Buying Resale vs. Buying new home vs. Building new home (investment, mortgage rates)
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I amcurrently renting and the lease expires in about 4 months and then go month tomonth leasing thereafter
I am in a dilemma between
1. Buying aresale home
2. Buying a newly built home by builder along with the lot in an upcomingneighborhood
3. Buying a lot and build a new home in a desirable neighborhood
For asimilar home size, I really don’t see the difference in the cost between buyinga resale home vs. building a new home in the desirable neighborhood. However, Iam not sure about the hidden costs in building a home.
Given thecurrent Default/Govt. shutdown scenario and possible short term solutions theywere talking, I am wondering what would be the mortgage interest rate when I close my home after 6 months, if I go with the build route.
Please advise the advantages and disadvantages to them?
Which wouldbe preferable from operational and resale perspective? Though my intentions are to stay in this homefor at least 5 years, I may have to sell the home and relocate for the jobpurposes within 5 years.
Which wouldbe preferable from operational and resale perspective? Though my intentions are to stay in this homefor at least 5 years, I may have to sell the home and relocate for the jobpurposes within 5 years.
Anything could happen in 5 years. If mortgage rates shoot up, housing prices will plummet. Since your payments are front loaded in interest, your counting on your home being worth more than you paid for it. That is a pretty big risk.
In terms of resale, it depends on the exact neighborhoods where all these options are located.
You've heard the saying, "The three most important things in real estate are location, location, location"?
You didn't say much about the neighborhood of the resale home. How would you rank the homes in terms of neighborhood desirability?
I have the option to buy resale home in other neighborhoods... but in the desirable neighborhood, I am talking about , the resale home price is pretty much same as the lot price + building costs... unless there are any hidden costs that might come up
Anything could happen in 5 years. If mortgage rates shoot up, housing prices will plummet. Since your payments are front loaded in interest, your counting on your home being worth more than you paid for it. That is a pretty big risk.
5 years is too short, I'd just rent.
I am paying about $900 for the condo I am renting...
With the downpayment of about $40000, I am looking about $950 per month including mortgage payment, insurance, taxes, hoa fees etc.,
Do you still think that I am risking, considering that I am planning to buy the home in a nice, quiet, desirable neighborhood with good schools....
Also I am thinking that owning a home would make me more determined in the current job and would leave the current job and relocate only if I get a better $$$ offer.
But things that are happening last 2 weeks regarding US Govt default/shutdown/budget crisis makes me crazy.... and wanted to make sure that I am doing right thing and that I should not repent later
With a new home there are other costs that you'll incur after buying - window coverings, landscaping, fencing, sometimes central AC, gutters, etc. - those are not normally included in a new build and will be out of pocket expenses. If you can find a resale home that has those things and is around the same price, you'll be better off buying used instead of new.
You've received some excellent advice here, so I'll only add a couple of thoughts.
Suzy Ormon? Not a great adviser, IMHO (and there are many who would agree with me).
That new home you're considering building in your OP Items #2 and #3? Add a minimum of 20% to what the builder is saying the base price is due to the upgrades you will inevitably purchase. That's the comparable price to compare to the resales.
Quote:
Originally Posted by spalam01
Also I am thinking that owning a home would make me more determined in the current job and would leave the current job and relocate only if I get a better $$$ offer.
At best, this is faulty logic. At worst, it's ridiculous. Reminds me of someone who is in a cruddy marriage who says 'let's have kids so that I feel more determined to stay in the current marriage.'
Entering the real estate business as a commercial/investment real estate broker in 1972 and staying in it till I retired decades later, I will tell you what the real financial experts told us time after time during the years.
1: Don't buy a home, if you plan on living in it less than 5 years. If there is a potential of moving in less than 5 years rent.
Reason: When costs to buy the home above purchase price, and costs to sell the home are added to the cost to own the home you will usually not sell at high enough price to recover these costs. It only works during a bubble to buy a home for shorter occupancy, and as many people found out the ones that owned their home less than 5 years when the bubble burst, found they under water with a mortgage that exceeded the value of the home and took considerable loss is they had to sell.
2: For the above reason, only buy a home for a long term ownership period.
3: Any good accountant that understands real estate, can show you it is cheaper to rent than buy a home, if you invest the difference in your payment vs. rent each month. That is taking any appreciation, tax breaks, etc. into consideration.
4: Only buy a home, if you love it, want to live in it for a long time. Pride of ownership of something you love, always costs something and is worth paying for a long term period of time.
As you are unsure of your future in the area, and figure it is 5 years or less, RENT.
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