‘The Big Move’ is a MarketWatch column that looks at the ins and outs of real estate, from navigating a new home search to applying for a mortgage.
Do you have questions about buying or selling a home? Do you want to know where your next step is? Send an email to 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 divide the land into subdivisions and make it pass.
I like where I live, but the house is getting old and the kids are leaving. I am a 58 year old nurse. I pay $ 800 a month in property taxes plus my mortgage, which adds up to $ 2,500 a month.
I was offered a good enough amount to sell my house for $ 500,000 over two years ago. I have another house that I like and am going to buy, so I want to sell it. But my home sale failed, so I had to leave the house I wanted to buy.
Now there are no houses for sale and I haven’t found anything I like. So I have to rent until I find something. Should I do that? Or just wait until more houses show up on the market and sell them when I find something? I might not get much but the house also wouldn’t be that expensive to buy. Isn’t everything even?
It would be nice to spend money, go on vacation and not have to work too much. But I also don’t want to be caught up in paying rent as much as when I own the house and feel unhappy that I’m renting where I don’t want it to live.
I love the house where I live! But property taxes were too expensive, and I almost retired and had to sell them. I still owe money for my house and won’t pay it off before I retire unless I move out.
Home ownership costs are rising rapidly across the country, so you are not alone in feeling overwhelmed.
A recent study from property data company Attom Data Solutions found that for the average household, owning a home is only affordable in 41% of counties across the country. In other words, in another 59% of districts across the district, the average family needs to spend more than one-third of their take-home salary on housing costs, including mortgage payments and property taxes.
Many sellers are in the exact same boat as you. They will sell right away – if they can find a house to buy. The inventory of homes for sale is at a record low, and that creates a vicious circle. Home sellers are hesitant to sell their property because there is almost no guarantee that they will have a place to live after the sale is over.
Renting may seem like a one-way ticket to save money, but it’s far from certain. You don’t say where you live, but there’s a good chance that it won’t be too cheap to rent. In fact, rents in suburban and rural areas have risen sharply amid the pandemic as families seek more space to live outside of major cities. A separate report from Attom Data Solutions found that owning a three-bedroom home (at the median house price) was cheaper than renting a three-bedroom home in nearly two-thirds of the country.
There are other downsides to renting, to be sure. You have no control over future housing costs, so even though you may be able to afford the rent for the first year, there’s nothing stopping landlords from jacking up while you’re about to renew. And when you own a home, you build up to a valuable financial asset.
A recent study found that owning a home is still more affordable than renting in nearly two-thirds of the US, despite rising house prices.
By renting, the money you spend will not come back to you. Even if you have lower monthly expenses, a lot depends on what you do with the savings. Ideally, you would invest it or save it for a rainy day, and not waste it.
You are not helpless. Given that mortgage rates are still low – despite rising in recent weeks – I recommend seeing if refinancing is right for you. But given how long you’ve been at home and the fact that you’re still working to pay off the mortgage, I’m going to assume that you’ve just refinanced.
You don’t say what you did after you went to the local government to divide your land, but if it was there I would consider selling it. Since you have a mortgage, this process isn’t always easy.
When land is subdivided, you need to get written approval from the lender or mortgage provider that underlies the property, said Tom Trott, manager of the Maryland branch of Embrace Home Loans.
“This requirement is in most mortgages and the standard language in the Fannie Mae and Freddie Mac trust deed,” said Trott. To sell a portion of a property, you will need your lender’s permission. But if that’s hard to come by, you still have options.
“Assuming they can’t get approval on time, then another option is to sell and refinance the remaining balance at the same time,” Trott said.