To buy or not to buy: That is the question.

[POZ]

To buy or not to buy

I am thinking about buying right now. My decision to buy at a glance is simple; I can buy a similar home to the one I rent now and pay about half of what I pay in rent. Let me break it down: Two years ago when I moved here prices for homes were in the 150 to 180K range (in the area we live) and out of our price range so we rented a nice 3/2 1450 sqft home built in 2002 for $1050 per month. Today I am questioning how wise it is to keep renting if I can buy the house down the street for 104k. If you run the numbers in a mortgage calculator and include PITI I could still save between 30 to 40% off of my current rent even with little down payment.

A little bit of history: Some time ago I married the most wonderful woman in the world, moved her to San Diego with me (north county) had three kids and lived happily ever after . . . .right? Almost. Around 2005 we found out we were expecting No. 2 so naturally we (I) got the itch. Now, being the curious techno-geek that I am I started looking for information online, and the more I read the less it made sense to me to buy. Something was nagging at me and I could not put my finger on it. Then an epiphany: I had found http://www.pigginton.com. Searching for the proverbial needle in the proverbial haystack of misinformation was a bit exhausting but well worth it-mine eyes were open. Brace yourselves cause here comes the point were I get all teary eyed, I could be one of those poor people loosing their homes because they never found Professor Pigginton’s Econo-Almanac for the Landed Poor. So thanks are due to Rich and all the posters and commenters on this site for their insights and comments over the last few years, they were truly invaluable in my edification. OK, now that that is out of the way I can move on (sniffle). As you might guess, at the time there was plenty of pressure to buy from family, friends, co-workers just to name a few, but never the ol battleax. Somehow she knew. A couple of years ago we decided to make a BIG change and moved out of the San Diego area altogether. We moved back to central California where we both grew up and met so long ago. She didn’t flinch, I took a pay-cut leaving my SD employer, the thinking was the difference in the cost of living up here would more than make up for it, furthermore this allowed us to be able to send her back to school full time, so we are a one income household for the time being.

So now the tables have turned, in my area and for my circumstance a mortgage could potentially be significantly cheaper than rent–The old adage of rent-vs-buy need not apply here—-even with no down payment (yes they DO still exist) a mortgage may be my best bet. I believe this area will still depreciate or stagnate at the very least for some time to come, unemployment is high and still rising, and even though home prices have slowed their descent and maybe even be up slightly in some areas (due to tax credit, Artificially low interest rates, MBS purchasing, or other form of Govt intervention-who knows) they are still not up to par with incomes.

Now, you might be asking yourself if I believe prices will continue to decline why would I buy now? Tax Credit? Nah. Finally, pressure from the ol battle axe? Nah. Interest Rates. I am afraid of the projected interest rate increase. An increase of just 1% on a 100k loan adds 30k over the life of the loan (30yr fixed). I am currently in the shopping for a lender step of my home buying 101 guide. We have checked credit, have a stable financial status (for now) with 2 yrs at current employer. We have acceptable debt to income ratio, $750/mo with 65k annual salary. Our one glaring negative is we have very little for a down payment (I was hoping to have some time to put something together in regard to a down payment but life has intervened and things have progressed faster than I anticipated).

We have reached the part of the tour where your input is necessitated. How significant will the cessation of the MBS purchasing program be? specifically on interest rates. Overall what do you guys/gals think? Is my logic sound? Do you have any tips or cautionary tales as I continue through the process? I should mention we (I) have put some feelers out and filled out an online application on Lending Tree and received several offers including zero down (Lenders are incessantly calling right now as I write this my phone is ringing). Does anyone have any experience good or bad with them? Are there glaring holes in my theory that I am missing?

Jeez–that was long winded. If you made it this far any comments or questions are greatly appreciated.

[(former)FormerSanDiegan]

If you can afford a place at the cost of renting in an area you want to raise your kids, go for it.

If you are buying it as an interest rate hedge (or because of a fear of higher interest rates in the future) don’t buy it.

[(former)FormerSanDiegan]

If you can afford a place at the cost of renting in an area you want to raise your kids, go for it.

If you are buying it as an interest rate hedge (or because of a fear of higher interest rates in the future) don’t buy it.

[(former)FormerSanDiegan]

If you can afford a place at the cost of renting in an area you want to raise your kids, go for it.

If you are buying it as an interest rate hedge (or because of a fear of higher interest rates in the future) don’t buy it.

