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Thread: the right time to buy a home?

  1. MilitarySOS Jewel
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    #1

    the right time to buy a home?

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    I am in the very early stages of considering buying a home. I currently rent, I'm in my sister's in-law apartment, which is great because the rent is low, but I am REALLY sick of renting/having landlords (love my sister to death). I just feel like I am really ready to be completely on my own. I'm meeting with a mortgage guy in a couple weeks to find out where I'm at and what I need to do to be fully prepared to buy a home.

    I have been questioning though, if it is the right time. The future is uncertain. DB has about 2 years left and still isn't sure if he will reenlist or not. I'm nervous if I decide to buy a home now and he reenlists and then I would have to sell it or rent it out. But, not even specific to me really. Regardless of DB, I know that eventually I will move in with my spouse. I wonder if I should just wait until that time to buy and just save save save in the meantime?

    So, if you had the financial means and the desire, would you purchase a home? Or wait a couple more years to see what the future holds...
    Any advice, opinions, stories to share, I would greatly appreciate!

    **For anyone who has read multiple posts of mine, you should know by now that I over-analyze EVERYTHING I cant help it! I also get really frustrated that I am not able to predict the future. I am trying to work on both of these things
  2. MilitarySOS Jewel
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    #2
    DB and I had this conversation the other day haha we decided to wait until he decides if hes getting out of the Navy or reenlisting. And if he gets out wait to see where he gets a good job (honestly I dread the idea of buying in the DC area because for what we want its just too expensive).

    Imo if you and your DB are planning to stay together I would just wait until you both know what your doing and where you want to live for the long term.
  3. In vino veritas
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    #3
    Figures are different for every area, but for where you want to buy, look to see when the break-even point is for purchasing a home vs selling. By this I mean, in some places you buy, and as long as you live there for about 18 months (assuming you buy on par with the market, and there are no major economic changes like another depression), then you break even, while other parts of the country mean you have to live in a house for 7 years to break even. Most of the country falls in around 5 years, but it can make a huge difference- it may be 'cheaper' for you to continue to rent if you plan on moving/moving in with someone else in less than 5 years, but again, depending on where you live, it may make sense.

    Also consider increased costs beyond mortgage, whether a one-time thing or a monthly/yearly recurrence- PMI insurance, property taxes, closing costs, maintanence fees. Not only that, but time/emotional costs- anything breaks, and you either have to fix it yourself or hire someone, and for a plumber to come, you then need to take a day off work to be there when they come. Shoveling snow (if you are in the northeast), gardening or at least maintaining a property. Will you upgrade the house- meaning re-do a kitchen or bathroom? Install central air? All of these things are stressful, time consuming and expensive.

    When you buy, you also dont want to entirely deplete your savings o put into a down payment or how will you pay for the 1001 things that come up when you buy a new home (need more furniture, curtains, rugs, bathroom stuff, general supplies etc..), so you have to have not only enough saved for a down-payment, closing costs, but also some extra.

    What are the costs associated with renting out your home should you decide to move. What is you have an empty house for 2, 3 or 6 months? Then you are payng double mortgage.

    Personally, I am glad I waited/am waiting. We know things could always change (what if Gabe lost his job? Or they moved him), but we are secure enough that we think we will be in the area for the next 5-7 years and are currently continuing to save. We could have bought a home as early as a year ago, but we really wanted to have a massive down-payment and way more in savings, so we are just starting the process now. It was sometimes annoying to wait, but I feel much more confident with where we are now vs a year ago.
  4. Dancing Backwards in High Heels
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    #4
    Beyond meeting with your mortgage person, figure out your own budget. Owning a home comes with all sorts of surprises (fridge dies, furnace breaks, roof needs repaired) that needs to be budgeted for, not to mention all of the maintenance items you probably don't already have to deal with (replacing furnace filters, annual testing of furnace/water heater, mowing/yard work) which isn't just extra money, but extra time.

    However, in your situation, it doesn't sound like you plan on staying there for the next five years, which is the general rule of thumb when buying.

