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Should I buy a house, keep renting, or move back to my parents' house?

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    Should I buy a house, keep renting, or move back to my parents' house?

    I need some advice from all of you. I have been renting apartments for the past 11 years after I started working a full-time job. I lived in apartments for around $600/month for 9 years and I have been living in a $450/month apartment since 2013. I have decided that it would be better to buy a house after losing so much money to renting that I can never get back. Earlier this month, I met with a mortgage loan officer at my bank for a preapproval for a loan. I gave her my W-2 forms, tax return forms, and bank statements, and I was preapproved. I was looking at buying a house for maximum of $90,000 and considered putting down a 20% payment of $18,000. The bank would, of course, loan me the remaining $72,000 for a 30 year mortgage if I decide to purchase a house.


    But if I continue renting the $450/month apartment, I could move right away after my full-time job is over. Also, if I shared a two bedroom apartment with a roommate to lower the rent even more, I could always move whenever. Of course, I can always call the landlord if there is a maintenance issue. There has not been any maintenance issue so far with my current apartment. The problem with renting is that you can't build equity on the rent, so I am embarrassed to say that I lost over $75,000 renting apartments over the past 11 years!


    However, if I lived at my parents' house, I would have absolutely NO expenses. Keep in mind that I wouldn't have as much privacy and I also work full-time for one of my parents. I don't need to live with my parents and I was able to put aside money in savings despite living in apartments, including money in mutual funds and retirement accounts. But living at my parents' house is another option worthy of consideration.


    Although I was preapproved for the loan, I haven't actually applied for the loan yet and there was no loan transaction, closing, title deed transfer, or anything. So I don't think that I am obligated to do anything yet since all I have done so far is meeting the mortgage loan officer for the preapproval in August and meeting with a realtor to look at several houses during the past few weeks.


    My question is: Should I buy a house (option #1), keep renting my current apartment (option #2), share a two bedroom with a roommate for lower rent (option #3), or move back in with my parents (option #4).


    Sorry for the extremely long message. Thank you in advance for your responses, and I appreciate your help in what will be one of the most important decisions that I will ever make in my lifetime.

    #2
    i would combine #1 with #3, buy a house and rent a room or 2 out

    or

    combine #1 with #4, buy a house, rent it out and live with your parents
    retired in 2009 at the age of 39 with less than 300K total net worth

    Comment


      #3
      Here is an interesting calculator that compares the cost of owning vs renting long term. http://www.bankrate.com/calculators/...-buy-home.aspx Here is another that is a bit shorter. http://money.msn.com/home-loans/rent...alculator.aspx I was shocked running different scenarios that renting is not always the loser financially. Another thing is to plan on lots of maintenance with a lot of homes in most first time buyers price range. Option 4 would be off the table for me personally after living independently unless it was dire circumstances.
      Last edited by Blessed; 09-16-2014, 11:21 AM.

      Comment


        #4
        Buying a house for your primary residence is buying a place to live, it is not necessarily a smart investment. All those people who had the market value of their home disappear nearly overnight were quickly under water with their mortgage provider demanding they pay the difference between what was owed and market value.

        A mortgage loan is different from borrowing for a car or a vacation. Interest is paid first so much of your monthly payment goes to interest, municipal [property] taxes, possibly insurance and only a token sum to the principal borrowed. Given the increase in the stock market, from the low in 2008 to this AM, putting 20% of a potential house downpayment and DCA the monthly sum of mortgage payment you'd likely be ahead in an Index Mutual Fund. The saving would be far more liquid and choices far reaching. It depends on a multitude of factors.

        Why do you want a house? It will require time and ongoing maintenance. You will pay more than you believe when you add your downpayment and monthly payments times a 30 year mortgage years. You will need to invest in tools, tools tools to cut he grass, trim at the property line, add landscaping, paint the exterior, paint the interior, buy large appliances [fridge/stove/W/D/Dishwasher. Replace furnace, water heater & roof. You will be adding to your skill set every few months learning something new! You will need to shine up diplomatic skills to cope with the silly things neighbours do that can make downtime unpleasant.

        Live at home with a loving, protective family but lose privacy looks like a tiny price from the distance. Are you disciplined to put sums into investments? Alternatively, buy a property and become a landlord which is a mountain of responsibility.

        What's your plan for the next 5 years? What is the goal for 2020?

        Comment


          #5
          Originally posted by snafu View Post
          Buying a house for your primary residence is buying a place to live, it is not necessarily a smart investment. All those people who had the market value of their home disappear nearly overnight were quickly under water with their mortgage provider demanding they pay the difference between what was owed and market value.

