Greetings and Happy Holidays!
First, I apologize in advance for the amount of details but I want to make sure I give you all enough information to provide an appropriate response :)
About Myself:
Age: 26
Net Monthly Salary: $3,750 (401k, HSA, and IRA fully funded – this is what’s left over)
Avg. Monthly Expenses: $1,250 excluding rent
Current Rent: $950/month for a 2 bed/2 bath (just resigned lease for 2016); approx. 1,050 sqft
Additional Facts:
I moved to Jacksonville 1 year ago and of course decided to rent 1.5 miles away from my work. However, after a number of years post-graduation I’d like to start building equity in a home instead of renting every month.
I’ve read numerous articles about renting vs buying, used Michael Bluejay’s online calculator, read forums, etc. but I’m hoping to gain more insight from you all.
I know while renting I get the “flexibility” instead of being tied down and it’s expensive to close on a house, but I have some advantages with my job that I think tip me into the buy camp.
Through my employer, if I get relocated (or decide to relocate with them) they will cover the both selling and buying closing costs. I have to stay 24 months with the employer (I’m not planning on switching employers anytime soon) and I already have to stay 36 months starting in 2017 so that I don’t have to pay them back for my MBA.
Proposal:
Given the above information, I’m looking to see if it’s beneficial to buy considering I’m looking for the following:
3+ Bed/ 2+ Bath SFH for around $175K +/- ~$25K depending on location
1600+ sqft (parents often visit from up north for 2+ months every winter – in fact, they’re here right now!)
These definitely exist in the Southside area of Jacksonville where I’m looking, I think it’s just a matter of pulling the trigger.
As of 12/31/2015 I have $0 saved for a down payment. However, throughout the duration of 2016 I have forecasted I will be able to save $18K (again while continuing to max 401k, HSA, and IRA). At this point if I decided to buy in 2016 or 2017 I would likely only be able to put 5% down. Additionally, if I need to break my lease the cost is 2 months of rent (although I could likely negotiate with the owner as he is quite flexible).
I’ve researched 30 year mortgages and with my credit score (770+) the lowest rate is ~4.25% give or take. Using usmortgagecalculator.com I’ve calculated the monthly payment (including PMI, taxes, insurance, HOA, etc.) to be approximately $1,400/mo.
Again, if I’m asked to move in the next few years both selling and buying closing costs (as well as a myriad of other costs such as house hunting, transportation and moving household items, etc. will be covered). This is the real differentiator here as the big "risk" in buying then moving in a few years is almost exclusively in this cost.
Let me know if you need any more info to give sound advice.
Thanks everyone!