‘The Big Move’ is a MarketWatch column that looks at the inside and outside of real estate, from navigating the search for a new home to applying for a mortgage.
Have a question about buying or selling a home? Do you want to know where your next step 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 the city to subdivide the land into a subdivision and have it passed.
I like where I live, but the house is aging 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 was offered a pretty good sum to sell my house for $ 500,000 more than two years ago. I had another house I liked and was going to buy it, so I wanted to sell. But the sale fell 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 haven’t found anything I like. So I would have to rent until I found something. Should I do that? Or just wait until more houses come up on the market and sell when I find something? I probably won’t get as much but the houses aren’t as expensive to buy either. Isn’t it all even out?
It would be nice to spend money, go on vacation and not have to work as much. But I also don’t want to be stuck in rent paying as much as I did when I owned my house and being unhappy because I’m renting in a place where I don’t want to live.
I like my house where I live! But the property taxes are a little too expensive, and I’m nearing retirement and need to sell. I still have money on my house and will not repay it before retiring unless I move.
Homeownership costs are rising rapidly across the country, so you are not alone in feeling burdensome.
A recent study by property data company Attom Data Solutions found that home ownership was only affordable in 41% of counties across the country. That is, in the other 59% of counties across the county, the average family would need to spend more than a third of their take-home pay on housing costs, including mortgage payments and property taxes.
Many dealers are in exactly the same boat as you. They would sell in a heartbeat – if they could find a home to buy. The list of homes for sale is at an all time low, which is creating a vicious circle. Home sellers are hesitant to put their property on the market as there is no guarantee they will have a place to live once the sale is complete.
Renting may seem like a one-way ticket to savings, but that’s far from certain. You don’t say where you live, but there’s a decent chance it’s not that much cheaper to rent. In fact, rents in suburban and rural areas have risen sharply in the midst of the pandemic as families have sought more space to live outside big cities. A separate report by Attom Data Solutions found that owning a three-bedroom house (at the median price of a home) is cheaper than renting a three-bedroom home across nearly 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 may be able to afford the rent for the first year, there is nothing to stop the landlord from defeating it when you go to renovation. And when you own a home, you’re building towards a valuable financial asset.
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A recent study found that home ownership is still more affordable than renting across nearly two-thirds of the United States, despite rising home prices.
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With renting, any money you spend doesn’t come back to you. Even if you have lower monthly costs, much depends on what you do with those savings. Ideally, you would invest it or stash it for a rainy day, and not spend it.
You are not helpless, though. Given how low mortgage rates are still – although they have risen in recent weeks – I would like to suggest if refinancing was right for you. But given how long you’ve been in your home and the fact that you’re still working to pay off a mortgage, I’m going to assume you’ve recently refinanced some.
You don’t say what you did after you went to your local government to subdivide your land, but if it’s sitting there, I’d consider selling it. However, because you have a mortgage, this will not necessarily be a straightforward process.
When land is subdivided, you need to obtain written consent from the lender or servicer of the mortgage underlying the property, said Tom Trott, branch manager with Embrace Home Loans in Maryland.
“This requirement is in most mortgages and standard language in the trust deed of Fannie Mae and Freddie Mac,” said Trott. To sell a portion of the property, you will need your lender’s consent. But if that’s hard to get, you still have options.
“Assuming they couldn’t get timely approval, another option would be to perform the sale and refinance the remaining balance at the same time,” said Trott.
