To rent or own, that is the question

[ragani]

The last couple of weekends have been taken up with the great apartment search. I love where I live, but it really is not big enough for me, my lovely roomies and chaosloom. And really, in align with that "starting our new lives together" thing that we are embarking on, it seems like a good time to strike out on our own. Timing wise, we should probably move out by the start of September, because that is when one of the roomies returns from abroad, and things will get much tighter here.

We have looked at a range of places, some decent, some ridiculous. We even found a great one right across the street from where we are now and thought we had ended the search, only to be turned down because of chaosloom's credit. One friend, who just finished law school, pointed out that is was illegal for them to have turned us down when my credit and income is enough for me to take on the lease on my own, but we are not sure we want to pursue that "fight back" route at this time. Sigh...

Meanwhile, we have also talked about the possibility of owning. My step-mom thinks this is the perfect time for us to look for a place to buy because of the the current market conditions. There are any number of first-time home owner assistance programs in the towns where we are looking to live. There are even ones that are based on low-income, for which we might qualify for now (based on 2007 income), that we might not qualify for next year.

But really, is it a good time to buy? If so, why? And, what is the first step?

Comments

[whuffle.livejournal.com]

If you can look at your lives and expect to commit to owning whatever you buy now for 5-10 years, then yes, it is a good time to buy. The market runs in 7-15 year cycles. We're at the low end of a cycle right now so if you buy now, you should see an appreciation of what you buy in 5-10 years' time.

First step to take is to get your finances in order. Do credit checks for both of you with all 3 major credit trackers. Then go talk to friends and get a recommendation for a good home inspector and a good mortgage broker. Find someone who answers your questions and even offers information that a first-timer won't think to ask for; that's the mark of a good mortgage guy/gal. Once you've got your mortgage stuff lined up, then its time to go shopping. Start out by looking at the forclosures-held-by-banks market because those tend to be a good buy. If you know that you can put in a little DIY skillz, kitchen remodeling and bathroom renovations are the cheapest way to see a big bang for your buck when it comes to home value.

When we bought 1.5 years ago, the house value had to be reassessed for insurance purposes. Turned out the land itself was worth the most and that the replacement value of the house if it burned to the ground was undervalued. The value of the house was adjusted, then adjusted a second time based on our kitchen renovation. We put in about $5k and a bunch of sweat equity. The house is now worth 1/4 again what we paid for it. When I looked 6 months ago, it was work another $30k above that. Since we plan to stick it out where we are for a while and make more improvements, the house will likely end up being valued at twice what we paid in 10 years.