rather than spend more on rent.
Post # 10
Make sure you talk to a lender and get a firm preapproval before you start looking. They will pull his credit calculate his debt to income ratios and want his w2 for the past two years. I don’t know if you’ve already done this but you can’t know 220,000 will work until you do. Also your monthly payments will be based on property taxes, hoa fees, home insurance and mortgage insurance not just your home price. Also make sure you would get a decent interest rate. We are doing this same thing although we are both full time workers which gives us a lot more in terms of budget and our credit is very good. There’s so much benefit to buying due to high rent cots in my area its a no brainer…but there’s a lot involved before you can start making offers
Post # 12
There are a lot of things to consider when you talk about buying a home. When you say your FI can afford a $220,000 house, have you considered the amount of money down you can put and how that will affect your monthly mortgage payment? The down payment really affects what you can actually afford vs just being able to purchase a $220,000 home.
And remember that renting is not saving. That money is just being thrown away as rent, where as with a home your money is actually being invested.
But definitely consider what your situation may be like AFTER you graduate. You don’t want to end up with a new home but your only job opportunity is in another city or state. You just never know.
Personally, I waited until after I graduated from college and had a full time job. Just make sure you talk with your FI and are realistic about what you can afford and what your situation is. Consider what could go wrong and think about if you are comfortable living with those possible unexpected circumstances.
Post # 13
Haruyou: My biggest advice is to get an idea of what homes in your buying are are appraising for.<br /> We learned that the hard way.
My husband and I were buying at a time when competition was suddenly fierce and home values were starting to rapidly rise. We ended up having to overbid $5k on our house (this is a smaller market — you can get a great place for under $100k). When it came time for the appraisal…it came in at about $15k under our bid (as they also base it on the selling price of similar homes in the area…usually within the past two years. Two years ago, houses were far less expensive here!) The sellers did drop the price a bit (so that it fell to $10k under), but that was still money that came out of pocket…in addition to the $5k down payment. So, by the time keys were exchanged, $15k cash was already on the table.
The next nasty surprise came when we moved in. The appraisal, the home inspector and even our agent (who had spent 40 years inspecting/constructing homes) all thought that our roof was fine. It looked like it was halfway through its life, but nothing terrible. No signs of water damage in the house.
Our insurance suddenly dropped us, claiming that our roof posed “serious damage” risk. Every other agency we went to had a different complaint about the roof and why they wouldn’t be able to cover it. So, $5k later, we had a new roof and they were willing to cover us. Every roofing company that came out to give us a quote expressed surprise that so many insurance companies wouldn’t cover us.
Had a great time a few months later when I met our new neighbors, whose roof is quite literally falling off of their place. It looks awful. They told us that their insurance company — the same one that gave us 3 weeks’ notice that they were dumping us — had offered them two years to get theirs fixed, while covering them without a problem. I was pissed.
Now that so many things are paid for — and this place was in great shape when we moved in — we are paying about $50 less per month than we did renting. But, it was also about $20k out of pocket upfront for various expenses that are factored into buying.