Weighing my options.

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halfnote19_IHB

halfnote19_IHB

New member
I know now is not the right time to be looking to buy anything, but here is my situation.



My husband and I currently own a small condo (650 sq ft) with a 30 year fixed mortgage which we can easily afford.

There is no way we can sell the place since comps are 100k less then what we owe. We don't want to ruin our credit or give up our down payment to pay off the difference. So we have decided to hold on to the condo and rent it out once we buy a new place.

I bought at almost the peak thinking I would be priced out forever.



We have been waiting patiently for the housing market to come down to reasonable prices.

I don't think we can wait for too much longer, we are starting to feel <i>very</i> cramped in our place.



Here is our choices:

1) We thought about moving out and renting a place, but doing that would not allow us to continue to save for a down payment.

2) We thought about buying a bigger condo and moving there and waiting till prices came down. (2 years) This again would probably not allow us to save for a down.

This also may hurt our chances on qualifying for a home later on.

3) Just bite the bullet and buy a house and know it will prob lose 100k or more in value in the next 2 years.

4) Staying put... the best financial decision but I might just go crazy. :grrr:



Your opinions would be greatly appreciated.
 
[quote author="halfnote19" date=1223337422]

4) Staying put... the best financial decision but I might just go crazy. :grrr:



Your opinions would be greatly appreciated.</blockquote>


My wife and I are in a little 700ish sqft place. We stay that way because it is WAAAAAY cheaper than doing anything right now. I know this, my wife does also, but she is rather preturbed that we aren't in a big house. My way of consoling her is we go on small trips, maybe pay for a few more dance lessons (ballroom). In the end we save something like 90% instead of the 100%, but we are still saving and keeping our sanity.



Also have you ever though about spring cleaning?



-bix
 
with no rental history (less than a year), the rental income will not be consider for your overall income, making it harder to qualify for a loan, since you have to proof that you can pay for two mortgages (without the rental income)



so moving into a rental, renting your condo out, might not be a bad move to establish a rental history on your condo. on top of that a lot of folks on here think the housingmarket is no-where near the botttom...
 
[quote author="flmgrip" date=1223340148]with no rental history (less than a year), the rental income will not be consider for your overall income, making it harder to qualify for a loan, since you have to proof that you can pay for two mortgages (without the rental income)



so moving into a rental, renting your condo out, might not be a bad move to establish a rental history on your condo. on top of that a lot of folks on here think the housingmarket is no-where near the botttom...</blockquote>


We are already pre-qualified for a loan on the basis of paying for both payments with no renters with 6 mo worth of payments in reserve.
 
[quote author="biscuitninja" date=1223339884][quote author="halfnote19" date=1223337422]

4) Staying put... the best financial decision but I might just go crazy. :grrr:



Your opinions would be greatly appreciated.</blockquote>


My wife and I are in a little 700ish sqft place. We stay that way because it is WAAAAAY cheaper than doing anything right now. I know this, my wife does also, but she is rather preturbed that we aren't in a big house. My way of consoling her is we go on small trips, maybe pay for a few more dance lessons (ballroom). In the end we save something like 90% instead of the 100%, but we are still saving and keeping our sanity.



Also have you ever though about spring cleaning?



-bix</blockquote>


I am at that point of getting rid of furniture, but my husband thinks it would be a waste.

He says why get rid of stuff just to buy new stuff in a year? :-S
 
I really depends on your situation, but 1 and 4 seem to be the best.



If number 1 means you will be renting your current condo and whatever rent you will get will cover that condo's costs (not just mortgage but all the other things like HOA, taxes etc), you will be better off renting a bigger place and saving until we really hit bottom.



If number 4 will save you much more money than number 1 and if you can stay a few more years... I would do that.



I wish I had been aware of this site sooner as 3 years ago I would have done number 1. Instead... we ended up buying a bigger house due to the same fear of being priced out and are now seeing that it was a mistake.



Good luck
 
Just a thought on #1. If you have enough of a down payment to buy now, then you don't <strong>need </strong> to save more for one. So, if moving to a bigger place will give you that much more mental happiness/sanity, you could swing it. Since prices will fall, your current $ amount of down payment will be a bigger % down payment in the future.
 
[quote author="halfnote19" date=1223337422]I know now is not the right time to be looking to buy anything, but here is my situation.



My husband and I currently own a small condo (650 sq ft) with a 30 year fixed mortgage which we can easily afford.

There is no way we can sell the place since comps are 100k less then what we owe. We don't want to ruin our credit or give up our down payment to pay off the difference. So we have decided to hold on to the condo and rent it out once we buy a new place.

I bought at almost the peak thinking I would be priced out forever.



We have been waiting patiently for the housing market to come down to reasonable prices.

I don't think we can wait for too much longer, we are starting to feel <i>very</i> cramped in our place.



Here is our choices:

1) We thought about moving out and renting a place, but doing that would not allow us to continue to save for a down payment.

