Profile picture for ToddMyers1985

To buy, or not to buy....THAT is the question.

I'm getting ready to start a new job and my family and myself will be moving to the St. Louis area.  We're in our late 20's.  I make approx $110,00/yr and she is transitioning to be a stay at home mom.   We have 32,000 in savings and 22,000 in debt (student loan, car, and wedding).  

We're having a hard time deciding whether it will be better for us to buy vs rent + pay off debt.  While we'd LOVE to be debt free, it's hard to justify renting for $1900 per month vs keeping our debt and using our savings as a down payment for a $1400 per month house.

I know part of the question is how much interest is going out for debt vs coming in for savings.  It's almost a wash between the too with outgoing just slightly beating incoming interest.
  • August 15 2013 - Maryland Heights
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Answers (9)

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Profile picture for SteadyState
Todd -

Please do a through analysis by running your numbers through  a good rent vs. buy calculator. It is difficult to provide a more precise answer as there are many details that are necessary - what is included in the rent, same neighborhood, etc. Link to NY times calculator.

Also remember that the only difference between buying and renting is that when buying you rent from a bank  (money flows from St. Louis to NY), you place a long bet on RE (the home value must go up of you stand to loose a lot of money) and you pay property taxes, insurance, maintenance, gardening, and utilities.  When you rent from your local neighbor, the money stays in St. Louis, you only pay renters insurance (property taxes, maintenance, gardening are typically paid by the landlord) - you also in most cases will not pay for cable, water, and garbage)
  • August 15 2013
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Profile picture for Kathy A Bowen
Hi Todd,

If you are going to be staying in the area I would buy.  At least this way you are building equity, living in a home you like and generally get a return on your investment when you do decide to move, depending on how soon you move and the market.

Do your cost comparisons and see what option is better for you.  It is generally less expensive to buy than to rent on a monthly basis. Talk to a local Motrgage Broker who can help you determine options available in your area.  Talk to a local Realtor to guide you through the marketplace and who can help you with your decision making.  The better educated you are, the better your decisions will be.

  • September 19 2014
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Profile picture for sunnyview
"I disagree, sunnyview - it is always a good time to buy for someone. It is never a good time for everyone to buy . "

I agree with you that it may be a good time for someone to buy, but the notion that it is ALWAYS a good time to buy is not right. 

As fas as I'm concerned, a professional helps you weigh options and risk up to certain point based on your needs, finances and timetable for ownership. While a salesman always tells you it's never been a better time to buy because he needs the commission. Big difference. I prefer hiring a professional.
  • September 19 2014
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Profile picture for forsalebygina
Todd,

I commend you for researching before jumping, and SteadyState presents a valid point. Do your homework thoroughly before making any decision.
  • September 19 2014
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I disagree, sunnyview - it is always a good time to buy for someone. It is never a good time for everyone to buy . . .

Two and a half years ago, nobody wanted to tell people that it was a good time to buy. In fact, commentators were saying it was a terrible time to buy, and people should wait. Well, prices are up over 20% nationwide since then, and if you listened to them, you may well be priced out of the market today.

  • September 15 2014
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Profile picture for sunnyview
"Buy!...The reason I say this is because buying a home is what they call "good" debt and a great investment!"

LOL Do agents ever say don't buy a house now or houses are not always a great investment? I believe in homeownership as a tool too, but unless you are the one getting the commission, it is not ALWAYS a good time to buy. 

Be smart, do your own research, look at your long term goals and don't rely on an agent to tell you when to buy. Make your own decision based on your situation. Buying can make sense, but it is not always the best choice.
  • September 15 2014
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Buy! Rent is good if you are not staying in the area long, but if your planning on settling in that area-buy! The reason I say this is because buying a home is what they call "good" debt and a great investment!
  • September 15 2014
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If you deceided to rent last year and are revisiting purchasing a home, I am here to help with any questions you may have.

  • September 15 2014
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Good Morning,

To rent or buy is a very common question!  The question usually gets asked like this, "Is it a good time to buy?" and I usually answer, "Well, that depends on your personal situation."

I would definitely way the pros and cons of each.  Based on your numbers of renting for $1900/mo vs. buying for $1400/mo it would seem that you'd be better off by $500/mo to rent.  Again, I'm not sure if you're taking into account property tax, insurance, etc in your $1400/mo mortgage figure???  You're still probably better off even if you had to add property taxes and insurance on to the $1400.  The monthly savings would still allow you money to pay down your debt.

Additionally, since real estate values are rising you stand to improve your equity position over the next several years. 

Please consult a Realtor so that they can give you various scenarios.  Then use that information to make the right decision for your family.

Please keep us posted on how things turn out for you.
  • August 15 2013
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