          A mortgage loan is different from borrowing for a car or a vacation. Interest is paid first so much of your monthly payment goes to interest, municipal [property] taxes, possibly insurance and only a token sum to the principal borrowed. Given the increase in the stock market, from the low in 2008 to this AM, putting 20% of a potential house downpayment and DCA the monthly sum of mortgage payment you'd likely be ahead in an Index Mutual Fund. The saving would be far more liquid and choices far reaching. It depends on a multitude of factors.

          Why do you want a house? It will require time and ongoing maintenance. You will pay more than you believe when you add your downpayment and monthly payments times a 30 year mortgage years. You will need to invest in tools, tools tools to cut he grass, trim at the property line, add landscaping, paint the exterior, paint the interior, buy large appliances [fridge/stove/W/D/Dishwasher. Replace furnace, water heater & roof. You will be adding to your skill set every few months learning something new! You will need to shine up diplomatic skills to cope with the silly things neighbours do that can make downtime unpleasant.

          Live at home with a loving, protective family but lose privacy looks like a tiny price from the distance. Are you disciplined to put sums into investments? Alternatively, buy a property and become a landlord which is a mountain of responsibility.

          What's your plan for the next 5 years? What is the goal for 2020?

          Honestly, the only reason why I wanted a house was because I was sick of renting and I had spent over $75,000 renting apartments over the past 11 years. But I moved into a cheaper apartment in 2013, and I am considering moving into a even cheaper apartment in 2015. I was worried about maintenance costs and repairs that occur after you purchase a house. Of course, I was also worried about the mortgage. In my opinion, if you take out a mortgage and you lose your job in 10 years and the house ends up in foreclosure, that would be even worse that if you didn't buy a house in the first place! I am considering living frugally in a cheaper studio apartment and saving up money over the next ten years and just buy a house outright without the mortgage 10 years from now!

          Comment


            #6
            Not many people are able to buy their first home with savings as 'life' often gets in the way of savings such major sums for so long. Meanwhile your rent, whatever the sum, is providing you with a place to live. Can you work out a solid investment plan to effectively use savings to boost your net worth? Meanwhile your savings are fluid and easily changed, bought or sold which is not the case in housing should you be offered a wonderful opportunity in another location.

            Comment


              #7
              I used to think renting was a waste of money, and so I lived in my parents basement till 28 when I bought my own place. Saved a ton for my house, but realized I should have just moved out earlier to rent. I love my house and the optional DIY projects, but at the same time I envy friends who rent and don't have to deal with repairs, property taxes, mowing/shoveling, etc.

              I don't know if $450 for rent is a lot, depending on your location, but that seems like a decent deal to me. Of course that's based on if you're in a high or lower cost of living foo location. As for moving back home to save money, while I wouldn't blame you, but I wouldn't choose that option just for independence/privacy alone.

              I'm sure a majority of people on this forum will agree purchasing a house is a want, while renting is a need. Unless you're ready for staying there for long term commitment, or "planting your roots", renting may be a better option for flexibility and less headache. But that's all about priorities, your career, and where you see yourself in the 5+ years.
              "I'd buy that for a dollar!"

              Comment


                #8
                Originally posted by cypher1 View Post
                I used to think renting was a waste of money, and so I lived in my parents basement till 28 when I bought my own place. Saved a ton for my house, but realized I should have just moved out earlier to rent. I love my house and the optional DIY projects, but at the same time I envy friends who rent and don't have to deal with repairs, property taxes, mowing/shoveling, etc.

                I don't know if $450 for rent is a lot, depending on your location, but that seems like a decent deal to me. Of course that's based on if you're in a high or lower cost of living foo location. As for moving back home to save money, while I wouldn't blame you, but I wouldn't choose that option just for independence/privacy alone.

                I'm sure a majority of people on this forum will agree purchasing a house is a want, while renting is a need. Unless you're ready for staying there for long term commitment, or "planting your roots", renting may be a better option for flexibility and less headache. But that's all about priorities, your career, and where you see yourself in the 5+ years.

                Actually I don't know how much longer my full-time job will be around. From September 2003 to January 2013 (about 9 1/2 years), I have been renting apartments for about an average of $600/month. I am embarrassed at how much I have spent renting apartments for such a long period of time. But I started living in cheaper apartments in January 2013. My current apartment is $450/month. I am looking at a cheaper apartment tomorrow morning which is $300/month and the garage would be an extra $50/month for a total of $350/month.

