Another RENT vs BUY issue

spunkymaj

Hi!

 My husband and I have been married over a year now and are currently living in a apartment. We've been in our current apartment about 3 years and pay $1080/month.  My husband is in a new position with a huge pay increase and we started throwing around purchasing a home. Our lease is up in September at that point we  will have at minimum $9500 in the bank. We both hate living in an apartment and know with what we pay in rent we could clearly pay our mortgage with no issues as we did it in the past with no issues for the past 3 years.  My question is do we stay renting to save more for a down payment or use what we have to make a purchase? Any advice you could offer would be greatly appreciated.

LoveKiss

Can you tell us more about the prices of homes in your area that you would actually want to live in? Would that $9500 be in addition to your emergency fund (equal to 6 months of your current living expenses)? Or would that be the only money you have saved at that point? Remember, you need a 6 month emergency fund, money for a down payment (equal to 3.5% of the purchase price), money for closing costs (another 3-6% of the purchase price), AND money for immediate expenses (moving costs, buying ladders/a lawnmower/hoses/tons of other random stuff). And you will probably want to have at least a small renovation fund handy for buying some paint, new furniture, matching bath towels, etc. just to make it feel like home. Seriously, you will feel like you are constantly hemorrhaging money for the first few months, so you need to have a good chunk of change ready for that experience.

jtmh2012

Also, think about all the things you call the landlord to fix.  Those are now your problem.  So you need to have money for those.  I had to put a new roof on one year and get a new hot water heater and HVAC system together at the same time a year later.  It was $3900 for the roof and $6400 for the HVAC system and hot water heater.  And those are things that need to be done when they break.  Not, "I'll spend the next year saving up for them."

strudel82

In our area, property taxes (average $12,000/year) pretty much double the mortgage payment, so even though the $1,000 you pay every month for rent would surely cover a mortgage, it would never cover mortgage+taxes+homeowner's insurance+mortgage insurance (for downpayments less than 20%). All of those things increased our mortgage payment by about $1,250

Seems like the biggest thing for you would be having enough for the down payment. There are some 100% financing programs out there though.

And regarding closing costs (which can be pretty hefty, like $5,000), you could always put your offer in on a house with a request that the sellers cover the closing costs.

LittleLady77

You need the down payment and a 6 month emergency fund.  It sounds like you don't have that.  Keep saving.