Housing these days is, well, interesting. Particularly ours.
We own a house in a small college town but live in a rented house in a nearby big city. The house we bought was a fixer-upper, and it’s livable (we have a nice family renting it from us right now) but it could definitely use a little sprucing up before it goes back on the market.
We got a note from our big city landlords this week saying they are moving back to Europe and are interested in selling the house we currently rent, either to us now or putting it on the market when our lease runs out December 1.
Kier and I have talked about buying a house, but not this house. So it looks like we are moving sometime in 2012. The question is when, and to where?
We would like to move to a nearby neighborhood that is closer to Kier’s office (he has a lot more emergencies than I do that require him to go into the office with 0 minutes notice, and we just like that side of town better), especially if we decide to buy. Kier isn’t totally sold on the idea of buying a house when we already own a house, especially in this market, and especially when we hope to move out to a more rural setting before our kid gets too old. If we did buy, we would need to get a LOT of help on a down payment from our parents, who have all offered to help in such a situation.
Why can’t we use the collateral in the house we own? Because most lenders I’ve spoken with view that as another payment we have to make each month rather than an asset, UNLESS we can prove that we’ve paid off at least 20% of the value of the house. The housing market certainly hasn’t helped us out with that since we bought it in 2007, but thankfully we didn’t get taken to the cleaners either. The renter has been slowly working on upgrades to the house, but one or two of the bigger projects isn’t done yet and I have no idea how much the house would appraise for in its current state. Plus any money we borrowed from that house would be seen as "borrowed" which is a big no-no right now in real estate (it wasn’t when we bought the house, but again, things change).
However, the rent in our city is atrociously high compared to actually purchasing a house, especially for a small house in the neighborhoods we like with any semblance of a yard that accepts dogs (a dog which we may not even be able to keep once the baby’s born, but that’s a whole different story).
So we’re kind of in a Catch 22: we basically need to put more money into the rental and make sure it appraises high enough before applying for a mortgage for a second home or selling the first home in order to make the more "logical" move to buy rather than rent right now.
Wait, you ask, what about a construction loan? Nope; because we don’t currently live in the house, we don’t qualify for any construction loan that I have looked into, or refinance package that would actually get us enough money out of the deal to make it worth the effort.
We also don’t have a lot of spare money right now because we are still paying off debt from grad school and the original cost of fixing up the house we own to at least be livable, AND I just took a HUGE paycut to get out of a job that was literally making me sick and was almost the final straw on the camel’s back of Kier’s and my marriage.
PLUS, just to throw an added kink in there, we are having a baby in September, and I reeaalllly don’t want to move anytime between August and October, although the way things work for us that’s probably EXACTLY when things will happen.
So, anyway, something along this chain is going to have to give or bend or break or sell, I’m just not sure what yet. If you have any insight or ideas, PLEASE feel free to share.