Need Advice from all you "money experts"

[WDWorBUST]

Okay....here is the scenario. Me, DH and baby (and two cats). We live in a small 2 bedroom - 1 bath house in Oklahoma (less than 800 square feet). When the baby came home the house got TINY - and fast. Granted we have too much stuff - but even so our house is little enough it is hard to have people over. I want to have people over - my family for Thanksgiving, an open house at Christmas - birthday parties and sleepovers for Sammi when she gets older. As it is now it would be impossible to have kids over. Here's my dilemma. Interest rates are low - building prices are going up - is now the best time for us to buy a house? My DH was out of work for almost a year so we have credit card debt, but we almost own our house outright. I think that we could sell our house and pay off the house and all our debt except our car and still have close to $20,000 for a down payment. I'm not looking at an outrageous house.....$150,000 tops. But at the same time we could have our house paid for and our debt gone or at least really close to gone in a couple of years. What would you do? In a couple of years the prices of houses are likely to increase AND interest rates are likely to be higher. I just need some insight from someone removed from the situation. I know my vision is clouded by the fact that I REALLY want a new house.

Thanks!
Amanda

 

[1MegMeg]

Okay, I am not a money expert by any means, so this is going to be more of my two cents than any sort of sage advice. Hehe! Just an outsider's perspective.

First off, 800 square feet is *tiny*! I can definitely understand why you want a new house! And I think it's okay that you want a new house. As you mentioned, even if you got rid of some of your stuff, at the end of the day your house is stilla small house. Sure you might have your mortgage paid off in a couple of years, but you'll still be unhappy in your house.

Personally, if I were in your shoes I would get a new house now. Housing costs/value only continue to appreciate and who knows what the interest rates will be like in a couple of years. Sadly, my magic eight ball was unable to tell me if they are going to go up or down, but one thing is certain, right now interest rates are some of the lowest they've been (meaning they will most likely be going up). So if you can sell your house, pay off the balance of your mortgage, pay off your credit card debt, AND still have $20 down payment, I'd say go for it.

Have you calculated what your mortgage would be for a house in your price range based on a $20k down payment? As long as you can comfortably afford your mortgage payment I think it makes sense to move now. It sounds like you are going to be moving at some point anyhow, so why not do it now when the prices/rates are lower.

Just my two cents.

 

[dizcrazy]

800 sq ft is small - w also have a baby and everything that comes with having a baby so I sympathize!

I am no money expert but I say GO FOR IT!

20 K down and no other debt is good, and it sounds like you are looking at houses (150 K) that suit your budget.

The housing market is unpredictable. Rates could go up, the price of houses down. Or up.

I think the rates will go up and the cost of houses will rise slowly.

Good luck and let us know what you decide

 

[pearlieq]

I'm thinking you might as well do it now. 800 sf is really cramped for three, and what happens if you decide to have more kids? I think it's inevitable that you're going to have to buy a new house someday, so you might as well do it now while it's a cheap as possible.

Housing costs are just going to go up, and interest rates are creeping up a bit too. If you can afford the mortgage on the new house, I think it would be wise to sell.

Good luck!

 

[momxx5]

Since you have quite a lot of equity, I think now would be the perfect time to purchase a larger home.

I would find a mortgage broker, either your bank or Countrywide is a great lender, and then get "pre-approved". Then you can go house hunting.

With rates low now and slowly climbing I think it would be a great time.

Good luck.

 

[nowellsl]

I would say sell now and buy a new house - unless you really like your location and could take out a home equity loan and build an addition. That might be cheaper in the long run.

 

[DiznEeyore]

We've lived in a 900 sq. ft 2bd/1bath house for the past 11 years (our ds will be 12 soon -- if you think a *baby* has lots of stuff -- oy! Wait 'til it's a preteen!!), so I feel your pain, LOL!!!!

We looked into moving last year, but the housing market here is the pits. This year, we finally made the long-overdue decision to just stay here and add on. We're in the final stages of our master suite addition; the 3rd bedroom and add'l bath bring the house to 1300 sq. feet and will make it much more appealing to buyers when we go to sell in a few years.

So if you like where you live, maybe consider the pros and cons of both moving and adding on, and see which sounds better.

Good luck with whatever you decide!

 

[SWVA BGSU Fan]

Rate are good right now. I would advise you to go for the purchase if you and your husband are comfortable with it. If you have $20 to pay down, you would end up financing about $133 on a $150k purchase (at least $3k closing costs). A $30 year amortization would result in a monthly payment of approximately $800 not counting escrow.

PLUS, you would be in a more comfortable house. You cannot place a monetary figure on the ability to get some additional living space. Housing prices may not get any lower and you should receive a very good rate. I say "go for it".

 

[kimbac3]

Go for it. We finally got a decent size house (with real doors and everything!!- we had sheets on rods previously) and I can't tell you how much less stressful it is! It's not our dream home buy it is very pleasant and comfy! Try to have fun househunting, it can be a headache but it's worth it!

