I can’t afford a house. The cheapest houses here cost $700k and those have 2 bedrooms and 1 bathroom and are major fixer uppers in not-so-nice areas. (Remind me again why I love the Bay Area?) But there are a few condos which fall into a price point that could make sense. $500k wouldn’t be that crazy (maybe?), if I were to liquidate all my stocks for $97k (well, it will be less than that due to taxes, but most of my stocks have been in there for a year so will qualify for 15% tax rate on profits.) Figure $80k from that, and I’d have to find $20k for a downpayment to have 20% down on a $500k property.
My credit score is a 724 (not perfect but still considered excellent to most lenders, I hear) so I should be able to get a pretty good rate. I don’t understand all the fees involved in buying, but I assume there will be quite a few added on to the total price of the condo, so that would mean I probably could only afford a $400k place. That would be basically enough for a decent 1br 1ba condo.
Going through those numbers, owning just doesn’t seem to make sense. HOA fees would be $500+ per month and more later down the line. I can’t imagine it will make sense to own until I have $1M liquid (like maybe by the time I’m 70.) So I guess I should keep renting, right? Well, renting isn’t perfect either.
At the moment, my rental costs are really cheap. $650 per month. But my boyfriend and I are planning on moving in together this year. I’m expecting we’ll rent for $1800 per month, 3x what I’m paying now, for a 1 bedroom. When I work out the mortgage on a $500k house on lender calculators online, the cost to own isn’t that much higher:
30 year fixed
Lender fees: $2100
Monthly Payment: $2091
So instead of paying $1800 per month, I’d pay $2091 plus HOA (maybe $2500 total) and own a place. I go back and forth on if owning is the dream of America’s past and something I should want for my future. I don’t long for a white picket fence, but I do want my own space and I’m tired of moving. I’ve actually lived in my current place for four years now, and I’m growing out of it. Living with a couple, even though they are nice, gets old after a while. I don’t like feeling like the third wheel in my own house. And I fantasize about having counter space to keep my grill and slow cookers out for ongoing use. (God, when did I become so domestic?)
I don’t understand enough about home buying and need to do a lot more research before moving forward with a purchase. The only thing I could see making sense is buying a 2br 2ba condo so I could rent out the second bedroom if needed. But most 2br 2ba condos are going to be more like $600k – $800k, and out of my price range.
Renting isn’t bad – but I also know to get a 1br that meets the quality of my current 3br, it’s going to cost a small fortune. So I’m not sure what to do. My boyfriend and I will probably move in together by September, assuming he gets a job, so I need to figure it out fairly soon. Waiting to buy isn’t the worst thing, but if rates are really low right now maybe I should at least consider it?