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First-timer - When would you buy? (If at all?)
I've been lurking for a while and am going to get some books this week to help make our decision, but wanted to see if anyone had any strong feelings one way or the other.
Background: DH is starting residency in June, which will be when we start having 2 incomes (currently living on just mine). We will be in the same city for 6 years at a minimum. Big city, HCOL. We currently pay $1550 in rent + parking. Looking at buying a condo since we'll be here so long and have the potential to rent it out if we move. We currently have about $35k in savings.
Option 1: Buy now (this summer). We're looking in the $175-200k price range, so for 20% down we'd need $35-40k. Plus potential closing costs, etc. To do this we would take a loan from DH's parents (more than willing + no interest) to cover what we need and allow us to keep an emergency fund. We'd pay the loan back over the next 1-2 years with DH's income.
Option 2: Buy next year. We'd have an additional $20-30k from DH's income, my raise in September and my annual bonus. DH doesn't particularly like this idea because he's afraid the market will swing back up over the next year.
Option 3: Don't buy at all. Keep renting. Self explanatory.
Yes, we could look at a lower price range to buy this year, but it won't get us what we need in order to feel good about buying. (2 bedrooms, good layout, good location.)
Any thoughts on these options? Thank you!
Re: First-timer - When would you buy? (If at all?)
I would never buy a home if I needed to borrow money from my parents to do it.
I'd continue renting until next year and then re-evaluate the situation then.
It really is up to you what you choose to do. No option is "the right" option. But here are my opinions
1) Can you not put less then 20% down? If so maybe this is an option that you could look at.Then you could put a bit of money down and still have an emergency fund.
I would not borrow money from inlaws even if you have a great relationship with them, it can ruin it.
2) I like this option over borrowing money from your inlaws. Your DH can't predict the way the market will go, but neither can anyone else. But this way you would have a lot more money for an emergency fund and this is always a good thing.
3) I don't really have anything to say on this front.
I would probably do it now. It looks like the market has at least stabilized now and if you will be able to pay your parents back in a year or two, I would go for it. Putting 20% down will give you instant equity even if the market doesn't swing up right away and waiting a year may cause you to have to pay more in case the market does go up.
That being said, we bought our house about 3 years ago in a buyer's market thinking we would be staying in the area for at least 6 years. Fast forward to now, we are moving out of state and currently our house is appraised $40k less than when we bought. Our loan was 3.5% FHA so our situation was a bit different but we are having to bring at least $30k to closing depending on the offer we get (hopefully we will get one). Luckily we are in a financial situation to do it right now but it is going to be tight with buying a new house. Just something to think about.
If it were me, I think I would buy sooner rather than later but every market/situation is different. It sounds like your mortgage payment might be the same as renting, but definitely look into the condo fees and insurance cost.
You'll need to tell the lender that the "loan" from H's family is in fact a "gift" to avoid paying PMI. They're very weary of loans from family members and given his relatively recent employment, it could make approval tough.This is true. My parents gave us some money they inherited from another relative and we had to have them sign a letter stating that the money was a gift. In this case it was a gift though.
I don't think prices are going to go up much between now and then. Interest rates will probably stay low as well, although maybe not as low as they are now.
I would wait. A year will not make that much of a difference. Don't rush into it. Do you have an emergency fund in place?
I would say rent.
H is an attending physician, so I've been through huge numbers of co-residents and co-fellows in our area. Most of the people that purchased during residency or fellowship have had to move out of the area for jobs, so they are stuck with homes they can't sell or rent in some cases.
As these guys are moving and trying to sell, and not able to buy in a new area, you begin to realize more and more how great of an idea it is to wait until your settled as an attending to purchase a home.
The dreaded ditto.
http://pandce.proboards.com/index.cgi#general
So I totally replied yesterday and The Nest ate my response. Glad I checked back today to see if it went through!
Thanks to everyone for your thoughts. It seems different scenarios will work best for different people. DH and I just need to sit down and talk through it more and figure out the best option. I'm glad to hear they all seem viable, though!