Asking for a sanity check here to make sure I'm not either A) throwing money away by falling into a trap or B) missing an opportunity out of overcaution. I've never done this before.
I'm renting a room in a house for $350 (which is a good deal even in my LCOL area), in which I have one agreeable roommate. The landlord, who is the roommate's mother, is considering selling the house. This means that I might have to either get a new place, or deal with a higher rent payment if she eventually does so--but to both avoid that and to make some extra income, I'm considering being the one to buy the house. This will depend on how long it takes the landlord to decide and how much she tries to sell the house for--since this will impact how much money I'll have available for a down payment and how much the resultant mortgage payments would be. For reference, similar houses around here are going for up to $100k. Being early in my career, I've got about $9k available, so this isn't enough for 20% down unless she dawdles on the decision to sell and I continue saving. I could also sell my car, which I was planning on doing soon anyway, to get more down payment.
The benefits of buying would be:
1) Mortgage payments going into home equity, so I could possibly sell the house later if I move, recouping some of the payments. Appreciation of the house is secondary and not something to count on.
2) Getting access to a home equity line of credit.
3) Rental income. An extra $350+ from a roommate every month would be a much better return on investment than the standard 7%. The way the house is set up, it also looks possible to DIY up some walls around a specific lowered area to cordon off a bedroom for myself, which would allow me to rent out both of the standard bedrooms.
Drawbacks would be:
1) Using up my entire stash for it. Concern! Alarm! Panic!
2) My credit might not be good enough to get a good mortgage interest rate, especially if I don't have a 20% down payment. Mortgage insurance would suck. It's also possible that the banks wouldn't be happy about a "small mortgage", because that's a reluctance that's happening lately for some reason. Due to my available funds, it might not be possible to buy the house at all?
3) Home maintenance costs--though since I started living here in early March, no appliances have broken or anything, so the home seems reliable on that front.
