Since moving back home to Chicago from New Orleans, I've been living with a relative, ok my
twin brother. My living situation is not Fibro Friendly and I need to be in my own place by June 01, no later than July 01. Based on the rents in the area in which I wish to reside and the corresponding move-in rates, I could purchase my home.
I've weighed the pros and cons of both renting and buying a home.
RENTING
Pros
Landlord is responsible for all repairs.
Mobility – free to move at the end of the lease.
Cons
Any equity accrued belongs to the Landlord.
Lack of stability – the landlord can refuse to renew the lease or can sell the home.
Your Landlord can increase the rent with each renewal period. In some places, there is no cap on the percentage of increase.
There are no tax benefits of renting.
The Landlord has control over your ability to own a pet or smoke in your home.
You are obligated to follow the rules and regulations set forth in your lease.
Can’t decorate or renovate the way you want.
When you move, you may not get your deposit back and may even owe the landlord for repairs of damage caused by you and/or your visitors.
BUYING
Pros
Homeowner accrues equity.
Stability – you know you can stay in your home as long as you wish, and, continue to pay your mortgage.
If you choose a fixed rate mortgage, your interest never increases over the life of your loan.
Tax deduction – you can deduct your annual interest paid on your mortgage loan.
Unless you purchase a condo or within a homeowner’s association, you set your own rules about what goes on and into your home. Ex: pets, smoking.
Pride of ownership.
Decorate and rehab to your hearts delight within your budgetary limitations.
Control – you can sell or rent your home based on your situation and needs.
If you were unable to keep up on repairs to your home, when you sell, you can sell it as is.
Cons
Homeowner is responsible for all repairs.
Restricted mobility – if you need or want to move to another locale, you have to either sell or rent out your current home.
Property taxes may go up, and if you used an adjustable-rate mortgage (ARM) your mortgage will fluctuate based upon the national interest.
Volatile housing market – when you do decide to sell your home, it may be worth more than you paid for it (hooray for you) or it may be worth far less (leaving you with little or no equity so that you have to bring money to the table in order to sell).
If you were unable to keep up with repairs to your home and you sell it as is, you might not get the amount you desire.
I actually started the homebuying process back in January 2020 by attending an introductory meeting to a not-for-profit organization called NACA (the Neighborhood Assistance Corporation of America). As I began collecting the information needed to apply for a mortgage, COVID-19 broke out and was declared a global pandemic. I went into a major Fibro Flare and canceled an appointment. The appointment was rescheduled and the governor enacted a Shelter-in-Place order so the second appointment was canceled.
Due to the urgency of my situation, I sought out comparative mortgage offers. I've received 3 other offers. NACA's is the best with no down payment, closing costs, points or fees. I'm still waiting to hear how much the approved loan amount will be. The other offers, all are modest based on my retirement pension, range from 3% down payment to 5% down with an interest rate of 4% to 5% and all require closing costs, points, and fees.
So I find myself looking at additional mortgage-related pros and cons:
Pro
Which mortgage program can get me to close the quickest
Which mortgage program provides the lowest interest rate
Which mortgage program offers the lowest down payment amount [as close to NACA as possible] (can loan officer find me a down payment assistance program?)
Which mortgage program requires the lowest amount needed to bring to table for closing (can real estate agent/loan officer get the seller to pay the cost)
Con
Long application and approval process (cannot get to closing on/before June 01)
Mortgage interest rate is prohibitively high
High down payment (no assistance programs)
Highest amount needed to bring to the table for closing
So the winner will be the mortgage company that gets me to closing the quickest with the lowest possible interest rate and little to no money down closing costs. I realize that most "No money down" programs are simply rolling closing costs into the loan, which either extends the loan or increases the monthly payments but ...
I have set a monthly budget for PITI so even if I am approved for a ridiculously high sales price, I am only going to look at listings that fall under my PITI.
I have a substantial amount saved for a down payment but I would rather save as much as possible for an emergency fund. Let's face it, no matter how well maintained a home is, something will need to be fixed or replaced within the first year. Besides, I want to paint and sanitize before moving in.
Housing hunting in the age of Coronavirus
I know the area I want to buy in, my son and daughter-in-law and their baby already live there and my daughter and her daughter are there also. My granddaughter loves her new school and is close to a whole new set of cousins.
I have ...
made a list of what I absolute must have in a home, and what I would like but can live without.
driven through the school district making lists of homes with for sale signs.
surfed the real estate websites for listings that don't have signs.
made a list of homes I'm interested.
checked the MLS of each home to compare asking prices and then calculating their PITIs.
looked at the listing pictures
No matter if I rent or buy, the search for a new home was already difficult with Fibromyalgia, now Coronavirus has added a new dimension, the need for creativity in the home search.
Comments