Buying A Home
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Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
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Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Rent is more expensive than mortgage?!
Rent will cost $1400+ (plus utilities and most have a pet fee) per month for a 12 month lease, more for shorter leases. And thats on the low end! Lots of places are closer to 2k! We want to buy a home soon, but don't have the down payment of 20%. Currently we have approximately $17,000 in the bank. We have no credit card debt, good credit scores, and we both own our cars. Our only continuous debt is student loans. My husband makes $76,000/ year. I am a recent graduate and have just received a job offer (salary has not been negotiated yet, expecting $50,000-55,000 range) with my job starting in late August. Our savings is so low because for the last 18 months we have been living apart because I was away at graduate school and he was unable to find a job near me that paid as well as his current job. It made sense in the long run for him to keep his job because we knew we would be moving back to the area when my schooling was complete. This way he for sure had a job and we knew his salary would only increase. But paying for 2 residences is expensive and my weekend job didn't really bring in enough money to be helpful. Should we just rent and try to save up a down payment? Or look in to 100% mortgage loans? It seems so ridiculous to pay more in rent than mortgage payments, but I know buying probably isn't the right choice since we don't have the down payment.
Re: Rent is more expensive than mortgage?!
The mortgage payment is all by itself. You still have to factor in home owners insurance and property taxes.
Also, there are tons of extra costs with homeownership such as, increased utilities, larger ticket items like a lawn mower and other yard care essentials, and the cost to furnish a larger proeprty.
You could get Home Buying for Dummies. It gives some info and advice on your situation.
We are the land of snowbirds and tourists, so rents are very high around us. Our mortgage is about $800 less than a similar TH would rent for in our neighborhood. However, we budget an additional $800 a month on top of the mortgage for taxes, insurance, HOA fees, pest control, sewer/trash, and maintenance and upkeep (a lot of tools in the beginning). That is not counting furnishings, light fixtures, window treatments, etc that we've also bought. I think some rental properties are giving people some income, but it is also important to remember that the landlord is building in a lot of costs they have to maintain the home so it isn't pure profit (or if you buy-savings).
Rent was more than our mortgage payment, insurance, taxes etc. per month in our area, which is why we decided to buy.
Our money is going towards something, we got a very low interest rate, and are paying less altogether each month than we would by renting!
You don't HAVE to have 20% for a down payment, but be prepared for the extra cost of PMI every month until you've paid down 20% of the loan. We are doing a conventional loan with 5% down. You should have at minimum 3.5% down.
Just like you, we found that rent + additional costs around here are more expensive than a mortgage + home insurance + PMI + taxes. But like others have said, just be aware of extra costs associated with buying. We're buying a house that's significantly bigger than our apartment, so we have to buy some furniture and additional decor. Not to mention we don't have a lawn mower, rakes, shovels, grill, patio furniture, etc and a lot of other things you need for a house that wouldn't necessarily need for renting an apartment. PPs have covered also the fact you need money for unforeseen repairs.
I'm not saying don't buy, but just make sure you're aware of all the "hidden" costs and are comfortable with your monthly expenses, PLUS have an emergency fund and extra money for repairs and what not. Also make sure you plan on being in the house for, I would say, 5+ years.
Depending where you live and cost of living etc.
We bought thinking we would rather invest in a house/property then throw rent away every month, and are paying the exact same in morgage as we were renting....however theres a LOT of other expenses now...property taxes come out to around $3000 a year (so that alone is an extra $250 every month!) , we have had to paint, finish the basement, etc, etc...oh and we have to pay for our own garbage removal/utilities based on what we use, not just a set expected amount every month, and gas is more because the area where we could afford to buy is further out from the city so we are driving more now. Oh and because theres no easy way onto our roof we have to call someone to come unclog our gutters....all of these things are not your problem when you rent and they get costly pretty quickly!
My Blog:Through My Eyes
Yeah, our mortgage includes the property tax. Our home insurance was $700 for an entire year. We pay $845 to rent a house in the ghetto right now and when all is said and done we'll be paying about $750 on a house that is our OWN in a quiet suburb. We don't have a tremendous savings account because I don't have a full time job in teaching yet but FI has a great job and owns his own business, too so it worked out well for us. We also were able to put down 5% thanks to his parents using some of his inheritance. It just made sense to us to buy.