To buy or not to buy???

[brightyellowhaha]

Hi All- again thanks for the advice. I have actually owned a home prior so I am aware of all the costs. However saving 20% for a down payment would be difficult, homes where I live range from $200k - $350k. These aren't bigs home either 900 -1500 sq. ft. So I would need to save $40k - $50k since I'm looking closer to purchase something for $200k. Right now my rent $1500/month and that doesn't include utilities and I'm responsible for the yard maintenance. I could buy and have all the additional expenses included (taxes, insurance, PMI) and still fall around that same price. This is why there aren't very many rentals in town it's pretty much the same price to rent and to buy, the only difference is I don't get a tax break while renting.

And again I have considered buying my current rental but I'm concerned about the street, it is very, very busy and I don't feel comfortable with my kids playing outside.

[oneasterisk]

Originally Posted by brightyellowhaha

Hi Everyone,

I am having an internal conflict and would like some words of wisdom. I would like to buy a home for myself and my kids spring/summer 2012. After cashing in some company stock, receiving my annual bonus and saving I should have around $15k for downpayment and closing costs (I'm actually hoping I can get the seller to pay for the closing costs so it could be $15k for downpayment). However I am carrying some debt:

$1600 Amex (will be paid off by the end of the year)

$12,700 car loan @ 8.5%

$10,915 student loans @ 2.65%

Part of me would like to use the $15k to pay off my car and pay down some of my student loans however I would like to also make a good decision long-term for my family. Currently I rent a single family home in a fantastic town, with fantastic schools, activities ect. When I will be buying a home I will be buying here. However, my landlord is considering putting this home on the market next year and if sold I would of course have to move. Unfortunately the town I live in offers very few rentals and since it's a desirable place to live finding an open one is almost impossible. I was very lucky to get my current rental. So if this house was to sell I would have to move to a neighboring town with more rentals but also poorer schools. My son has autism so I really need a good, supportive school system.

So what would you do if you were in my situation? I want to do what is best for my family long-term.


Thanks!

Last time I bought a house, the mortgage lender said that they don't take into account any debt that will be paid off in the next year so I wouldn't worry about your AMEX bill.

I personally would continue to save till you have your 20% DP. Don't rush into a home purchase. I don't believe home prices will recover for at least a few more years, so no pressure to rush and buy "at the bottom". Pay off your debt as fast as you can starting with the car loan since it has the higher interest rate. Once that is paid off, then funnel the money you were paying on the car towards the school loans to pay that one off quicker.

If you're fine living in your current rental, ask your LL to see if you can sign a 1yr lease. This will lock him/you into a contract to rent until you're ready to buy. Even if he sells the house, the new owner will have to honor the lease.

[golfgal]

Originally Posted by oneasterisk

Last time I bought a house, the mortgage lender said that they don't take into account any debt that will be paid off in the next year so I wouldn't worry about your AMEX bill.

I personally would continue to save till you have your 20% DP. Don't rush into a home purchase. I don't believe home prices will recover for at least a few more years, so no pressure to rush and buy "at the bottom". Pay off your debt as fast as you can starting with the car loan since it has the higher interest rate. Once that is paid off, then funnel the money you were paying on the car towards the school loans to pay that one off quicker.

If you're fine living in your current rental, ask your LL to see if you can sign a 1yr lease. This will lock him/you into a contract to rent until you're ready to buy. Even if he sells the house, the new owner will have to honor the lease.

Only if there isn't a clause in the lease for selling the home---in many states if they sell a rental the renters have 60 days to vacate if the new owners don't want to continue the lease.

[brightyellowhaha]

I just renewed my lease for another year so I'm good until September 2012 however I am concerned as the PP mentioned that I will only be given a month or two of notice that the house will be put on the market. I will then only have a short window of time to either find another rental (again almost impossible in my town) or find a home to buy. The last thing I would want to do is to settle on any old house because I need a place to live. I rather take my time looking at homes and buy one that will work for me and my family. It's this very situation that makes me think I should try to buy and work on paying the car and schools loans off after I'm in the new house.