The Money Mustache Community
Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: wtrfre on April 30, 2016, 06:20:25 AM
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I currently rent. I live in an area where the rent/buy calculation comes out in favor of buying. Barring a severe catastrophe, (which I can't picture), I will be staying here for at least the next 10+ years for family reasons. The catch, and the reason I am currently a renter, is having a down payment. If I stopped most investing I could gather down payment funds in two to three years. Would it make sense to do this?
I would continue obvious beneficial investing such as 401k for match.
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How much of a down payment do you think you need (you didn't post your location). Do you qualify for VA loan, FHA, etc?
I bought my first house (in 1993) because my mortgage was $300 and rent on a similar house was $500.
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It's also a lifestyle choice. This has been discussed a lot on other threads, as I recall. Which lifestyle do you prefer: Owner or renter?
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I'm concerned that the only way you think you can come up with a down payment is to stop contributing to savings, including your 401(k).
Sure, rent vs buy equation may favor buying here, but what happens if you buy a place and you need a new roof?
If coming up with a down payment requires eliminating your retirement contributions it sounds like you don't have a lot of cash-flow to handle a several thousand$ home repair.
Maybe you are in an area where a down payment is $100k+ - but if you bought the house could you afford a $10k-20k repair in the first year?
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Given your situation, I would only buy if you can rent out one bedroom to a co-worker or a friend. Apply their rent contributions to savings and/or investing.