‘The Big Move’ is a MarketWatch column that looks at the ins and outs of real estate, from the search for a new home to a loan.
Do you have a question about buying or selling a home? Want to know where your next move should be? Email Jacob Passy at TheBigMove@marketwatch.com.
I have lived in my house for 40 years. I live on 5.25 acres and went into town to subdivide the land into subdivisions and passed it.
I love where I live, but the house is getting old and the kids are gone. I am a 58 year old nurse. I pay $ 800 a month in property taxes plus my mortgage, which together is $ 2,500 a month.
I offered a pretty good amount to sell my house for $ 500,000 more than two years ago. I had another house that I liked and was going to buy, so I wanted to sell. But the sale fell on my house, so I had to leave the house I wanted to buy.
Now there are no houses for sale and I have not found anything I like. So I have to rent until I find something. Should I do that? Or just wait until more houses come on the market and sell when I find something? I probably do not get that much but the houses will also not be so expensive to buy. Isn’t it all even out?
It would be nice to spend money, take vacations and not work so much. But I also do not want to get stuck in a rent paying as much as I was when I owned my house and am unhappy because I g rent in a place where I do not want to live.
I love my house where I live! But the property taxes are just too expensive, and I’m coming to retirement and have to sell. I still owe money on my house and will not pay it before retirement unless I move.
The cost of home ownership is rising rapidly across the country, so you are not alone and feeling burdened.
A recent study by real estate data firm Attom Data Solutions found that the average household could only afford to own a home in 41% of counties across the country. In other words, in the other 59% of counties during the county, the average family would have to spend more than a third of their home payments on housing costs, including mortgages and property taxes.
Many sellers are in the exact same boat as you. They sell in a heartbeat – when they find a home to buy. The inventory of homes for sale is at a record low, and that makes for something of a vicious circle. Home sellers are reluctant to bring their property to market as there is hardly any guarantee that they will have a place to live when the sale is complete.
Rent may seem like a one-off ticket to savings, but that is far from certain. You did not say where you live, but there is a decent chance that it is not all cheaper to rent. In fact, rents in the suburbs and in rural areas have risen sharply in the pandemic as families have sought more space to live outside the big cities. A separate report by Attom Data Solutions found that a three-bedroom house (at the median home price) is cheaper than renting a three-bedroom home in almost two-thirds of the country.
There are other disadvantages to renting, to be sure. You have no control over your future housing costs, so while you can afford the rent for the first year, there is nothing to stop the landlord from taking it up when you renew. And when you own a home, you build a valuable financial asset.
A recent study found that owning a home is still more affordable than renting over two-thirds of the United States, despite house prices.
With rent, all the money you spend does not come back to you. Even if you have lower monthly costs, a lot depends on what you do with these savings. Ideally, you would invest it or stick to it for a rainy day, and not spend it.
But you are not helpless. Given how low mortgage rates still are – even though they have risen in recent weeks – I would suggest seeing if a refinance was right for you. But from how long you have been in your home and the fact that you are still working to pay off a loan, I assume you have recently refinanced yourself.
You did not say what you did after you went to your local government to subdivide your country, but if it was sitting there, I would consider selling it. However, since you have a loan, this will not necessarily be a proper process.
If the land is subdivided, you must get written permission from the lender or mortgage lender, said Tom Trott, a branch manager with Embrace Home Loans in Maryland.
“This claim is in most loans and default in the Fannie Mae and Freddie Mac trust deed,” Trott said. To sell part of the property, you need your lender’s permission. But if that’s hard to come by, you still have options.
“Assuming they could not get timely approval, then another option would be to make the sale and refinance the remaining balance at the same time,” Trott said.