Well since we're expecting another baby, we've started thinking about buying a house. This is supposed to be a great time to buy, right? We've spent some Saturdays touring homes, speaking with our realtor (who's also our landlord) about the local market, and looking at our finances/seeing what we qualify for.
Our credit is really strong, we don't have another house to sell (thank God), we have a fair bit of savings considering we paid cash for our vehicle a few months ago. Still we just don't feel like we're ready to buy, despite what a lot of people keep telling us.
I think Dave's getting into my head. He suggests that you don't buy a house until you have your debt paid off, and have three to six months of savings. We've always been a fan of Dave, but I'm starting to realize how wise his advice really is.
Now we're not following the order of his baby steps, but certainly understand his reasoning for it. We have some of my student loans to pay for, but instead have focused all of our "extra" money on building a down payment. This was wise, in my opinion, since both cars broke at the same time, and drained some of our savings when we decided to buy a more reliable vehicle. I'm glad we had that money - otherwise we would have had to taken a loan.
We've decided to save x amount for a down payment, and will have that once we get L's bonus (praise God for this). We will then focus on saving three to six months worth of expenses, especially in this volatile economy. Once that is done, we will then discuss whether we want to buy a house or focus on paying off the rest of my student loans.
Dave has often referred to renting as "patience money", and that's exactly what it is. It's not an ideal situation, and it's not supposed to be for forever. Still, if a couple of years of living in an less than ideal place results in a better place financially, and a house that we really enjoy, then it's worth it in our opinion.
For those dealing with "house fever", read this blog from Simple Mom. It calms me pretty quickly. :)
Wednesday, February 18, 2009
To Buy or Not to Buy
Posted by Sheri at 3:43 AM
Labels: frugality, money management, simple living
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4 comments:
I don't know...you guys have a great apartment...and Baby will be in your room for awhile, anyway...and while now MAY be a good time to buy...you guys have a steal of a deal on that apartment. I'd stick woth it as long as you can...because I think times are only going to get tougher in coming days...why not save as much as you can to make sure you have a good cushion to fall back on? I wish we could have done that...every day is a struggle to make ends meet...you have an awesome opportunity that most of us aren't lucky enough to get....and it could determine your future for the next many years to come. It's nice to own your own home, yes, but expensive, too. Especially when stuff breaks, or you get a leak, and then the car goes out at the same time, and then the kids get sick right after all of that, and before you know it, within 2 weeks you have to find thousands of dollars to fix all the immediate needs. Anyway...all that to say, if you can handle your apartment, I'd say stick it out as long as you can. It's a great place, for a great deal, and the longer you stay, the better your fallback cushion will be in years to come.
I think your plan to save a set amount of money for the down payment and then saving three to six months of expense money is a great plan to prepare you to begin thinking about purchasing a house. I agree with Mommy of Three though, the longer you stay in your apartment, the longer you have time to build a cushion for the unknown expenses. But what is the break point? Eventually you're just saving and not stepping out to do anything with those savings!
Good luck in praying through this decision - I know how big it is!
You are so right! The only flipside I would like to add to your points is the issue of equity and sweat equity that was mentioned in Simple Mom's entry. We bought our first house definitley in the fixer upper category and with a whole lot of blood, sweat, tears and some of our hard earned dough along the way, were able to sell it for $30,000+ more than we payed for it 5 years earlier. If we'd timed things a little better we would have done even better than that, but God's timing is perfect inspite of the timing of the real estate market. It wasn't easy, but I certainly was thankful along the way that we hadn't taken the bank's offer to lend a whole lot more money since I ended up not working once the kiddos arrived. Suck wisdom and patience you have S. God will direct your path my friend since I know you're seeking Him.
Yes, we are in quite a deal.. which is another reason why we're having difficulty giving it up. Well that and we know what it's like to sell a house at a loss... Not fun.
Elizabeth, I agree on saving and saving forever. There's a balance that needs to be reached, I think. Hopefully we're learning what that balance is?
Sara, wow... good for you for clearing so much cash! I think it takes someone very skilled and talented to do that in this market, though... and clearly you and Andy did a great job with that. I'm not sure L and I are quite that skilled?
In fact, our realtor drove us around, and pointed to your own place, stating that you guys did a great job on your place. So kudos to you both!
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