Rent or buy in same neighborhood...

I don't have 20% to put down and some of the neighborhoods I'm looking at, the rent would actually be cheaper than a mortgage with insurance and PMI. Is the housing market really gonna suffer that much? I'm afraid of waiting here cuz it everything is still going through the roof.

Does it matter?

 

Rent, and be disciplined about investing the amount you'll save on PMI, taxes, home repair, maintenance.

And rent smaller than you'd buy. And save that money, too.

 

I think that's what Imma gonna do. For one, the thought about finding another roomate to share a house payment with keeps me up at night after my last experience. I could get a part time job to pay for it all myself, but then I'd never get to enjoy it so what's the point.

Plan now is to move downtown near Front Street so I can walk to everything, live by myself, and start saving money.

 

Finance with an 80/20 loan and avoid the pmi while buying with 0% down.

 

Hope he has good credit.

 

Depending on alot of things, renting is likely a better move financially.

We're talking about a single male......

How long are you going to stay?
How much are homes in the area appreciating?
New house, old house?
Are you buying the house for a 'deal'?
What kind of monthly / annual money will you be spending on house shit ( furniture, curtains/blinds, lawn shit ) that you wouldn't spend $$ on if renting?

I bought my first home in Dilworth. It appreciated nicely. I lived there for 3.5 years. I'd have been better off renting. Nobody believed me until I whipped out the spreadsheet. That was with 20% down, too.

Combination of higher payment amount than if I rented, the desire to spend money on shit for my home because I 'owned' it, maintenance that would not have been necessary if i rented, opportunity cost of the down payment, closing costs, and realtor's fees to sell the illiquid asset.

Regardless of the situation, if you asked me I'd say to rent and save/invest the money. Liquidity is extremely nice. Primary residences purchased with no money down are extremely illiquid, and IMHO should not be classified as an asset but as a liability - as you have to pay into them every month and they do not pay you every month.

 

If the neighborhood is appreciating at all you just do an 80/20 loan with interest only an the 80%. You avoid the pmi and there is no way you could rent the place for less than the two payments combined.

People get too wrapped up in paying principal. If you buy smart in a place that is appreciating at even a couple %/year, you don't need to worry about the principal just pay as little as possible to live there until you sell. If you are staying 5 years or so all of your equity is coming from appriciation anyway. Go interest only, avoid pmi and don't tie up all your cash by putting 20% down. Your going to have to pay prime plus 1/2 at least to access that down payment if you should need it down the road.

The only issue in going 80/20 I/O os that you need pretty good credit to dot it.

 

So if you dump 20% of your own cash into the deal it is an asset but if chose not to tie up a large chunk of cash and let the property appreciate on it's own it is a liability?

I think that kind of thinking is a financial liability. If you buy in the right place, at the right time you should put no cash into the deal and pay as little/month as possible. Save your cash to work somewhere else.

The problem is too many people buy in the wrong places at the wrong times becasue they just want a house no matter what and they take bad advice.

 

That is what i did, and it is the way to go. BUT you have to make sure you buy in a good area, Also if you can pay one month extra payment a year towards principal even if you spread it out, would do better then someone who pays p&i in every payment for the first few years of the loan. Also, it is best to do those loans if you dont plan to stay in the house but 2-5 years.