06 Jun
Posted by author as Investing, Real Estate, Spending and Saving
Recently, my job has caused my wife and I to relocate to Jacksonville, Florida. It’s about 75 miles northeast of Gainesville, Florida. We currently own the condo we’re living in right now, and we’re in the the process of selling our condo. At first, we were all about buying a nice starter home in Jacksonville. The prices are not too high there, and there is a good deal of newer construction available. However, we started crunching the numbers, and it would be very tight to justify buying a house on my salary alone. We may not even have qualified for a mortgage. My wife is finishing her Master’s of Physician Assistant degree, so money is a little tight until she is done. We were a little bummed out, but we realized that renting might be the best option for us right now. Here are a few things to consider when thinking about buying versus renting a home:
If you are a visual person and you like numbers, Here is a calculator that helps you figure out if it is mathematically better to buy or rent.
Buying a home is the American dream. I think everyone should strive towards homeownership at some point in their life. However, all too often people get in over their heads when buying a home at the wrong time in their lives. Renting should not be a long term solution. It should be a temporary solution until you are in a financial situation to buy a house with a down payment of 10% to 20% and at least a couple of thousand dollars left over for house repairs and maintenance. Sit down and put together a plan for saving to buy a house. See how much you can put away and how long it will take you to reach your goal. If it ends up being longer than five years, then come up with some creative ways to earn some extra income to speed up the process. Before long, you’ll in a nice house, and you’ll thank yourself that you didn’t buy one when you were broke.
6 Responses
Thomas
June 7th, 2007 at 7:51 am
1Don’t forget to include closing costs and taxes into your home buying expenses. When we were in the process of buying a house, it ended up adding about $8,000 to the cost of the home. I know that took us by suprise.
Tim Cox
June 7th, 2007 at 10:42 am
2Should one, facing a move, pay off debt in the face of a move? We’re currently saving into a money market account but have postponed paying off a higher interest student loan due to the impending move. Any tips on this?
Jacquelyn Hart-McCoy
June 7th, 2007 at 11:31 am
3Some thing that bit me when I first bought our townhome is that taxes will go up ALOT when you buy your house. I saw that the people before us were paying 900 bucks a year in taxes and thought that is what we would be paying. (Or close to it) Come to find out our taxes tripled. Big surprise!
author
June 7th, 2007 at 11:03 pm
4Yeah, you’re right Jacqui. Every time the house sells they jack up the appraised value to somewhere near what you bought the home for. So, you can’t go by what someone else paid for taxes unless they sold it like a year later for exactly what they paid for it.
Tim, I think I answered your question in another post, I just can’t remember which one. I think you should definitely hold off paying off debt for now. You don’t want to pay off student loans but then put moving expenses on a credit card. That wouldn’t make sense. If it were me, I would pay cash for the moving expenses, and continue paying off the student loans when you are settled in to your new place.
author
June 7th, 2007 at 11:04 pm
5Thomas, you’re definitely right. property taxes and closing costs add a lot to the cost of buying a house. Make sure the mortgage company gives you a good faith estimate of what you’re estimated costs will be to get the keys handed over to you.
Rich
June 19th, 2007 at 12:08 am
6Welcome to Jacksonville! We moved here last November (southside). You’re gonna love it!
My first time reading your site. Looks great. Seems like solid advice. Thanks.
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