WWYD - housing?

[HeatherBelle614]

DH and I are newlyweds (7 months tomorrow, actually) and we've been living in an apartment together since last April. Right now, I have a steady job in an industry that I'm not too worried about, but DH is an unemployed teacher (there have been bad lay-offs and not many positions in our area). He is working 2 part-time jobs though, which he'd be able to transfer to other locations, if need be (but, of course, the hours aren't always reliable).

So, here's where I'd like opinions from you awesome DIS'ers. Our lease is up in April, and we've been looking at other options. Because it is a buyer's market, we're considering buying a house.

We are currently looking for a 4 bedroom, 2 (to 2 1/2 bath) in an area near my parent's house so they can help us with kids when we have them on down the road.

We do live in Texas, which in case you aren't familiar with housing around here, we have GREAT pricing for square footage. We looked at a foreclosure house this last weekend for $116,900.00 for 2,000 sq ft and a HUGE lot; new carpet, new paint, new appliances - it needs cosmetic work in the kitchen and bathrooms, but that's nothing immediate. That's pretty much the price range and square footage that we'll be looking at, though.

We also have enough in savings to put down at least 5% in that price range, but it would drain our savings account. We're used to high bills as our apartment does the split heating/water/etc. and we have so many families around us, so no matter that DH and I don't use much of anything, our bills are outrageous.

I'm just very hesitant because of how everything is in the economy, we're first time home buyers, and we aren't sure WHEN DH is going to be able to find something full time again. (Our Disney trip this year would be out the window too, haha. That's what we have been saving money for - to take my parents on a vacation to Disney.)

What would you all do if you were in our shoes? I know the whole it's my life, make my decisions thing, but I'd love to hear some opinions.

 

[Handbag Lady]

I am 40 and am still looking to buy our first house. Houses here are about $500,000 so it is much harder.

At $114,00, I would buy the first house I liked and make sure it is a regular 30 year or 15-year loan.

Then, I would budget so that the mortgage was tended to as well as the taxes, etc. Then, start a small house fund for repairs. Bite the bullet NOW. Rent will only go up. Your mortgage payment will stay the same. Trust me, you will LOVE this in five years.

Don't worry now about your DH not having a "steady" job. You have one and that's enough. He'll get on his feet soon.

And I wish that someone gave me this advice when we started out. We tried and went to a realtor. He told us we'd never be able to buy a house and we listened to him and never looked outside the box.

 

[Kay1]

I would continue to rent. The way you are positioned now, should you need to relocate for work - and it sounds like that may be a possiblility - you can move freely and with the savings to do so.

 

[CruiserMom]

What would you all do if you were in our shoes? I know the whole it's my life, make my decisions thing, but I'd love to hear some opinions.

IMHO, you need to be pretty sure you won't be moving any time soon (several years). Sure, it's a bargain now, but if you end up having to relocate for a job, you may not be able to sell until the market turns around.

Have you spoken to a lender? Find out what price range to look in, and keep your monthly mortgage payments as close as possible to what you are paying in rent now. If you can do that, and you are sure you won't need to relocate in the next couple of years, I'd say go for it.

 

[Chicago526]

If it's a space issue, can you rent a house instead of an apartment? This will allow you to live in a house but with the flexability needed if you have to relocate. A lot of people are renting out their homes because they can't sell them, and banks are starting to rent out foreclosures for the same reason. You may be able to rent a house for not much more than an appartment, but since the landloard takes care of maintenance, you don't have that expense to worry about.

 

[Stucas]

also keep in mind with 5% down your most likely looking at an FHA loan and PMI (private mortgage insurance) which can be an extra $150 a month in that price range. You really should have SOMETHING in savings when you start in a new house. With an FHA loan you can put down as little as 3.5% so hopefully you could keep a little cash in pocket. In your 5% are you including closing costs? As a buyer you may be able to roll part into your mortgage, however you may need a few thousand cash as well. Talk to a reputable lender (stay away from internet only places) try Wells Fargo (its who we are currently using and they have some of the lowest interest rates right now or Bank Of America. They will be able to really explain all the little things cost-wise that go into owning a home.

Whatever you decide good luck!


-Lauren

 

[wall*e2008]

I would stay where I was and wait until you DH gets a teaching job. What if you buy this house and he never gets that teaching job. What if you want to stay home after the kids arrive? You only have a small amount saved and will have no emergency fund after the purchase. You will need thousands more than you have just to move in (curtains and such)

 

[hlane]

I'd wait until DH had a f/t steady job. With an apt you could move if he needed to due to finding a job but once you're homeowners its not so easy.

 

[girli565]

Could you prequalify for the loan amount alone without DH's part time income? Than do it. If not than no.

 

[disneybridetobe]

I would stay where I was and wait until you DH gets a teaching job. What if you buy this house and he never gets that teaching job. What if you want to stay home after the kids arrive?

ITA! Make sure you can survive on one salary!

I didn't think I'd ever be a SAHM, but here I am. It's tough at times, but it's 1000x more rewarding!

 

[Karenj2]

I know you probably want a 4BR, but do you really NEED one? I'll tell you my story - we were married a year and living in an apartment when we decided to buy a house. We picked a 4BR house (new construction) and threw away my BC pills.