2) We thought about buying a bigger condo and moving there and waiting till prices came down. (2 years) This again would probably not allow us to save for a down.

This also may hurt our chances on qualifying for a home later on.

3) Just bite the bullet and buy a house and know it will prob lose 100k or more in value in the next 2 years.

4) Staying put... the best financial decision but I might just go crazy. :grrr:



Your opinions would be greatly appreciated.</blockquote>


There is a hybrid #3, which I'm not advocating, just informing. Buy a bigger place you'd be comfortable in for at least seven years now, then do a short on the condo or just walk away from it. Your credit will not be permanently harmed by the hit from the condo. The dings from that will be gone in 7 years.
 
<strong> Ipop is endorsing: Buy and Bail!!!!??????</strong>



of course, that only works if you have never refi'd or heloc'd. and we don't know that the 7 year time period won't be changed in years to come in terms of assessing credit risk.
 
[quote author="ipoplaya" date=1223343663][quote author="halfnote19" date=1223337422]I know now is not the right time to be looking to buy anything, but here is my situation.



My husband and I currently own a small condo (650 sq ft) with a 30 year fixed mortgage which we can easily afford.

There is no way we can sell the place since comps are 100k less then what we owe. We don't want to ruin our credit or give up our down payment to pay off the difference. So we have decided to hold on to the condo and rent it out once we buy a new place.

I bought at almost the peak thinking I would be priced out forever.



We have been waiting patiently for the housing market to come down to reasonable prices.

I don't think we can wait for too much longer, we are starting to feel <i>very</i> cramped in our place.



Here is our choices:

1) We thought about moving out and renting a place, but doing that would not allow us to continue to save for a down payment.

2) We thought about buying a bigger condo and moving there and waiting till prices came down. (2 years) This again would probably not allow us to save for a down.

This also may hurt our chances on qualifying for a home later on.

3) Just bite the bullet and buy a house and know it will prob lose 100k or more in value in the next 2 years.

4) Staying put... the best financial decision but I might just go crazy. :grrr:



Your opinions would be greatly appreciated.</blockquote>


There is a hybrid #3, which I'm not advocating, just informing. Buy a bigger place you'd be comfortable in for at least seven years now, then do a short on the condo or just walk away from it. Your credit will not be permanently harmed by the hit from the condo. The dings from that will be gone in 7 years.</blockquote>


I have never ref'd or heloc'd my place, but as nice and easy as that sounds I think the guilt would eat me alive.

I have really good credit right now and don't want to ruin it, I have worked so hard to get it here.
 
This question is really, really hard to answer. I don't have any advice beyond what has been stated above. It really makes me sad that so many good people were caught up in the bubble fallacies and are now facing the difficult choices you have in front of you. We all revel in the destruction of the flippers and speculators, but the market punishes saints and sinners alike. It is very sad in your case. I wish you the best in whatever you decide.
 
[quote author="halfnote19" date=1223340807][quote author="biscuitninja" date=1223339884][quote author="halfnote19" date=1223337422]

4) Staying put... the best financial decision but I might just go crazy. :grrr:



Your opinions would be greatly appreciated.</blockquote>


My wife and I are in a little 700ish sqft place. We stay that way because it is WAAAAAY cheaper than doing anything right now. I know this, my wife does also, but she is rather preturbed that we aren't in a big house. My way of consoling her is we go on small trips, maybe pay for a few more dance lessons (ballroom). In the end we save something like 90% instead of the 100%, but we are still saving and keeping our sanity.



Also have you ever though about spring cleaning?



-bix</blockquote>


I am at that point of getting rid of furniture, but my husband thinks it would be a waste.

He says why get rid of stuff just to buy new stuff in a year? :-S</blockquote>


Find a nice cheap storage place and go from there. That is what I did and i've been s l o w l y, getting rid of the unwanted stuff. Now about the 3 other cars that I have... hummmmmm



-bix
 
I think a big, and difficult, part of the upcoming few years is for people to get used to living within their means. No HELOC, no artificially low 'teaser' rates, no leased cars, etc. Maybe people will even re-think having big families? Maybe people renting instead of buying? I'm not saying going back to living in depression era frugality, but living at a level where you can actually build equity in your house, and maybe even save some too.



And no moving to a big house just because you want to, unless you can afford it.





(not really a dig at you, halfnote19, but merely my thoughts in re-reading this thread right now)
 
This was brought up in part by thoughts of a few friends who grew up as a family of 4 or 5 in a two or one bedroom NYC apartment. Having one or two kids does not mean that you *NEED* to have a 3,000 sf SFR
 
My wife and I face a similar situation, except we are renting the condo. My solution to our small living space was to rent a mini storage near work. With the mini storage I can move all our seasonal stuff out of the way, and shuffle large items that are not used frequently. This clears the condo of a lot of junk and gives us some reasonable breathing room until we buy a place.
 
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