Which is the better deal?

**captain Lej** · 10-06-2010 09:42 PM

Okay so my fiance and I plan to go and buy a house where I plan to go to college and well we kind of plan to stay there for like 10 yrs or maybe alittle less but seriously we don't plan on going anywhere else at the moment. Anyway, I was talking to a friend down in Miami, OK where we plan to move to, she is renting an appartmen bassed on her boyfriends income and its like 300 dollars plus 100 or more for electricity. I thought that wasn't bad but I'm not fond of having to wash clothes at a laundry mat and my fiance is a mechanic and he would very much like a garage, that's why we plan to get our own place.

So here's my question after an arguement with my friend about going into debt if my fiance and I buy a house.

Which is better? Renting a place or buying?

**SidneyAlive** · 10-06-2010 09:50 PM

Well it's always to buy if you can get the loans, if you rent you have nothing, when you buy a house you build up equity, and you own something..

**ItsASecret** · 10-06-2010 10:02 PM

Your income will depict your mortgage loan amount (and therefore if you can afford to own a home yet), remember that down payments can get very pricey even if it is 10%. If you can find a place to rent for a decent price and save up a good chunk of change then you have a pretty good down payment to start with...personally that would be my suggestion especially if you still plan on going to school. Factor in your student loans as well, that is if you are getting them. Having those loans will likely factor in towards whether or not you can get a mortgage approval at a certain price. With some looking around you can also find a rental in a house and not an apartment so you can still get the appearance of having your own home without necessarily paying a mortgage payment type rent.

**KMonte85** · 10-07-2010 06:48 AM

renting or owning depends entirely on your financial situation.

Do you and your fiance make enough money to pay a mortgage, utilities, property taxes, maintenance, insurance and all the other expenses that come along with owning a home? Most people fail to remember that there is more than just the mortgage to pay when someone buys a home... make sure you know EXACTLY what you can afford to pay every month (and add cushion for any road bumps - think new furnace, roof, etc)

Do you and your fiance have money saved for a significant down payment (think around 10%)? The importance of this twofold: 1. paying a good chunk down will improve your interest rate and will reduce the amt you pay each month as your principle will be decreased. 2. Depending on your state, if you pay less than 10% you will be required to pay PMI (Private Mortgage Insurance) IN ADDITIONAL TO your mortgage, usually the amount is a percentage of the mortgage owed.

Do you and your fiance have a good credit rating, and do you not have a lot of debt? High debt and a bad credit score will really kill your chances of getting a good interest rate, and may even prevent you from getting a loan in the first place. If your debt is high and/or your credit is bad, work on this before you try to get a mortgage, it will save you boat loads of money.

These are all things to carefully consider before you purchase a home. If you can, look into home-buying workshops in your area - you will learn a lot about what you need and how the process works. But also, be leary of workshops put on by real estate firms, obviously they're going to provide a skewed-in-their-favor presentation.

**captain Lej** · 10-07-2010 04:29 PM

Thanks right now we're saving...I'm mainly saving for my dress but after I have that money set aside I'll start saving for our down payments. Trust me on the good credit I wouldn't know because I haven't been on my own yet and I'll ask my fiance. Well...now that I think abou it mine may not be so great since I have student loans that I'm paying off slowly when I get the money.

I'm pretty sure we'll be renting first so we can slightly save some as we go and purchase a home later, I'm hoping though he has it stuck in his head once he becomes a certified mechanic we'll have plenty of money but even mechanics don't get paid that much to buy a home. I don't know I just found it kind of rude for my friend to just tell me I should start renting before buying when I know for a fact we're going to be living there for well maybe the rest of our lifes, I only plan to go to college for a few years and don't plan to go to another one and if I have to I'll go to the city that's 30mins away and go there.

But is it possible to rent a home because I can't stand appartments, lived in a dorm and the laundry mat stuff gets expensives especially if you see my fiance in his clothes dirty clothes he wears to school.

**ItsASecret** · 10-07-2010 04:38 PM

The thing that matters right now is if you are financially capable of paying the mortgage + countless other bills + current student loans (and future). If you need to rent for another year to save up a comfortable down payment, and thus making it less hard on yourselves in the future with mortgage payments, then so be it. Buying a home is an absolutely massive undertaking and life altering event, and you are possibly spending 100's of thousands in the process. You want to make sure you know that you can do it, and do it comfortably.

And it is possible to find a place with an in suit laundry in apartments...you just need to search for a bit lol. But I would say if you are wanting to rent to have that security of saving money then try to find a nice bungalow or townhome to rent. You will get to have the feel of having your own home which is the whole point of moving to the city.

**CHANDLERS WISH** · 10-07-2010 04:42 PM

Buying your own home, is exciting and a smart move, rent is wasted money, whereby paying your mortgage even interest only, still builds equity, (bricks and mortar)...

I own a Real Estate Company in Australia and I've dealt with a lot of forclosures from banks, so your friend perhaps should have said, "ensure your safe first" it's not about how long you intend to stay there, it's whether or not as others have stated, you can survive and make the morgage repayments and pay the rates, utilities as well, the plumbing bills when things go wrong, hot water system when it blows up, the lawns to be mowed, maintenance such as painting the exterior, getting the gutters cleaned, so much to consider..

The things I see in what your saying would make me think, rent for 12 months first. You mention your dress, income, credit rating, no savings,laundry mats are expensive.

To me I think it's like anything, when you are going to make a management decision you do your homework.

1. Speak to your bank - provide your income and your fiances and see what they would loan to you, they will do credit checks, so you'll know if it's possible or not as well or what you have to do to change your rating.

2. If you would be pre-approved, find out what the mortgage repayments will be. Here they add 4% for stamp duty on top of the purchase price AND what deposit do you need, and what saving pattern do you need, here, you need 10% - 20% deposit and 6 months record of savings, plus you have to be employed for at least 6 months as well...

3. Check if there are Council rates where you live and what they are per annum, water rates, approx electricity, budget another $80 a month for things that may break down or need to be repaired.

4. Then add in your food, washing, do you need items as well for the home? Furniture, washing machine, bedding, cutlery etc, and if so, shop around and gage what that will cost you.

You may very well find that I've scared you off now lol's.. But, seeing a house instead of an apartment a garage, future, is a great start, just don't start it until you have your facts and figures and know what to expect and can do it, the last thing you want is the banks to reposess, if it doesn't sell, they'll take what ever it sells for, thereby putting you more in debt with the difference they couldn't gleam from the market.