    Personally, I love that we have the freedom to have any pets that we want, but all of the major projects we've tackled in the past 3 years and the ones on schedule for this year make me wish we would have waited, there was just no place for us to rent.
  5. MilitarySOS Jewel
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    #5
    Quote Originally Posted by *Heather* View Post
    DB and I had this conversation the other day haha we decided to wait until he decides if hes getting out of the Navy or reenlisting. And if he gets out wait to see where he gets a good job (honestly I dread the idea of buying in the DC area because for what we want its just too expensive).

    Imo if you and your DB are planning to stay together I would just wait until you both know what your doing and where you want to live for the long term.
    haha, yea the Navy makes it so difficult to plan! I guess it cant hurt for me to just wait two years while I save more. I'm just feeling antsy lol. And I've also always kind of had a goal to purchase my own home, but that's not really a huge deal to me either anymore. I just want to do what financially makes sense. Yea, prices on homes in the Boston area are going way up as well, its definitely not a buyers market at this point.

    Thanks for your input
  6. MilitarySOS Jewel
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    #6
    Quote Originally Posted by Dr.VinoVet View Post
    Figures are different for every area, but for where you want to buy, look to see when the break-even point is for purchasing a home vs selling. By this I mean, in some places you buy, and as long as you live there for about 18 months (assuming you buy on par with the market, and there are no major economic changes like another depression), then you break even, while other parts of the country mean you have to live in a house for 7 years to break even. Most of the country falls in around 5 years, but it can make a huge difference- it may be 'cheaper' for you to continue to rent if you plan on moving/moving in with someone else in less than 5 years, but again, depending on where you live, it may make sense.

    Also consider increased costs beyond mortgage, whether a one-time thing or a monthly/yearly recurrence- PMI insurance, property taxes, closing costs, maintanence fees. Not only that, but time/emotional costs- anything breaks, and you either have to fix it yourself or hire someone, and for a plumber to come, you then need to take a day off work to be there when they come. Shoveling snow (if you are in the northeast), gardening or at least maintaining a property. Will you upgrade the house- meaning re-do a kitchen or bathroom? Install central air? All of these things are stressful, time consuming and expensive.

    When you buy, you also dont want to entirely deplete your savings o put into a down payment or how will you pay for the 1001 things that come up when you buy a new home (need more furniture, curtains, rugs, bathroom stuff, general supplies etc..), so you have to have not only enough saved for a down-payment, closing costs, but also some extra.

    What are the costs associated with renting out your home should you decide to move. What is you have an empty house for 2, 3 or 6 months? Then you are payng double mortgage.

    Personally, I am glad I waited/am waiting. We know things could always change (what if Gabe lost his job? Or they moved him), but we are secure enough that we think we will be in the area for the next 5-7 years and are currently continuing to save. We could have bought a home as early as a year ago, but we really wanted to have a massive down-payment and way more in savings, so we are just starting the process now. It was sometimes annoying to wait, but I feel much more confident with where we are now vs a year ago.
    Thank you! So much helpful info. I think my frustration with renting is giving me more fuel to just want to buy something already. But, I know that owning a home will come with plenty of frustration. I will definitely consider that break-even point though, that will probably be the deciding factor. I live in MA and prices on homes have been going up so. I feel OK with my savings now, but I could certainly save more to feel even better about it all. I'm just ready to be in a place that is my own and I can build up and put my all into. I also have just wanted to purchase my own home, on my own, but that's probably just a pride thing at this point and not super important haha. Thanks again!!

    Quote Originally Posted by HisJuliet View Post
    Beyond meeting with your mortgage person, figure out your own budget. Owning a home comes with all sorts of surprises (fridge dies, furnace breaks, roof needs repaired) that needs to be budgeted for, not to mention all of the maintenance items you probably don't already have to deal with (replacing furnace filters, annual testing of furnace/water heater, mowing/yard work) which isn't just extra money, but extra time.

    However, in your situation, it doesn't sound like you plan on staying there for the next five years, which is the general rule of thumb when buying.

