Buy house we rent or wait for choices in the fall?

[syracusa]

I have asked some questions related to house-buying on this forum before - but it looks like there is always a new dimension to the story shaping up - and no end to how torturing this process can be!

We have been renting over the past two years because we went through a short-sale almost two years ago, hence we were not allowed to apply for a loan for two years.
In September, there will be two years since we closed on that short-sale and we will finally be able to buy.
We already checked with a mortgage broker and he confirmed that with our current financial situation, the down payment we have available and our current credit score (in 2 years it went back up from "bad" to over 750), we will be able to qualify for a loan come September. He just said that we need to wait until September to have the "ban" lifted.

That being said, we initially considered buying the house we've been renting. Over time though, we realized that this house, despite having many attractive points, does not entirely meet our needs. Having studied carefully the area, we began to feel that we can do better. Push comes to shove, we COULD make this one work, but we keep feeling we would be settling and that we could do better, with a bit of luck.
Not only does this house lack a "bonus" room that we want to be more "away" from the children's bedrooms as we often have family visiting for longer periods of time, but the big "boo-boo" is that the middle school it belongs to gets somewhat mixed/"lukewarm" reviews.
Some people in the neighborhood choose to put their kids in private during middle school years just to avoid this school. The school is not BAD, but it is the "least good" from all five middle schools of this larger, generally coveted area we are looking at.
The elementary and high-schools are great.

The house itself needs renovations, including kitchen, new windows (poorly isolated), parts of the bathroom - and I also want to add hardwoods in dining and office because I absolutely loathe those neutral, beige carpets anywhere on the main floor. By the time we looked at what the house needs to have done, we realized we would get close to making it one of the smallest, as well as one of the most expensive, houses in this neighborhood - which is not something we fancy.

Finally, the neighborhood itself is not a very good "fit". Ideally, we would have preferred a neighborhood with families we might have a bit more in common with than what we have here - but this is a very hard one to "pin down".


As we are heading towards the end of our two years lease, the owners just gave us the message "pee or get off the pot". Aka "please either commit to buying the house or move out as we want to put it up for sale presto".

If we don't commit to buying, we need to move out at the end of May.

They told us that if we commit to buying the house, they are willing to wait until September/October when we will have the "short-sale" ban lifted and we'll be ready to close. The housing market in this coveted area has picked up incredibly so they hope to give it away soon.
Any houses that generally meet most criteria people have (renovated, flat yards, good location, etc) sell in a matter of days and sometimes even hours. I heard some even cause bidding wars.
This one needs some work and chances are it will not go that quickly, but it might go quickly enough - especially if they find a family that values a flat yard highly - as these are kind of hard to find in this area.

So we found ourselves in a torturing situation:

1. Commit to buying this house NOW and make everything simple and easy? (this house would be perfectly affordable for us but a little "less" than what we actually want, especially when it comes to middle school).

or

2. Rent again temporarily for 5-6 months and wait for more choices in the Fall?
(This would involve two moves in one year, mess with trying to keep our son in the same school district during our temporary stay, which requires asking for a hardship at the County, ...just a major headache).

Right now our only choice is the house we rent - and it is definitely not our ideal house. Then again, in the Fall we might not be able to find the "ideal" either, given we are in a heavily seller's market now in this area.

Al in all, I just hate making such a huge purchase based on only one "choice" - which, by definition, is not an actual choice.

In the Fall, even with a modest house inventory, the choices should be more than just one house. Unfortunately, we are also afraid that prices will go up over the summer, the inventory will still be small (little choice in this area anyway) and that we will be forced to compromise either house-wise (go with something way below what we want) or money wise (pay more than what we want to pay for a house that meets all of our criteria).

Unfortunately, there are not many neighborhoods in our desired price range. They are either on the lower side (like the one we are in right now or less), or on the "too high" side". We keep hoping that something will come up right in our price range, in a neighborhood we have our eyes on...but odds are not in our favor.

Given all this mess, would you buy the one we rent in now or would you go through some inconvenience to get more choices in the Fall?

Thank you so much - we honestly can't even sleep at night anymore. We are both tired of all this stress and second guessing.