Kimba

 

[crisi]

It sounds like you guys are in a pretty good place to buy a house.

Only one thing - which is some people have said "real estate only goes up." That isn't necessarily true. Some markets have gone up incredibly and some people believe there is a bubble waiting to pop. It has happened before (Dallas in the 1980s, LA in the early 1990s). I have a Fortune magazine arcle on my desk right now about it. However, if you are in Oklahoma, I don't know that the housing market there is sitting on much of a bubble - and if you are intending on spending years in your new house, you should be protected from a bubble burst anyway (the only city in OK mentioned in the article is Tulsa - undervaled according to regional income by 11% - as opposed to Salinas - overvalued according to regional income by 41%!). Since no one has a crystal ball, I'd go for it.

 

[HockeyDadof2]

Unless you have special financing needs I would steer clear of a mortgage broker. I see no point in paying someone 1% of the mortgage for something you can spend a couple of hours researching. There are some situations were a mortgage broker can earn his fee, but it doesn't sound like yours is one of those situations. Even if you have special needs, it's not hard to find a good deal on your own.

 

[WDWorBUST]

Thank you so much for all the input....keep it coming. I know I'm not thinking of everything.....and you guys have such valuable information and opinions.

Oh...and Crisi.....I am looking to buy in Claremore, which is about 25-30 minutes from Tulsa.

I want this so much - but it is so scary....Scary because it is a huge decision...and scary because the home we have now we are buying from my dad so it's not a regular mortgage....so in a way it's like buying our first home. AND on top of that we currently live next door to my parents which me and my DH both like and my mom keeps my daughter.

Thanks Again and keep the info coming.
Amanda

 

[my3kids]

Can your neighborhood support the addition to your existing home...meaning if you added onto your current house, would it still be similar to those around it, or would it be much larger than the others on the block? If the current property would support an addition, I would absolutley say stay where you are. It would be so much easier to not move. You could change your existing house into exactly what you want. Don't just envision a room off the back...think outside the box. Imagine going out the front, or out the sides to lengthen the profile.

I looked for a couple of years for the house we needed, and nothing ever came up on the market. We hired an architect who reviewed our needs and wants, came up with ideas and we went into construction mode. We had a great experience. Yes, it took longer than we expected but we'd do it again in a heartbeat.

If you really like where you are, consider building. Otherwise, it does sound like you would do well in the sale and be able to get a house that fits your family better.

 

[Lucky4me]

If you get along with your parents very well this may be an idea. Buy a home with an in law apartment attached. You could go in together and buy much more than what you could on your own. They'd be there to help you with your dd now and you'd be there to help them later on.
If your parents own their current home and it's next door, maybe you could enlarge and attach the two houses? I've seen this done where it turned out very nice.

Good luck~

 

[MrsPete]

You didn't mention your work status, but the fact that you have a good bit of equity in your house leads me to believe you and/or your husband have stable jobs. You sound very realistic. I think it's probably time for you to move up to a bigger house. Good luck finding a perfect spot for your family!

 

[jgates]

I would seriously be looking at the remodel right now. Keep your remodeling/addition expenses low enough right now that you can sock away the extra. In a few years if you decide you want to sell and purchase elsewhere, the money you have socked away and the sale price of your current home (which should also go up if values increase) should crunch out a huge chunk of a new home. You will probably not be borrowing much at all. Somewhat of a rate increase 5 years down the road will not affect you much at all if you are not borrowing much.

Consider:

1. Increase in taxes
2. Increase in homeowners insurance.
3. Increase in utilities (heat/lights etc) for add'l size of home
4. Possible child care expenses (that you may not have now if mom is watching - even if you pay her something you will probably pay someone else a LOT more)
5. Possible increase in commuting costs - this could even require add'l or replacement vehicles depending on your driving situation right now.

I would - either way - go to your bank and see what your options are right now. Secondary market, long-term loans may have higher restrictions such as length of time on job etc & your DH is only at one year on current job. Know what type of loan you can qualify for. Using your current home for a home equity loan to improve on it may also require a bit of creative financing if your parents still hold the mortgage - might require a bit more time.

If you do an equity loan, look at pulling in that credit card debt into the same line. However, check different payment options - don't just pay the minimum. Get rid of the remodel/addition debt as soon as possible, while also banking money for the next house down the road.

 

[Zoesmama03]

Go for the house is my un-money wise opinon too.


I have more space in my 2 bedroom apartment your house is little and you will need space.


If you pay of the house and debt and the down payment you will be left with house payment. Do you think you can pay your cars off if you have loans too? That would just leave house payment and basic bills you could save or apply extras to try to pay off new house sooner.

Or you could always look in to the remodeling or adding additions if you can and have the lot space.