Feeling STRESSED

Mustard76 · May 2015

Back story: H and I moved from Albuquerque (where we were for 3 years) to St. Louis almost a year ago for a job promotion. I was able to transfer with my company, and took on a bigger staff, so I ended up getting a promotion out of the deal, too. Woohoo! We knew this was going to be temporary; we were counting on two years. So we've been renting for the last 11 months, planning on buying our forever home when we move back home to Chicagoland next year.

We save anywhere between $1000 and $1200 a month to our move money account for our next down payment. This is the same account that hold our proceeds from selling our home in NM. So we've got a jump start on our next DP. Well, we found out two weeks ago that we may be moving by the end of Summer. What?! What cuts my budget time in HALF and there is no way possible to double what we're saving; we pay too much in rent for that to happen. So here's the real problem, and why we don't want to move to a short term rental in IL: H's company pays for our move. They have people come out and pack our stuff, move it, and unpack it. I don't want to do that to a rental and then have to pay to move our stuff again when we've saved to our entire goal. Also, since this will be the third home we've owned, we really want to find something we love, not something we can just live with. We plan on this being our last move and the home where we stay. I'm really having an internal struggle and doing what makes the most financial sense vs. following our original plan and just eating financial crow and doing what we want. What to do, what to do...

This is really a tough call. I just wish we had more time! My goal to payoff my student loan before the end of the year is still in place, but we are postponing our Disney vacation plans for the forseeable future.

simplyelise · May 2015

That's a big change to your plans!

Unfortunately I'd probably recommend you do the rental for a bit until you finish saving. Not just because of the savings side of it, but because you're saying you want this to be more of a forever home and having to find something you love within a couple months from 4+ hours away would really stress me out.

Do you guys have kiddos? Also, you said you "may" be moving. How set is the move?

If it's encouraging at all, at least you're only looking at having to pay for one move and it's the across town move not the 4+ hour move. Still annoying, but it still saves you a ton of money.

blondie42107 · May 2015

I'm sure you have already compared these but for the area you are looking to move to, is there a big difference between renting or buying your forever home?

Xstatic3333 · May 2015

How frustrating! A couple of thoughts-could you find a cosmetic fixer upper that you could afford and fix up just to your liking? Our house has great bones but hideous wallpaper that I'm convinced drove its price down about 5%. Also, could you put a smaller DP toward a potential forever home while still keeping your housing payment to 25% or less of your take home pay?

If the answer to those is no, could you rent a tiny apartment and have them move most of your stuff to storage? That would save some of the effort.

Mustard76 · May 2015

The good news is that we're originally from Chicagoland, so finding an area/neighborhood is super easy. We kind of have an idea what we would be looking for. The move is about 50/50 right now. We're in a "hurry up and wait" situation. We don't have kids, so that's easy enough.

If this happens, we are looking at a smaller DP, but that's my struggle. I know I don't WANT to go with < 20%, but to prevent a second move, it may make sense this go around. im such a planner by nature, this whole idea is stressing me out. I'm not really a roll with the punches kind of person. I'm trying, but I don't like when people mess with my plans! Haha

Xstatic3333 · May 2015

Mustard76 said:
The good news is that we're originally from Chicagoland, so finding an area/neighborhood is super easy. We kind of have an idea what we would be looking for. The move is about 50/50 right now. We're in a "hurry up and wait" situation. We don't have kids, so that's easy enough.

If this happens, we are looking at a smaller DP, but that's my struggle. I know I don't WANT to go with < 20%, but to prevent a second move, it may make sense this go around. im such a planner by nature, this whole idea is stressing me out. I'm not really a roll with the punches kind of person. I'm trying, but I don't like when people mess with my plans! Haha

I'm the same way-I can definitely identify!

Maybe you can keep your great momentum going to pay down your mortgage and get rid of PMI very quickly (if that remains your top priority).

als1982 · May 2015

Considering what interest rates are right now, I'd go ahead and buy. I'd never heard about prepaying PMI before this board, which sounds like the way to go. A few thousand extra upfront would be worth being rid of renting IMO.

brij2006 · May 2015

Haha Type A people unite!

I personally would move to a cheap rental that allowed me to put aside as much each month as possible, with a 1 year lease or less if you can find it (I know that isn't common in Chicago or the burbs). Then it buys you some time to save up to your goal (or more) and you can make the move in an non-rushed way. Taking your time to find the right forever home that suits your needs.

kmurphy2131 · May 2015

I would look and see what is available. If you find the "perfect" home maybe it would be worth taking a larger mortgage and prepaying the PMI if you can or just making larger payments as able. I don't know a ton about mortgages and PMI (I rent) so I don't know details about how that would work. If you can find the forever home you want, start crunching numbers, if not, rent and move when you find it/have the $. A good point was made above about the ease of moving across town vs states.

maple2 · May 2015

I definitely understand the stress when it comes to major life events like moving and buying a house. I get not wanting to have to move twice in two years (or less) because moving is a huge pain, but I don't really see it as a big deal from a financial perspective. Moving, especially across town, can be pretty darn cheap as long as you are willing to put in the time/labor and can convince some friends/family members to do the same. All that costs is some beer and pizza and maybe a U-haul if you don't know anyone with a vehicle large enough for all your furniture. That would probably only run you a couple hundred dollars. You can hire professional movers relatively cheaply if you go ahead and do the packing yourself. If you decide you don't want to deal with any of the moving issues, I can't imagine full service moving across town would cost you more than a couple thousand dollars, which is definitely going to be less than you would pay in PMI and interest by buying with a lower down payment.