[breathemusic]

Is there some reason you absolutely have to buy as soon as the ban is lifted? Personally I'd wait and while you can start shopping around when the ban is lifted, it's not like you can't take a few months, or even wait until the following spring/summer when your kids have finished out their school year. But from your own description it clearly sounds like the house you're in now doesn't really fit what you're looking for and would need quite a bit of work. And if you waited a bit longer to buy, that's even longer to save up additional money toward a downpayment to lower your mortgage.

Just don't think that you have to buy something the second the ban is lifted.

[syracusa]

Is there some reason you absolutely have to buy as soon as the ban is lifted? Personally I'd wait and while you can start shopping around when the ban is lifted, it's not like you can't take a few months, or even wait until the following spring/summer when your kids have finished out their school year. But from your own description it clearly sounds like the house you're in now doesn't really fit what you're looking for and would need quite a bit of work. And if you waited a bit longer to buy, that's even longer to save up additional money toward a down-payment to lower your mortgage.

Just don't think that you have to buy something the second the ban is lifted.

There are several reasons why we want to buy as soon as the ban is lifted, assuming there are some reasonable choices on the market at that moment:

1. We have already been renting for four years (in two states) and have been throwing money out the window, without benefiting from the very nice tax break homeowners get; when time comes to pay those taxes in April, it's usually ugly.

2. We have had enough time to study the area we are looking at, so we know exactly what can and cannot be achieved around here.

3. Our oldest is already in elementary school (one we would desperately try to keep when we move) and our youngest will start K next year - so we really need stability sooner rather than later. None of them deal well with change.

4. Finally, and most importantly, the house market in this area is NOT evolving in the buyer's favor. On the contrary. Waiting until next season is not going to get any better - if anything it's going to get worse price-wise. It is already predicted that prices will rise about 3% in this area over the next few months; let alone having to uproot two kids instead of one from elementary school to elementary school. In the Fall, we hope that if we do get lucky enough and some good house will show up on the market at the time, there may be less competition to deal with as fewer people are looking to move in late Fall...and we may even be able to negotiate a slightly lower price.

In the Fall we would be very much ready to buy - the question is, will the right house be there? We will have the 20% down-payment and we would probably have to just go ahead and make a choice even if it's not perfect, because in this area, chances are you have to compromise somehow.

No such thing as "dream house" around here - unless you're willing to pay insane prices or to invest tons in it without expecting to get your money back in case you need to sell later. If we decide to wait for our "ideal/dream" house - all criteria met at a reasonable price, in the elementary school district we want, in the few neighborhoods we have our eyes on - we could be waiting for years for something like that to show up; and when it does, chances are we would get into a bidding war with a few others...and in the meantime, prices are crawling up.

In general, there are always some choices on the market, but with all of them you have to make some kind of compromise: either in terms of location (further away from amenities), neighborhood (either too upscale or too low-scale), no yard, very abrupt driveway, too dark or low-ceiling inside, neighborhood too hilly, neighborhood too dead (kids never heard playing outside) or somewhat lesser schools. Something will have to give.

We do have our eyes on one ideal neighborhood, with houses in our price range; well... maybe slightly more than what we would want (not afford!) to pay;...but chances of something showing up there any time soon seem very low.

Hence the torture.
Sometimes I just wish I could throw my hands up in the air and just make an offer on the one we're in right now as the owners are willing to wait until we can close in the fall. We would save ourselves tons of headache and two more moves. Right now they are in the yard, re-seeding and getting the house ready for sale - and I wish I could just bust out there and tell them we want to make an offer on their house and just put ourselves out of our misery.

My husband though thinks I am too scared and that I refuse to go through some extra inconvenience a few more months so that we can have a better choice for the long term. As far as I am concerned, I don't think we will end up doing "better" - just doing more "expensive".
The trouble also comes from our different perceptions of what would be an OK mortgage to go with; my husband thinks that just because we could afford monthly payments on a house around 360,000-380,000, means that we should do it. I lean more towards a mortgage that we could easily blow out of the water in a few years and have it paid off very soon.

[boefixepa]

Have you considered buying the house you are in and then selling it next summer after you have had time to look for the house you want. If houses are selling as well as you say you should be able to do this. And you shouldn't loose more then if you were to rent another house for a while. Most make you sign a year lease as well when you rent. Just flip the house you are in. Go in with mind set when you negotiate the sale price of the house (but I would not tell them that)just get a good deal for all the rent you have given them.

