Should I buy a house? This one? Now?
December 6, 2007 9:28 PM Subscribe
Should I buy a house? This one? Now? (Sticky family and personal issues involved.)
posted by anonymous to grab bag (15 answers total)
Background: My grandparents are Florida 'snowbirds', with a condo there and a house in an NYC outer borough. I lived with them in the house since I was a teenager (27 now), and now live there as a sort of caretaker while they spend longer and longer periods in FL. Florida hits snowbirds with considerable property taxes, and they have a mortgage on the house. They need (on a fixed income so these bills hurt) to sell to do away with those mortgage payments and qualify for the low taxes as actual FL residents.
I'd like to buy the house: I've lived there for over 10 years now and have lifelong friends nearby. It's a good neighborhood and near all forms of transportation into Manhattan.
But my grandparents think it's still 2005 and can get $500k for the house. Earlier this year, on the same block, a significantly larger lot went for $550k, and a slightly larger corner lot went $470k. They're asking $450k from me, a family 'discount' of sorts. This (the possibly unrealistic pricing) I can deal with, but it's delicate because it's family and money.
One problem is the down payment: I don't have it, but my 401k has plenty to cover it (I'd pay the closing costs with cash). I'm not all that comfortable dipping into that, but others whom I trust said it's not a big deal since I'm young. Brokers told me about no-money-down mortgages, via sort of slight-of-hand with the bank, another thing I'm not exactly comfortable with. Is there anything wrong with either of these options?
I make enough to cover the monthly payments including taxes and insurance and utilities, with extra for actual living.
Indecision #1: The house is zoned for two-families and can be converted to such relatively easily, though not quickly. So there's potential income but nothing that would cover more than a third of the mortgage payments. Renting the house as two units (one 3br, one big basement studio) would cover up to a quarter, but in my area a 3br can take a while to fill and isn't all that practical. This is the basic rent vs buy problem, but with 'buying' being upwards of 4x what I could rent adequate space for. So: buy now, or rent and save to buy later when I have cash to put down? Market uncertainty plays heavily into my considerations here.
Indecision #2: Since I was a teenager, I've nearly always sacrificed youth and time in pursuit of money and financial security, right up until today, mostly with regret at having 'missed out'. For example, the past three years building a company, I've lost that time for finding stable (romantic) relationships, and the social skills necessary for that. So: am I now at the age where pursuing financial security is more important than living 'normal', renting, being social?
Indecision #3: I was hoping to go to school (I have no degree and would be starting from scratch). Two motivations here: an education towards a career switch or simply advancement, and an environment conducive to socializing. I've had these intentions going on 5 years now, never actively pursued. It would be impossible financially if I were to buy the house. School being recommended, is it realistic given my past?
Indecision #4: I'm being treated for bipolar, relatively successfully, but I am always wary of long-term plans, that they're unattainable, that they'd fizzle out. This mainly applies to renovating and converting the house to a two family and renting it out. I have no idea how to approach this.
Indecision #5: I think you'll find it apparent that I'm more uncomfortable with buying than not. But I can't shake the thought that I'm rationalizing apathy towards moving or just plain fear and uncertainty. Or something more complex: Am I avoiding real, binding responsibility? Avoiding 'growing up'?
Apologies for the length. I tend to over think things trying to sleep at night.