It's 11+ years later, and the three other bedrooms are still basically unused since we can't have kids. They've come in handy when we have guests, but otherwise they're a drain on our utility bills, and depressing to see as well.

We actually had our house on the market last year, partly to downsize, and to reduce our mortgage payments. (We took it off, 'cause the market wasn't good enough, but we'll reconsider when the housing market gets better.)

If you can get by with more of a starter home, do it! Don't go for the high end of what you can afford.

Oh - starting ASAP, you also might want to pretend that you're already paying the mortgage plus an extra $500 or so (for those household things that you'll need once you have a house vs an apartment). It'll help you to get used to the payments, plus it'll help you save more than 5% towards your home. I have a feeling that mortgage lenders are going to be much more strict regarding the down payment, and you'll want to have as much as possible to put towards the house (and still have savings left over).

 

[ceecee]

I would continue to rent. The way you are positioned now, should you need to relocate for work - and it sounds like that may be a possiblility - you can move freely and with the savings to do so.

You may have to relocate to find a good job for DH, I would continue to rent and save so you will have more than 5% down.

 

[HeatherBelle614]

Thanks so much for the advice so far!

To answer a few questions, we're staying here for some time to come. As soon as DH finds a job, I'll be the one cutting back to part time to finish law school. My schooling is just on hold until he finds something full time as we're relying on my insurance and secure pay right now. I'm already set on the law school here, which is not too far from the area we're looking to live in, either. So, there's not much question about relocating. It's pretty much that we just have to wait for a teaching position to open up before I can finish school.

As for being asked about the apartment situation or renting, that is really why we are hoping to buy right now. We both can not stand paying as much as we'd have to pay to continue living in an apartment or a rental house with no ownership rights to that location. I've lived in an apartment for 6 years (since I gradauted from high school) as has he; it's saddening how much money we've put in to renting places.

Looking in to a smaller size is a great idea though; I know right now, we're being hopeful about our future. But, as one of you pointed out, it is just us (well, the 2 cats and 2 labs that are currently living with grandma because they don't fit in our apartment.) I know we would have to find at least 2 bedrooms though; or, something that can be turned in to an office. Our current apartment is 2 bedrooms, and I don't know what I'd do without the office area in the guest room to work on my law school stuff!

 

[luckofthedraw]

Is the house you are looking at owned by the seller or a bank? If it's owned by the seller, ask if they will consider a lease option. Lease the house for a year, and if DH gets a job, go ahead and buy it. If not, you can walk, with nothing more than your option payment lost. If you decide to do this, make sure you get an attorney who specializes in real estate to write the contracts for you, so all of your rights are preserved. There are a lot of lease/option scams out there.

 

[girli565]

I do think that a 4br is big but a 3br and 2 bath is just right, even if you have a baby you still have an office/guest room and a baby room. The 4br might be a strain on the finances, more utilities and such.

We have a 3br apt right now and would be fine in a 3br house with a garage, as long as it had a yard we could build a shed/storage unit on.

 

[HeatherBelle614]

Is the house you are looking at owned by the seller or a bank? If it's owned by the seller, ask if they will consider a lease option. Lease the house for a year, and if DH gets a job, go ahead and buy it. If not, you can walk, with nothing more than your option payment lost. If you decide to do this, make sure you get an attorney who specializes in real estate to write the contracts for you, so all of your rights are preserved. There are a lot of lease/option scams out there.

I am definitely going to look in to the lease to own options; we just started looking, so I honestly hadn't thought about that yet. But, my old boss (attorney) specializes in that field and would definitely help us. D'oh!

Thank you!!

 

[Sandi]

I would continue renting. Maybe look for a new/different apartment or house. Homeownership comes with a lot of responsibilities and expenses. I wouldn't consider rent money that's thrown away -- you get a value for what you are buying. I also can't imagine buying a house and then going to law school. Unless you have a full ride scholarship, there is an expense to law school, too. I'm a lawyer and my loans from over 20 years ago were plenty -- to add a mortgage would have made me nutso. I paid off those loans as quickly as possible. We also paid our mortgages off as quickly as we could. There is a lot to be said for "debt free."

 

[luckofthedraw]

I am definitely going to look in to the lease to own options; we just started looking, so I honestly hadn't thought about that yet. But, my old boss (attorney) specializes in that field and would definitely help us. D'oh!

Thank you!!

Glad to help! Sounds like you are in an ideal situation to try this.

 

[wall*e2008]

You say you wasted so much money by not owning. Ask somebody who is in foreclosure if they would have rather wasted money renting or owned and then lost the house. Renting is a great option under the right condition. What if you buy the house and then in 6 months the entire roof needs to redone. How many months of rent would that be and it will not add to the value of your home.

There are multimillionaires who rent rather than own. Their money is invested in other ways.

 

[HeatherC]

Would the mortgage be cheaper than you are paying in rent? That would help me decide.

I would also only buy a house based on one salary. You will never regret doing that. Think of how nice it would be to have an "extra" income that you don't "need" to pay your bills. That's what we have done and it was the best decision we ever made.

Luckily, you are in a part of the country where housing is affordable so that is definitely a possibility.

Good luck to you!