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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Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
Buying or building a house!!??
My husband and I have been married for a little over a month and we would like to buy a house or build one. We are currently living with my mom and its nice because we get to save more money this way, but then there is always a problem living with the mom/mother-inlaw. I have a really good relationship with both my parents but I just don't want to ruin this and therefore I want to be a ble yo find our own place ASAP.
We got approved for $110,000 to spend on a house but we don't want to spend all that money because we also don't want to be in debt the first few years of our marriage.
I guess my question is should we wait on moving out and if we do should we build on a land or buy a house. If we should just wait to save more money then what should we do about the living situation with my mother. Please help! thank you
Re: Buying or building a house!!??
Many points to answer your question RE: home buying are found in the previous post about Downpayments. I think it appears about 3-4 posts before yours.
It's great you are saving money now.
I guess we need more info...how much do you have saved for a down payment already? And, how much do you have in an Emergency Fund that is separate from that downpayment savings? What does your budget say you can afford to buy - please keep in mind that what the bank approves you for and what you can afford are two different numbers.
For example, our bank approved us for a $500k house, but we could only afford one that is $250-$300k. And, we tried to buy one even less than those figures.
Get Home Buying for Dummies.
There are pros and cons to building new and to buying an existing property. Regardless, you should buy a home that will suit your needs in the years to come. Many posters here bought hoems that are now too small for their growing family and are disappointed that they don't have the space they need. If you think about a growing family, buy that home with an extra bedroom and an extra bath. It will help in the long run.
Also, focus on location. If it's a great home, but the location is cruddy, then it isn't a great home. Always think in terms of resale - as in, how tough would it be to resell this home if you needed to. Check out your city's our county's zoning maps both for the current plans and for the 20-30 year plans. And, you can also do a registered sex offender search too. Keep in mind that they don't always live where they are registered, etc. but it is a helpful search anyway.
In addition to the above advice - keep in mind that is it not wise to spend more than 25-28% of your TAKEHOME pay on housing (that would be mortgage+PMI+insurance+taxes+utilities) or you will wind up house poor. Spend less if you have alot of other debt (credit cards, car payment, student loans)
You also need in addition to the downpayment: closing costs, moving costs, utility deposits, repair/renovations, decorating/furiniture/appliances, yard items and tools --- just to start. The emergency fund is a NEED not a want - stuff happens with a house, yes, even new houses.
If 110,000 is maxing you out, I don't see how you can afford to build anything at all.
It sounds like your income is modest. I would set a time limit for living with your parents (6 months??) and evaluate at that time if your finances permit a home purchase. Be realistic and if they are not ready for home ownership, then rent a cheap apartment and keep saving. Mortgage rates are going to remain low until at least 2014. This is a huge commitment and not something to rush into.
Renting is NOT throwing your money away - it provides you a home with no responsibilities for it's care or upkeep. It gives a much needed amount of privacy that most newyly weds desire. It gives a sense of independance.
Accepting the generous gift from your mom (living with her) is one thing, but staying too long can become taking advantage of her generosity.
IF you are old enough to get married, you are old enough to stand on your own 2 feet. Time for DH to get a new attitude - fast.
The Home Buying for Dummies book has a while section devoted to renting versus owning, pros and cons for each and how to decide what to do. And, ditto this post. Renting isn't throwing your money away. Also, by renting longer you are taking advantage of even lower housing prices, which are probably coming as the housing market continues to drop and settle. There are still tons of foreclosures being processed right now that have not hit yet.
I think it is also going to depend on the area you live in. I live in a very HCOL area and there is no way I could buy land and build a house on it for the same money as buying an existing one.
I agree with a PP about buying what you can afford. We were also approved for over $500,000, in the end we are under agreement for a $250,000 home, because really that is all we feel we can afford.
If you were approved for $110,000 you really need to ask yourself if you can buy land and build a house on it that would be similar to what your money would get you if you were to buy. Because you do not want to outgrow your home in a few years because the novelty of new was more important that having something older that you could grow into for years to come.
I lived with my sister for the first year we were saving a house. I am very close with her, but my poor husband suffered. I say you need to rent. In fact, many financing places require rental history in order to finance a mortgage anyway. My advice is rent for 12 months, stick to a strict savings plan, get out and look at houses so you know what you like and want. Save up that downpayment, make sure you credit is in the good....and that way when you go looking, you have the money, you know what you want, you'll get approved, and you won't have taken advantage of your mother's generosity or put undo pressure on a new marriage.
Good Luck.
This. While I appreciate your DH's thought that he would like to invest in a home rather than pay rent, like PP's said, you want to buy a home you can stay in a long time. There are financial reasons for doing so: home purchases involve steep closing costs and real estate agent fees. If you buy now and get a place that is too small for the long run, you will lose money if you have to sell soon to upgrade to a bigger or better place, as you will not build enough equity in the home to recoup the closing costs.
Also consider that you need to walk before you run. A rental would be a great way to get out on your own right away. Most younger people rent before they buy (I know I did, and for a long time, too). There is no shame in doing so, and for most people it makes the most sense financially. Save money and get a place that is less of a "starter" home and more of a place that will meet your longer term needs.
If all else fails, I'd also suggest going to a few open houses for homes in your price range. Once you and DH see what you could afford, it may help you realize that renting is not so bad after all.
I think what you need to do is this......get four sheets of paper. On each, list the pros/cons of 1) staying where you're at, 2) renting somewhere, 3) buying a house, and 4) building a house. You could combine the last two depending on how you see the buying/building situation. Now you can make an informed decision relative to your situation.
Personally, I tend to agree with your DH. I have no issues with short term renting. I rented an apartment in college because I knew I wasn't going to be there long term. However, I've been where I'm at now for 10 yrs and even with the current crappy market, I could make $100k on my house over the loan amount. Plus the $30k or so I've paid off on the loan.
I do see long term renting as throwing your money away though. Yes, you are getting a place to stay for your rent payment and some people even get utilities or other things as well for their rent payment and so I understand why people will say you're not. You also get a great degree of flexibility in regards to your lease compared to having to buy/sell a house. However, when you move out, you've made many thousands of dollars of payments to someone else and you get nothing. When you have a house, you potentially will walk away with some equity unless you're one of the unfortunate now trying to see your house for less than what it's worth.
Either way, you need to sit down with your husband, list out the plus/minus for all your options and make the best decision for you and him.
Also, for all the people who are telling you that since you're old enough to be married, you're old enough to make your own way. It used to be really common in the old days to do what you're doing now and it's really common now in a lot of foreign countries still and it is becoming even more common in this country these days for adult children/couples to be living with relatives due to the current economy/job availability. As long as you're truly trying to find jobs you can live on and support yourselves, I don't see any shame in your current living situation. It's totally different than saying I'm living with mom and dad because neither of us or one of us can't be bothered to even try to find a job. Nor do you seem to be the type that says "we won't move out until we can afford a top of the line home".