[(former)FormerSanDiegan]

If you can afford a place at the cost of renting in an area you want to raise your kids, go for it.

If you are buying it as an interest rate hedge (or because of a fear of higher interest rates in the future) don’t buy it.

[(former)FormerSanDiegan]

If you can afford a place at the cost of renting in an area you want to raise your kids, go for it.

If you are buying it as an interest rate hedge (or because of a fear of higher interest rates in the future) don’t buy it.

[jeeman]

In the 1990s, interest rates went down from 1990 to 1996, and RE went down too. If you think higher rates would cause unaffordability in your area, then it might be better to wait for them, because house prices will compensate. If rates won’t affect affordability, and it’s purely a regional unemployment issue, house prices will go down until wages support them.

If your area is growing and housing is going to be in short supply soon, then it is probably a good time to buy.

Only buy if you plan to be there > 5 years and you are trying to get into a neighborhood.

Yes, you might save by owning over renting, but commissions and repairs could overcome that. It’s hard to say always, you gotta do what is best for you.

jeeman

[jeeman]

In the 1990s, interest rates went down from 1990 to 1996, and RE went down too. If you think higher rates would cause unaffordability in your area, then it might be better to wait for them, because house prices will compensate. If rates won’t affect affordability, and it’s purely a regional unemployment issue, house prices will go down until wages support them.

If your area is growing and housing is going to be in short supply soon, then it is probably a good time to buy.

Only buy if you plan to be there > 5 years and you are trying to get into a neighborhood.

Yes, you might save by owning over renting, but commissions and repairs could overcome that. It’s hard to say always, you gotta do what is best for you.

jeeman

[jeeman]

In the 1990s, interest rates went down from 1990 to 1996, and RE went down too. If you think higher rates would cause unaffordability in your area, then it might be better to wait for them, because house prices will compensate. If rates won’t affect affordability, and it’s purely a regional unemployment issue, house prices will go down until wages support them.

If your area is growing and housing is going to be in short supply soon, then it is probably a good time to buy.

Only buy if you plan to be there > 5 years and you are trying to get into a neighborhood.

Yes, you might save by owning over renting, but commissions and repairs could overcome that. It’s hard to say always, you gotta do what is best for you.

jeeman

[jeeman]

In the 1990s, interest rates went down from 1990 to 1996, and RE went down too. If you think higher rates would cause unaffordability in your area, then it might be better to wait for them, because house prices will compensate. If rates won’t affect affordability, and it’s purely a regional unemployment issue, house prices will go down until wages support them.

If your area is growing and housing is going to be in short supply soon, then it is probably a good time to buy.

Only buy if you plan to be there > 5 years and you are trying to get into a neighborhood.

Yes, you might save by owning over renting, but commissions and repairs could overcome that. It’s hard to say always, you gotta do what is best for you.

jeeman

[jeeman]

In the 1990s, interest rates went down from 1990 to 1996, and RE went down too. If you think higher rates would cause unaffordability in your area, then it might be better to wait for them, because house prices will compensate. If rates won’t affect affordability, and it’s purely a regional unemployment issue, house prices will go down until wages support them.

If your area is growing and housing is going to be in short supply soon, then it is probably a good time to buy.

Only buy if you plan to be there > 5 years and you are trying to get into a neighborhood.

Yes, you might save by owning over renting, but commissions and repairs could overcome that. It’s hard to say always, you gotta do what is best for you.

jeeman

[sobmaz]

If you can save that much….BUY BUY BUY.

If you truly intend on living there for years to come the money saved (if invested) would far outweigh any potential price declines.

If the house you are buying is below or close to rebuild cost you are not paying bubble prices.

[sobmaz]

If you can save that much….BUY BUY BUY.

If you truly intend on living there for years to come the money saved (if invested) would far outweigh any potential price declines.

If the house you are buying is below or close to rebuild cost you are not paying bubble prices.

[sobmaz]

If you can save that much….BUY BUY BUY.

If you truly intend on living there for years to come the money saved (if invested) would far outweigh any potential price declines.

If the house you are buying is below or close to rebuild cost you are not paying bubble prices.

[sobmaz]

If you can save that much….BUY BUY BUY.

If you truly intend on living there for years to come the money saved (if invested) would far outweigh any potential price declines.

If the house you are buying is below or close to rebuild cost you are not paying bubble prices.

[Author]

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