‘The Big Move’ is a MarketWatch column that looks at in and out of real estate, from navigating the search for a new home to applying for a mortgage.
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 have gone to town to divide the land into a subdivision and get it passed.
I like where I live, but the house is getting old and the kids are gone. I’m a 58 year old nurse. I pay $ 800 a month in property taxes plus my mortgage, which totals $ 2,500 a month.
I was offered a pretty good sum for selling my house for $ 500,000 more than two years ago. I had another house that I liked and had to buy so I wanted to sell. But sales fell through on my house, so I had to walk away from the house I wanted to buy.
Now there are no houses for sale and I have not found anything I like. So I’ll have to rent until I find something. Should I do it? Or just wait until more houses come on the market and sell when I find something? I probably won’t get that much, but the houses won’t be that expensive to buy either. Is not it all happy?
It would be nice to spend money, go on vacation and not have to work so much. But I also do not want to be stuck in a rent that pays as much as I was when I owned my house and be dissatisfied because I rent g a place I do not want to live.
I like my house where I live! But the property tax is just too expensive and I am getting close to retirement and will have to sell. I still owe money on my house and will not pay it before retirement unless I move.
The cost of residential property is rising rapidly across the country, so you are not alone in feeling burdened.
A recent study by real estate data firm Attom Data Solutions showed that owning a home was affordable for the average household in 41% of counties nationwide. In other words, in the other 59% of counties throughout the county, the average family would need to spend more than a third of their take-home pay on housing expenses, including mortgage payments and property taxes.
Many salespeople are in the exact same boat as you. They would sell with a heartbeat – if they could find a home to buy. The inventory of houses for sale is record low and it creates something of a vicious circle. Home sellers are reluctant to market their properties because there is hardly any guarantee that they will have a place to live once the sale is completed.
Renting may seem like a one-way ticket to savings, but it is far from safe. You do not say where you live, but there is a decent chance that it is not that much cheaper to rent. In fact, suburban and rural rents have risen sharply amid the pandemic as families have sought more space to live outside major cities. A separate report from Attom Data Solutions showed that it is cheaper to own a three-bedroom house (at the average house price) than to rent 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 expenses, so even though you may be able to afford the rent for the first year, there is nothing to stop the landlord from smoothing it out when you go to renew. And when you own a home, you build up a valuable financial asset.
A recent study showed that renting a home is still cheaper than renting in nearly two-thirds of the United States despite rising house prices.
When renting, the money you spend will 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 save it for a rainy day and not use it.
However, you are not helpless. Given how low mortgage rates still are – even though they have risen in recent weeks – I would suggest if a refinance was the right one for you. However, given how long you have been in your home and the fact that you are still working on paying a mortgage, I would assume that you have refinanced something recently.
You do not say what you did after you went to your local government to subdivide your land, but if it sits there, I will consider selling it. However, because you have a mortgage, this will not necessarily be a straightforward process.
Once land is subdivided, you need to obtain the written consent of the lender or service person for the mortgage underlying the property, said Tom Trott, a branch manager with Embrace Home Loans in Maryland.
“This requirement is in most mortgages and standard languages in the Fannie Mae and Freddie Mac Trust Act,” Trott said. To sell part of the property, you need the permission of your lender. But if it’s hard to get, you still have options.
“Assuming they could not get a timely approval, another option would be to execute the sale and refinance the remaining balance at the same time,” Trott said.