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Thread: Buying vs. Renting?

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    #1

    Buying vs. Renting?

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    This is kind of a ways away, but I've been thinking about it recently, so bear with me.

    DB will be ETSing this fall and coming home (yay!). His plan is to become a police officer and we have always talked about moving in together once he gets a job. I will be finishing my teaching credential program and looking for a job as well - I should have something lined up by late spring. We had always been considering renting, but recently one of DB's buddies bought a house, and he's been very interested in buying a home ever since. Today, he told me that he thought we should look into purchasing a home sometime late next year instead of renting an apartment together earlier in the year. I didn't think that would ever be possible, but after looking at the VA loan website and some of the local real estate websites, I've come to the conclusion that we could buy a 2-3 bedroom house in a neighboring town and have our monthly payment (including taxes and insurance as calculated by the VA website) for about $500-700 more per month than it would cost for us to rent a 1 bedroom apartment in our town in a neighborhood that I would feel safe living in.

    Obviously, there's a lot I don't know about this. Like, can we buy a house together using both of our incomes (for lending purposes) without being married? Is it a really stupid idea to buy a house with someone you aren't married to? Or would we just need to come to an agreement about what would happen if we ever broke up? (Using the house as an income property, selling and splitting any profits, etc.). Is the extra cost worth owning a home of our own? On this matter I'm thinking that the answer is probably yes, particularly because if we don't purchase a home we will be putting $500-1000 per month aside for a future down payment on top of our $2000-2500 rent. We could also have the option to rent out one of the extra bedrooms in a home and make up the extra cost there. One more thing - wherever we could afford to buy a house wouldn't be somewhere I would want to live super long term. It would be a good starter house for us, probably somewhere we could live for 5-10 years. Is that a reasonable timeframe to be expecting to sell? Like would it be worth it to buy if we would be selling in 5-10 years?

    It really blew my mind that buying a house would even be an option for us moving in together, but it definitely interests me if it is feasible for us as an unmarried couple - we aren't planning on getting married for 2.5-3 years. Any input or advice at all would be appreciated! Obviously we would wait to finalize any decision until we both had jobs and could figure out the cost in relation to our monthly income, but looking at the salary schedules I've found online (we're both going into public service jobs so that information is readily available) it seems doable.
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    #2
    You will not be able to get a loan until you have a job for a year. You'll have to look at renting first.

    Honestly, I wouldn't even think about purchasing a home until I was either: Almost married or married. Buying without that legal commitment is way too risky for me.

    As for the loan amount, take what they said and double it. That is where you should start. Our house was "Quoted" at 900 and our mortgage is 1350. Do you have money for the closing costs? Our was 6800. Do you have money for the ernest fund? Our was 1,000.

    Another is you were saying you don't want to buy long term in your area. If you aren't there for at least 5 years, it isn't worth it. You need time to get the loan off the payment of interest and into the principal. After looking at the itemized list, it was about 4 years in at minimum payment to get there.

    Also, if you can't sell right away, can you afford to keep up the payments until it does?

    I hope what I said makes sense. My mind is racing a bit and I don't type well when it is there.
    "Obstinacy is a fault of temperament. Stubbornness and Intolerance of contradiction result from a special kind of Egotism, which elevates above everything else the pleasure of its own autonomous intellect, to which others must bow.: Carl von Clausewitz
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    #3
    DH and I would probably buy. When we moved here we had the option to buy a house, but we decided to skip the extra stress and just rent. We kind of regret it because we would almost have the house paid off by now, but instead we've been paying thousands and have nothing to show for it.

    There are lots of extra costs when owning, but I think it's well worth it.
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    Quote Originally Posted by Sabrina22LE View Post
    DH and I would probably buy. When we moved here we had the option to buy a house, but we decided to skip the extra stress and just rent. We kind of regret it because we would almost have the house paid off by now, but instead we've been paying thousands and have nothing to show for it.

    There are lots of extra costs when owning, but I think it's well worth it.
    Aren't you 19? How could you almost have a house paid off already? That's amazing.

    OP there is so much more that goes into buying than I realized. No, I would not purchase without at least being engaged. If he's using a VA loan, you won't need to have a down payment. I'd take that money you'll be saving by renting a one bedroom and put it towards your wedding or a fund to fix up the house the way you want it. As PPs have mentioned there are always costs that come up. We bought a newer house (only 12 years old at the time) and have had to replace the water heater, had a leak in our kitchen ceiling which caused black mold, and had to completely replace our deck. We've been here for 2.5 years and have put nearly 10k into this house and not on anything exciting/fun aesthetically pleasing.
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    #5
    To add, while I do think in general it's a good idea to buy vs rent, it doesn't seem that way in your situation. I'd only buy if I were married and planned to stay in the house for more than 5 years. Those first 5 years you're just paying off the interest.
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    I know lots of people purchase homes together before they are married, but honestly I don't think its a smart idea. If you break up figuring out the housing situation would almost certainly be challenging. If neither of you can afford to buy the other out you will be forced to sell it or rent it, regardless of the market and timing. At least when people get divorced the house is figured out legally as part of the deal.