AprilZ81 · May 2015

There are three common ways to deal with PMI (four if you count putting down a full 20%).

1) PMI is added to your monthly mortgage payment and you can get rid of it once you reach a minimum of 20% equity (amount varies depending on loan terms). If you use FHA loans the PMI ***NEVER*** goes away unless you refinance into a traditional mortgage.

2) PMI can be prepaid at closing, your mortgage company will be able to tell you how much it will cost. The last time I did it the cost was about $1,700 I think. This number will vary depending on the size of your downpayment and the amount of your mortgage.

3) The lender can also pay your PMI but slightly increasing your interest rate (usually just a few hundredths of a percentage) for the duration of the mortgage.

I've done each of the three options and by far the worst was the monthly payment. Even after I had 20% equity I couldn't get rid of it and when I called to ask they said it wasn't possible (ever). So I wouldn't recommend this way at all.

With the house we just bought last May the cheapest option was the lender paid. Just run the numbers.

********************

Now to your original question... I understand why you wouldn't want to rent or move twice in a short amount of time.

I would first check to see what rent is running in the areas you want/need to be and see if a short term rental is even possible. If the rent is low enough to allow you to save enough at a speed that makes sense then I would suck it up and move twice.

If rent ends up being high enough that you are only saving a few hundred dollars extra each month (or worse paying the same amount as a mortgage) I would go ahead and look for your dream house.

As long as you have 10% down and good credit you shouldn't have trouble finding a lender and getting good rates.

Mustard76 · May 2015

Our rental options are really limited. H has an 1100 pound safe (empty), so we have to live on a first floor slab. Not altogether a huge deal, but when looking for an apartment, it's annoying. That stupid safe is also the reason I don't want to move twice. Traditional movers won't move them, due to liability or something. (This was a huge issue when we were leaving NM) So there are specialty safe movers that come out and will move/install. Those movers are $500 a pop. I can probably suck it up and pay that $1000 (if we were to do it twice) but it's more annoying than anything. Not really knowing if this is happening is what is driving me crazy.

brij2006 · May 2015

Is it a gun safe? 1100 pound safe is insane. Sell that sucker!

Mustard76 · May 2015

It is a gun safe. We can't sell it, H is a police officer and firearms instructor. It's full of his duty gear, so it stays and follows us around.

short+sassy · May 2015

I'd be inclined to go with a lower down payment, even if it meant having to pay PMI (one way or the other).

Especially with the safe issue. My goodness!

But here is another thought I didn't see anyone mention. Is it possible you all could severely cut down expenses...like minimum pay credit cards/no entertainment...and one or both of you take a part-time job? It would obviously be harsh, but it would also only be for a few months. But maybe that would bulk up the savings enough to be where you want to be.

Mustard76 · May 2015

Lots of ideas, thanks, everyone! @short+sassy we could probably trim our budget. I haven't really had a chance to look at the hard numbers. The good news is we have no debt outside of my SL. Second jobs aren't an option right now, but we could also look to sell some of our belongings.

MommyLiberty5013 · May 2015

Mustard76 said:
It is a gun safe. We can't sell it, H is a police officer and firearms instructor. It's full of his duty gear, so it stays and follows us around.

Question: with the gun safe being for your DH's job and therefore a job and safety necessity, is there any way he could have its move paid for with an employer reimbursement? Can you at least deduct its moving expense in your taxes for job-use?

simplyelise · May 2015

Could you sell the current safe and then buy a new one at your new place? Not sure if that would make more sense on your loss on the sale vs. cost of moving.

dragonstarjk · May 2015

Honestly, what I would probably do is start looking at homes in the area to see what's available. If you don't find your forever home, then it makes it easier to deal w/ the double move and all of that trouble, because you have more time to save until you find what you want.

If you do find the perfect home, I would probably just go ahead and try to buy, rather than miss an opportunity to buy the perfect home because of trying to save more. Then you wouldn't have to worry about paying all the extra expenses involved in moving, you'd have the home of your dreams, and you could always pay the amount you would be saving towards a down payment as extra principal on the mortgage to get caught up to where you planned to be originally.

short+sassy · May 2015

One place to look to find some pretty rock bottom home prices is a website called Hubzu. They are an auction site, but you can still finance most properties. I almost bought a home listed on there. In my area, the opening bid is usually 30-50% less than the home's value...though the reserve will be a bit higher than the opening bid.

I almost didn't want to mention it because there are also some serious drawbacks with them. They are not for the faint of heart.

Here are the caveats:

--They are an auction site, though not many bidders. At least in my area.

--No contingencies. No financial contingencies, no inspection contingencies. You can still back out of the contract, but you will be out your earnest money. My plan for the house I was going to buy is have an inspector already lined up and ready to go one day after the auction closes. If I lose the auction, I cancel. If I win, we hightail it over to the property...because I still have about 3 business days before I have to sign the purchase agreement and mail in my earnest money.

--Almost all the homes are foreclosures that have already not sold under more typical channels. The utilities are almost never on, nor are they turned on. And almost all the houses will need some kind of work. I had my realtor show me two houses from the site. One of them was in a pretty deplorable condition. The second one, the one I almost bought, only had a few things wrong (the interior actually looked great)...but they were big things. Missing HVAC units, roof and fence work.

Feeling STRESSED

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