Poll: Rent or buy? (life decision time)

[brookles]

Who wants to weigh in on a life decision? Right now I'm going back-and-forth between buying a house (eeek!) and continuing to rent. And it's Monday and I don't feel like doing anything.

Some factors:

I don't have a ton of down payment money. Some, but my savings were depleted when I moved back to Cincy from Chicago.

Right now I'm paying hardly any rent to live with a roommate whose soon-to-be Ex moved out of the house she owns. It's in a nice area and is a very nice house. I am WAY over the roommate, thing, though, and can't wait to be on my own again. Plus her new boyfriend is around a bunch and I think he's a giant douche. I've committed to staying there through July but could stay as long as I want. Right now I am inclined to leave at the end of the summer.

There's really only one street I want to live on, and it's about a half hour commute to my place of employ. Unless something changes, though, I only plan on being at this job for a year or so and would find a job that's more convenient.

I make decent money and even though I don't want to stay at this job for a super long time, I am confident that I could find something comparable.

Committing to owning kind of freaks me out since I've never lived in the same house for more than a couple of years, like, ever, including childhood.

I do plan on staying in Cincy for the next 3 to 5 years.

What says P&CE/CE&P?

[heightsyankee]

Keep renting for now but maybe get your own place. Shore up your savings a little more.

While I own a home and think it's a good investment, it can drive me crazy. Remember that in addition to your mortgage, you'll have homeowners insurance, property taxes, a home warranty company payment or repairs to make on your own dime, possibly utility bills that you aren't paying now, e.g. water is often included in rent.

It is a buyer's market now, but financing may also be harder to come by and there is a chance (not knowing your credit history, of course) that you may not qualify for those super low interest rates that some people are getting.

So, again, I would wait and if you want to buy, which is great, really focus on building up that savings, not necessarily even to use it all as a down payment but to make sure you have some extra cushion for the inevitable broken oven or clogged toilet...

[Deleted]

Sorry, there is no way I'd buy in your situation. Way too many variables, and this MMer would never approve to buy if you don't have 20% dp. We only put down 10% because we were in a rush to buy, and it was a mistake all around. We have a second mortgage at 7%, which is insane in this market, that we are trying to pay off early.

It's also stupid to buy if you only plan to be in your house for 3-5 years. Houses are not cash cows like they used to be.

I would stay with the roommate and save up as much as you can, or find a new rental.

[Deleted]

I would look for a new rental. It sounds like besides not having a down payment saved up ( :N: ) you don't really know what you want yet. Buying a home is a big commitment. I say sign a new lease, save up some money and start looking 8 months from now. Time will fly.

[Deleted]

I don't know what the market is like there, but I don't feel like 3-5 years is long enough for buying to make financial sense unless you want to turn it into a rental property when you leave.

We didn't buy until we landed in a place where we saw ourselves staying for the next 10-15 years.

[Deleted]

Rent. Since you're renting from a friend now and can be flexible on move-out date, I'd just be super picky and look for the perfect rental.

[Deleted]

May 21, 2012 9:06:35 GMT -5 @littlemoxie said:

Nothing in your post at all seems like you should buy. You won't be there long term, you're not flexible on where you'd want to live, you're not sure where your job will be in another year or so, etc.

I'm a realtor so you'd think I'd say buy, but rent. 100%. Unless you KNOW you will stay for 5+ years, buying doesn't make sense.

[chichimi]

I would rent but if I were you, I would stay as long as you can with the roommate to save money. Take you time in looking for a nice apartment that you can afford. I love my apartment but I am starting to hate living alone so I know its different for everyone but this may be a grass is greener scenario. Do you know of someone that may be a better roommate for you so you could still save money?

[penguingrrl]

I definitely wouldn't buy until you know you'll be happy in the home/location for a minimum of 10 years. We're renters and for right now I prefer being able to call the landlord if things break!

[teflep]

Rent. While finding a job may seem like a given, it may not be a year from now unfortunately (at least not your area).

[msmerymac]

Even with a good DP, with a 30 year conventional mortgage, you'd need to be there AT LEAST 7 years to recoup your investment from buying - don't forget that when you sell, you have to pay 6% for realtor commission, in addition to anything the buyers need fixed for the house to pass inspection (most of the time). And that's also considering that you'll be paying mostly interest and not principle for the first few years, plus taxes and insurance, plus increased utilities if you're in a bigger place, plus outside maintenance for a house or HOAs for a condo, PLUS upgrades, upkeep (cleaning gutters, sealing the driveway, repainting, fixing the deck, reseeding the lawn), plus anything else that might go wrong (new water heater, fixing the roof).

H and I want to buy eventually, I'd just kind of scared shitless of it!

[marie427]

I see no reason in your OP that indicates buying would be a good idea. Rent a new place.

[emilyj]

Rent. You've still got too many things that are up in the air for you that make buying a bad decision for you right now. Ditch the roomie, and find a good place for just you, and build your savings back up.

