Buying a house | Imamother

petiteruchy

Sun, Oct 29 2017, 8:19 pm

Please be cautious about home ownership on a tight budget! Be very realistic about what you can carry in terms of taxes, mortgage and regular owner costs, plus a buffer for the serious things that come up. All houses can have things go wrong, but an older house in a high cost area means you're looking at thousands in additional costs for any repairs that come up, and something WILL come up. If you can only afford 10% or less, what will happen if you need a new roof, or there's a plumbing issue, if one of you loses your job? You're much less mobile when you own a home.

I always feel like such a negative Nancy but I find most people are very unrealistic about the costs of owning versus renting. If the market is climbing quickly and people are buying with less than 20% that's a pretty good sign that the market is unstable. You may very well be better off investing that 20k and continuing to rent, especially if you live in an area with a decent rental market and some rent control.

Kiwi13

Sun, Oct 29 2017, 8:33 pm

There are good reasons to stretch your budget to be able to buy a house, but it really depends on the specifics. Such as: the location and nature of the housing market in that area, whether or not you’re likely to be “priced out” of the area if you don’t buy soon, your need for additional space, equity-building reasons, resale value, etc.

BUT... putting less than 20% down has some disadvantages, too, as others pointed out. And you need to be able to afford the monthly payments, including mortgage, taxes, PMI (if applicable), homeowners insurance, utilities, repairs, and so on. It’s not smart to go into homeownership without sufficient savings. Getting into debt and risking foreclosure will very quickly undo any financial benefits of homeownership. And if even if you manage to stay afloat with payments, letting repairs slide for too long can result in lowering the value of your home and needing to sell at a loss if/when you move.

Buying a house is something that you ideally want to do right.

(Just some thoughts from someone who probably technically CAN buy a house, barely, but still isn’t really ready, and so we continue renting.)