[~bs]

Having to "short sale" is also throwing money out the window. I agree that you should also take some time to evaluate what's out there. There's always deals that come around, a house purchase generally shouldn't be a spur of the moment sort of thing. Seems like you're being rushed into this, which is not always good.

[syracusa]

Have you considered buying the house you are in and then selling it next summer after you have had time to look for the house you want. If houses are selling as well as you say you should be able to do this. And you shouldn't loose more then if you were to rent another house for a while. Most make you sign a year lease as well when you rent. Just flip the house you are in. Go in with mind set when you negotiate the sale price of the house (but I would not tell them that)just get a good deal for all the rent you have given them.

To flip it in just a year we would lose tons of money. Only the real estate fees and closing costs would kill us. We had thought about renovating some of it and then maybe flipping it in about 4 years or so but even then husband thinks we might be losing money.

Trouble is...this evening we had a long and hard discussion. When pressed really, really hard, he gave me the "skinny" on what he REALLY wants; and it turns out he was also hoping to get more "niceness" in the house itself, along with a better middle school for the kids. Bigger, brighter, nicer, more curb appeal, possibly a "step up" in neighborhood. Not just a "better school". So he's quite down about making an offer on the one we rent right now - which he clearly doesn't like. He sees it as "settling".

He just darn wants more house; and while I love "nice" as much as the next human, I also understand that I don't want to work my bones off forever for monthly payments. I just want as small of a mortgage as possible so we can pay it off as fast as we can, while I still work full time (the next four years) - and then I want us to be left with serious financial security and disposable income to bust in Europe over the summers; plus I don't want to work so much for so many years to come just so we can continue to afford "monthly payments". I dream of being able to allow myself to be idle and slow-paced. Yes, as in "lazy" and "siestas".

Bummer that it looks like we have a bit of a mismatch in life philosophy.
Then again, I am European and I grew up with "small, conservative, paid off, keep the change, enjoy life and don't forget God made work as a punishment, not as a virtue ".

By contrast, he is American and he grew up with "nice house = success = nice life".

I think I am going buhzirk.

[syracusa]

Having to "short sale" is also throwing money out the window.

What do you mean by that?

[LivingAlmostLarge]

Wait. It's a lot of money to settle for a house.

[BMEPhDinCO]

Wait. Several reasons - 1, you don't like the house. 2, you have plenty of time to look around for other ones now, while you have a place and if you have to rent, so be it - a 6 month lease from May-November would be just enough time to qualify, find, buy, and move in from September, your kids will survive. 3, Location, location, location - you can change a house but you can't change where it sits (usually) so if you want a better location, go find it.

Additionally, I HATE when people say they are "throwing money away" if they don't own a house - it's not a bank! And taxes - unless you pay more than $11,200 or so in INTEREST on your house each year, you don't get a tax break. We pay much less and we don't get one, not every owner does.

[syracusa]

Wait. It's a lot of money to settle for a house.

Well... in our case, not settling doesn't mean that we could do better at this price level. It simply means going for more house by increasing the price range. Buying more. Heck, after all, if you put enough extra money in the game, you could end up buying Versailles at this rate.

At the current very affordable price range I am insisting on (and which my husband wants to expand), this house is about as good as it gets. We would in fact get a deal because there would be no agent involved. The house is phenomenally located (best location from everything we have seen) and is the nicest we have seen at this price level. Great yard too, walking distance to the pool, coveted neighborhood with a very manicured entrance, etc. The house just needs to have the kitchen renovated (cabinets) and the windows changed to make the house more energy efficient. Some updates needed in the bathroom too and some hardwoods to be added on the main. We would be factoring all these in the offer we will be making.

My husband would simply want a different house style -taller, brighter, grander, newer. Trouble is, in this area, you don't make the jump from the style we are renting in now ( 80's traditional) to the style my husband has in mind (90's cathedral ceilings, mansion-ish, bordering on lots of wasted space) without a lot of extra money.

So I am afraid this would not really be a case of settling, but a case of staying conservative and not caving in to emotional temptations of financing "nicer" just because you feel that you can afford bigger monthly payments for now.