[basilosaurus]

I love renting. I don't think I'll ever buy again until we think we'll have 10 settled years.

[brookles]

I appreciate the feedback. I really don't know what I'm doing as far as a house-buying is concerned, because I'd never even considered it as an option until recently.

May 21, 2012 10:02:57 GMT -5 pennypenny said:

May 21, 2012 9:08:05 GMT -5 @iheartcosmos said:

Sorry, there is no way I'd buy in your situation. Way too many variables, and this MMer would never approve to buy if you don't have 20% dp. We only put down 10% because we were in a rush to buy, and it was a mistake all around. We have a second mortgage at 7%, which is insane in this market, that we are trying to pay off early.

It's also stupid to buy if you only plan to be in your house for 3-5 years. Houses are not cash cows like they used to be.

I would stay with the roommate and save up as much as you can, or find a new rental.

I agree with this. Can you afford to live on your own if you are renting? If so, then rent on your own. If you can still contribute to savings and live on your own, then go for it. If you can't I say keep a roommate. Maybe you could rent with someone else.

Yes, I can definitely afford to live on my own, and I'd prefer it that way. It was convenient to live with my friend when I first moved back because I wouldn't have to figure out housing from afar. We get along okay but I definitely miss living alone and can't wait to be roommate-less again. It's too bad, because it's so affordable to share housing. My roommate will be mad, too, because I don't think she can afford this place on her own. Oh well, that's not my problem, and it's too bad her boyfriend is such a chodey douchebag.


Renting will be much more expensive than buying, especially in the area I want to live, but I guess it evens out as far as expenses and such, yeah?

[heightsyankee]

May 21, 2012 10:32:54 GMT -5 @littlemoxie said:

Who voted for buy, and why don't you elaborate?

I was thinking the same thing

[basilosaurus]

Renting may be more expensive monthly, but overall I don't think it will when you consider closing fees and commision (twice) plus insurance and maintenance.

I'm still bitter at having to sell our home a year after we bought it instead of the 5 (minimum) we'd anticipated. We lost a lot of money. Thanks for nothing, air force.

And, ditto. Who voted yes and why?

[Deleted]

Even if true that "buying is less than renting" I would think if the real estate is so cheap, then you will probably have a hard time selling the house-- and could suffer a huge loss on that end.

Also, if you don't have 20%, you will need a second mortgage or PMI which you may not be calculating in this cost. Have you also figured in the cost of property taxes? Or water/sewer/electricity/heat/your hot water heater going to the tune of $1500; spraying for termites at a few hundred/plumbing issues/tree falling on the roof, etc etc etc etc etc? There are a million "hidden" expenses in house ownership- everything is on you, not your landlord.

eta because I'm an idiot.

[ESF]

I'm also on Team Rent. I may be a renter for life, though. I think it's a much better value.

More flexibility to move if something comes up, and it prevents you from keeping all your cash tied up in a house. Like the other said, even if a mortgage is cheaper than rent, the other expenses associated with it add up. Property taxes, repairs, and maintenance add up.

[brookles]

May 21, 2012 10:46:07 GMT -5 basilosaurus said:

And, ditto. Who voted yes and why?

Hmmm, I don't know, and now there are 4 votes for "buy." I want to know why they think so, too, after getting so many "rents."

You all make a very compelling case. Buying a house in Cincy is cheap as hell (relatively), but you're right; I don't really know how long I'll want to be here. Maybe long term, but maybe not.

[Deleted]

brookles, the other thing to remember is that the real estate market is going to take a loooong time to recover. I think there are a few delusional people who think that people should buy right now because prices are going to start climbing and we're going to be back at 2006 prices in 2 years. My economic understanding is admittedly limited, but every reasonable analysis I've read has said the housing market will be slow to recover. So if it's cheap as hell to buy a house now, it's probably still going to be pretty darn cheap in 2 or 3 years. I'd wait until you have a better idea of your long-term plans.

[dev22]

I am not on board with the "you have to have 20% down to buy or else" crew, because based on the market, I think it is smart to get in if you are able. But I don't agree with MM on many things lol

That said, there is no way you will recoop and/or make money in 3-5 years with the market like it is. I jsut dont think it would be worth it for you unless you were sure you were going to stay in Cincy for at least 10 years. No reason to worry about repairs/taxes/insurance/PMI on a place if you are not going to make any money when you sell it, KWIM?

[StrawberryBlondie]

I chose to stay renting, and live on your own - but I do think that if you're possibly even considering buying, you may want to meet with someone at a bank to discuss what you would have for a down payment and what a mortgage would cost you per month at various price-points.

I'm not a huge fan of the "you must have 20% down to buy a home" mantra, and when we bought our house, we didn't (no regrets) but I do wish we would've met with someone earlier to discuss what the anticipated monthly payments would be - I think it would've helped us have more of a concrete savings goal (X for down payment, plus Y to cover a certain number of months of payments) in case of emergency.

Also, while I liked the flexibility of renting, after owning my own home, I never want to rent again.