Vanderbandit, Other/Just Looking in Fond du Lac, WI

Should we buy now with a smaller down payment (4-6%), or buy in two years with a better down payment (6-10%)? Worried home prices might go back up.

Asked by Vanderbandit, Fond du Lac, WI Mon Dec 12, 2011

My husband and I are ready to have another child, but we need more space. After looking at prices of renting a 3 bedroom home it feels like i'm throwing my money away. It would cost us more to rent than to own. Price of av. rent for 3 bedroom home is 600-900 with little to nothing included for utilities. Average mortgage for homes were looking at is 300-500 (including ins. and tax). We both have fair (630-670) credit that is on the rise since we have been establishing our credit. We also have decent stable jobs with no debt. The only problem is we do not have a lot for a down payment on a house. I just want an opinion on if it would be worth it to get into a house of our own now even if it means paying higher rates or if we should just keep renting for awhile to save a little bit more and build our credit more. I'm just wondering how long before house prices start to climb again.

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Heath Perry, Agent, Fond du Lac, WI
Sun Nov 11, 2012
The biggest worry should be about rates going up. We just saw a slight interest rate increase this week. The rates will never be this low again. A couple of percentages of a downpayment do not make up for a percent of interest.
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J, Agent, Greensboro, NC
Tue Jan 17, 2012
This is a great question. While reading your thread my first thought would be your credit score (CS) rating. Your CS rating will have a major impact regarding the type loan you will qualify for and the terms and rate at which you will get. Looking at your current financial situation I begin to think about short and long term goals and how purchasing a home right now will affect this.

Perhaps, instead of looking at what you may be able to purchase with your current CS today, think about what you may be able to purchase with a higher CS and more downpayment in the near future? I would not settle on a property because it is all your CS will afford you right now. Your choices will be far greater financially if you continue to work toward a higher credit score and downpayment. I think the housing market will continue on its current path. Please, do not settle. Good luck!
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Maria Morton, Agent, Kansas City, MO
Mon Dec 12, 2011
If you buy in 2012, you can always work on raising your credit scores and refinance in a year or two - if interest rates are still low. To raise your scores, pay all of your bills on time every time and lower your debt-to-income ratio.
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Susan Rahn, Agent, Fitchburg, WI
Mon Dec 12, 2011
Hi Vanderbandit,

I completely agree with every answer thus far. There are many reasons to look into buying now. Fond du Lac is a very stable area and there are many potential ways to get additional closing cost help and possible down payment assistance or grants in this current real estate market.
down payment: I think you will find that the additional 2-4% down is going to have a very minimal affect on your monthly payment at the current interest rates. a slightly higher interest rate over 30 years will have a much more significant negative affect.
credit score: in talking with one of the lenders i use often, the discount in interest rates for having a higher score really don't have a lot of impact until you are around 740 score. Feel free to contact her anytime at 608-212-9305... just tell her I sent you over. She specialized in first time home buyers.

We cannot predict what the market will be like 2 years from now but i can tell you that in the last year Fond du lac, as a whole, has had a .2% increase in home prices. some specific neighborhoods, of course, have declined. If you want to let me know the neighborhoods or areas you are looking at in Fond du lac I would be happy to assist you in any way i can.
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Bob Movin-On, , Hartford, CT
Mon Dec 12, 2011
The lending industry bases their underwriting on a 2016 rebound and if you search real estate sites you find many agree that their will be a very slow real estate market rebound. Obviously that is a general US territory consensus and rebound will be area specific.

Good Luck
Bob Patrick
Buy a home after foreclosure, short sale, deed-in-lieu-of or bankruptcy
Movin-On LLC
Helping families/people that have lost their homes get back into another in as little as 6 months
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Jim Simms, Mortgage Broker Or Lender, Louisville, KY
Mon Dec 12, 2011
The price of the house going up is not the only issue, that will happen as the demand increases. Increased demand will also make interest rates push higher. Prior to last year the average conventional rate for the previous 40 years was 9%. THAT is the number to be concerned about. It isn’t what you pay for the home but the cost of the funds you borrow that is the kicker. No one can tell you when is the right time for your family to jump in, only every day you don’t is one day closer to the day rates rise. Good luck,
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John Dietel, Agent, Hutchinson, MN
Mon Dec 12, 2011
Check this calculator out. It may help your decision.
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Bill Eckler, Agent, Venice, FL
Mon Dec 12, 2011

The one thing you can depend on is an opportunity that exists now....planning on what the housing market will be like in 2+ years will likely only present you with speculation at best with no guarantees.

Our recommendation is to begin by visiting several mortgage representatives to find out if and what you may qualify for. Having an accurate appreciation for the programs and rates for which you qualify may clarify your options.

There is no time like the present but being practical involves becoming involved with resources within reason and currently at your disposal.

Good luck,

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Abu Musa, Agent, New York, NY
Mon Dec 12, 2011
Look buying is always better than renting.If you can afford mortgage you may buy.You may talk to a mortgage banker about down payment.
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Carlos Herre…, Agent, Orlando, FL
Mon Dec 12, 2011
In all honesty, your guess MAY just be as good as ours for the future conditions of the housing market. Many different factors can make a difference in a few years from now.

I really do think, however, that you have answered your own question and made some valid points for yourself about buying.

Prices are very low right now. I do think the market has began SOME stabilizing which doesn't necessarily mean that prices will jump up, but it doesn't mean that they will go any lower either. Mortgage rates aren't very high at all right now. Between that, home prices being low and the ability to buy with several low down payment programs, I don't see any reason not to buy. You already know that renting is quite possibly costing you more, and even if it was costing you the exact same amount, you're paying someone else's mortgage.

With rent vs. buying there are pro's and con's to each. You may not want to deal with big repairs and other issues that could arise from owning. Then again you may not want to deal with a landlord, changing rent rates, the potential of not getting a lease renewal the following year, etc.

In my opinion, I say go for it. Buy.
Get to a mortgage professional and see where you stand. See how much you qualify for and do some looking around at houses. This might give you a much better insight as to whether the market has what you are looking for right now, with what you can afford.

Best of Luck!
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