Help: We are First time home buyers!? No family to give us advice.?

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I need some perspective here.
History: We are 1st buyers= no experience.
We have been renting a parsonage house from my husbands employers for 400 a month- large house, 100+ years old- issues with mold and structure are going to cost the Church (my husbands employer) about 4300 dollars AND A LOT more money to fix up this house right… ( not just patch it up) It is a money pit so they want to tear it down…I completely understand that.
They have asked us to relocate- Since there are NO houses for rent in our price range- we have to buy a home….
They have decided to give us the money that was estimated to fix the mold (4300) and have raised my husbands pay 200 dollars a month… All that is great. However- I am 7 months pregnant, and we STILL have a very limited price range to buy a house… 70-100K
We were given an estimate that our mortgage payment with tax and insurance included will be 670 a month which is pretty much as high as we can go a month since we have a toddler and are expecting a baby in Oct.

The major problem is: we are probably only going to be living in this town for another 5-7 years until my husband can go to graduate school- so being able to resell the house is a priority. Location is a key issue for us. We live in a town that has old run down houses right next to nice sub divisions -the “good” neighborhoods are WAY out of our range,so finding a good house in a resalable location is difficult in our price range.

We’ve looked at houses at the low and high end of our price range and as it turns out- we are on the edge of all the good houses- and on the tale end of all the crappy houses (that will need WAY MORE WORK *costly*- than we can afford either financially or time wise- as we will have 2 small children).

SO here is the QUESTION:
Should we go for the top of our budget to have a nicer home but be close to, if not totally “house poor” – but not have to do as much fixing up and have a better chance at resale…OR…should we aim at lower priced homes, get a house that needs more work -in a more questionable location, do what we can afford within the 5-7 years and hope for the best?

I know this is long, but I am desperate for help and we are running out of time… We are working with a USDA loan and a guy who is known for closing in 3 weeks… So I do think it is possible to get into the house before I have the baby. However, I know that may not happen- either way we don’t want to get locked into a house that we can’t sell, or end up not being able to afford our children.
Another reason for the Rush is the mold issue- it has started to affect our health.
Commuting is NOT an option- the nature of my husbands job ( facilities supervisor ) requires that he be available to the church sometimes even in the middle of the night.
Since we aren’t financial stable- GAS is an issue to consider as well.
We pay 400 for this house because it is old and because the church owns it and my husband works for the church… There are NO 3 bedrooms for rent in town and a 2 bedroom is more than a house payment would be. OBVIOUSLY THIS IS NOT AN IDEAL SITUATION.

  1. Reply
    January 30, 2011 at 11:12 am

    You would be mad to buy anything. You need to move further away and your husband needs to have a long commute. I say this because you do not sound very financially stable and as you are planning to move in 5-7 years, it is too big a risk for you.

  2. Reply
    Patricia C
    January 30, 2011 at 11:22 am

    We’ve bought several houses over the past 53 years and made what I consider the mistake of sometimes buying low. Unless you are a senior citizen I recommend that you buy the best house you can afford. Good houses increase in value more proportionately than less expensive houses do. In case you haven’t heard this before, they say the 3 most important things about a house are – location, location, location.

  3. Reply
    January 30, 2011 at 11:51 am

    Educate yourself with the real estate market in your area. Ask your realtor to give you information regarding how long it takes to sell a home, average price, areas that sell the quickest, age demographics of Future home buyers (old/young), future growth prospects for your town. Get all the information a seller would need. In many areas the price of real estate could still drop due to the number of foreclosures the banks are holding that have to be put on the market. Prior to making any offers get a market evaluation done based on the like sold properties in your area for the past 90 days. You can base your offer on that. Make sure your realtor shows you the comparative properties that are being used for the evaluation so you can drive by and look for yourself. 5-7 years from now the market should start to recover. We just don’t know from what point they are going to recover from. The next demographics that will be the dominant buyers will be a younger group 28-35 years old. Most likely buying starter homes. Again check your area. Information is key.

  4. Reply
    GI Jane
    January 30, 2011 at 12:50 pm

    Would you consider renting a few more years? 100K investment for such a short term is pretty risky. Odds are your home will not increase in value at all, better odds are it will lose value especially if you’re in an older run down area. You may be upside down when you decide to sell leaving you in financial hardship.. It’s rarely recommended to buy if you know you’ll be selling/moving in under 10 years, unless you are making improvements, such as putting in hardwood floors, new counter tops etc – think of it as flipping, but very slowly. Then it may be wise to buy short term…
    Also consider a 15 year mortgage, you’d be in decent shape to sell in 5-7 years, whereas if you go with a 30 year loan, your principle will barely have a dent in it, again, could leave you upside down.

    Plus keep in mind basic upkeep and maintenance, if your finances are tight, you may not be able to afford to fix/replace problems that arise, such as leaky roof or broken fridge, etc.. It’s very important to keep an emergency savings, especially when owning a home, insurance doesn’t cover everything, you have to be financially prepared. Problems will occur in a home, it’s not a matter of “if”, it’s a matter of when..
    Keep bills in mind too, utilities, heat, yard, trash, water etc is all your responsibility. It’s expensive.. I’m not trying to talk you out of buying, I’m just trying to help you understand the finances involved, whatever you pay renting in total, expect to pay about double that when owning, from increased bills to basic maintenance, the costs add up quickly… good luck

  5. Reply
    January 30, 2011 at 1:04 pm

    One thing that you might consider is renting or buying something besides a house. Townhomes or duplexes will be lower cost, and if you are planning on moving in 5 years any way, you can get something lower cost now and save the difference to apply towards a bigger house when you move.

    If that’s not possible, you want to be in the best location you can afford. However, I am concerned about you being house poor. If you can’t afford the fixes to a place, it will deteriorate and that will make selling it harder.

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