Home Buying in Plano>Question Details

Gayle, Home Buyer in Plano, TX

Considering purchasing a home (for the 3rd time) have been in an apartment for the past year because we

Asked by Gayle, Plano, TX Thu Jun 19, 2008

weren't sure we were staying here, now we know we will be here for at least 2 more years. Would it be wise to buy now or continue renting? I know its how much is rent vs. home payment, but are there other factors to consider?

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Yes, there are other factors you may want to consider. One of them being the Tax write off you will now be able to write off on the mortgage interest and Mortgage insurance (if needed) when you own a house. Compared to renting when you have no write off, it can make a big difference at the end of the year. Also keep in mind that you are now in a buyers market where you may be able to get a bargain on a house. Interest rates are still historically low. Now keep in mind that banks have tightened their guide lines, so qualifying for a mortgage will be a deciding factor as well. Now if you’re still on the fence you may want to consider a lease option. This will allow you to lease the property (for a pre-determined amount of time) with the option to buy (pre-determined price) at the end of the lease term. Most importantly I think you need to consider what your future goals and plans are and start there. Keep in mind that if you bought now you could always sell later and or keep the property as an investment and start building your real estate portfolio.
1 vote Thank Flag Link Thu Jun 19, 2008
A lease option is when you rent a house and are given the option to purchase it at the end of the lease term. The terms of the sale are agreed upon at the time you lease it and negotiated with a portion of the rent to go towards the purchase price. However, there is also a down payment that is paid to the owner upfront and it is non-refundable.

This is a practice that is not recommended as too many things can go wrong within the time you rent.

If you decide to purchase a place but you think you have to sell in 2 years, to make it worth your while, you would probaly want to look at something in a highly desirable area to rent. The rental market is very likely going to remain strong for a few years.

Naima
Web Reference: http://www.sumnerrealty.com
3 votes Thank Flag Link Wed Jun 25, 2008
Yes Tax deductions is one of the top reasons. Then appreciation, even though properties are not appreciating as much as they did 10 years ago, we are lucky to be in a market where we are still seeing home values go up. Also the pride of owning your own home is priceless.

Financially it would take you 2 years to recoupe your closing costs, so if you are 100% sure that you are leaving in 2 years and if you are happy with the place you are renting, may be keep renting may be the right answer for you. In 2 years, you may end up staying longer and you would have been renting for 3 years instead of building your own equity. etc...

Naima
214-289-8555
naima@sumner-realty.com
Web Reference: http://www.sumnerrealty.com
3 votes Thank Flag Link Thu Jun 19, 2008
Gayle, Typically I'd suggest planning to stay at least 3-5 years, unless your company will pay for your move. However, this is really crystal ball forecasting as none of us can tell you what the market will do in two years. Could go down, could go up, could stay the same. Remember you'll have closing costs going in and approximately 8-9% costs when you sell. If you think prices will rise 5% or more per year over the next two years, you might consider buying. If you think there is risk that they won't, then financially it may make more sense to rent. Of course none of this takes in to account happiness and hassle factor. If you hate apartment living, then you might live better in a house.
Web Reference: http://www.teamlynn.com
1 vote Thank Flag Link Fri Jun 20, 2008
Bruce Lynn, Real Estate Pro in Coppell, TX
MVP'08
Contact
Gayle,
I would suggest that you look at your expenses and look how much you will pay out in the 2 years for renting or leasing a property. Remember that you will have closing costs if you are going to sell a home and that may eat up some of the money that you are going to make when selling. You will also need to make sure you have a strong professional realtor to guide you on where to buy a home because in some neighborhoods the values may have been hurt because of foreclosures. They might help you find a good deal when buying but you also have to be able to sell when it comes time. So if buying is your decision, buy in an area that has the potential of increasing in value. Depending on your finanicial picture you will need to consider your mortgage options. Buying a home is great for tax reasons, but that shouldn't be the only reason. If you find a great buy, you may want to hold onto it because you can later use it as an income producing property. By doing this you get both tax deductions and income. It really all depends on your goals and what you are looking to do with your finances. Feel free to contact me if you have any additional questions.
1 vote Thank Flag Link Fri Jun 20, 2008
Gayle,
Another thing to consider (aside from the tax reasons & the fact that after only 2 years in a home you may still be "upside down" and have to pay money to sell it) is that if you don't own a home for 3 years or more you may be considered a "first time buyer" which could afford you some additional benefits when you do decide to buy. Since you have already been renting for 1 year, you may consider signing a 2-year lease and then when you relocate the next time you could qualify as a first time homebuyer in your new location.

Good luck! I hope you find the perfect solution for your family.