I'd rather get into the local market at a lower level, renovate, continue to save for 4 more years while I will continue to work full time, and then later, if we're really the "gangastah-s" my husband seems to think we are, we can upgrade to a nicer house across the street. If that "dream house" will go up in price, this one will too.

Right now, moving again temporarily and waiting to buy until fall would place us in a position of vulnerability.

In fact, after much deliberation, we decided to make an offer on the house we are renting - but then again, it might or might not make it. If not, we'll keep packing and we will know we did our best to at least try to get a good deal with the house we are already in.

[syracusa]

Wait. Several reasons - 1, you don't like the house. 2, you have plenty of time to look around for other ones now, while you have a place and if you have to rent, so be it - a 6 month lease from May-November would be just enough time to qualify, find, buy, and move in from September, your kids will survive. 3, Location, location, location - you can change a house but you can't change where it sits (usually) so if you want a better location, go find it.

Additionally, I HATE when people say they are "throwing money away" if they don't own a house - it's not a bank! And taxes - unless you pay more than $11,200 or so in INTEREST on your house each year, you don't get a tax break. We pay much less and we don't get one, not every owner does.

Like I said, the house we are now renting does have great location.
As for renting, after paying very high rents on houses in great schools districts for 4 years, I am very much looking forward to paying almost half of that in mortgage payments to get absolutely the same thing - plus a little bit towards principal. Plus we would get about 3000 dollars a year tax breaks with our situation.

Renting temporarily to figure out what you want to do makes sense. Renting for the longer term is just as bad of a deal as it has been for a long time in most parts of this country. We would have bought long time ago if the short sale hadn't restricted us.
We're quite sick of renting.

[Tree0164]

I would move at the end of May into a rental for a few months. You really don't like the house that you are currently in at all so why buy it. Can you work with your current landlord for you to stay there until the fall-offer to really flexible on letting real estate agents come on through and keeping the place clean so you can go to a month to month.

[~bs]

What do you mean by that?

I mean that you bought a property, then was forced to do a shortsale. Any downpayment money or payments on the property was wasted. I would take more time to consider what you're doing and not be rushed into a "limited time only" impulse buy.

[syracusa]

You really don't like the house that you are currently in at all so why buy it.

Well...this is all relative. We lived in this house very well for 2 years; but we had started to think that we could get even nicer and bigger, so we began to look at all sorts of "shiny" alternatives, thinking we could get those with not that much more money. This was when the market was still frozen and there were quite a few foreclosures available, etc. This is no longer the case - and we learned that what we wanted extra comes at a much larger price than what we thought.

The house we are in only needs some renovations - and it becomes a perfectly comfortable, pretty and very well-located house to live in. No, it's not as nice as the more upscale options we had started looking at, but it is a NICE house, nothing off-putting about it.

I would move at the end of May into a rental for a few months. You really don't like the house that you are currently in at all so why buy it. Can you work with your current landlord for you to stay there until the fall-offer to really flexible on letting real estate agents come on through and keeping the place clean so you can go to a month to month.

No, they want to sell it now; but this is not the point - as in the Fall the market will be worse than what it is now anyway (less inventory, prices will have gone further up - they already have, in fact).
Even if we could buy right now, there is still nothing better we see on the market at this price range. Most are worse.
There are, of course, nicer options - with 100,000 dollars more! - which for me, is a lot of "extra" to finance.

The one we are in now can, in fact, be a very nice house with some renovations. We had considered buying it when we first moved in, but later we thought we could get extra space and an even higher test scores middle school with only 30,000-40,000 more. We recently learned this is not the case; to get that "extra" we had in mind, we would need to add 100,000 more. Considering I might no longer be working full-time in 4 years, this sounds like a very risky, "on the edge" move to me - especially when we want to have generous disposable income left over for summers overseas, where we go to visit my family almost annually.

Now if only the owners would agree to give us the house at the price we are ready to offer. If they think they might get even more by putting it on the market, we will have to move on - and at least we will know we tried to make the responsible, conservative choice.

[syracusa]

I mean that you bought a property, then was forced to do a shortsale. Any downpayment money or payments on the property was wasted. I would take more time to consider what you're doing and not be rushed into a "limited time only" impulse buy.

Well, that's a closed chapter. It has nothing to do with the choice are trying to make now.