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  1. #1

    Should you buy as soon as you can afford to?

    I always heard it is better to be a homeowner, but what if you want to live in an area you can't afford to buy in?

    My husband and I pay $3500 a month in rent to live in a great area.
    We have $120,000 saved up for a down payment. Unfortunately, studios go for $715K plus HOA/maintenance fees in the region of the city we are in love with. So those numbers don't work for us. We don't want a studio, want at least a 1BR preferably 2.

    However, we could easily move to the suburbs and buy a piece of land with a nice little 3 BR house on it with our 120K down payment and be paying less than $3500/mo in mortgage. But we wouldn't be living exactly where we want to live with our awesome pedestrian commutes to work.

    Just wondering if it is foolish to pay rent and live where we want when we can afford to buy (albeit somewhere else.)

    When the little ones come along, we will likely migrate to the suburbs as everyone else does. But many of my friends and siblings chose to buy sooner rather than later I guess for good financial sense. Of course, they're not spending any more than we can on down payment / mortgage.

    When is the best time to buy: when you can or when you want to move to a town you can afford?

    Before getting married, I couldn't afford to buy my own place. So it seems weird to me to be able to buy, but still be a renter.



  2. #2
    Remember to add in the other costs of owning a home.....homeowner's insurance, property taxes, maintenance and repair,. Those costs are covered by your rent now. Also any utilities that you might not be paying in your rental. What will your new commute cost you? Will you need a second car? And, if there isn't enough cushion above and beyond your expenses you could end up not being able to keep up the mortgage in an emergency (lost job, health problems, unanticipated budget problems) you could lose the house altogether. Are you planning to stay put in that new house for years or moving on fairly soon? Its easy to pack up and move out of a rental, but when you own the home you could take a loss if selling it before you have equity built up.



  3. #3
    Live where you want to live (as long as you can afford it). The financial arrangement (i.e. owning vs renting, sharing, etc) is just the detail that enables you to live where you want to live. Choosing a place to live based on the financial arrangement is 'cart before horse', 'tail wagging dog'.

    To be clear, i'm not talking about affordability as affordability does matter in the equation. It's easy to compare the costs between renting and buying. Just figure out how much each month you will put toward principal the first year if you buy. if your mortgage is 3,500 per month, you will 'save' very roughly 1,300 per month (30 yr mortgage) into principal with the rest going to interest. You might pay close to that amount in the additional expenses that Allison mentions so you might find that in the first year or two, the costs to own (mortgage interest amount plus property tax plus insurance, plus other expenses) are about the same as renting. But you can easily run the numbers. The delta would be the amount it's costing you to live in the city vs the suburbs and then you can gauge the affordability. If it's very close, then it's just 'financial arrangement detail'.

    You can afford to live where you want to live as long as you rent so this seems like a no brainer. From your post, it seems very clear to me that at this point, you do not want to live in the suburbs.

    Don't worry if some people think that you rent only because you can't afford to own. Most people in large, expensive cities know better. Anyway, it's quickly becoming common for people to divert from the usual prescribed pathway of school, rent for a few years in the city, marry, buy house in suburb, babies, buy bigger home, ...


  4. #4
    When WILL "the little ones come along?"
    If you decide the burbs are your familial destination, and that is likely to happen within a couple of years, you might start looking now to make a good choice.

    Two people moving is easier than 2/1/1 people moving....

    But, you love where you are. That speaks volumes. If you are able to pay the rent and continue to save, why rush?



  5. #5
    Don't buy if you don't want to. You will likely regret it. Plus, it is a seller's market across most of the country- meaning it benefits the seller, not the buyer. By the time you are ready to buy, it may be a buyer's market, or at least a neutral one.




 

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