Morning everyone,
I am looking to buy a home in May when my lease ends. I plan on buying a single family home with a minimum of 3 beds and 2 baths. I am currently renting a 2200 sq. ft. 3/2 house for $1500 a month. After rent is split, my cost is $515 + utilities. I live in San Antonio, Texas so the COL is pretty low here. The average cost of a 3/2 here is around $210K – $200K.
$515 in rent is not much but I would like to pay less in rent or no have rent by buying a place and renting out the extra rooms.
Financials:
I net around 70K a year. However, I am front loading my 401K this year so for the first 4 months of this year, my bi-weekly check will be 50% of what it would normally be. I’ve calculated for the first 4 months of this year, my gross pay will be $822, which I can manage with without having dipping into my savings.
I have roughly 17K in cash before I max out my IRA for 2017.
My monthly expenses other than rent are extremely low. I own my car and don’t have any loans to pay. My cell phone and insurance are $100 monthly. I also spend around $40 a week on groceries and $30 a week in gas.
My credit score is hovering around 750, most in part to churning a year or so ago. I was planning on going with a conventional mortgage and putting down 5% as opposed to an FHA and putting 3.5%. I don't like the fact that the PMI/MIP for an FHA doesn't drop off at 20% equity and your only option to get rid of it is to refinance. If anyone disagrees, please convince me. With the home price staying the same, 5% down on a conventional has a lower monthly payment than 3.5% on an FHA. If I can qualify for a conventional mortgage with 5% down, it seems like the better option in the long run.
Looking Forward:
For reference, I’m 25 and have been in a relationship for about 3 years now but am not married. In about a year I’ll graduate with my MS in Data Analytics and I’ll probably be looking for a new job if I don’t get a raise/promotion/ new job at my current company. With that being said, especially with the work I’ll be doing, it might be advantageous to move to a larger city that has more prominent tech companies. This is the only reason I am holding back from buying, is the idea that I might be moving within a year. However, the chances are slim.
If I do purchase and within two years need to relocate, my plans are have a management company take over the property, as a buy and hold strategy. It wouldn’t make sense to sell because I would probably put myself in the hole because of it especially in that short of a time frame.
My other worries are juggling a full-time job as well managing the house i.e. finding tenants and maintain the home.
I’d appreciate some outside perspective on this situation. I need some sense talked into me to help me rationalize this decision. It’s obviously a big one and would appreciate the advice.
Thank you!