    You will likely need a year of employment, my lender requested six months of bank statements to verify income. Also, I'm not a fan of the VA loans and needing 0% down (DB has one, and I wasn't a fan when he went through with it either). The fees are high, and you think your getting a deal because there isn't PMI (private mortgage insurance), but likely your not. Furthermore, having almost no equity in the home from the start can more easily put you in a situation where you need to bring money to the table to get out the house, even years down the road. That doesn't even include the closing costs and potentially rolling them into the mortgage.

    I think you are asking all of the right questions, once you are both settled into jobs you will have better clarity on what you can and can't afford. Owning a home is awesome, but it is super important to be financially ready to do it. If you don't have savings set aside to handle repairs and issues that come up, homeownership goes from blessing to burden in a hot second. There is nothing wrong with renting until the time is right. Good luck!
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    #7
    Oh missed the part about should have a job... my lender required a year's worth of pay stubs before they'd approve me. They actually contacted my boss to verify employment dates.
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    #8
    I agree with the PP's that it may be too risky to buy a house without at least the commitment of being engaged. You said you were planning for marriage, which is great! But I dont think it is worth the risk. In addition, there is so much extra money that quickly gets incorporated when buying, ANYTHING goes wrong and it's on you to fix. DH and I have always rented because he is still active and who knows when we will have to move, but my sister and BIL chose to buy and blew through their savings very quickly! Now, it's all up to my sister to resell as they are gearing up to move again next year. It's nice to have the flexibility of doing whatever you want if you own, but I just don't think it is worth it as this stage.
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    #9
    Quote Originally Posted by DakotaCowgirl View Post
    You will not be able to get a loan until you have a job for a year. You'll have to look at renting first.

    Honestly, I wouldn't even think about purchasing a home until I was either: Almost married or married. Buying without that legal commitment is way too risky for me.

    As for the loan amount, take what they said and double it. That is where you should start. Our house was "Quoted" at 900 and our mortgage is 1350. Do you have money for the closing costs? Our was 6800. Do you have money for the ernest fund? Our was 1,000.

    Another is you were saying you don't want to buy long term in your area. If you aren't there for at least 5 years, it isn't worth it. You need time to get the loan off the payment of interest and into the principal. After looking at the itemized list, it was about 4 years in at minimum payment to get there.

    Also, if you can't sell right away, can you afford to keep up the payments until it does?

    I hope what I said makes sense. My mind is racing a bit and I don't type well when it is there.
    I've looked online and it's not necessarily always true that you have to be at a job for a year to get a mortgage. I've looked at several scenarios and it may be harder for us to get a loan that early on but by no means impossible.

    I'm curious as to why your monthly payment is so much higher than the estimate... is that typical? The monthly payment I anticipate is very close to what my parents pay for a house they bought 15 years ago that was a bit more expensive than what we could afford.

    About the length of time: if we buy I'm fully intending on staying in the house for at least 5 years. The towns we could afford aren't exactly where I'd like to end up in the long term but we're both 21 so we have plenty of time. We are planning on staying in the area though. I would anticipate living there around 7-10 years
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    #10
    Quote Originally Posted by kt_bug View Post
    I've looked online and it's not necessarily always true that you have to be at a job for a year to get a mortgage. I've looked at several scenarios and it may be harder for us to get a loan that early on but by no means impossible.

    I'm curious as to why your monthly payment is so much higher than the estimate... is that typical? The monthly payment I anticipate is very close to what my parents pay for a house they bought 15 years ago that was a bit more expensive than what we could afford.

    About the length of time: if we buy I'm fully intending on staying in the house for at least 5 years. The towns we could afford aren't exactly where I'd like to end up in the long term but we're both 21 so we have plenty of time. We are planning on staying in the area though. I would anticipate living there around 7-10 years
    You have your House, year home insurance insurance, taxes, interest, and so much more.

    We have rocking FICO scores too (around 800) and our interest is 3.5. It is the "Extras" that you have to have in the loan. You can never bank on what others have. It is based on your income, history, FICO, debt, and so much more. Hubby being military, they looked at his time in service, what he has left, his BAH, his retirement, and all our bank information (savings and checking) for 2 months, credit card statements, 2 years of tax forms, and everything had to be accounted for.

    http://www.homefinder.com/research/c...e-payment-70id
    Last edited by DakotaCowgirl; 08-19-2017 at 10:28 PM.
    "Obstinacy is a fault of temperament. Stubbornness and Intolerance of contradiction result from a special kind of Egotism, which elevates above everything else the pleasure of its own autonomous intellect, to which others must bow.: Carl von Clausewitz
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