Is it time to buy or rent? (Orlando, Winter Garden: mortgage, good credit)

[emr]

Hi, my job is relocating me to the South Orlando/Celebration area in a couple of months. I am coming from Palm Beach county. I was planning on renting a home for my family since we are not too familiar with the area. And homes in Celebration seemed out of my price range. But after driving up there to look at rental homes, I noticed home prices in the Clermont, Davenport area are much cheaper than here in Palm Beach county and it got me thinking I may actually be able to afford to buy a home in one of those towns.

I would be a first time buyer. So I applied for a mortgage at 2 different places just too see what we could get. The first place said we were approved for up to $250,000 but to stay in a monthly payment I felt comfortable with with taxes & insurance to stick with something around $170,000 to $180,000 at a 6.3% interest rate fixed for 30 years. The next place mentioned something I never heard of before called a bond. They said first time home buyers can qualify for 4% price of the home free money, to help with closing costs or bigger down payment. And they told me using a bond I would get lower interest rates as well. But then sent me a good faith estimate with interest rates of 7.09%. Which I felt was a joke. We would not be subprime, when they pulled my credit they said it was a 702. So using that interest rate, even with the 4% bond, to keep payments where I wanted I had to take a lower priced home.

So now I am on the fence, Davenport is building some brand new homes in some areas starting in the $160's but the homes that would fit my needs start at around $177,000. Used homes in Clermont & Davenport seem to cost more. So I do not know if I should stick with my original plan of renting a home, to get familiar with area and hope home prices stay the same or drop some more within the next year. Or are these "hot" areas that I should try to buy now, because prices may jump by next year?

Is it better to rent a house right now and watch what the market does? Or is now the time to buy in these areas? With only 2 & 1/2 months before we need to relocate I need to decide what would be the best move for my family. I don't want to rush into anything too quickly, but I also don't want to not buy now, and next year, not be able to afford to do so.
Thank you. Ed

[doogie88]

imo, from what I've read, and am in a similar situation, I would rent.
1. Houses are slowly coming down in price as no one is buying. Ziprealty.com shows when the sellers lower their price.
2. You don't really know if you'll like the area (like me), so you can rent for 9-12 months, see if you like the area, and in the mean time check out other areas.

you can then continue renting, or if you found an area you like and housing comes down a bit, you can buy.

[SRQ_Sioux]

I agree : RENT until you "know" where it is you'd lreally ike to live. It's a buyers market now so prices are lower but you could get stuck if the area turns out not to be what you thought, mortgages are now harder to get even with good credit.
Remember: location, location, location. Check out the area especially on the weekend.
IMOo not fall into the A.R.M. nightmare as many did and are now in foreclosure.
Happy hunting!

[emr]

Thanks, That is what I was leaning towards as well. After moving there I feel I will be able to drive around to different areas, see what we like ect. And not settle for a home just because we can buy one right now. But my fear is that after I wait 9-12 months the housing prices will go back up again. And I will be priced out of the market, unable to buy, and would have missed my oppourtunity to purchase a home. We are a young family, with 3yr old. so we would love to buy soon. But I also would like it to be in a neighborhood we enjoy & can aford. -doesn't everyone..lol.

IMOo not fall into the A.R.M. nightmare as many did and are now in foreclosure

No, I definetly do not plan on doing that. A couple years ago, I could not believe how home prices were rising and so quickly, way out of my price range here in Palm Beach County. I wondered how on Earth people were affording these homes. I felt like I was missing something. But now I am so thankful I didn't get lured into any of those risky loans.

[**NoodLes**]

You never know what the market will do even 6 months from now. I think if you got your numbers right and find a decent place then go for it. Rent just never makes sense to me. Good luck!

[rholborn]

because everything is on sale, meaning the housing prices are low, i would be buying. it is always scary to buy something to begin with, but also moving to a new area! do you know anyone that can show you the area? i do that all the time. pm me anytime with questions!

[afghan67]

Unless you find the deal of your lifetime and have a long-term time horizon (e.g., you will be here for at least 5-10 years), you would be crazy to buy right now. Do a google search and peruse the newspaper articles regarding the central florida real estate market. Nothing is moving, a lot of foreclosures are pending and a whole lot more are coming.

A lot of sellers cannot even afford to sell for less than they paid - and most of the houses purchased in 2003-2007 are not worth what most sellers paid for them. And appraisals aren't worth the paper they are written on - the market is literally changing week by week.

You should wait until things shake out. It's not like houses are going to resume appreciating like they did over the 2004-2006 period. After the market corrects itself, prices will stagnate for awhile - a la the dot.com bubble. That is the time to buy.

And I would not listen to what real estate agents tell you. They bear a lot of responsibility for this mess. The same real estate agents that were pressuring buyers in 2004-2006 with the "buy now or you will forever be priced out of this market" pitch are responsible for a lot of buyers making huge financial mistakes. There will be a lot of blood in the water before this shakes out.

[TerryRiddle]

I was in the same situation 10 years ago when I moved to Orlando. I rented for a year then built a home. Hopefully my mistake won't be yours as well; renting is throwing money away if you can afford to buy. Consult someone who specializes in buyers. Chances are they have a strong lender as well who can help you understand the tax benefits of ownership.

[afghan67]

Originally Posted by TerryRiddle

I was in the same situation 10 years ago when I moved to Orlando. I rented for a year then built a home. Hopefully my mistake won't be yours as well; renting is throwing money away if you can afford to buy. Consult someone who specializes in buyers. Chances are they have a strong lender as well who can help you understand the tax benefits of ownership.

Spoken like a true real estate agent. Buying is throwing your down payment away if prices are falling as they are currently. There are no signs that the market will get better anytime soon. In fact, the central florida housing market is in for a rough couple of years, especially given the following:

(1) A significant number of people that would have been in the pool of qualified buyers a year ago cannot get a loan under the new underwriting standards. A smaller buyer pool = lower prices as sellers compete for fewer qualified buyers.

(2) Investors and other home purchasers who bought homes they could not afford long-term (probably thinking they could just refinance later) used 2/28 ARMs and other loans with teaser interest rates to afford central florida homes. As these interest rates reset over the next 12 months, expect a spike in foreclosures and fire sales - the effect of which will be lower home prices.

[Stupid Flanders]

Rent for at least one year. I think the market still has a ways to go. I am tracking a townhome in Winter Garden (nice part) that has gone from $242k down to $180k, and they are still emailing me $10k incentive packages on top of that.

Or you could rent a bungalow in Thornton park for $1,600.00 per month that would cost you $3,100.00 per month to own.