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Message
re: potential first-time home buyer
Posted on 9/19/24 at 6:31 pm to TigerTatorTots
Posted on 9/19/24 at 6:31 pm to TigerTatorTots
quote:
Being a home owner has a lot of risk with unexpected costs that a renter wouldn't have to worry about. A couple major repairs will eat up any increase in home value over that 10 year period.
The rent argument for that kind of time frame is still extremely strange. 10 years of rent is absolutely staggering in the realm of wasted spending.
There are a lot of unknown details around taxes, HOA, down payment, insurance, etc., so look at it from a a bare bones scenario. If the prices are comparable between rent and mortgage, a $285,000 home at 4.75% over 30 years is going to be around $1,500.
10 years of rent - $180,000. That is money you are never getting back.
If buying the house after 10 years, he will still owe $230,000. If the house has zero appreciation, there is $50,000 of equity to offset the $180,000 in payments. Once you start adding in insurance, tax, closing costs that number will get reduced, but not zeroed out. The future is unknown, however there is a greater chance of appreciation in new construction.
10 years is worth a buy
I would seriously figure out how to make a 15 year note though. At the 10 year mark, you would have $118,000 left to pay.
This post was edited on 9/19/24 at 6:41 pm
0
Posted on 9/19/24 at 9:07 pm to El Gallo
quote:
Navy federal quoted me 4.75% on a 30-year mortgage. I am looking at a couple of new builds, one is a townhome (220k) and the other is a single-family home (285k). No children.
Run from Navy Federal. The Vet marketed banks are a rip off.
Every bank does VA loans.
Hard to get hurt on home under 300k. Go for it.
Posted on 9/20/24 at 8:28 am to TheOcean
quote:What?
I would 100% rent. Ten years is not long enough to make buying it worth it
I bought in 2015 for $210k and sold 3.5 years for $250k. Even after you factor in original closing costs when I bought it and realtor commissions on the sale, I still ended up about $20k on the plus side in a short amount of time.
Bought my current house in 2019 for $350k and based on 2 recent comp sales on my street, I could get $450-460k today.
10 years is absolutely worth it to buy. Rent isn’t going to get cheaper over that time span and its more than enough time for OP to build enough equity to offset closing costs and maintenance costs between ammortization over that length of time and increase in property values.
This post was edited on 9/20/24 at 8:30 am
Posted on 9/20/24 at 8:36 am to Weekend Warrior79
quote:Insurance and property tax is almost always factored into the mortgage payment amount. If Navy Federal is preapproving him, they’d have to factor in insurance and tax cost estimate to make sure his debt to income numbers worked.
When comparing the rent to the mortgage are you also factoring in the "other costs". Renter insurance is cheaper than homeowners & flood. Is there an HOA, what are those costs? Property taxes factored in with mortgage
HOA dues would probably not be included in escrow.
Landlords have insurance and property tax costs too and it gets factored into what they charge for rent.
Posted on 9/20/24 at 9:20 am to Tiger Prawn
quote:
Rent isn’t going to get cheaper over that time span
Another solid point we have not covered. The mortgage is going to be pretty stable, with just insurance and taxes moving the needle. Which will not be extreme.
There is zero chance a landlord is going to lock you into a 10 year price or lease. You should expect 1 year lease, up for renewal every year with terms changing each time. You might get something longer and better, but that is the norm for 1 year leases. Based off market valuations, that rent could actually increase dramatically.
Posted on 9/20/24 at 2:45 pm to El Gallo
Buy the single family home instead of the townhome
Posted on 9/20/24 at 8:40 pm to TorchtheFlyingTiger
quote:
don’t assume Navy Fed is best rate
NFCU is almost always the best rate and GREAT customer svc.
Posted on 9/21/24 at 8:43 pm to TheOcean
It’s tough to find somewhere that will let you rent for 10 years. I’ve lived the move every two years renting and there is no way I’d want to do that when I’m 50.
Posted on 9/21/24 at 10:24 pm to TheOcean
quote:
I would 100% rent. Ten years is not long enough to make buying it worth it.
As with any real estate purchase, location is one of the, if not the primary consideration. In an average to above average market, ten years is plenty of time. Four to five years is the typical rule of thumb in such an area.
Posted on 9/24/24 at 6:19 pm to Drizzt
quote:
If you retire in 10 years and start build now, you will only live in home 8 years. You need 4-5 years just to recoup closing costs.
Just about everyone in the United States who bought a home between 2011 & 2020 disagrees.
OP, Look at your local market projections for the time you plan on occupying the property and make the call.
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