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WWYD - re: selling and buying a new home
Background:
Bought a "starter" house 5 years ago. Plan was to move after 3-4 years but with the housing market crash, we are going to lose ~$60,000. We did a 80/10/10 - 80 % 1st mortgage, 10% second mortgage, and 10% down payment. We paid off the 2nd mortgage so we now have the 1st mortgage, at ~6% interest rate. (Refinancing is an option but we would have to pay PMI. With the quotes we received it is better to stick with the 6% and no PMI).
We want to move within 3-5 years b/c we are in a shitty school district and want to move before our kids enter school. We would also like a slightly bigger house.
1) Sell now. Rent for a year or two and save enough for another down payment.
2) Sell next year. Have savings for ~10% down payment (which would mean high PMI/long time before we could pay off PMI)
3) Sell in 2-3 years. Have ~15-20% down payment + money to put into our future house.
4) Put our kids in private school. Finish our basement. Live in our house for another 7-8 years until we have a huge amount of savings that we are completely comfortable to move.
We are leaning toward #3 but I am slightly afraid that we are going to get screwed over again by waiting b/c interest rates may go up/housing market may not be as good. They say right now is the time to buy. The houses are also starting to sell quickly in our development. Having enough cash is our biggest problem right now. We are saving as much as we can but with baby #2 on the way...it will be harder.
Re: WWYD - re: selling and buying a new home
I would lean toward 3 or 4. Interest rates are going to hold flat through 2014 and after that they won't just jump up to 15%. Projections are to slowly increase after that (the Fed has held them steady) so even in 2015 maybe rates are 5.25 or 5.5%. That's still historically low!
I would not sell now just to rent. I doubt that housing prices are going to steadily decline in the next year so it would be a hassle to sell now and then move to a rental and then look for a house to buy sometime in the future. You might as well stay put for a few years and hope the market recovers/holds flat while you save for a downpayment.