                Comment


                  #9
                  Having a shelter is a basic human need. The same as food.
                  Did you ever count how much you spend on groceries? I bet it is comparable to your $500 rent.
                  You can eat kraft diners and mcdonalds to save money but it would not make you either healthy or happy.
                  You have to spend money on necessities. It is just the way life is going to be.

                  If I look back: my rent payments only grew from one apartment to another. But hey my income also grew. Higher rent always pushed me to find a better job.

                  Live a little.

                  Comment


                    #10
                    Originally posted by anonymous51 View Post
                    Honestly, the only reason why I wanted a house was because I was sick of renting and I had spent over $75,000 renting apartments over the past 11 years. But I moved into a cheaper apartment in 2013, and I am considering moving into a even cheaper apartment in 2015. I was worried about maintenance costs and repairs that occur after you purchase a house. Of course, I was also worried about the mortgage. In my opinion, if you take out a mortgage and you lose your job in 10 years and the house ends up in foreclosure, that would be even worse that if you didn't buy a house in the first place! I am considering living frugally in a cheaper studio apartment and saving up money over the next ten years and just buy a house outright without the mortgage 10 years from now!
                    Welcome to the forums!

                    You spent 75k renting apartments in the last 11 years. So that is about $570 a month on average you have spent on rent.

                    How much would you have spent in upkeep on a house, taxes, insurance, PMI, interest, etc. if you had bought a house?

                    But let's get back to the basics here:

                    1. How much do you have saved up in your savings account? Do you have any retirement or investment accounts?

                    2. Are you on a budget? If so what expenses can you trim off from you budget?

                    3. How much debt do you have? What are the balances, interest rates, and minimum payments on the debts?

                    4. How much do you take home a month? (Say September 2014 for example)

                    5. How much do you spend a month? (Say September 2014 for example)

                    Let's start there and then we can more accurately give you feedback on your question.
                    ~ Eagle

                    Comment


                      #11
                      Originally posted by Eagle View Post
                      Welcome to the forums!

                      You spent 75k renting apartments in the last 11 years. So that is about $570 a month on average you have spent on rent.

                      How much would you have spent in upkeep on a house, taxes, insurance, PMI, interest, etc. if you had bought a house?

                      But let's get back to the basics here:

                      1. How much do you have saved up in your savings account? Do you have any retirement or investment accounts?

                      2. Are you on a budget? If so what expenses can you trim off from you budget?

                      3. How much debt do you have? What are the balances, interest rates, and minimum payments on the debts?

                      4. How much do you take home a month? (Say September 2014 for example)

                      5. How much do you spend a month? (Say September 2014 for example)

                      Let's start there and then we can more accurately give you feedback on your question.


                      I have different savings accounts (two bank accounts, a roth IRA, and exchange traded fund in a brokerage account, and an old simple IRA.

                      Comment


                        #12
                        Moving back with your parents after being free for 11 years might be a big shock. I know several cases where the person quickly realized it was a mistake. Also, are your parents begging you to come back? Even if they say they want you, it's possible they are just being nice. I love my kids and we are always here if they need to move home and I've told them so, but I don't really want them to. It's hard enough dealing with middle age without adult children coming back into the house.

                        I echo what others have said about shelter.... it's the number one need after oxygen. It is a higher priority than water. You can live 3 days without water but you cannot live 3 hours without shelter if the weather is bad. So that $75,000 was not a waste. It is what you spent on your own survival. Don't give it another thought. Water under the bridge.

                        Maybe buying now would be wise, maybe not, it all depends on your complete picture. Not just finances but everything. The possibility of job change and moving, if real, inclines me to think you should continue to rent. Do you think the future holds a partner or marriage? If there are too many unknowns then you might not want to tie yourself to land. Owning is a big hassle, with all the upkeep, repairs, taxes, liability (if someone slips on your walk because you didn't shovel snow, or you did but there was a molecule left to trip them) and you have retirement accounts now, so you'll want liability insurance, so on and so forth.

                        If I were in your situation the financial benefit would have to be pretty big but the question is, what is that benefit ultimately? It used to be you could pretty much count on the home's value increasing. Now, that is not true anymore. Therefore money toward a house could end up being just as "wasted" as your rent.

                        If you buy, look at the mortgage payment, and add amounts to that monthly payment to save for replacing appliances, repaving the driveway, buying a lawnmower, hiring a plumber, hiring an HVAC guy, replacing heat pumps or furnaces (they do go bad), re-roofing (that comes up before you know it) and so forth. All this stuff you don't think about when you figure the monthly mortgage payment. Take all those and bring them back to a monthly amount you will need to save to pay for all those, and compare it to your rent now. That additional expense will only be worth it if your home's value increases a lot and happens to be high at the time in the future you NEED to sell.

