Last week I got a message from my landlord informing me that by the end of the summer, she plans to move into the house where my family and I currently reside. She's giving us plenty of notice, but we want to get situated and out of here by June or July.
We're sad to leave. Our 3-bedroom rowhouse has a great little backyard, it's close to parks and the library, and it's really walkable to nearly everything in our daily lives--all for $975 a month, which is about $100-200 below market in our area (eastern PA). Comparable rentals are more like $1200 on average.
Since we had such a great deal on the rental, we planned to keep renting for a few more years while aggressively tackling our student loans. But now that we have to move, after researching the rental market vs. buying a house, buying looks like something we should at least consider. Or maybe it's ridiculous.
Here's our financial picture--
ASSETS: we have $15k in cash, $20k in my IRA and $7k in my wife's Roth IRA. Plus a family member has pledged a gift of $10k when we buy the house. Assuming about $5k for closing costs and not tapping retirement funds, we'll have $20k cash available for a downpayment.
LIABILITIES: $37k in student loans. [Edit: Highest loans are at 6.8%.]
So in other words, we have a net worth of just a few thousand over $0.
Are we crazy to think of buying a house? We could buy a place comparable to our current house for around $150-180k. With P&I, taxes, and homeowner's insurance, we would still pay less per month than the going rate for rentals on a similar house. Not sure how much PMI will add, since we would not be putting down 20% (more like 10-15%). [Edit: Average property taxes (school district, county, and municipal) in our area are about 2.5% so we're looking at $300–400 per month in taxes.]
My wife and I have both been property managers; we know the headaches of owning and there's a good reason we've been renting all this time! But the rental options are very limited, not very cheap, and we're not thrilled at the idea of having to uproot again if something similar happened with our next landlord.
We just want to get these student loans knocked out as soon as possible so we can move on to the saving side of financial independence. And we're trying to figure out which option, renting or buying, will be the best at getting us there. Now soliciting advice from those of you who have been here and want to share your wisdom. Thanks in advance!