    Personally, I love that we have the freedom to have any pets that we want, but all of the major projects we've tackled in the past 3 years and the ones on schedule for this year make me wish we would have waited, there was just no place for us to rent.
    Thanks. I'm just so anxious and wanting to buy something. But, I will definitely look more closely at the whole budget and building up a better safety net.
  7. "If you don't like my attitude, quit talking to me"
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    #7
    my rule of thumb is, if you can't make at least a 5 year commitment to owning a house then its not the right time.
    Many states require you to own for at least 2 years to not pay a heavy tax. 5 years is ROI, where you likely have enough equity to either break even or come out with a profit.

    There are 10 types of people in the world, those that understand binary and those that don't
  8. MilitarySOS Jewel
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    #8
    Quote Originally Posted by TrishAFSpouse View Post
    my rule of thumb is, if you can't make at least a 5 year commitment to owning a house then its not the right time.
    Many states require you to own for at least 2 years to not pay a heavy tax. 5 years is ROI, where you likely have enough equity to either break even or come out with a profit.
    Yes, I'm thinking I should at least wait until I know what DB plans to do. Thanks!
  9. Senior Member
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    #9
    With that level of uncertainty, I probably wouldn't buy.

    I also wouldn't buy unless I had 20% to put down, in order to avoid PMI and also to avoid being upside down on the house (especially since your future is uncertain so moving is a strong possibility). Even if prices have been going up, then could easily go down at any moment. Prices were going up and up when we bought our current place in San Diego. A few years later, the place had lost about 25% of its value. If that were you and you had to move at that time, you could be faced with a choice of foreclosure, renting it for a huge loss ever month (and dealing with being a long distance landlord, which is not fun and ends up costing even more because you usually have to pay someone to manage it), or having to bring tens of thousands of dollars of savings to the table just to be able to sell it and walk away with every penny you've put in to it gone.

    Also someone else alluded to this, but if you own for less than 2 of the past 5 years. It's actually not as big a deal as many people think since the tax is only on profit and there's a fairly large exculsion, so it would only come in to play if your house increased by a very large amount--I think $250,000 (in which case paying capital gains tax wouldn't be the worst thing since it would mean you made a ridiculous amount of money). There is also a military exemption, but it probably wouldn't apply in this case because the house was hypothetically bought before you were married and because you still need to live in it 2 years, I believe, it's just that you get more than 5 years to do so. *

    *I am not a tax expert, so don't trust me or take this as gospel.
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  10. MilitarySOS Jewel
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    #10
    Quote Originally Posted by villanelle View Post
    With that level of uncertainty, I probably wouldn't buy.

    I also wouldn't buy unless I had 20% to put down, in order to avoid PMI and also to avoid being upside down on the house (especially since your future is uncertain so moving is a strong possibility). Even if prices have been going up, then could easily go down at any moment. Prices were going up and up when we bought our current place in San Diego. A few years later, the place had lost about 25% of its value. If that were you and you had to move at that time, you could be faced with a choice of foreclosure, renting it for a huge loss ever month (and dealing with being a long distance landlord, which is not fun and ends up costing even more because you usually have to pay someone to manage it), or having to bring tens of thousands of dollars of savings to the table just to be able to sell it and walk away with every penny you've put in to it gone.

    Also someone else alluded to this, but if you own for less than 2 of the past 5 years. It's actually not as big a deal as many people think since the tax is only on profit and there's a fairly large exculsion, so it would only come in to play if your house increased by a very large amount--I think $250,000 (in which case paying capital gains tax wouldn't be the worst thing since it would mean you made a ridiculous amount of money). There is also a military exemption, but it probably wouldn't apply in this case because the house was hypothetically bought before you were married and because you still need to live in it 2 years, I believe, it's just that you get more than 5 years to do so. *

    *I am not a tax expert, so don't trust me or take this as gospel.
    Thanks, I'm so ready to just move out but I'm going to pump the breaks and focus on saving. I think I'll still meet with the mortgage guy so he can give me more information and what to expect etc...
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