                        In some areas of the country that might be the case, home values may rise a lot again. In other areas, not. Take all that into account and do your research.
                        Last edited by UDRogue; 10-19-2014, 01:51 PM.

                        Comment


                          #13
                          My opinion is that a primary residence isn't really an investment since you dont see a real return on the money you're sinking into it other than price appreciation. And there are real costs that are associated with owning that go beyond your monthly rent. That's not to say that there isn't value in owning your home.

                          From a purely financial perspective, moving home with your parents is the best option.

                          From a longer term perspective (assuming you dont plan on living with parents forever and inheriting their house), owning is probably better. Compare rental and mortgage prices from 30 years ago to prices now. A final mortgage payment on a property from 1980s might be a few hundred dollars, compare that to a new mortgage today on a comparable property, and it might be two thousand dollars. The same effect should happen with a mortgage today, people will look back and think how cheap it is. On the other hand, if you're renting, you'll always pay market rates.

                          Comment


                            #14
                            Originally posted by anonymous51 View Post
                            I need some advice from all of you. I have been renting apartments for the past 11 years after I started working a full-time job. I lived in apartments for around $600/month for 9 years and I have been living in a $450/month apartment since 2013. I have decided that it would be better to buy a house after losing so much money to renting that I can never get back. Earlier this month, I met with a mortgage loan officer at my bank for a preapproval for a loan. I gave her my W-2 forms, tax return forms, and bank statements, and I was preapproved. I was looking at buying a house for maximum of $90,000 and considered putting down a 20% payment of $18,000. The bank would, of course, loan me the remaining $72,000 for a 30 year mortgage if I decide to purchase a house.


                            But if I continue renting the $450/month apartment, I could move right away after my full-time job is over. Also, if I shared a two bedroom apartment with a roommate to lower the rent even more, I could always move whenever. Of course, I can always call the landlord if there is a maintenance issue. There has not been any maintenance issue so far with my current apartment. The problem with renting is that you can't build equity on the rent, so I am embarrassed to say that I lost over $75,000 renting apartments over the past 11 years!


                            However, if I lived at my parents' house, I would have absolutely NO expenses. Keep in mind that I wouldn't have as much privacy and I also work full-time for one of my parents. I don't need to live with my parents and I was able to put aside money in savings despite living in apartments, including money in mutual funds and retirement accounts. But living at my parents' house is another option worthy of consideration.


                            Although I was preapproved for the loan, I haven't actually applied for the loan yet and there was no loan transaction, closing, title deed transfer, or anything. So I don't think that I am obligated to do anything yet since all I have done so far is meeting the mortgage loan officer for the preapproval in August and meeting with a realtor to look at several houses during the past few weeks.


                            My question is: Should I buy a house (option #1), keep renting my current apartment (option #2), share a two bedroom with a roommate for lower rent (option #3), or move back in with my parents (option #4).


                            Sorry for the extremely long message. Thank you in advance for your responses, and I appreciate your help in what will be one of the most important decisions that I will ever make in my lifetime.
                            I think it would be better to buy a house after losing so much money to renting that I can never get back.

                            Remember that there are many extra costs with owning a home that can be classified as money you throw away, just like:

                            Homeowner's insurance
                            Loan origination fees
                            PMI/MIP costs
                            Any realtors buying and selling fees. Easily 6% to sell in most cases.
                            HOA dues
                            Maintenance costs
                            Mortgage interest
                            Any cost or lost opportunity that results from not being able to move to a different city as easily
                            Time spent on house-related chores
                            Property taxes (this is easily shrugged off if you've never owned a home, but think of it as giving 1.5% of your home back to the county every year. Would you invest in a mutual fund with a 1.5% expense ratio?)

                            The decision to buy is MOSTLY about job and life stability. So, the question here, is your full time job ending? Are you thinking about changing areas? If so, you shouldn't be looking to purchase anything because the problem with renting is that you can't build equity on the rent, so I am embarrassed to say that I lost over $75,000 renting apartments over the past 11 years!

                            Also, you should consider your current annual income. Do you have a 20% down payment, plus a 6 month emergency fund, plus a move-in fund?
                            How long are you going to stay in your current area?

                            Comment


                              #15
                              It will be better if you move to your parent's house. But if you doing not so and wanted to buy a new house then I suggest you to buy the metal roof house as there are many advantage of the metal roof house like the weight of metal roof is 1/20 of the concrete roof and you can use it for green energy purpose.

                              Comment

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