Thursday, September 18, 2008

To Buy Or Not To Buy

After out growning our previous home, my husband and I set out to find our next new home.

The purchase of our last home did not go so well. Because the house wasn't lived in for over a year, the seller didn't have to disclose any of the problems with the home. Well, within the first month, we had to replace the central heat, the septic systems, the house flooded, and part of it had to have the wiring re-ran because it was no longer up to code. and those are just the big ticket items we ran into. So this time around we were a bit smarter. I found a house that I loved. It is 6 bedroom and has over 5025 sq ft of living space, we will not out grow this home. I absolutely loved it. So we schedule a walk through and find out it is a flip, it was a foreclosure that is now owned by it's second flipper. The house hasn't been lived in, in about 3 years. The flipper did put in some nice upgrades, but I am really having flashbacks. Because it is for sale by owner, my husband and I discuss our concerns with the owner (who does not have a mortgage on this property) and she agrees to rent it to us for a year. At the end of the year, they will offer it to us for the same asking price or put it back on the market. Well, the rent payment is about half of what I was expecting the mortgage on this home to be, so I am already saving tons of money a month. I am not having to pay the taxes or the home owner's insurance on it, another large savings. Because of the real estate market homes of this size just aren't selling so this works out well for both of us, and gives us time to sell our other home. I am guessing that with what we are able to save this year to go towards the purchase price, we will be able to get a 15 year fixed interest rate for about what we would have been paying for a 30 year note if we had purchased this year.

We signed a lease agreement and move in. Within the first week one of the AC units and the jets on the tub go out. This is the great thing about a lease, the owner had to replace both. I didn't spend one penny of my money on those repairs.

While I generally think that renting is throwing money away, in this case, we are actually saving more money. If we had purchased this house only about 10% of our payment would be going to principle for the first year. We are now able to save about 50% of what our payment would be in an interest bearing account along with the taxes that we would be paying. And it is very possible that the real estate market won't bounce back this year. So we may get a better price on the house in general or find another that is just a large at an even greater savings.

I truly hope this is the one, it is a beautiful home, and I hate to pack.

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