Melissa Hailey
Coldwell Banker
http://www.NorthTexasTopRealtors.com
214-418-0180
1 vote Thank Flag Link Fri Jun 20, 2008
Gayle, I would ask your agent the average appreciation per year. In our area you may end up coming to the closing table with a bit of money if you aren't there for a little more than 2 years. That being said it still might be worth it. Our rentals here are fairly expensive compared to the house note that you would have if you bought a comperable home. Sit down with a good real estate agent and call your CPA for better advice that applies to your area.

Good luck whatever you do!
Web Reference: http://www.ChrisTesch.com
1 vote Thank Flag Link Fri Jun 20, 2008
Gayle,

You also get to write off your homeowners taxes and insurance on your Federal Taxes, so you get a big tax break that you are not getting now as renters. Additionally, you are building equity in a property and increasing your wealth instead of Lincoln Property's or wherever you live. You get to enjoy living in the home and not having people live on top/side/bottom of you. You have more control - you can paint, put up all the wall hangings you'd like, change flooring - do whatever you'd like as you own it.

Those are just some of the benefits I can think of when buying off the top of my head.

Happy to help,
Terri Hayley
1 vote Thank Flag Link Thu Jun 19, 2008
Hi Gayle,

If you haven't purchased a home yet the $8,000 tax incentive for first time home buyers will make home ownership even more valuable. You are considered a first time buyer if you have not owned a home in the last three years. Go to http://www.thefirsttimehomebuyerguide.com/ for information on qualifying and buying your first home. You must close on your new home by December 1, 2009 to qualify for the new $8,000 tax credit .
0 votes Thank Flag Link Wed Sep 9, 2009
House Price= $140,000
Monthly PMT= $1,339.00
Interest Rate= 7.5 %
Tax Rate: 26 %
Down Payment: $7000
Average Annual Interest= $9,886
Annual Tax Savings: $2,570
Adjusted PMT= $1,124
Your Rent is $1,200

If appreciation is as planned then,
appreciation will be $6,395

What do you think Gayle, would investing in your own home over renting be a good move? YOU BET.

Plano, Texas, more than ranches and wide open spaces
It’s true that Plano, Texas, is home to acres and acres of ranches and wide open spaces but this diverse city has much to offer culturally, economically and intellectually too. In fact, Money magazine has voted Plano "The Best Place to live in the Western United States." Anyone interested in buying a home in Plano will be glad to know that the city is rich in the arts, has a strong economy and has schools which rank as some of the top in the country. So, if you’re interested in wide open opportunities, be sure to check out Plano, Texas.
Consider Plano Gayle

Ron Pritchett, Realtor
Century 21 Judge Fite
214-802-6708
Web Reference: http://www.RonPritchett.com
0 votes Thank Flag Link Sun Aug 17, 2008
Hello Gayle, lets talk about your concerns and the money you can save owning a home of your own. Have you considered Plano?
Plano, Texas, more than ranches and wide open spaces
It’s true that Plano, Texas, is home to acres and acres of ranches and wide open spaces but this diverse city has much to offer culturally, economically and intellectually too. In fact, Money magazine has voted Plano "The Best Place to live in the Western United States." Anyone interested in buying a home in Plano will be glad to know that the city is rich in the arts, has a strong economy and has schools which rank as some of the top in the country. So, if you’re interested in wide open opportunities, be sure to check out Plano, Texas.

Ron Pritchett, Realtor
214-802-6708 cell
Web Reference: http://www.RonPritchett.com
0 votes Thank Flag Link Sun Aug 17, 2008
Look for something under 5 years old if you are only going to be here for a few years. You will not recover what you are spending in rent but you will get tax benefits if you purchase a home now. Brad is right, there are so many options and bargains out there. The time is right!!!
Web Reference: http://www.CaroLPease.com
0 votes Thank Flag Link Mon Jul 7, 2008
BUY, BUY, BUY.

There are so many deals and why not have equity in a home and in 2 years, the market will be back up again.
0 votes Thank Flag Link Mon Jul 7, 2008
You have all been excellent. Thank you for sharing your knowledge with me. Now I have one more question- what exactly is a lease/buy option? What is involved with that? It seems like a good option for us since we aren't sure we'll be here for more than 2 years, but could end up staying much longer.
0 votes Thank Flag Link Wed Jun 25, 2008
Hi Gayle - I agree with Bruce's advice as there are a lot of costs to buying and selling a home. Two years can go by pretty quickly. I would suggest putting together a financial spreadsheet with projected costs/expenses to compare renting and owning. Of course you have many positive factors with owning a home, but you want to make sure those projected expenses are something you can afford. Since you have a finite amount of time, doing a 2 year projection shouldn't be too hard. This way, you can find out the exact number that will make more sense, whether it be buying or renting. Let me know if we can help you with putting together a financial projection.
Web Reference: http://www.janusREgroup.com
0 votes Thank Flag Link Tue Jun 24, 2008
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